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FOOTNOTES9n6OMFootnote - Appearance8S 9H*_0F_8S\E2do 1xHIGHLIGHT 1n6OMItalics and Bold(_08S :H*_0F_8S\E DRAFT ONS;n6OMHeader A Text = DRAFT and DateH*_0F_8S\E X 8 Xx@ `(#DRAFTă `(#"3 1, 4"  ӓDRAFT OFF?n6OMTurn Draft Style off8S ?H*_0F_8S\ED    LETTER LANDn6OMLetter Landscape - 11 x 8.5 AH*_0F_8S\E '3   2 yO- X   (D X- { #XP\  P6QXP#Federal Communications Commission`y(#FCC 9736 ă  yxdddy (v3 Before the Federal Communications Commission  yO Washington, D.C. 20554 ă  X -#XP\  P6QXP#In the Matter ofR) R)  X-Implementation of Infrastructurehh@hCC Docket No. 96237R) Sharing Provisions in theR) Telecommunications Act of 1996R) R)  Xh -  REPORT AND ORDER TP  X# -X` hp x (#%'0*,.8135@8:section 259 arrangements. Moreover, we further promote competitive entry by finding that  X- xqualifying carriers may include any carrier that satisfies the requirements of section 259(d)  xin other words, not just incumbent LECs, but competitive LECs and any other carrier that satisfies section 259(d) requirements.  Xa- ` x8. ` ` In this Report and Order, we choose to implement section 259 by adopting rules  x0that recognize the central role played by private negotiations in promoting the ability of  x\qualifying carriers to obtain access to "public switched network infrastructure, technology,  xzinformation, and telecommunications facilities and functions" provided by other carriers. A  X - xjnegotiationdriven approach is appropriate because, inter alia, section 259, unlike section 251,  xycontemplates situations where the requesting carrier is not using the incumbent LEC's facilities  xKor functions to compete in the incumbent LEC's telephone exchange area. In such circumstances,  xxwe believe that the unequal bargaining power between qualifying carriers, including new entrants,  xand providing incumbent LECs is less relevant since the incumbent LEC has less incentive to  xexploit any inequality for the sake of competitive advantage. Thus, wherever possible we adopt  xyspecific rules that restate the statutory language. The approach we adopt, which relies in large  xpart on private negotiations among parties to satisfy their unique requirements in each case, will  xhelp ensure that certain carriers who agree to fulfill universal service obligations pursuant to  X8- xsection 214(e) can implement evolving levels of technology to continue to fulfill those  xobligations. Again, because we also affirm the rights of competitive LECs to secure  xinterconnection pursuant to section 251 our approach to implementing section 259 does not discourage the development of competition in any local market.  X- ` x9. ` ` Regarding the scope of section 259(a), we allow the parties to section 259  X- xagreements to negotiate what "public switched network infrastructure, technology, information,  X- xand telecommunications facilities and functions" will be made available, without per se  X- xexclusions. We also decide that, whenever it is the only means to gain access to facilities or  xfunctions subject to sharing requirements, section 259(a) requires the providing incumbent LEC  xto seek to obtain and to provide necessary licensing of any software or equipment necessary to  xgain access to the shared capability or resource by the qualifying carrier's equipment, subject to  xthe reimbursement for or the payment of reasonable royalties. We decide that it shall be the  xresponsibility of the providing incumbent LEC to find a way to negotiate and implement section  x259 agreements that do not unnecessarily burden qualifying carriers with licensing requirements.  x0In cases where the only means available is including the qualifying carrier in a licensing  xjarrangement, the providing incumbent LEC must secure such licensing by negotiating with the relevant third party directly. x  X#- `  x 10. ` ` Regarding the implementation of section 259, we conclude that section 259(a)  x[grants the Commission authority to promulgate rules concerning any section 259 agreement to  xshare public switched network infrastructure, technology, information, and telecommunications  xfacilities and functions, regardless of whether they are used to provide interstate or intrastate  x=services. At the same time, we make clear that nothing in our analysis of section 259 indicates"+',N(N(ZZ%"  xan intent to regulate intrastate services, as opposed to regulating agreements regarding the sharing  xof infrastructure. We also note that section 259 dictates two discrete roles for the states with  x!respect to section 259: states may accept for public inspection the filings of section 259  x>agreements that are required by section 259(b)(7); and states must designate a carrier as an  x"eligible telecommunications carrier" pursuant to section 214(e)(2)(3). We further conclude that  xit is unnecessary to adopt any particular rules to govern disputes between parties to section 259  xagreements that may be brought before the Commission. Finally, we decide that it would be  xZinappropriate to further construe the requirements of section 259(d)(2) in this proceeding because  xissues materially relating to section 259(d)(2) will be decided by the Commission in the universal service proceeding scheduled to be concluded by May 8, 1997. x  X - ` x 11. ` ` We require that providing incumbent LECs may recover their costs associated with  xinfrastructure sharing arrangements, and we conclude that incentives already exist to encourage  xproviding and qualifying carriers to reach negotiated agreements that do so (section 259(b)(1)).  x.We decide that no incumbent LEC should be required to develop, purchase, or install network  x-infrastructure, technology, and telecommunications facilities and functions solely on the basis of  xa request from a qualifying carrier to share such elements when such incumbent LEC has not  xotherwise built or acquired, and does not intend to build or acquire, such elements. We also  x[decide that a providing incumbent LEC may withdraw from a section 259 infrastructure sharing  xagreement upon an appropriate showing to the Commission that the arrangement has become economically unreasonable or is otherwise not in the public interest.  X- ` x 12. ` ` We permit but do not require providing incumbent LECs and qualifying carriers  xto develop through negotiation terms and conditions for joint ownership or operation of "public  xswitched network infrastructure, technology, information, and telecommunications facilities and  x!functions" (section 259(b)(2)). We decide that joint owners will be treated as providing  xincumbent LECs for purposes of section 259 regulations. We also decide that it is not necessary  xfor the Commission to consider, at this time, the accounting and jurisdictional separations  X|-implications of joint ownership arrangements pursuant to section 259.  XN- ` x 13. ` ` We conclude that infrastructure sharing does not subject providing incumbent  x.LECs to common carrier obligations, including a nondiscrimination requirement, because such  xza result would be contrary to the clear mandate of section 259(b)(3). In the NPRM we asked  x[whether an "implied nondiscrimination requirement" should be inferred based on the "just and  x>reasonable" requirement included in Section 259(b)(4). We conclude that Section 259(b)(4)  xincludes no nondiscrimination requirement, but we also conclude that the "just and reasonable"  xrequirement will serve to ensure that all qualifying carriers receive the benefits of section 259.  xWe reaffirm that, to the extent that requesting carriers seek access to elements pursuant to section  x251, sections 201 and 251 expressly require rates set pursuant to those provisions not only to be  X#-just and reasonable, but also nondiscriminatory or not unreasonably discriminatory.|#T yO%-ԍ 47 U.S.C.  201 (not unreasonably discriminatory), 251 (nondiscriminatory).| "h$X,N(N(ZZF#"Ԍ X- ` }x 14. ` ` We decide that, although the Commission may have pricing authority to prescribe  xguidelines to ensure that qualifying carriers "fully benefit from the economies of scale and scope  x>of [the providing incumbent LEC]," it is not necessary at this time to exercise this authority  xL(section 259(b)(4)). We anticipate that, in this negotiationdriven approach, qualifying carriers  xand providing incumbent LECs will face economic incentives that will allow them to reach  xKmutually satisfactory terms for infrastructure sharing. In particular, we note that, because section  xK259 contemplates situations where requesting carriers are not using the incumbent LEC's facilities  x-or functions to compete in the incumbent LEC's telephone exchange area, the unequal bargaining  x-power between qualifying carriers, including new entrants, and providing incumbent LECs is less  xzrelevant since the incumbent LEC has less incentive to exploit any inequality for the sake of  xcompetitive advantage visavis a noncompeting qualifying LEC. We further decide that  xyavailability, timeliness, functionality, suitability, and other operational aspects of infrastructure  x>sharing also are relevant to determining whether the qualifying carrier receives the benefits  xmandated by section 259(b)(4). We conclude that the negotiation process, along with the  xavailable dispute resolution, arbitration, and complaint processes available from the Commission,  xwill ensure that qualifying carriers fully benefit from the economies of scale and scope of  x-providing incumbent LECs. We note that nonqualifying competitive LECs may avail themselves  xof these same processes to prevent unlawful anticompetitive outcomes resulting from section 259 x<negotiated arrangements. Further, we note that any anticompetitive outcomes may be proscribed  xzby operation of the antitrust laws from which Congress has granted no exemption to parties  xjnegotiating section 259 agreements. We further note that the Commission has ample authority  xpursuant to Title II to set aside any intercarrier agreements found to be contrary to the public interest.  X- ` x15. ` ` We conclude that it is unnecessary at this time for the Commission to establish  x=detailed national rules to promote cooperation (section 259(b)(5)). We conclude that, because  xthere is a requirement that infrastructure sharing arrangements not be used to compete with the  xproviding incumbent LEC, and because a providing incumbent LEC is permitted to recover its  xLcosts incurred in providing shared infrastructure pursuant to section 259, sufficient incentives  xxexist to encourage lawful cooperation among carriers. We also decide that the adoption of a good  xfaith negotiation standard would promote cooperation between providing incumbent LECs and qualifying carriers.  X - ` x16. ` ` We conclude that, for any services and facilities otherwise available pursuant to  xKsection 251, carriers that do not intend to compete using those services and facilities may request  xythose services and facilities pursuant to either section 251 or 259, and carriers that do intend to  xcompete using those services and facilities must request them pursuant to section 251. We decide  x<that, with respect to facilities and information that are within the scope of section 259 but beyond  xthe scope of section 251, carriers that do not intend to compete using those facilities and  xinformation may pursue agreements with incumbent LECs pursuant to section 259. We conclude  xzthat a providing incumbent LEC is not required to share services or access used to compete  xagainst it, and that an incumbent LEC's right to deny or terminate sharing arrangements extends  xto the full breadth of section 259. We also conclude that a qualifying carrier may not make  xavailable any information, infrastructure, or facilities it obtained from a providing incumbent LEC"#' ,N(N(ZZ%"  xto any party that intends to use such information, infrastructure, or facilities to compete with the  xproviding incumbent LEC. We emphasize that this will not otherwise affect the interconnection  X- xobligations of carriers pursuant to section 251. Moreover, competitive carriers, i.e., regardless of  xwhether they qualify for infrastructure sharing pursuant to section 259(d), that require the use of  xinformation or facilities to compete with the providing incumbent LEC may request the necessary  xfacilities pursuant to sections 251 and 252. We also find that nothing in section 259 permits a  xproviding incumbent LEC to refuse to enter into a section 259 agreement simply because the  x[qualifying carrier is competing with the providing incumbent LEC, provided that the qualifying  xcarrier is not using any shared infrastructure obtained from the providing incumbent LEC pursuant to a section 259 agreement to compete.  X -XxX` ` (#`  X - ` ~x17. ` ` We decide that section 259 agreements must be filed with the appropriate state  xcommission, or with the Commission if the state commission is unwilling to accept the filing;  xmust be made available for public inspection; and must include the rates, terms, and conditions  x[under which an incumbent LEC is making available all "public switched network infrastructure,  xtechnology, information, and telecommunications facilities and functions" that are the subject of  xthe negotiated agreement (section 259(b)(7)). We decide that this filing requirement refers only  xto agreements negotiated pursuant to section 259 and affirm that all previous interconnection  Xd- xagreements must be filed pursuant to section 252 as mandated by the Commission's Local  XO-Competition First Report and Order."OT {O- x ԍ Local Competition First Report and Order at  165171. We note that section 252(a) requires all  xJinterconnection agreements, "including any interconnection agreements negotiated before the date of enactment of  xI the Telecommunications Act of 1996," to be submitted to the appropriate state commission for approval. In contrast, we note that section 259 does not include a comparable provision.  X#- ` x18. ` ` We decide that section 259(c) requires notice to qualifying carriers of changes in  xthe incumbent LECs' network that might affect qualifying carriers' ability to utilize the shared  xZpublic switched network infrastructure, technology, information and telecommunications facilities  x>and functions; that section 259(c) requires timely information disclosure by each providing  x]incumbent LEC for each of its section 259derived agreements; and that such notice and  xdisclosure, provided pursuant to a section 259 agreement, are only for the benefit of the parties  xto a section 259derived agreement. We also decide that section 259(c) does not include a  xrequirement that providing incumbent LECs provide information on planned deployments of telecommunications and services prior to the make/buy point. x  X=- ` x19. ` ` We decide that no incumbent LEC is excused, per se, from sharing its  X(- x]infrastructure because of the size of the requesting carrier, its geographic location, or its  X- xaffiliation with a holding company. A carrier qualifying under section 259(d) therefore may be  xZentitled to request and share certain infrastructure and, at the same time, be obligated to share the  xysame or other infrastructure. We conclude that parties to section 259 negotiations can and will  xmake the necessarily factbased evaluations of their relative economies of scale and scope  x<pertaining to the infrastructure that is requested to be shared. To facilitate such negotiations, we  xadopt a presumption that a telecommunication carrier falling within the definition of "rural"" ,N(N(ZZ!"  xtelephone company" in section 3(37) lacks economies of scale or scope under section 259(d)(1),  x>but we decide to exclude no class of carriers from attempting to demonstrate to a providing  xMincumbent LEC that they qualify under section 259(d)(1). In negotiations with a requesting  xcarrier or in response to a complaint arising from a refusal to enter into a section 259 agreement,  x[a providing incumbent LEC may rebut the presumption that a "rural telephone company" lacks economies of scale or scope. x  X_-  III. IMPLEMENTATION OF SECTION 259 ă  X1- A. x General Issues  X - x 1. ` ` Background  X - ` x20. ` ` As an initial matter, we stated in the NPRM our belief that we should adopt rules  xand guidelines that, in every case, promote the development of competition and the preservation  X - xjand advancement of universal service.9 T yO -ԍ NPRM at  6.9 We maintained that any significant variance between  x\our implementation of section 259 and our implementation of other sections of the 1996 Act  xwould undermine these two important and interrelated goals of promoting the development of  Xb- xcompetition and universal service. To this end, we tentatively concluded that the requirements  x.of section 259 should be interpreted as complementary to the Commission's implementation of  X4- xKother sections of the 1996 Act.34XT {O=-ԍ Id.3 We noted that section 259 is codified within a newly designated  xPart II of Title II of the 1934 Act, which part Congress designated "Development of Competitive  xZMarkets." We tentatively concluded that terms used in section 259 should be defined as they are  xydefined in other Commission proceedings implementing the 1996 Act, except where section 259  X-clearly imposes a different definition.3 T {Os-ԍ Id.3  X- ` x21. ` ` At the same time, we also tentatively concluded that the best way for the  xCommission to implement section 259, overall, would be to articulate general rules and  X|- xyguidelines.9!||T yO -ԍ NPRM at  7.9 We expressed our belief that section 259derived arrangements should be largely  Xe-the product of private negotiations among parties.3"e T {O"#-ԍ Id.3  X7-x 2. ` ` Comments "  ",N(N(ZZ"Ԍ X- ` _x22. ` ` Some commenters state that the Commission, overall, should interpret section 259  X- xin a way that is complementary to the other sections of the 1996 Act.#T {Ob-ԍ See, e.g., ALLTEL Comments at 3; BellSouth Comments at 2; NCTA Comments at 2. There is a notable  xdifference of opinion, however, about what should be considered a proper complementary  xapproach. Basically, this controversy concerns the relationship between section 259 and sections  X- x251 and 252.$~ZT {O- x-ԍ See, e.g., ALLTEL Comments at 3 (sections 251 and 259 are "distinct, yet complementary"); BellSouth  xJComments at 2 (section 259 "operates in complement with, but is distinct from" section 251); Frontier Comments  xat 12 ("The plain language of section 259 evidences that it serves a purpose far different from the unbundling,  xwinterconnection and resale requirements of section 251. The Commission should not contrary to the suggestion in  {O - xthe Notice attempt to harmonize the two sections." (citation omitted)). But see NCTA Comments at 2 ("The  xxCommission's critical task in this proceeding is to implement section 259 in a manner that fully accords with the  {Oc -Act's central purpose of promoting competition in all telecommunications markets." (emphasis in original)). Accordingly, we discuss these issues and related comments in Section III. B. 1.,  X-infra.  Xa- ` x23. ` ` A majority of commenters agree with the tentative conclusion in the NPRM that  XJ- xthe Commission should articulate general rules and guidelines to implement section 259.%$JT {O- xԍ See, e.g., Ameritech Comments at 3 ("strongly supports" tentative conclusion); BellSouth Comments at 2;  {Oe- xwGTE Reply Comments at 14; Castleberry Telephone Company, et al. comments at 34;  NYNEX Comments at 23;  x<Oregon PUC Comments at 2; PacTel Comments at 2; RTC Comments at 3; Southwestern Bell Comments at 1; Southwestern Bell Reply Comments at 2; Sprint Reply Comments at 2; USTA Comments at 15.  xIndeed, some commenters suggest that the Commission need only adopt the statutory language  xfor its rules implementing section 259 because these, along with the analysis and directives set  X - xout in this Report and Order, will be enough to guide parties in their section 259 negotiations.{& T {OB-ԍ See PacTel Comments at 7; GTE Reply Comments at 67; US West Comments at 8.{  x=In the words of the Minnesota Coalition, "[n]egotiations should be the primary avenue for the  X - x<development of section 259 infrastructure sharing arrangements."' T {O- xԍ Minnesota Coalition Comments at 8. See also Ameritech Comments at 3; BellSouth Comments at 2; BellSouth Reply Comments at 2; GTE Comments at 2; NYNEX Comments at 12; US West Comments at 3. Among the benefits of such  xa negotiationdriven approach to implementing section 259, NYNEX specifically identifies three:  xj(1) it would accommodate evolving technologies and "unforeseen circumstances;" (2) it would  xpromote negotiating flexibility so that parties can tailor agreements to meet individual needs; and  X{-(3) it would successfully reduce the need for government involvement.F({xT yO!-ԍ NYNEX Reply Comments at 89.F  XM- ` x24. ` ` Moreover, according to the commenting LECs, the Commission need not be  x]concerned about the effects on competition of a negotiationdriven, flexible approach to  ximplementing section 259. PacTel offers its view that it is precisely where there is a foreseeable" (,N(N(ZZ)"  X- xlack of anticompetitive behavior that general guidelines are appropriate.@)T yOy-ԍ PacTel Comments at 5. @ PacTel references the  xlimitation in section 259(b)(6) and states that its prohibition against qualifying carriers competing  xNwith the providing incumbent LEC in the latter's service area means that concerns about  X- x.anticompetitive behavior are "absent."*"XT {O- xԍ Id. See also GTE Comments at 2 ("LECs entering into infrastructure sharing arrangements are not  xcompetitors, so there is no need for rules to assure against discrimination and anticompetitive conduct. The fact that  xinfrastructure sharing agreements are already in place throughout the country shows that detailed rules are unnecessary."). PacTel further offers the view that an approach that  xrelies on general rules and guidelines is consistent with "the deregulatory national policy  X-framework of the 1996 Act."?+BT yO -ԍ PacTel Comments at 2.?  X_- ` Ax25. ` ` NonLEC commenters like MCI and NCTA, however, oppose this LECadvocated  xapproach to implementing section 259 in favor of approaches that would tie the implementation  X1- xof section 259 overtly to the Commission's regulations implementing section 251.i,1T {O-ԍ See, e.g., NCTA Comments at 6; NCTA Reply Comments at 3. i Although  xboth MCI and NCTA contemplate section 259 arrangements that would be the result of  xnegotiations by parties, both advocate imposing specific section 251derived restrictions on the  X - x=scope of such negotiations.- d T {O- xԍ See, e.g., NCTA Reply Comments at 3 ("The [incumbent LECs'] accent on exclusivity and discriminatory  xipricing, as well as their call for the Commission to adopt only minimal guidelines under section 259, evince their  xintention to use section 259 to enable noncompeting incumbent carriers in adjacent markets to enter into special  xinfrastructure sharing agreements with one another under rates, terms and conditions that would be unavailable to competitive local exchange carriers (CLECs) in the incumbents' home markets." (citations omitted)). Thus, MCI would have us adopt rules to implement section 259  X - xthat impose section 251derived concepts like price regulation based on forwardlooking costs.. T {O-ԍ MCI Comments at 36. See also Discussion at Sections III. C., D., and E., infra.  xNCTA, on the other hand, would have us impose requirements on qualifying carriers to ensure,  X - xZinter alia, that any competitive LEC obtains the benefit of infrastructure arrangements negotiated  X-by the providing incumbent LEC and the qualifying LEC./T {O-ԍ NCTA Comments at 37. See also Comments and Discussion at Section III. B. 1., infra. x  Xd- x 3.` ` Discussion  X6- ` x26. ` ` First, we affirm our tentative conclusion in the NPRM that terms used in section  x259 should be defined as they are defined in other Commission proceedings implementing the  xk1996 Act, except, as indicated herein, where we determine that section 259 clearly imposes a  xdifferent definition. We also, as reflected in what follows, affirm our tentative conclusion and  xadopt general rules and guidelines to define the obligations imposed by section 259. Further, we" :/,N(N(ZZ"  xadopt rules that restate the statutory language in most cases. Such an approach comports with  x\a statutory scheme that, we conclude, depends in large part on negotiations among parties,  xnegotiations that will vary depending upon the unique requirements of parties in each case. We  xbelieve that, at this time, all such negotiations should be constrained by very few explicit  xregulatory requirements. To this extent we agree with those commenters who have urged upon us just such a course of action.  X_- ` x27. ` ` We conclude, contrary to the arguments of some parties, that this approach also  xMis the best way to satisfy our other stated general concern, namely, that rules implementing  xsection 259 should not impede the development of competition in any market. We recognize that  xthe primary goal of section 259 is to help ensure that certain carriers who agree to fulfill  xMuniversal service obligations pursuant to section 214(e) continue to have access to "public  xswitched network infrastructure, technology, information, and telecommunications facilities and  X - xfunctions."Y0 T {ON-ԍ See 47 U.S.C.  259(d)(2); 259(a).Y But, as discussed below, there is no evidence in the language of section 259 or its  X - xlegislative history that Congress intended to use section 259 to insulate any telephone service area  xyfrom the advent of competition and no commenter in this proceeding makes such a claim. Some  xcommenters advocate rules, however, which we also discuss in the following sections of this  x<Report and Order, that we think might tend to promote such an outcome. Moreover, to the extent  x-some LEC commenters argue that Congress intended no connection between section 259 and the  x<other procompetitive sections of the 1996 Act, we agree with NCTA that, to the extent that these  xcommenters rely upon history for legislation that was considered but never enacted, prior to the  X- x1996 Act, this legislative history is entitled to no weight in our deliberations.R1ZT {O(-ԍ See NCTA Reply Comments at 2 n.5. R Mindful of these  xconcerns about the potential for insulating certain telephone service areas from competition, we  xbelieve that our approach adopted in this Report and Order is consistent with the Congressional  xpolicy goals, as set forth in Section 257, of promoting vigorous economic competition and  xeliminating market entry barriers for small businesses in the provision of telecommunications  X-services and equipment.G2T {OG-ԍ See 47 U.S.C.  257.G  X|- ` x28. ` ` We conclude that the economic incentives and disincentives facing the incumbent  xLEC differ substantially in the circumstances contemplated in section 259, as implemented in this  xyReport and Order, visavis the circumstances in which section 251 may apply. We have noted  xelsewhere that an incumbent LEC has little economic incentive to assist new entrants (i.e.,  xcompetitors) in their efforts to secure a share of the incumbent LEC's local exchange market,  x=and that the incumbent LEC also has the ability to act on its incentive to discourage entry and  xrobust competition by, among other possible actions, insisting on supracompetitive prices or other  X- xunreasonable conditions of interconnection.l3~T {O '-ԍ Local Competition First Report and Order at  10, 55.l However, based on our interpretation of section"3,N(N(ZZ"  X- x259(b)(6), section 259 applies only in instances where the qualifying carrier does not seek to use  xshared infrastructure to offer certain services within the incumbent LEC's telephone exchange  X- xarea.b4T {OM-ԍ See Discussion at Section III. C. 6., infra.b Stated simply, the incumbent LEC will not lose market share in its telephone exchange area as a consequence of sharing infrastructure with a qualifying carrier under section 259.  X- ` ax29. ` ` An incumbent LEC that receives from a qualifying carrier a request to share  xinfrastructure under section 259, as a result, does not face the incentives to charge excessive  xprices or to set other unreasonable conditions for the use of its infrastructure that arise in the  XJ- xcompetitive situation in which section 251 applies. At the same time, because we decide that an  xjincumbent LEC may recover all the costs it incurs as a result of providing shared infrastructure  X - xpursuant to a section 259 agreement,b5 ZT {O' -ԍ See Discussion at Section III. C. 1., infra.b the incumbent LEC will not be discouraged from entering  xinto such an agreement out of concern that it will be financially harmed by doing so. Moreover,  x[we are less concerned, as we are in competitive situations, about the relative bargaining power  xof the parties negotiating section 259 sharing agreements. Unlike competitive situations, the  xunequal bargaining equality between qualifying carriers and incumbent LECs is less relevant  xsince the incumbent LEC has less incentive to exploit any inequality to achieve a competitive advantage.  Xd- ` ~x30. ` ` In sum, we conclude, consistent with the goals of the 1996 Act, that it is vitally  xKimportant that we adopt rules in this proceeding that do not serve to discourage the development  xof competition in any local market. The approach we take here will, we believe, help to ensure  x"an interpretation of section 259 that fully serves the intent of the section and is fully  xcomplementary to the other sections of the Act particularly given the placement of section 259  xwithin a newly designated Part II of Title II of the 1934 Act, which part Congress designated "Development of Competitive Markets."  X- ` x31. ` ` Certain commenters apparently fear that the Commission will implement section  xL259 by adopting the same regulatory approach employed in our implementation of section 251.  xkThese commenters suggest that the measures adopted in section 251 designed to remove  xjbarriers to competitive entry in all telecommunications markets would essentially subvert the  x=statutory purpose of section 259 to assist certain telecommunications carriers to upgrade their  X9- xnetwork capabilities through particular, i.e., cooperative, arrangements with other carriers.69T {O!-ԍ See, e.g., RTC Comments at 2. See also discussion infra, at  3637, 5052. We  xagree that section 251 and section 259 fulfill different statutory purposes. In contrast to sections  x[251253, which focus on eliminating the legal, regulatory, economic, and operational barriers to  xcompetition in telecommunications markets, and on interconnection agreements between carriers  xthat may compete against one another, section 259 addresses infrastructure sharing between an  xincumbent LEC and a qualifying carrier that will not use shared infrastructure to compete with  xthe incumbent LEC. In this context of cooperation between noncompeting carriers, we believe,"!~6,N(N(ZZ "  xZto the contrary, that our negotiationdriven structure as set out in this Report and Order fully  xeffectuates the statutory purpose. Infrastructure sharing pursuant to section 259 is one means  xby which smaller LECs can implement evolving levels of advanced technology in order to  xcontinue to fulfill their universal service obligations. We have specifically considered the impact  xon small telecommunications companies of the regulatory regime we adopt here and we conclude  xthat it imposes few burdens on such companies and none that are not explicitly required by the  xstatute. We discuss in the following section other specific conclusions about the relationship  X_- xLbetween sections 259 and 251, and we set out in Sections C, D, and E, infra, other conclusions  x regarding these issues as they arise in interpreting the implementation criteria contained in sections 259(b), (c), and (d). x  X - B. xRequirements of Section 259(a)  X -x32. ` ` Section 259(a) requires the Commission to "prescribe" by February 8, 1997: x  }Xx[R]egulations that require incumbent local exchange carriers (as defined in section  251(h)) to make available to any qualifying carrier such public switched network  infrastructure, technology, information, and telecommunications facilities and  functions as may be requested by such qualifying carrier for the purpose of  3enabling such qualifying carrier to provide telecommunications services, or to  provide access to information services, in the service area in which such  5qualifying carrier has requested and obtained designation as an eligible  X-telecommunications carrier under section 214(e).@7T yO-ԍ 47 U.S.C.  259(a).@  x  X-x 1. Scope; Relationship Between Sections 259 and 251  X-x` ` a.  Background x  X~- ` x 33. ` ` In the NPRM, we first sought comment on how we should interpret the scope of  xthe section 259(a) requirement. We asked what is included in "public switched network  XP- xinfrastructure, technology, information, and telecommunications facilities and functions . . . ."f8PXT yOY-#C\  P6Q/P#э NPRM at  9.f  xySpecifically, we sought comment on what constitutes "public switched network infrastructure"  xKfor the purposes of section 259(a). Likewise, we sought comment on whether and how we should  x[define the terms "technology, information, and telecommunications facilities and functions" to  xLfurther the statutory goals of section 259(a). We asked what definitions for these terms would  xiprovide necessary or desirable flexibility as technology continues to evolve. We stated our belief  x.that how these terms are defined has specific implications for the overall scope of section 259  xand how section 259 relates to other sections of the 1996 Act, and we sought comment on"!8,N(N(ZZ "  xiwhether other provisions in the statute, or its legislative history, could provide guidance on these  X-issues.39T {Ob-ԍ Id.3  X- ` x!34. ` ` We further noted that there could be an overlap between those  x"telecommunications facilities and functions" that are the subject of section 259(a) and  xinterconnection, unbundled network facilities, and resale made available pursuant to section  Xv- x251(b) and (c).:vZT {O -ԍ 47 U.S.C.  251(b), (c). See also Local Competition First Report and Order at Sections IV., V., VIII. We asked whether "telecommunication facilities and functions" provided under  x\section 259(a) could include, for example, access to rightsofway and resale made available  xunder section 251(b), interconnection made available under section 251(c)(2), and unbundled  X1- x=network elements made available under section 251(c)(3).:;1T yO -ԍ NPRM at  10.: We offered the view that, because  x"telecommunications facilities and functions" in section 259(a) is stated without terms of  xlimitation, we might conclude that resale, interconnection, and unbundled network elements are  X -included within the scope of section 259(a).3< |T {O-ԍ  Id.3  X - ` x"35. ` ` We also noted statutory differences that distinguish who may obtain access to an  xincumbent LEC's network under section 251 and who may obtain infrastructure sharing under  xsection 259. In this regard, we noted that section 251(c) requires incumbent LECs to provide  xinterconnection and network element unbundling to all requesting telecommunications carriers,  Xb- x.including carriers that plan to compete with the incumbents in the incumbents' service areas.K=bT yO!-ԍ 47 U.S.C.  251(c)(2), (c)(3).K  xOn the other hand, section 259(b)(6) provides that an incumbent LEC shall not be required to  x>"engage in any infrastructure sharing agreement for any services or access which are to be  xprovided or offered to consumers by the qualifying carrier in such local exchange carrier's  X- xtelephone exchange area."C>T yOU-ԍ 47 U.S.C.  259(b)(6).C We sought comment on the implications of this distinction for our  X-implementation of section 259.A?. T yO -ԍ NPRM at  1011.A  X- ` _x#36. ` ` We also sought comment on the implications of such an approach for qualifying  xcarriers that might want to obtain certain "telecommunications facilities and functions" as  xunbundled network elements pursuant to section 251(c)(3). We asked whether the limitation  xprovided in section 259(b)(6) means that qualifying carriers must take, for example, resale,  xinterconnection, and unbundled network elements exclusively pursuant to section 259 where the"e ?,N(N(ZZO"  X- x-qualifying carriers do not propose to compete in the incumbent LEC's telephone exchange area.?@T {Oy-ԍ Id. at  11.?  X- ` x$37. ` ` We pointed out that interpreting the scope of section 259(a) as relatively narrow  xappears to be supported by its requirement that only qualifying carriers, defined pursuant to  X- xsection 259(d), may obtain section 259 arrangements from incumbent LECs.DAZZT {O- x[ԍ As discussed in greater detail at Section III. E., infra, qualifying carriers are defined as carriers that lack  x,economies of scale or scope and that request and obtain designation to receive universal service support pursuant to section 214(e).D Such a definition  x/would appear to apply to many small LECs. We asked whether this observation supports a  xconclusion that Congress primarily, or exclusively, intended section 259 to benefit small carriers  xin an effort to advance the universal service goals of the 1996 Act. We asked further whether  xsuch a conclusion would support a Commission decision to construe the provisions of section 259  xso as to apply only to cases involving small LECs or, even more restrictively, to arrangements  X -between such qualifying carriers and their adjacent incumbent LECs.:B |T yOG-ԍ NPRM at  12.:  X - ` x%38. ` ` We also offered the view that it might be possible to interpret the scope of section  x259 and its relationship to section 251 in a very different way. Neither section 251, on its face,  xnor the Commission's Orders in CC Docket No. 9698 would appear to prohibit qualifying  xcarriers, defined pursuant to section 259(d), from obtaining access to rightsofway, resale  X- xfacilities, interconnection, and unbundled network elements pursuant to section 251 (i.e., outside  xjthe framework of section 259 with its apparent restrictions on competition). We asked whether  xthe Commission could conclude that section 251 grants rights of access to rightsofway, resale,  xinterconnection, and access to unbundled network elements, on terms that also satisfy section 259  X6- xzcriteria, as types or examples of "telecommunications facilities and functions.":C6 T yO-ԍ NPRM at  13.: We sought  xjcomment about whether the Commission can and should find that qualifying carriers must take  xysuch resale, interconnection, and unbundled network facilities pursuant to section 251. On the  xother hand, we asked whether the Commission could give qualifying carriers the choice whether  x<to obtain access pursuant to section 251 or section 259, or whether the Commission should apply  x<section 259 only to elements of "public switched network infrastructure, technology, information,  X- xand telecommunications facilities and functions" that are not otherwise provided pursuant to  X-section 251.3DT {O"-ԍ Id.3  Xi- ` x&39. ` ` We offered the view that, besides promoting infrastructure development on behalf  x/of qualifying carriers, requiring qualifying carriers to take, for example, interconnection and  xunbundled network elements pursuant to section 251(c) instead of pursuant to section 259  xyalso might tend to promote competition in local exchange markets. As discussed in Section III."$. D,N(N(ZZ"  X- xLC. 6, infra, section 259(b)(6) does not require incumbent LECs to "engage in any infrastructure  xsharing agreement for any services or access which are to be provided or offered to consumers  xby the qualifying carrier in such local exchange carrier's telephone exchange area." No such  xlimitation on the incumbent LEC's obligations appears in section 251, and, consequently,  xqualifying carriers are free, pursuant to section 251, to use interconnection and unbundled  xnetwork elements whether or not they intended to compete in the providing incumbent LEC's  Xx- x/telephone exchange area.ExT {O-ԍ See generally Local Competition First Report and Order at Sections IV., V., IX. We sought comment on this approach to defining any overlap  xbetween sections 251 and 259 and on the consequences of such an approach for promoting the  XJ-development of competition, particularly in rural markets.:FJZT yOU -ԍ NPRM at  14.:  X -x` ` b. Comments  X - ` Px'40. ` ` Incumbent LECs and others urge us to avoid attempting to define with specificity  xnthe scope of public switched network infrastructure, technology, information, and  X - xtelecommunications facilities and functions as set out in section 259(a).GZ T {O[- xԍ See, e.g., BellSouth Comments at 9. But see AT&T Comments at 2 (arguing that defining proper scope of  xapplication of section 259 depends in part on properly defining "qualifying carrier" per section 259(d), and also on carefully tailoring definition of facilities and services subject to sharing). These commenters  xcontend that Congress intended section 259 to narrowly focus on and benefit a certain class of  xcarriers, namely, "qualifying" carriers defined pursuant to section 259(d), to the virtual exclusion  xof any concerns about the effects of infrastructure sharing on competition. To this end, some of  xthem cite legislative history from earlier legislation never enacted that they think establishes  XM- xsuch an intent.zHM T {O - x;ԍ See, e.g., GTE Comments at 8; Pacific Comments at 23; USTA Comments at 2, n.2; RTC Comments at 14.  {O- x,But see NCTA Reply Comments at 2 n.5 ("The weakness of the [incumbent LECs'] position is highlighted by their  xmisplaced reliance on one predecessor bill, H.R. 3636, that was never enacted (sic) by the Senate, and on another  xYbill, S. 2810, that was never even considered by either chamber . . . . These citations to bills that were never enacted are entitled to no weight." (citations omitted)). z According to these commenters, carriers which, pursuant to the specific  xzrequirements of section 259(d)(1) and (2), are found to lack economies of scale or scope and  xwhich agree to undertake specified universal service obligations will be aided by section 259 to  xobtain that infrastructure including advanced technology to enable them to continue to meet  X-their universal service obligations.I T {Ob"- xԍ See, e.g., ALLTEL Comments at 23; BellSouth Comments at 3; Frontier Comments at 1; Southwestern Bell  {O,#-Comments at 4. See also ALTS Comments at 2; GTE Reply Comments at 3.  x"I,N(N(ZZ"Ԍ X- ` x(41. ` ` Universal service promotion, not the promotion of competition, is the true purpose  X- xbehind section 259, according to these commenters.JZT {Ob- xԍ ALLTEL Comments at 2; see also Sprint Reply Comments at 4 ("[section] 259 enhances the ability of  xsmaller carriers to provide universal service period"); PacTel Reply Comments at 4 ("The Commission should not adopt any recommendation that would promote competition above universal service for section 259"). Accordingly, these parties argue that the  x/Commission should avoid grafting procompetition policy goals onto its implementation of  X- xNsection 259.KZT {OV- xԍ See, e.g., ALLTEL Comments at 2 (questioning Commission's belief that section 259 should be construed to  xpromote dual goals of universal service and competition); NYNEX Reply Comments at 2 (noting that, while section 259 is consistent with procompetitive goals of 1996 Act, it is not designed to open up local markets to competition). According to ALLTEL, "infrastructure sharing is far less about promoting  xcompetition in small and rural markets (which are generally less attractive to competitors) as it  xis about elevating the service offerings available in those markets beyond that which the  Xv- x]qualifying carrier's economies of scale and scope or finances would otherwise permit."Lzv T {O3- x;ԍ ALLTEL Comments at 2.  Accord PacTel Comments at 25; see also Frontier Comments at 12 ("The plain  xxlanguage of section 259 evidences that it serves a purpose far different from the unbundling, interconnection and  x resale requirements of section 251. The Commission should not contrary to the suggestion in the Notice attempt  xto harmonize the two sections."); GTE Reply Comments at i ("[T]he Commission should acknowledge that  xwinfrastructure sharing under section 259 is independent of a carrier's obligation under sections 251 and 252."); USTA  xwComments at 7 ("the Commission should confirm the clear intent of the statute that the provisions of section 259 stand on their own and have no relationship with section 251").  X_- xALLTEL further argues that sections 251 and 259 are "distinct, yet complementary."?M_N T yO^-ԍ ALLTEL Comments at 3.? ALLTEL  xargues that section 251 is designed to "govern the relationship among carriers in competitive  xsituations," whereas section 259 is a cooperative provision to assist "communications 'have X - xnots.'"3N T {O-ԍ Id.3 Based on these asserted differences, ALLTEL argues that section 259 agreements should  x="sunset" when either the qualifying LEC's service territory becomes subject to competition, or  xwhere the qualifying LEC uses section 259 "facilities" to compete outside its service territory  X - x>with the providing incumbent LEC.;O pT {O-ԍ Id. at 34.; RTC, which also argues that sections 251 and 259 are  xdistinct, nevertheless takes issue with ALLTEL's analysis as imposing an unwarranted limitation  X -on the availability of infrastructure sharing arrangements.PZ T {OZ!- xԍ See RTC Reply Comments at 4 n.3 (arguing that ALLTEL's "sunset" proposal is a request for regulatory  xforbearance that fails to meet forbearance criteria set out in 47 U.S.C.  10, and would establish an unwarranted "repeal" of section 259 which is "quite specific about what competition is incompatible with infrastructure sharing").   Xy- ` px)42. ` ` LEC commenters by and large say that it is important for the Commission to  x=ensure that qualifying carriers have the flexibility to define what infrastructure they can obtain  xMpursuant to section 259 based on their individual requirements. Moreover, this flexibility is  xlparticularly important given that technology will continue to evolve. According to GTE,"4$P,N(N(ZZf"  x>"[d]efining exactly what facilities are eligible to be shared will by necessity result in a static  X- xdefinition which would not adapt to rapidly changing technology."Q&T {Ob- xԍ GTE Reply Comments at 2.  See also Castleberry Telephone Company et al. Comments at 3 (terms in section  {O,- x259(a) should be defined as defined in other proceedings, including section 251 Local Competition First Report and  {O- xOrder; terms in section 259 not so defined should be defined using "broadest possible language" recognizing continual evolution of technology and services). Those LEC commenters  X- xwhich addressed the issue also oppose an adjacency requirement, i.e., whereby infrastructure  X- xsharing could be obtained by qualifying carriers only from neighboring incumbent LECs.aRT yO$ -ԍ Minnesota Coalition Comments at 11; RTC Comments at 6.a The  xMinnesota Coalition contends that, although some services or functionalities otherwise obtainable  xby infrastructure sharing might be distance sensitive and, thus, legitimately exempt from provision  xpursuant to the "economically unreasonable" stricture of section 259(b)(1), other services such  xas advanced CLASS features and Signalling System 7 may be provided "over substantial  XJ- xdistances."MSJFT yOA-ԍ Minnesota Coalition Comments at 11.M Although some commenters note an apparent intent on the part of Congress to  xbenefit "small, largely rural carriers," they largely oppose the adoption of size restrictions for  X -carriers seeking to become "qualifying carriers."TT T {O- xԍ  See, e.g., RTC Comments at 5. Contra, NCTA Reply Comments at 9 (arguing for restricting qualifying  {Om- x=carriers to small, rural carriers; opposing application of qualifying carrier status to large carriers, inter alia as  xiviolating section 259(d)(1) restrictions; and concluding that "[a]ny definition of 'qualifying carrier' that includes  xcarriers that are affiliated with large telephone companies or carriers that serve a majority of access lines in a  {O- xparticular state would contravene the Act and undermine competition."). And see Minnesota Coalition Comments at 11 ("Qualifying carriers should be determined by their economic power, which is demonstrated in size.").T  X - ` x*43. ` ` LEC commenters disagree about how we should construe "public switched network  xinfrastructure, technology, information, and telecommunications facilities and functions." Thus,  xfor example, USTA takes issue with the Commission's proposal in the NPRM to read this phrase  xin a way that, according to USTA, would result in various types of technology, information, and  xtelecommunications facilities and functions being improperly included in the scope of section  x259(a). Instead of the proposed reading that would find that "public switched network" modifies  xonly "infrastructure," USTA argues that the entire phrase should be read as modified by "public  XM- xswitched network."UMT T {OR -ԍ USTA Comments at 5. Accord GTE Comments at 3. See also BellSouth Comments at 910. This results, according to USTA, in an interpretation of the infrastructure,  xtechnology, information, and telecommunications facilities and functions available under section  X- x259 that is limited to that which is networkrelated.VT {O#- xԍ USTA Comments at 5. See also Sprint Comments at 3 ("['Public switched network infrastructure, technology,  xinformation, and telecommunications facilities and functions'] includes those facilities necessary to provide voice and  xidata communications and signalling capability, including access to industry standard databases and connections to  xother networks. Those are the advanced telecommunications infrastructure facilities that would ensure that the qualifying carrier can offer advanced telecommunications services . . . ."). One result of this interpretation, according"V,N(N(ZZ "  xto USTA, is that services resale, intellectual property owned by third parties, and nonpublic  xlinformation like marketing information would be clearly unavailable to qualifying carriers  X- xMpursuant to section 259 agreements.GWT yOK-ԍ USTA Comments at 45. G Similarly, some larger LEC commenters advocate the  X- xelimination of resale and services from the scope of section 259.-X&XT {O- xԍ See, e.g., GTE Comments at 4 ("Section 259 requires only the sharing of infrastructure, not services. When  {O- xCongress intended to include services, it did so specifically . . . ."); Southwestern Bell Comments at 5. See also  yOX- xSprint Reply Comments at 3 ("[S]ection 259 establishes requirements for the sharing of infrastructure, not the  {O -provision of service."). But see RTC Reply Comments at 78.- Frontier would have us limit  xthe scope of section 259(a) to advanced services and functionalities like advanced signalling  xsystems because, according to Frontier, even carriers which lack economies of scale or scope  xymust "have the resources to deploy a network and, in the case of an incumbent rural telephone  X_-company, already has."EY_FT yOV-ԍ Frontier Comments at 4 n.9.E  X1- ` Qx+44. ` ` RTC disagrees that such limitations should be read into section 259(a).<Z1T yO-ԍ RTC Comments at 3.< RTC  xyargues that qualifying carriers should be able to obtain whatever they need "to modernize their  X - xnetworks and broaden the services they provide to their customers."3[ f T {O-ԍ Id.3 According to RTC, this  xwould allow qualifying carriers to obtain those facilities and functions otherwise available  xpursuant to section 251 including services resale, interconnection, and unbundled network  X - xelements "so long as such facilities and functions are a part of the public switched network."p\ T {Og-ԍ Id. at 34. See also Minnesota Coalition Comments at 46.p  xRejecting assertions from PacTel, BellSouth, and GTE and others that services should be  xexcluded as not belonging to infrastructure, technology, information, or telecommunications  Xy- xfacilities and functions, RTC says that such distinctions "rely too heavily on semantics."H]y T yO-ԍ RTC Reply Comments at 7.H This  x=is so, according to RTC, because the same arrangement often can be classified as a service, as  XK- x1a network element, or as a "joint provision vehicle.";^KT {O!-ԍ Id. at 78.; According to RTC, this entire  xclassification scheme should be rejected because it derives from common carrier regulation, and  xcommon carrier treatment of section 259provided arrangements is specifically prohibited per the"^,N(N(ZZe"  X- xzmandate of section 259(b)(3)._ZT {Oy- xԍ Id. at 4. See also MCI Reply Comments at 45 (arguing that Commission should broadly interpret scope of  xLsection 259(a) to include services, including information services, subject only to requirement that providing incumbent LEC need not provide such services if this necessitates also transferring its service customers). RTC also disagrees with Frontier that section 259 should be  X-viewed as providing only advanced services and functionalities.F`T yO-ԍ RTC Reply Comments at 7 n.7.F  X- ` x,45. ` ` The LECs and their representatives disagree about another issue as well. Some  xLEC commenters welcome the suggestion in the NPRM that the Commission could allow non x=competing, qualifying carriers to choose between obtaining what they need pursuant to either  Xv- x-section 259 infrastructure arrangements or pursuant to section 251 interconnection agreements.avzT {O - xԍ PacTel Comments at 10; RTC Comments at 4; Southwestern Bell Comments at 4. See also MCI Reply Comments at 3.  xyOther LECs, like Ameritech, argue that the Commission "should make clear that noncompeting  XH-carriers are compelled to obtain shared infrastructure under section 259."<bHT yO- xԍ Ameritech Comments at 4 (arguing that benefits to competition "would be minimal" as result of allowing non {O- xcompeting qualifying carriers to choose freely between sections 251 and 259). See also Frontier Comments at 45  yO_- x<("[The] Act provides qualifying carriers with a choice. They may obtain advanced network services pursuant to  {O'- x,infrastructuresharing agreements for use in serving their own customers. Alternatively, they may obtain unbundled  xelements and interconnection for any purpose permitted by the Act. What the Act precludes is a qualifying carrier  yO-from obtaining both." (emphasis in original)). <  X - ` }x-46. ` ` ALTS, NCTA, and MCI, in different ways, oppose the general view offered by the  xLECs and their representatives that the Commission should construe section 259 as focused solely  X - xon the promotion of universal service goals without regard to any effects on competition.Uc\ P T {O- xԍ See generally ALTS Reply Comments at 1; NCTA Reply Comments at 14; MCI Reply Comments at 15.  {O- x: But see Sprint Reply Comments at 13 (supporting LEC interpretation of intent and scope of section 259 and rejecting specific arguments of ALTS).U All  xthree argue that the Commission ought to recognize a close connection between the pro X - xcompetition policy goals of, e.g., section 251, and the infrastructure sharing goals of section  X - x259.d" tT {O- x=ԍ See, e.g., NCTA Comments at 3 ("The Commission's administration of section 259 should in no way  xundermine implementation of the core local competition requirements of section 251. Section 259 should not operate  xwto provide rural telcos with special advantages over rural cable companies entering the telephony market with regard to access to advanced network capabilities."). ALTS generally argues that qualifying carriers ought to be able to obtain "infrastructure,  xLtechnology, information, and telecommunications facilities and functions" pursuant to section  X{- x259.=e{^T yO%-ԍ ALTS Comments at 1.= But, reflecting its concerns about LEC assertions about the scope of section 259(b)(6),f{T {O- x,ԍ See Section III. C. 6, infra (addressing issues relating to limitations on use of infrastructure obtained pursuant to section 259 in section 259(b)(6))."{"f,N(N(ZZ"  xALTS argues that anything thereby received should also serve, in the ordinary course, as "prima  xfacie evidence that such services can and should be made available by the incumbent for any  xpurposes pursuant to section 251, except in those few hypothetical situations where the matters  X- xprovisioned pursuant to section 259 might extend beyond those provided under section 251."g$"T {O- xԍ ALTS Comments at 3. But cf., Frontier Comments at 46 (arguing that, because advanced infrastructure  {OX- x"services and facilities" will not include unbundled elements, resale, and interconnection included per procompetition  xrequirements of section 251, Commission "should not require incumbent local exchange carriers to make the terms and conditions of these agreements generally available").  xLThus, according to ALTS, qualifying carriers should be "permitted to use Section 259 services  xand facilities for any purpose, provided only that when such services are utilized outside the  xqualifying carrier's universal service territory, the provisioning incumbent must be compensated  X_-for such use pursuant to the pricing standards of Section 251."Dh_T yO-ԍ ALTS Comments at 1. D  X1- ` x.47. ` ` NCTA urges us generally to understand that "[the] Commission's critical task in  xthis proceeding is to implement Section 259 in a manner that fully accords with the Act's central  X - xipurpose of promoting competition in all telecommunications markets."Ti T yOR-ԍ NCTA Comments at 2 (emphasis in original).T NCTA proposes, in line  X - xwith its perspective, that the Commission construe the scope of section 259 as relatively narrowj . T yO- xԍ NCTA Comments at 23 (scope of Section 259 narrowed by Section 259(d) criteria imposed on qualifying LECs).  x so that the scope of "public switched network infrastructure, technology, information, and  xjtelecommunications facilities and functions" used in section 259 "is no broader than the scope  xof features, functions, services and information available to CLECs [competitive local exchange  X- xcarriers] under Section 251."Ck T yO-ԍ NCTA Comments at 4 n. 13.C Alternatively, NCTA would have us require qualifying carriers  xseeking infrastructure sharing under section 259 to demonstrate that the requested capability  Xd- xycannot be obtained from the incumbent LEC pursuant to section 251.9ldT {O+ -ԍ Id. at 6.9 Further, to ensure that  xyqualifying carriers are not able to impede the development of competition in their service areas,  xNCTA urges us to find that qualifying carriers are obliged to provide section 259obtained  xnetwork capabilities to competitive LECs. "Absent such a requirement," according to NCTA, "a  xqualifying carrier would have an incentive to obtain network capabilities from an adjacent  x<[incumbent LEC] under Section 259, rather than deploy its own features and functions that would  X- xkbe subject to unbundling under Section 251.";mT {O3'-ԍ Id. at 48.; Further, NCTA would have us impose this":m,N(N(ZZ"  x{requirement even on qualifying carriers which have obtained exemption from section 251  xxresponsibilities pursuant to section 251(f), because, according to NCTA, such exemption can only  x/be predicated "upon the economic unreasonableness or technical infeasibility of meeting a  xparticular Section 251(c) obligation," neither of which finding could obtain if the qualifying LEC  X- xsuccessfully obtained a capability pursuant to Section 259.XnT {O-ԍ Id. at 5 (citing 47 U.S.C.  251(f)).X If, in any event, the qualifying  xcarrier nevertheless cannot provide section 259obtained network capabilities to competitive LECs  xLfor technical or economic reasons, NCTA would have us require the providing incumbent LEC  X_-to make available the requested capabilities directly to the requesting competitive LEC.;o_ZT {Oj -ԍ Id. at 56.;  X1- ` x/48. ` ` MCI agrees with NCTA's proposals regarding qualifying carrier obligations,Dp1T yO -ԍ MCI Reply Comments at 34.D and  xalso argues, more generally, that the Commission should find that there is a close relationship  xbetween sections 251 and 259. MCI, indeed, would have us read sections 251 and 259 as  X - xjessentially overlapping.?q |T yO-ԍ MCI Comments at 23. ? Basically, this appears to mean, in MCI's view, that the Commission  xshould recognize that section 259 is intended to provide qualifying carriers with a parallel  xopportunity as provided pursuant to statutory restrictions unique to section 259 to obtain,  X - xinter alia, those facilities and functions that are otherwise made available to interconnecting  X- x=carriers pursuant to the Commission's implementation of section 251 in the Local Competition  X}- x-First Report and Order.r} T yO:- xԍ MCI Comments at i, 36 ("Congress intended the Commission to implement rules permitting carriers  xJqualifying under Section 259 to receive access to [incumbent LEC] network facilities, resources, and information on  xterms more favorable than they would receive, either under Section 251, or under any agreement among non xcompeting LECs prior to passage of the 1996 Act. Section 259 can realize Congress' desire of promoting universal  xservice only if the qualifying LEC has the ability to gain access to incumbent LEC facilities, overandabove its ability to do so under Section 251."). But, according to MCI, Congress would not have intended to provide  xKsuch a parallel provision unless noncompeting qualifying carriers could receive an added benefit  xfor negotiating pursuant to section 259, namely, the ability to negotiate better terms than they  X:- xwould receive pursuant to section 251.s : T yOo - xԍ MCI Reply Comments at 3 ("Since any carrier may automatically obtain terms and conditions equal to any  x-existing 252 agreement, there is no reason for it to enter into negotiations under Section 259 unless it is able to  xreceive more favorable terms and conditions. The Commission should implement its Section 259 rules so as to ensure this outcome."). To this end, MCI urges us, generally, to make rules  X#- xiwe adopted in the Local Competition First Report and Order regarding access to incumbent LEC  X-facilities and services available as "baseline terms" to any section 259 qualifying carrier.tlT yO+&- xԍ MCI Comments at 35 (specifically recommending that Commission make "available" 47 C.F.R.  51.305323; 51.405; 51.501515; 51.601617; and 51.701717 to any Section 259 qualifying carrier). "t,N(N(ZZ "Ԍ X- ` ԙx049. ` ` Moreover, MCI argues that we should ensure that qualifying carriers are able to  X- xobtain section 251 functionalities in infrastructure sharing arrangements at prices lower than those  xprovided pursuant to the forward looking costsderived prices for section 251 functionalities  X- xmandated by the Local Competition First Report and Order.9uT {O6-ԍ Id. at 9.9 Accordingly, MCI urges the  xCommission to assert pricing authority to ensure that prices negotiated pursuant to section 259  xarrangements are less than or equal to the interim proxy prices the Commission adopted in the  Xz- xLocal Competition First Report and Order, "minus an average amount of common costs and a  Xe- xznormal rate of return."vZeZT {Op - xԍ Id. at 9. But see USTA Reply Comments at 67 (Congress intended unique treatment, distinct from Section  xx251, to qualifying carriers subject to universal service obligations; terms of Section 259 agreements may be but are not required to be more favorable than terms in Section 251 agreements).  Beyond applying such an approach to those network features and  xkfunctions otherwise available under section 251, MCI would also construe section 259(a) to  xinclude information services "and the facilities required to provide information services," subject  xto rejection only if the providing incumbent LEC demonstrates that it would, under the  xagreement, "have to provide access at prices lower than those consistent with the costing  X -principles established in the First Report and Order in CC Docket 9698."w |T {O- xԍ  MCI Reply Comments at i. But see Southwestern Bell Reply Comments at 4 ("MCI ignores the distinction between 'what is eligible for sharing' versus 'to what use the infrastructure may be put.'"). x  X -x` ` c. Discussion  X- ` x150. ` ` We decline to adopt specific definitions of the "public switched network  xinfrastructure, technology, information, and telecommunications facilities and functions" that  xproviding incumbent LECs must make available to qualifying LECs. We do so because we  xbelieve that such a flexible approach best ensures that qualifying carriers are able to obtain that  xpublic switched network infrastructure, technology, information, and telecommunications facilities  x[and functions they require to meet their universal service obligations, now and in the future as  xtechnology continues to evolve. We also find no reason to exclude any facilities, functions, or  X- xinformation from the negotiations and agreements under section 259. Moreover, we note that  xLsection 259 establishes specific limitations on a qualifying LEC's use of a providing incumbent  xLEC's infrastructure under section 259. Specifically, a qualifying LEC may use section 259 to  X- xgain access to another LEC's infrastructure only "for the purpose of enabling such qualifying  xjcarrier to provide telecommunications services, or to provide access to information services, in  x[the service area in which such qualifying carrier has requested and obtained designation as an  Xm- xKeligible telecommunications carrier under section 241(e)."PxmT yO#-ԍ 47 U.S.C.  259(a) (emphasis added).P In addition, the providing incumbent  xLEC is not required to share facilities that will be used to offer service or access in the providing  X?- xincumbent LEC's telephone exchange area.by?f T {OV'-ԍ See Discussion at Section III. C. 6., infra.b As discussed below, other subsections of section"? y,N(N(ZZ"  x]259 establish further limitations on the scope of section 259. We expect that section 259 agreements will reflect these limitations.  X- ` 3x251. ` ` We also find that adopting limitations in this Report and Order on the type of  x/infrastructure that must be made available to qualifying carriers under section 259 could be  xinconsistent with the conclusions reached in the universal service docket. One requirement for  x<becoming a qualifying carrier under section 259 is designation as an "eligible telecommunications  X_- x>carrier" under section 214(e) to receive universal service support.Mz_T {O-ԍ See 47 U.S.C.  259(d)(2).M The specific universal  xservice mandates are currently being developed by the Commission and the states, and we cannot  xdecide in the section 259 proceeding what requirements, if any, would best support the  x<conclusions ultimately reached in the universal service proceeding. Further, because technology  xwill continue to evolve, it is essential to ensure that the statutory purpose behind section 259  xto provide qualifying carriers with specific opportunities to obtain infrastructure is not defeated  xby definitions that are restrictively based on perceptions of present network requirements. We  xalso note that this approach is consistent with the Congressional mandate to eliminate market  xentry barriers for small businesses, in section 257 of the Act, because it enables small carriers  xto obtain access to advanced infrastructure that might otherwise be unavailable, for the purpose  Xy-of providing telecommunications services and access to information services.H{yZT {O-ԍ  See 47 U.S.C.  257.H  XK- ` x352. ` ` We are also not persuaded that we should restrict the class of qualifying carriers  xto "small" carriers. Although the qualifying criteria set out in section 259(d)(1) and (2) would,  xas we stated in the NPRM, "appear to apply to many small LECs," those criteria speak for  xthemselves and we do not believe that we should, in effect, prejudge what carriers or class of  X- xcarriers can satisfy the criteria of section 259(d). As noted in Section III. E., infra, we have  xdecided to adopt a rebuttable presumption that certain carriers meet section 259(d)(1) criteria as  x"lacking economies of scale or scope," but such a presumption will not operate to preclude any  x[carrier from demonstrating to an incumbent LEC that it does, in fact, lack economies of scale or  xyscope for section 259(d)(1) purposes. Moreover, we promote competitive entry by finding that  X~- xqualifying carriers may include any carrier that is found to satisfy the requirements of section  Xi- x259(d), i.e., not only incumbent LECs but, perhaps, also competitive carriers.c|ZiT {O -Ѝ See Universal Service NPRM; see also Joint Board Recommendation on Universal Service (recommending eligibility criteria for carriers seeking universal service support). We note that the Commission must complete a proceeding to implement the Joint Board's recommendations on or before May 8, 1997.c We have  xspecifically considered the impact on small telecommunications companies of the flexible  xKregulatory approach we adopt here to define the scope of the section 259(a) requirement. We find  xkthat a flexible approach that relies upon negotiation by parties will allow small companies to  xjbetter negotiate section 259 agreements that respond to their individual requirements, with few regulatory burdens and none that are not explicitly required by the statute. "|,N(N(ZZ"Ԍ X- ` x453. ` ` We also find that nothing in the language of section 259(a), the legislative history,  x]or the record in this proceeding persuades us that we should limit the class of providing  xincumbent LECs to carriers that are "adjacent" to qualifying carriers. Section 259(a), on its face,  x=merely defines providing incumbent LECs pursuant to the definition of incumbent LEC set out  X- xin section 251(h).V}T {O-ԍ See 47 U.S.C.  251(h), 259(a).V Whether any specifically identified nonadjacent incumbent LEC may be  xLrequired to provide any given element of "public switched network infrastructure, technology,  xinformation, and telecommunications facilities and functions" to a qualifying carrier will depend  xsolely on the criteria set out in section 259(b), including the section 259(b)(1) prohibition against  xrequiring incumbent LECs "to take any action that is economically unreasonable or that is  X1- xcontrary to the public interest."!~1ZT {O< -X` hp x (#%'0*,.8135@8:statutory language of section 259 or its legislative history that persuades us that Congress  xintended any particular price outcome at all pursuant to the negotiationdriven regime  xKcontemplated by section 259. Rather, we think that the statutory language evidences a belief that  xjthe parties to section 259 negotiations are best able to determine what suits their requirements,  xsubject to certain explicitly stated statutory limitations. We discuss the necessity for pricing rules  X -or guidelines more fully at Section III. C. 4., infra.  X}-x 2. ` ` Intellectual Property and Information Issues  XO-x` ` a. Background  X!- ` Cx<61. ` ` We asked a variety of other questions about the meaning and scope of the  X - xlanguage of section 259(a).=  T yO!-ԍ NPRM at  1516.= We noted that each element of public switched network  xinfrastructure, technology, information, and telecommunications facilities and functions made  xLavailable pursuant to section 259 might pose unique questions and issues for this proceeding.  xFor example, we asked whether technology sharing would require mandatory patent licensing to  x!qualifying carriers so that these carriers can develop equipment or software that is fully  xinteroperative with proprietary systems (if any) deployed by an incumbent LEC. In cases where  xlicensed technology is the only means to gain access to facilities or functions subject to sharing"V ,N(N(ZZ"  xrequirements, we tentatively concluded that section 259 requires mandatory licensing, subject to  xjthe payment of reasonable royalties, of any software or equipment necessary to gain access to  X-the shared capability or resource by the qualifying carrier's equipment.:T yOK-ԍ NPRM at  15.:  X- ` x=62. ` ` We also sought comment on what types of information must be made available  x]to qualifying carriers by incumbent LECs pursuant to section 259(a). We asked whether  xmarketing or other proprietary business information should be found to be included. We asked  xwhether the information sharing mandated by section 259(a) implies any sort of joint network  XH- xplanning requirement.:HXT yOQ -ԍ NPRM at  16.: Specifically, we asked whether section 259(a) requires incumbent LECs  xyto make network information databases (other than those already required to be made available  X - xzpursuant to section 251(c)(3)m T {O-ԍ Local Competition First Report and Order at  452503.m) available to qualifying carriers and, if so, how? We sought  xcomment on whether and how network information made available pursuant to section 259(a)  xmight vary from that type of information to be disclosed under section 251(c)(5), which requires  xreasonable public notice of changes in the information necessary for transmission and routing of  X -services using the incumbent LECs' facilities or networks.j zT yO-ԍ #X\  P6G;/P#47 U.S.C.  251(c)(5).j  X-x` ` b. Comments  Xb- ` Bx>63. ` ` The majority of the commenters, i.e., larger LECs and Octel, which address the  xprotection of proprietary information and other intellectual property rights, raise concerns about  X6- xthe Commission's tentative conclusions in the NPRM.6 T {O- xKԍ See, e.g., Octel Comments at 3; NYNEX Comments at 13; Southwestern Bell Reply Comments at 1112; Octel Reply Comments at 14. Several parties reject the Commission's  X- xtentative conclusion to require mandatory licensing in certain situations.d T {O4- x;ԍ See, e.g., GTE Comments at 6 ("In some cases, [GTE] would not be permitted to license such technology."); Sprint Comments at 5; Southwestern Bell Reply Comments at 1112. A number of the  X- xlarger LECs and USTA comment that patent licensing is not needed for infrastructure sharing.>\ T {Ow!- xԍ See NYNEX Comments at 1213; Southwestern Bell Comments at 59; GTE Reply Comments at 5; USTA  {OA"- xJComments at 5. See also Sprint Reply Comments at 5 ("infrastructure sharing can be accomplished through service agreements").>  x<Other parties, such as Southwestern Bell, argue that, because incumbent LECs' networks are built  x\upon licenses to use intellectual property, "the sharing of any intellectual property must be  xconditioned upon the qualifying carrier obtaining a sufficient license from parties that have a" ,N(N(ZZ"  X- x[protectable] interest in such property."T {Oy-ԍ Southwestern Bell Comments at 5.  Cf. NYNEX Comments at 13; Sprint Comments at 5. Southwestern Bell argues that there is no authority in  xsection 259 for the Commission to "override any party's intellectual property rights, or the  X-binding legal obligations of incumbent LEC[s]."ZT {O-ԍ Southwestern Bell Comments at 7; see also Southwestern Bell Reply Comments at 1112.  X- ` x?64. ` ` Octel, a supplier of voice processing systems to government and businesses,  xMincluding the larger LECs, argues that the property rights of third party providers that have  xlicensing agreements with providing incumbent LECs should not be injured by the section 259 X_- x=imposed sharing obligations placed on incumbent LECs.6X_T yO - xԍ Octel Comments at 14; Octel Reply Comments at 14. Octel explains that its licensing agreements allow  xJLECs access to a wide variety of proprietary information that is subject to strict nondisclosure arrangements. Octel Comments at 2.6 Octel notes that the Commission's  xtentative conclusion about mandatory licensing is limited to those situations where licensed  X1- xtechnology is "the only means to gain access to facilities or functions subject to sharing  X - xjrequirements."> T yO-ԍ Octel Comments at 3.> Beyond those limited situations where mandatory licensing may be required,  X - x-Octel argues that the Commission should not displace the commercial licensing process.:X T yOR- xxԍ Octel Comments at 3 n.5 ("Given the availability of voice processing technologies . . . a qualifying carrier  xLought to purchase such service from Octel or another vendor independently of its sharing agreement with an incumbent LEC . . . .").: Octel  x[maintains that, to the limited extent that the Commission might approve mandatory licensing, it  xshould be subject to the proprietary information restrictions in third party providers' licensing  X -schemes.> T yO--ԍ Octel Comments at 3.>  X- ` $x@65. ` ` A few parties, particularly RTC and AT&T, argue that proprietary information  X{- x^should be made available to qualifying carriers unconditionally.n{L T yOx-ԍ RTC Comments at 6; AT&T Comments at 2 n.2; AT&T Reply Comments at 5.n RTC supports the  xCommission's tentative conclusion to require mandatory licensing, subject to reasonable royalties,  xzwhere necessary to gain access to a shared capability or resource by the qualifying carrier's  X6- xequipment.<6T yO"-ԍ RTC Comments at 6.< AT&T contends that "[incumbent LECs] that have obtained the right to use  xsoftware generics from their switching vendors are entitled to use those facilities to serve not only  xtheir own traffic, but also to serve qualifying carriers that share the incumbent carriers'  X- x.infrastructure under Section 259 without any additional costs or fees."AlT yO'-ԍ AT&T Comments at 2 n.2.A In fact, according to"!,N(N(ZZ'"  xAT&T, "[i]f qualifying carriers were required to negotiate licensing agreements with all of an  xK[incumbent LEC's] equipment vendors, none of which have any incentive to negotiate reasonable  xlterms or to act expeditiously with a small, rural carrier, it is reasonable to assume that the  xcarrier's ability actually to use the [incumbent LEC's] infrastructure to serve its customers will  X- xbe seriously impeded."'"T yO- xԍ AT&T Reply Comments at 5 (footnote omitted). As an example, AT&T cites to a dispute between itself  xand Southwestern Bell over licenses and righttouse agreements in an interconnection proceeding before the Public  {O- xUtility Commission of Texas. AT&T Reply Comments at 56 n.12. See also RTC Comments at 6 ("A providing carrier cannot be permitted to refuse to license a patent as grounds for avoiding its obligations under Section 259.").' RTC comments that, in some cases, joint network planning will be  X-required to implement sharing obligations.{T {O -ԍ RTC Comments at 7. But cf. GTE Reply Comments at 12; PacTel Comments at 9.{  X_- ` xA66. ` ` Some commenters specify that marketing information should not be included  XH- xwithin the scope of section 259(a).HDT {O=-ԍ See, e.g, GTE Reply Comments at 56; Southwestern Bell Comments at 910; Sprint Comments at 4. For example, PacTel and GTE contend that marketing  xinformation would not facilitate infrastructure sharing because it only relates to the providing  X - xkincumbent LEC's customer base.j T {O-ԍ GTE Reply Comments at 6. See also PacTel Comments at 89.j USTA would except intellectual property and marketing  X - xinformation, but asserts that "[o]ther public information owned by the providing LEC . . .  x]necessary for a [qualifying carrier] to provide services to its customers using the shared  xinfrastructure, technology or telecommunications facilities, would plainly fall under the scope of  X - xSection 259."= h T yO-ԍ USTA Comments at 6.= Without further specification, RTC argues that there may be databases that are  xKnecessary for a qualifying carrier to fully benefit from the sharing arrangement beyond that which  X- xan incumbent LEC is required by section 251(c)(3) to provide competitors.< T yO;-ԍ RTC Comments at 7.< PacTel argues that,  x`where proprietary information is necessary for the qualifying carrier to provide  xtelecommunications services to its customers, it should be provided pursuant to nondisclosure  XM-agreements.iM T {O-ԍ PacTel Comments at 89.  See also Octel Comments at 34.i  X-x` ` c. Discussion  X- ` xB67. ` ` As described above,bT {O$-ԍ See Discussion at Section III. B. 1., supra.b the negotiationoriented framework we have decided to  xadopt in defining the scope of section 259(a) obviates the need to define specifically what is  xincluded in the "public switched network infrastructure, technology, information, and  xtelecommunications facilities and functions" that incumbent LECs must make available to"",N(N(ZZ"  xqualifying carriers. We are persuaded that an approach that attempts to identify discrete elements  xԩ or even examples of public switched network infrastructure, technology, information, and  xjtelecommunications facilities and functions would tend to defeat the legislative purpose which  xis to better ensure that qualifying carriers have access to evolving technology. As we noted  xLabove, we conclude that the language in section 259(a) that requires section 259 arrangements  xbe made available "for the purpose of enabling such qualifying carrier to provide  x<telecommunications services, or to provide access to information services" acts as a limitation on  X_- x.the scope of information available under section 259.J_T {O-ԍ See 47 U.S.C.  259(a).J It is reasonable to assume that certain  xtypes of information could be found to be remotely connected, at best, to advancing this stated  X1- xpurpose of section 259.p1ZT {O< -ԍ See 47 U.S.C.  259(a).  See also RTC Comments at 67.p We have decided, nevertheless, not to exclude, per se, any type of information or information service from the negotiation process.  X - ` CxC68. ` ` The very flexibility of our approach to defining the scope of section 259(a),  xhowever, would seem to exacerbate those disagreements between commenters about intellectual  x property issues, specifically, where otherwise protectable intellectual property is owned or  xcontrolled by incumbent LECs and is properly sought by qualifying carriers. There is, for  xLexample and as we have noted, sharp disagreement between larger LECs and Octel, on the one  x/hand, and smaller LECs and other parties, on the other hand, about the scope of necessary  x=protection for such proprietary information. The larger LECs and Octel appear to suggest that  xythe possession of proprietary information, including information licensed from third parties like  x>Octel, necessitates a Commission decision that imposes restrictions on the sharing of such  xinformation. According to these commenters, unless such information is provided to qualifying  x.LECs pursuant to separately negotiated agreements or to restrictive nondisclosure clauses in  xsection 259 agreements, the result will force incumbent LECs to breach their contracts with third  X- xxparties.T {Ow-ԍ See, e.g., Southwestern Bell Comments at 59. See also Sprint Comments at 5. Smaller LEC commenters and their representatives, on the other hand, essentially argue  xjthat the restrictions proposed by the larger LECs would defeat the effectiveness of section 259  xand, in effect, allow incumbent LECs to avoid their section 259 obligations altogether in many  X-cases.y~T {O-ԍ See, e.g., RTC Comments at 6. See also AT&T Reply Comments at 36.y  Xg- ` xD69. ` ` We affirm our tentative conclusion that, whenever it is "the only means to gain  XR- xzaccess to facilities or functions subject to sharing requirements,"vRT {O$-ԍ NPRM at  15 (emphasis added). See also Octel Comments at 3.v section 259 requires the  xproviding LEC to seek, to obtain, and to provide necessary licensing, subject to reimbursement  xxfor or the payment of reasonable royalties, of any software or equipment necessary to gain access  xto the shared capability or resource by the qualifying carrier's equipment. In the ordinary course" #,N(N(ZZ"  xof providing "public switched network infrastructure, technology, information, and  xtelecommunications facilities and functions" to qualifying carriers, we fully anticipate that such  X- x!licensing will not be necessary.iT {OK-ԍ See, e.g., GTE Reply Comments at 5; USTA Comments at 56.i We believe that, as suggested by AT&T and Sprint,  x=infrastructure sharing can be accomplished through the use of agreements whereby providing  xincumbent LECs who own or lease certain types of information or other intellectual property  xZprovide functionalities and services to qualifying carriers without the need to transfer information  Xv-that is legitimately protectable.tXvZT yO - xԍ AT&T Reply Comments at 45 ("the qualifying carrier will purchase the use of the [incumbent LEC's]  xyfacilities and services in the same manner that carriers have historically done without acquiring access to embedded intellectual property"); Sprint Comments at 5; Sprint Reply Comments at 45.t  XH- ` xE70. ` ` We expect that the same process will occur in the context of negotiating section  x259 agreements. At any rate, we agree with AT&T and RTC that providing incumbent LECs  xymay not evade their section 259 obligations merely because their arrangements with third party  xjproviders of information and other types of intellectual property do not contemplate or allow  xyԩ provision of certain types of information to qualifying carriers. Therefore, we decide that the  xproviding incumbent LEC must determine an appropriate way to negotiate and implement section  X - xN259 agreements with qualifying carriers, i.e., without imposing inappropriate burdens on  xqualifying carriers. In cases where the only means available is including the qualifying carrier  xNin a licensing arrangement, the providing incumbent LEC will be required to secure such  xjlicensing by negotiating with the relevant third party directly. We emphasize that our decision  xis not directed at third party providers of information but at providing incumbent LECs. We  xKmerely require the providing incumbent LEC to do what is necessary to ensure that the qualifying carrier effectively receives the benefits to which it is entitled under section 259.  X- ` xF71. ` ` Regarding RTC's comments on the provision of network information databases  xN(other than those already required to be made available pursuant to section 251(c)(3)) to  xqualifying carriers, we conclude that there is no independent network information disclosure  xLrequirement set out in section 259(a). Similarly, we determine that Section 259(a) infrastructure  xsharing requirements are independent of current disclosure requirements, or any that the  X- xCommission may hereafter adopt, pursuant to Section 251.^zT {O- xԍ See, e.g., Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Second  {O - xwReport and Order, CC Docket No. 96-98, FCC 96-333, 11 FCC Rcd 15499 (rel. August 8, 1996) (Local Competition  {OT!-Second Report and Order). See also Discussion at Section III. B. 1., infra. Network information disclosure to  xqualifying carriers is properly the subject of section 259(c). As a result, we discuss commenters'  Xg-positions on information disclosure and decide these issues in Section III. D., infra.  X;-x 3. Dispute Resolution, Jurisdiction, and Other Issues  X$-  X -x` ` a. Background " $,N(N(ZZ["Ԍx  X- ` xG72. ` ` In the NPRM, we stated our general belief that rules implementing section 259(a)  xshould be definitive enough so as to minimize disputes between or among the parties to section  xk259 agreements, but not so restrictive as to inhibit the Commission's ability to act flexibly to  xLresolve disputes that may arise. We asked how best to achieve these goals, particularly given  xour tentative preference that section 259derived arrangements should be largely the product of  Xv- xprivate negotiations among parties.:vT yO-ԍ NPRM at  17.: Regarding possible disputes between parties to section 259  xagreements, we noted that section 259(d) defines qualifying carriers based on decisions made by  x[the Commission and the states. We asked whether this joint responsibility has implications for  X1-deciding who should resolve section 259 disputes.:1XT yO: -ԍ NPRM at  17.:  X - ` xH73. ` ` The express language of section 259(a), on its face, grants the Commission sole  X - xauthority to create rules to implement this section. T {O-ԍ #X\  P6G;/P#47 U.S.C.  259(a) ("The Commission shall prescribe . . . ." (emphasis added )). We tentatively concluded that section 259,  X - xby its express terms, pertains to both interstate and intrastate communications.: zT yO-ԍ NPRM at  18.: Further, we  xtentatively concluded that section 259 contemplates that the states may accept for public  xjinspection the filings of section 259 agreements that are required by section 259(b)(7), and that  xLthey have authority to designate eligible carriers under section 214(e), as referenced in section  x=259(d)(2). We sought comment on each of these tentative conclusions. To ensure a complete  xjrecord, we also asked whether the Commission has authority to preempt state regulation under  XK- xLLouisiana Public Service Commission v. FCC, in the event that section 259 does not apply to  X6-intrastate services, contrary to our tentative conclusion.6 T {O-ԍ NPRM at  18. See Louisiana Public Service Commission v. FCC, 476 U.S. 355 (1986) (Louisiana PSC).  X- ` 2xI74. ` ` Finally, we noted that, while section 259(a) refers to carriers that have "requested  X- xyand obtained designation . . ."QT yO@-ԍ 47 U.S.C.  259(a) (emphasis added).Q as section 214(e)eligible carriers, section 214(e) also provides  X- x-that a state commission may designate a carrier as eligible on its own motion without a request,j, T yO!-#C\  P6Q/P#э 47 U.S.C.  214(e)(2).j  xMand that the states, with respect to intrastate services, and the Commission, with respect to  x[interstate services, shall designate a carrier as an eligible carrier to provide service in unserved  X- xareas.t T {O&-#C\  P6Q/P#э See 47 U.S.C.  214(e)(3).t In light of this provision, we asked whether we can and should adopt regulations to  ximpose section 259(a) requirements on incumbent LECs in cases where the state has designated"%N ,N(N(ZZ"  xja qualifying carrier as an eligible carrier pursuant to section 214(e) but where the carrier did not  X-request such designation.:T yOb-ԍ NPRM at  19.:  X-x` ` b. Comments  X- ` xJ75. ` ` Most commenting parties, including RTC and USTA, support the Commission's  xtentative conclusion that "the best way for the Commission to implement section 259, overall,  X_- x.is to articulate general rules and guidelines."DZ_XT yOh - xԍ RTC Comments at 11 (urging the Commission not to adopt detailed rules "in the absence of a demonstrated  {O0 - xneed"); USTA Comments at 34. See also BellSouth Comments at 2; Minnesota Coalition Comments at 8; Sprint Reply Comments at 2.D Consistent with that approach, the majority of  xcommenters suggest that flexible rules that promote cooperation and negotiation among providing  xand qualifying carriers would be more useful than detailed rules that attempt to predict all  X - xpossible disputes.  zT yOE- xԍ Ameritech Comments at 3; Minnesota Coalition Comments at 9 ("[w]hile definitive rules might minimize  x<disputes, they would also minimize opportunities for parties to craft arrangements that are appropriate for their  xspecific circumstances"); RTC Comments at 11; USTA Comments at 34 ("regulations attempting to establish rules for all possible disputes that may later arise are counterproductive"). For example, GTE argues that "[d]etailed, inflexible rules would discourage  X - xcooperation and prevent carriers from developing arrangements that meet unique needs." b T {O- xJԍ GTE Comments at i. See also Castleberry Telephone Company et al. Comments at i ("reducing government involvement is key to success"); Southwestern Bell Reply Comments at 2. The  xMinnesota Coalition states that "[t]he adoption of definitive rules would be at odds with the  X - xreliance upon negotiations as the primary vehicle for implementing infrastructure sharing."cZ T {OB- xԍ Minnesota Coalition Comments at 9. See also NYNEX Reply Comments at 89 ("FCC should avoid micro xmanaging this area with stringent, prescriptive rules"); US West Comments at 3 ("the Commission's regulatory structure implementing Section 259 should be minimalist in nature").c  xSeveral parties comment that there is an extensive history of useful interconnection agreements  X - xjbetween noncompeting carriers that were reached without national rules.c T {O6-ԍ See, e.g., Southwestern Bell Reply Comments at 12.c For example, RTC  xsuggests that "[m]any of the qualifying carriers under Section 259 will be independent LECs that  xhave been successfully negotiating mutually beneficial sharing arrangements for more than 100  Xb-years with virtually no federal government intrusion."bpT {O"- xZԍ RTC Comments at 3. See also Sprint Reply Comments at 2 (concurring with RTC); USTA Comments at 12. "K&,N(N(ZZ"Ԍ X- ` xK76. ` ` In contrast, MCI and NCTA envision a more detailed structure to implement  X- xsection 259.rZT {Ob- xԍ MCI Comments at 36; NCTA Comments at 27. See also Octel Reply Comments at 4 (urging the  x<Commission to adopt rules to protect proprietary information); AT&T Comments at 2 n.2 (recommending the Commission "carefully tailor its definition of facilities and information subject to sharing").r MCI urges that Commission to adopt national rules to make unbundled elements  xavailable pursuant to Part 51 of the Commission's rules as a lower bound standard for qualifying  X- x<carriers to obtain access to infrastructure under section 259.<T yOV-ԍ MCI Comments at 4.< Similarly, NCTA recommends that  xthe rules adopted under section 259 should be conformed to the requirements of section 251 and  X-should include sufficient safeguards to prevent anticompetitive behavior by incumbent LECs.EzT yO -ԍ NCTA Reply Comments at 13.E  X_- ` xL77. ` ` There was near universal support among the commenting parties that the  xCommission need not adopt new procedures for resolution of disputes arising under section  X1- x{259.1 T {O-ԍ See, e.g., RTC Comments at 7; USTA Comments at 34; PacTel Comments at 9; NYNEX Comments at 15. For example, MCI agrees: "It is reasonable for the Commission to rely on informal  xconsultations between the parties and the Commission and, if necessary, existing declaratory  xruling procedures and the . . . complaint process, including settlement negotiations and alternative  X - xMdispute resolution."= T yO9-ԍ MCI Comments at 10.= A number of parties suggest that state commissions should also be  xavailable to resolve disputes under section 259, including the Minnesota Coalition which argues  X - xZthat states should be the primary forum for section 259 disputes.` , T {O- xԍ Minnesota Coalition Comments at 12. See also GTE Comments at 18 ("If any difficulties do arise, the  x;Commission's and state public utility commissions' complaint processes will be available."); Oregon PUC Comments  x;at 3 ("States retain jurisdiction over the exact terms and conditions of the contracts . . . for intrastate facilities and  xfunctions . . . ."); PacTel Comments at 9 ("The Commission or state regulator should become involved only if parties are unable to reach agreement.").` Only USTA responded to the  xCommission's question about whether the joint responsibility reflected in section 259(d) the  xCommission's role concerning economies of scale or scope in subsection (d)(1) and the states' role  xin designating eligible carriers in subsection (d)(2) has implications for who should resolve  xZsection 259 disputes. According to USTA, the joint responsibility in section 259(d) indicates that  xdisputes should be resolved according to "the jurisdictional nature of the service to be provided  X4-using the facilities, technology or information to be shared.">4T yO"-ԍ USTA Comments at 10.>  X- ` #xM78. ` ` Numerous parties comment that sharing agreements per section 259 may be used  X- xto provide interstate and intrastate communications.~nT {O'-ԍ See, e.g., US West Comments at 1213; USTA Comments at 10; GTE Comments at 12.~ Among those parties to directly address"',N(N(ZZ "  xOthe question of jurisdiction, the majority concur that section 259 contemplates a dual  xjurisdictional scheme in which the Commission and the states share authority. For example, GTE  xasserts that "[a]lthough it is true that Section 259 requires the Commission to adopt certain rules  xyregarding infrastructure sharing, the states retain authority to regulate the intrastate aspects of  X- xinfrastructure sharing arrangements . . . ."xT yO-ԍ GTE Comments at 12 (citing sections 2(b) and 261(b)); GTE Reply Comments at 6.x USTA, similarly, states that "[s]ection 259(a) is not  xan omnibus grant of authority over intrastate services to the Commission, only a directive to  xenact regulations to govern the obligations of [providing incumbent LECs] to share facilities and  X_- xfunctions."@_XT yOh -ԍ USTA Comments at 910.@ A number of parties contend that section 259 does not in any way alter the  XH- xtraditional limits on Commission jurisdiction codified in section 2(b).HT yO - xԍ USTA Comments at 10 ("Section 259 does not eliminate Section 2(b) from the Act, nor does it provide explicit and unambiguous authority over intrastate services."); GTE Comments at 12; PacTel Comments at 56. In comments that are  xKgenerally representative of these parties, Southwestern Bell articulates a view of the jurisdictional scheme in which:  nXx[J]urisdiction must be determined on a disputebydispute basis, with the location  }of [the] sharing LEC, the infrastructure, and the interstate/intrastate jurisdiction of  X -its use determining the proper forum for a specific dispute. @T {O-ԍ Southwestern Bell Comments at 10. See also USTA Comments at 1011; GTE Comments at 12.   xSome of these parties seem to distinguish between jurisdiction over infrastructure sharing  xagreements as used to provide intrastate services, as opposed to the more narrow issue of  Xb- x<jurisdiction over intrastate services, per se." bT yO- x,ԍ USTA Comments at 910 (arguing that the Commission does not have authority over intrastate services "or  xdisputes associated with the provision of such services"); Oregon PUC Comments at 3 ("States retain jurisdiction over  xthe exact terms and conditions of the contracts formed under the FCC's rules and guidelines for intrastate facilities and functions, and they [also] retain jurisdiction over rate setting for intrastate facilities and functions.")." Other parties cite the language of section 259(b)(7)  xas evidence that Congress intended for the Commission and the states to share jurisdiction over  X6-infrastructure sharing arrangements.\6 T {O- xԍ See, e.g., GTE Reply Comments at 6 (section 259(b)(7) "demonstrates that Congress expected the states to  xYoversee the implementation of infrastructure sharing agreements under the Commission's guidelines"); Oregon PUC  {O3!-Comments at 2. See also Minnesota Coalition Comments at 12.  X- ` qxN79. ` ` In contrast, several parties expressly indicate that section 259 grants the  X- xyCommission plenary authority over infrastructure sharing under the Act. \T {O%- xԍ US West Comments at 12; NCTA Comments at 78; and see RTC Comments at 78. See also MCI  xComments at 10. While MCI does not explicitly address the question of jurisdiction, it advocates the adoption of  {O'- xrules similar to those adopted in the Local Competition First Report and Order, apparently suggesting a jurisdictional"',N(N(3'" scheme similar to that in section 251.  NCTA agrees with"(X,N(N(ZZ"  xNthe Commission that "[T]he Act 'grants the Commission sole authority to create rules to  ximplement' Section 259 and that such rules would pertain to 'both interstate and intrastate  X- xNcommunications.'"=XT yO-ԍ NCTA Comments at 7.= NCTA argues that nothing in section 2(b) limits the Commission's  X-jurisdiction with respect to the implementation of infrastructure sharing.HT yOT-ԍ NCTA Reply Comments at 9 n.33.H US West reasons:  AXxWe perceive that public switched network infrastructure made available pursuant  to Section 259 will consist of facilities and services used by the qualifying carrier  to provide both interstate and intrastate services. These services of the qualifying  `carrier will be subject to regulation by the appropriate jurisdiction. There is no  2reasonable way to separate these facilities at the level of the transaction between  X -the qualifying carrier and the incumbent LEC. The Notice's analysis is correct.D xT yOC-ԍ US West Comments at 1213.D   X - xWith respect to the Commission's authority under Louisiana PSC, PacTel advises that preemption  X - x=is limited to those situations where "inconsistent state regulation frustrates federal policy."? T yO-ԍ PacTel Comments at 6.?  xRTC comments that the Commission's preemption powers are limited; for example, the  xCommission could not preempt a state's designation of an eligible telecommunications carrier per  X-section 214(e). T yO- xԍ RTC Comments at 8 (also commenting that "it is unlikely that the issue of preemption will arise under Section 259 because of the distinctly separate spheres in which the FCC and states operate under the statute").   Xf- ` xO80. ` ` Both USTA and RTC agree that the Commission should require providing  xkincumbent LECs to enter into sharing agreements with any requesting carrier that meets the  X8- xrequirements of section 259(d), regardless of whether the carrier requested designation as an  xeligible telecommunications carrier under section 214(e) or the state designated the carrier on its  X - x=own motion.V  T yO -ԍ USTA Comments at 1112; RTC Comments at 89.V USTA argues that "[t]he universal service goals of Section 259 would be best  x=served by determining that Section 259 obligations apply to a [providing incumbent LEC] who  X- xreceives a request from any carrier who meets the definitional criteria in Section 259(d)."> T yO$-ԍ USTA Comments at 11.> RTC  x[advises that "[s]ome state commissions, in an effort to avoid unnecessary paperwork, may ask  X- xjthat incumbents not file requests and simply deem them eligible on their own motion."<T yOq'-ԍ RTC Comments at 8.< As a"),N(N(ZZ"  xLmatter of statutory construction, USTA argues that "the specific language of Section 259(d) . .  X-. should control over the more general language in Section 259(a).">T yOb-ԍ USTA Comments at 12.>  X-x` ` c. Discussion  X- ` axP81. ` ` We encourage parties to bring disputes over section 259 agreements to the  xCommission. We decline to adopt particular rules to govern disputes between parties to section  x259 agreements. First, because our negotiationdriven approach in implementing section 259  xgrants significant flexibility to parties, we expect that the parties themselves will be able to  xanticipate most difficulties and disputes and provide for routine means to resolve them. Second,  xit is predictable that the ability of parties to infrastructure sharing agreements to anticipate, and  xprovide for, various contingencies will improve as more and more section 259 agreements are  xnegotiated. Third, in the event of particular failures to anticipate or resolve disputes, our  x.declaratory ruling and complaint processes are available. We expect that parties will routinely  xmake good faith efforts to resolve disputes among themselves before availing themselves of  xformal or informal adjudication or arbitration before the Commission. Pursuant to our  X- xKconcerns about the proper scope of section 259 agreements,nXT {O-ԍ See Discussion at Section III. B. 1., supra, at  50.n and the section 251 rights of non Xy- xjqualifying competitive LECs,nyT {O-ԍ See Discussion at Section III. B. 1., supra, at  59.n we also expect that carriers will utilize these same processes to  xbring to our attention any unlawful anticompetitive effects resulting from section 259negotiated agreements.  X- ` 2xQ82. ` ` On the question of the proper relative roles of the Commission and the states, we  X- xconclude that (1) section 259 directs the Commission to promulgate rules concerning any public  xswitched network infrastructure, technology, information, and telecommunications facilities and  xfunctions, regardless whether they are used to provide interstate or intrastate services or, more  xcommonly, both, and that (2) the states may accept filings pursuant to subsection (b)(7) and may  X- xdesignate eligible telecommunications carriers under subsection (d)(2). NCTA , RTC, and US  x West agree with the Commission's observation in the NPRM that section 259(a) grants the  x=Commission authority to create rules to implement section 259 and that section 259 pertains to  x]both interstate and intrastate communications. The remaining commenters who address  xjurisdiction assert that the Commission, in the NPRM, proposes to restrict impermissibly the role  xof the states in section 259 matters in contravention of sections 2(b), 261(b), and 261(c) of the  X"- xzCommunications Act.c\"|T {OO$- x-ԍ 47 U.S.C.  152(b). See, e.g., USTA Comments at 10; GTE Comments at 12; PacTel Comments at 56.  {O%- xSee also Oregon PUC Comments at 3 (arguing that states retain jurisdiction over terms and conditions of contracts for intrastate facilities and functions). c These parties essentially argue that there is no justification for the  xCommission to usurp the role of the states in regulating intrastate services and, to the extent that" *,N(N(ZZy"  xqualifying carriers, for example, are utilizing section 259 agreements in order to provide intrastate  xjservices, the Commission may not regulate such services or agreements absent a showing that  X-meets the standards set out in Louisiana PSC.T {OK- xԍ See, e.g., USTA Comments at 11 ("Whether preemption is justified will depend on the specific facts and  {O-circumstances involved, and whether they meet the test of Louisiana PSC.").  X- ` xR83. ` ` We believe that section 259 must be interpreted as encompassing all network  xinfrastructure sharing agreements, regardless of whether the shared infrastructure is to be used  xto provide solely interstate services, or intrastate services as well. The language of the section  xmakes no explicit distinction between interstate and intrastate matters, and certain aspects of  xsection 259 suggest that no such distinction was intended. First, we note that subsection (b)(3)  xLprovides that the Commission's rules shall ensure that LECs subject to section 259 obligations  X - x."will not be treated by the Commission or any State as a common carrier for hire or as offering  xcommon carrier services with respect to any infrastructure, technology, information, facilities, or  xyfunctions made available to a qualifying carrier in accordance with regulations issued pursuant  X - xto this section."[ $T yO-ԍx47 U.S.C.  259(b)(3) (emphasis added).[ States have no authority to regulate interstate services in any event. Thus,  xif section 259 is read as addressing only interstate matters, this reference to state regulation would  x.be superfluous. This provision makes sense only when read in the context of a provision that  xaddresses both interstate and intrastate matters the Commission is directed to adopt rules that  xprevent states from regulating (in a way that they otherwise might) the sharing of infrastructure  Xf-used to provide, intra alia, intrastate services as common carriage.  X:- ` xS84. ` ` Second, the tie between section 259 and the universal service provisions of the Act  xalso supports a conclusion that section 259 encompasses both interstate and intrastate matters.  xA carrier qualifies for section 259 infrastructure sharing only if it "offers telephone exchange  X- xservices, exchange access, and any other service that is included in universal service."JT yOZ-ԍx47 U.S.C.  259(d)(2).J Thus,  xwe conclude that at least one purpose of section 259 is to advance the Act's universal service  xMgoals. Given the conditions on qualification, it is logical to conclude that the infrastructure  xobtained pursuant to section 259 may be used to provide "telephone exchange services, exchange  x[access, and any other service that is included in universal service." Since telephone exchange  xservice is essentially a local service, the scope of section 259, thus, encompasses both intrastate and interstate services.  X=- ` xT85. ` ` Section 2(b) does not alter this conclusion. Section 2(b) is a rule of statutory  xconstruction and as such applies only where the authoritygranting statutory provision in question  X- xis ambiguous.DT {O&- xԍ 47 U.S.C.  152(b) ("[N]othing in this Act shall be construed . . . to give the Commission jurisdiction with respect to [matters relating to intrastate communications services]." (emphasis added)). But there is nothing ambiguous about the authoritygranting provisions in"+,N(N(ZZ["  X- xzsection 259.T yOy- x;ԍ In addition, we note that section 201(b) clearly grants the Commission authority to "prescribe such rules and regulations" for all of "the provisions of this Act." 47 U.S.C.  201(b). As explained above, section 259(a) must be read to direct the Commission to  ximplement the requirements of section 259, without any distinction between interstate and intrastate matters.  X- ` oxU86. ` ` Even if section 2(b) were applicable in construing section 259, we note that the  xknetwork infrastructure addressed by section 259 can be used to provide both interstate and  xyintrastate services. As US West aptly observes, there "is no reasonable way to separate these  x{facilities at the level of the transaction between the qualifying carrier and the [providing]  XH- xincumbent LEC."AH T yO -ԍ US West Comments at 13.A We agree with this analysis, and believe that, because of the inseverability, Commission regulation under section 259 is particularly warranted.  X - ` xV87. ` ` Moreover, we do not believe that section 261 affects the Commission's jurisdiction  xjin this case. Section 261(b), on its face, applies only to states enforcing regulations prescribed  xprior to the enactment of the 1996 Act or to states regulations prescribed after said date "if such  xyregulations are not inconsistent" with 1996 Act provisions. We hold, in this Report and Order,  X - x-that the rules adopted herein apply only to section 259 agreements, i.e., those that are negotiated  xprospectively. By definition, state regulation that governed any previously negotiated intercarrier  xagreements would not apply since these agreements fall outside the scope of section 259. Section  x=261(c), on its face, applies only to affirm certain state regulation of intrastate services "that are  xnecessary to further competition in the provision of telephone exchange service or exchange  xKaccess . . .," and we have held here that section 259 is a "limited and discrete provision" designed to promote universal service by carriers who are not, by and large, competing with one another.  X- ` xW88. ` ` We affirm our tentative conclusion in the NPRM that the Commission has  xauthority to create rules to implement the section, as it relates to both interstate and intrastate  X- xmatters. Section 259(a) states that "The Commission shall prescribe, within one year after the  xdate of enactment of the Telecommunications Act of 1996, regulations that require . . ."  X- xinfrastructure sharing.QT yO-ԍ 47 U.S.C.  259(a) (emphasis added).Q Similarly, Section 259(b) refers to the terms and conditions of the  xregulations to be "prescribed by the Commission," and Section 259(d)(1) makes clear that the  xterm "qualifying carrier" will be defined "in accordance with regulations prescribed by the  XR- xCommission pursuant to this section."HR@T yOC#-ԍ 47 U.S.C.  259(b), (d)(1).H This language emphasizes the agency's already  xexpansive general rulemaking powers, under sections 4(i) and 201(b). States generally are not  xempowered to implement the Communications Act, and nothing in section 259 suggests otherwise  xhere. The only references to the states in section 259 concern the filing of agreements for public  xinspection, and the designation of "eligible" carriers pursuant to section 214(e) as part of the",,N(N(ZZZ"  xdetermination of who is a "qualifying" carrier under section 259. Section 259 emphasizes the role of the Commission, not the states.  X- ` xX89. ` ` Of course, this does not alter the states' authority to regulate the common carrier  xservices provided by providing incumbent LECs and qualifying carriers. Intrastate services that  xnmake use of "public switched network infrastructure, technology, information and  xtelecommunications facilities and functions" obtained pursuant to section 259 will be regulated  xby the states, just as interstate services will be regulated by the Commission. Nothing in our  xanalysis above should be construed as establishing an intent to regulate intrastate services, as  xopposed to regulating agreements regarding the sharing of "public network infrastructure,  xtechnology, information and telecommunications facilities and functions" under section 259(a).  x Our conclusions regarding a limited role for the states only apply to the terms under which qualifying carriers negotiate and obtain section 259 agreements.  X - C.XxTerms and Conditions Required by Section 259(b) (#  X-x 1.` ` Section 259(b)(1) (#`  Xb-Xx` ` a. Background (#  X4- ` xY90. ` ` Section 259(b)(1) provides that the Commission shall not adopt regulations that  xwould "require a local exchange carrier to which this section applies to take any action that is  X- x<economically unreasonable or that is contrary to the public interest."CT yO-ԍ 47 U.S.C.  259(b)(1).C In the NPRM, we sought  xcomment on what standard should be established for determining whether an action is  x economically unreasonable or not in the public interest. We tentatively concluded that no  x|providing incumbent LEC should be required to develop, purchase, or install network  x?infrastructure, technology, facilities, or functions solely on the basis of a request from a  xKqualifying carrier to share such elements when such incumbent providing incumbent LEC has not  xotherwise built or acquired, and does not intend to build or acquire, such elements. We sought  x/comment on whether an action could be considered economically unreasonable even if the  xKrequesting carrier agreed to pay the costs associated with the request. We tentatively concluded  xthat a sharing request would be considered economically unreasonable if the terms proposed by  xthe qualifying carrier were such that the providing carrier would incur costs that it could not  xzrecover. Finally, we sought comment on whether a providing incumbent LEC may withdraw  xfrom a sharing agreement if it later determines that such agreement is no longer economically  X-reasonable.:XT yO#-ԍ NPRM at  20.:  X!-XxX` ` b. X Comments (# ""-,N(N(ZZ!"Ԍ X- ` RxZ91. ` ` Many commenters claim that the Commission should set forth only general  X- xyguidelines for determining what is "economically unreasonable or not in the public interest."T {Ob- xԍ See, e.g., GTE Comments at 14; USTA Comments at 15; NYNEX Comments at 13; BellSouth Comments at 11.  x0GTE claims that this standard is "not susceptible of precise definition . . . [and thus] the  X- xCommission should not add further details to its rules."="T yO-ԍ GTE Comments at 14.= USTA argues that overly detailed  X-standards could frustrate negotiated resolution of this issue.>T yO -ԍ USTA Comments at 15.>  Xv- ` }x[92. ` ` ALLTEL urges that the Commission, either by specific example or through general  xguidelines, indicate the types of actions which are economically unreasonable under section  XH- x259(b)(1).?HBT yO;-ԍ ALLTEL Comments at 4.? Several commenters argue that the term "economically unreasonable" requires that  X1- xproviding carriers not be required to share infrastructure at belowcost rates.1T {O- xԍ See, e.g., ALLTEL Comments at 4; PacTel Reply Comments at 5; GTE Comments at 14; BellSouth Comments at 11. GTE and PacTel  xclaim that Congress intended that sharing agreements exist only where the providing LEC is not  X - xfinancially harmed and the agreement is costeffective.U , T yO-ԍ PacTel Comments at 34; GTE Comments at 14.U GTE argues that not allowing a  xNproviding LEC to recover its common costs or a return on its investment is by definition  X - x<economically unreasonable and unconstitutional.B T yOB-ԍ GTE Reply Comments at 8.B Southwestern Bell suggests that the test for  x<determining whether an agreement is economically unreasonable should be that agreements must  xuse fewer resources than would be required for both firms to provide the infrastructure separately,  X- xZand providing LECs must be fully compensated for costs associated with sharing.L T yO- xԍ Southwestern Bell Comments at 1011 (relevant costs include a reasonable return on capital and risk premium, and the opportunity costs of engaging in infrastructure sharing). RTC claims,  xyhowever, that, although it would be unreasonable to require a providing LEC to incur expenses  xwhich it could not recover, an incumbent's inability to earn a "fair" return on its investment with  xa requesting carrier because of competitive market conditions does not thereby excuse the  X4- xZproviding LEC from its section 259 obligations.=4T yO#-ԍ RTC Comments at 10.= MCI argues that the Commission should apply  x>its Part 51 standard of technical feasibility so long as the facilities would be included under  X- xsection 251(c)(2)(A).<4T yO&-ԍ MCI Comments at 7.< The Oregon PUC contends that the Commission should make clear that".,N(N(ZZd"  xcarriers should not have to incur costs that they cannot recover, but that any calculation of rates  X-for intrastate facilities remains under states' ratemaking authority.CT yOb-ԍ Oregon PUC Comments at 3.C  X- ` x\93. ` ` Many carriers support the Commission's tentative conclusion that section 259 does  x.not require a providing LEC to construct and share facilities that it neither currently owns, nor  X- xplans to own.$XT {O- xԍ  See, e.g., USTA Comments at 1516; Ameritech Comments at 6 (sharing implies facilities that already exist);  xxGTE Comments at 13; ALLTEL Comments at 4; BellSouth Comments at 11; PacTel Comments at 13; NYNEX  {O( - xReply Comments at 10 (should be left to negotiation and subject to possible Commission intervention, e.g., the Commission's complaint process as necessary). MCI, however, argues that, as long as a providing LEC is compensated for the  xadditional costs plus a reasonable profit, the providing LEC should be required to build facilities  X_-to satisfy section 259 requests._DT {OT- xԍ MCI Comments at 7; MCI Reply Comments at 6; but see USTA Comments at 15 (no requirement even where qualifying carrier agrees to pay costs).  X1- ` Cx]94. ` ` Several commenters claim that section 259(b)(1) permits a providing LEC to  X - xdiscontinue an infrastructure sharing agreement if it becomes economically unreasonable. T {Oi- xԍ See, e.g., USTA Comments at 17; ALLTEL Comments at 4; GTE Comments at 14; BellSouth Comments at 12.  x{USTA claims that the Commission could require "a minimum of sixty days notice prior to  X - xidiscontinuing any infrastructure sharing arrangement." T {O- xԍ USTA Comments at 17; see also GTE Reply Comments at 8 (the Commission need not adopt a mandatory termination standard). ALLTEL argues that providing carriers  x=should not be required to provide infrastructure under section 259 where the qualifying carrier  xeither offers, or may be required to offer, those services obtained under an infrastructure sharing  X - xagreement for resale.oX R T yO- xԍ ALLTEL Comments at 34 (section 259 agreements should sunset at such time as either the qualifying  xcarrier's service territory becomes subject to competition or where the qualifying carrier uses section 259 facilities to compete outside its service territory with the providing incumbent LEC).o ALLTEL also argues that smaller carriers should not be burdened with  xLinfrastructure sharing requests from neighboring LECs who are able, but not willing, to deploy  Xy- xtheir own technology.?yrT yO!-ԍ ALLTEL Comments at 3.? Southwestern Bell claims that the Commission should not foreclose a  Xb-providing LEC from refusing a request for sharing based on public interest grounds.KbT yO$-ԍ Southwestern Bell Comments at 11.K  X4-XxX` ` c.X Discussion (# "/,N(N(ZZe"Ԍ X- ` x^95. ` ` Section 259(b)(1) provides that the Commission not require a LEC to take any  xaction in satisfying a request for infrastructure sharing that is economically unreasonable or that  xis contrary to the public interest. We affirm our tentative conclusion that section 259(b)(1) thus  xrequires that the terms proposed by the qualifying carrier are such that the providing incumbent  x LEC does not incur costs that it cannot recover. We conclude that such a requirement will  xencourage and facilitate infrastructure sharing arrangements because such LECs will be assured  xthe ability to recover their investment. We also conclude that the requirement that shared  xinfrastructure not be used to compete against the incumbent LEC in its telephone exchange area  XH- xywill encourage such LECs to reach satisfactory agreements.bHT {O -ԍ See Discussion at Section III. C. 6., infra.b As discussed at Section III. A.,  X1- xlsupra, an incumbent LEC considering a request to share infrastructure does not face the  X - x>disincentive (e.g., loss of market share in its telephone exchange area) that is present in the  xcompetitive situations in which section 251 applies. We also note that a qualifying carrier is able  X - xto demand an infrastructure sharing agreement per section 259(a). Moreover, in the specific  xcircumstances in which section 259 applies, we believe that the unequal bargaining power  xbetween qualifying carriers, including new entrants, and providing incumbent LECs is less  xrelevant than it is in the more general competitive situation since the incumbent LEC has less  xincentive to exploit any inequality for the sake of competitive advantage. We thus conclude that the negotiation process should be permitted to proceed with only limited Commission regulation.  XQ- ` x_96. ` ` We also affirm our tentative conclusion that no incumbent LEC should be required  xto develop, purchase, or install network infrastructure, technology, facilities, or functions solely  xon the basis of a request from a qualifying carrier to share such elements when such incumbent  xLEC has not otherwise built or acquired, and does not intend to build or acquire, such elements.  xkWe agree with the comments of USTA and other parties that providing LECs should not be  xrequired to build or acquire such elements merely because a qualifying carrier agrees to pay the  xcosts. Commenters have also not shown that there would exist any scale and scope benefits in  x=situations where the providing carrier did not also use the facilities. Of course, parties are free  xto agree to such an arrangement if both sides determine it is in their best interests. We note,  xhowever, that, because providing LECs' networks may not be designed to provide the broad range  x-of infrastructure sharing required by the language of section 259, providing incumbent LECs may  xbe required to engage in some modifying of their network to accommodate sharing requests for  xexisting infrastructure. In negotiating such buildout requirements, parties should be guided by  x<the circumstances of the particular case and by the similar requirements in the Commission's local  xcompetition rules concerning buildout requirements for interconnection and unbundling  X- x<requests.nZT {O#-ԍ Local Competition First Report and Order, 11 FCC Rcd at 15605.n In the Local Competition First Report and Order, the Commission stated that "LEC  xMnetworks were not designed to accommodate thirdparty interconnection or use of network  xelements" and that "[i]f incumbent LECs were not required, at least to some extent, to adapt their  xjfacilities to [permit] interconnection or use by other carriers, the purposes of sections 251(c)(2)"!0,N(N(ZZ "  X- xand 251(c)(3) would often be frustrated."3T {Oy-ԍ Id.3 We also conclude that section 259 could be similarly  xfrustrated and that, for section 259 requests, providing incumbent LECs must make such network modifications as are necessary to implement infrastructure sharing arrangements.  X- ` x`97. ` ` We also conclude that providing LECs should be permitted to withdraw from  x]section 259 infrastructure sharing agreements if the arrangement subsequently becomes  xeconomically unreasonable or not in the public interest. We believe, however, that providing  xincumbent LECs should bear the burden of proving to the Commission that an existing  xarrangement has subsequently become economically unreasonable or not in the public interest.  x]We believe that it is appropriate to place this burden on the party seeking relief from the  xobligations of its contract. Moreover, we believe that the providing incumbent LEC will have  xgreater control over and access to information that would support a claim that an agreement has  xbecome economically unreasonable. We also conclude that, if an arrangement become  xeconomically unreasonable or not in the public interest and thus requires a providing incumbent  xLEC to end an agreement, the providing incumbent LEC must be required to attempt to  xrenegotiate the agreement prior to termination. Also, qualifying carriers should be given adequate  xnotice to protect their customers against sudden changes in service. We agree with USTA that  xkproviding carriers should give qualifying carriers sixty days notice prior to termination. We  xbelieve that this result both protects qualifying carriers and their customers from sudden service  xdisruptions and still allows providing carriers to terminate in a timely fashion uneconomic  xlagreements. These conclusions notwithstanding, we expect that parties should address  xcontingencies, including the possibility that particular arrangements might become economically unreasonable at a subsequent date, in their infrastructure sharing agreements.  X- ` xa98. ` ` Section 259(b)(1) ensures that providing incumbent LECs are given the opportunity  x<to recover the costs associated with infrastructure sharing arrangements. We thus conclude that  xthe rates agreed to by providing incumbent LECs and qualifying carriers for infrastructure  x.available pursuant to section 259, may assist parties and the states to arrive at rates for similar  xelements in arrangements reached pursuant to section 251. We also believe that although the  xrates for individual elements obtained pursuant to section 259 may be probative of the costs  xincurred by a providing LEC in making infrastructure available, it may be that, depending on the  xcircumstances, these rates may not correspond with the rates competitive carriers can obtain  xjpursuant to section 251 agreements because, among other reasons, providing incumbent LECs  xmay be recovering costs for specific elements via other terms in the agreement. Similarly, when  xa party to a section 259 agreement is negotiating or arbitrating an interconnection agreement  xpursuant to section 251, information about the technical arrangements of that party's section 259  xKagreement may facilitate negotiation and arbitration of the technical feasibility of interconnection, unbundling, and collocation issues in the section 251 context.  X#-Xx 2.X` ` Section 259(b)(2) (#` "h$1Z,N(N(ZZF#"Ԍ X-XxX` ` a.X Background (#  X- ` xb99. ` ` Section 259(b)(2) allows the Commission to "permit, but . . . not require, the joint  x-ownership or operation of public switched network infrastructure and services by or among such  X- x-local exchange carrier and a qualifying carrier."CT yO-ԍ 47 U.S.C.  259(b)(2).C In the NPRM, the Commission noted that joint  xMownership of shared network infrastructure with a qualifying carrier thus appears to be one  xjmethod by which a providing LEC may meet many of its sharing obligations under section 259,  xassuming the qualifying carrier agrees. We also tentatively concluded that providing LECs and  x0qualifying carriers should be able to share the risk of development and/or purchase and  X1- x<installation of network infrastructure.:1XT yO: -ԍ NPRM at  21.: We further tentatively concluded that, in the absence of  x[evidence that there are problems in making these arrangements, we should let the participating  xcarriers develop terms and conditions through their own negotiations. We proposed to treat the  x\joint owners as the providing incumbent LEC for the purposes of our infrastructure sharing  x[regulations. We sought comment on the implications of sharing and joint ownership for those  xKcarriers subject to the Commission's cost accounting rules. We also sought comment on whether  xjoint ownership of technology, information, and telecommunications facilities and functions,  xspecifically listed in section 259(a) but not included in section 259(b)(2), is permitted. Finally,  xwe sought comment on methods for infrastructure sharing other than joint ownership that might  Xb-satisfy the requirements of section 259.3bT {O-ԍ Id.3  X4-XxX` ` b.X Comments (#  X- ` xc100. ` ` The majority of commenters expressly agree with the Commission's tentative  xconclusion that joint ownership arrangements are one means of meeting section 259 sharing  x.obligations, and that, in the absence of evidence that there are serious problems, participating  xcarriers should be both allowed and encouraged to develop terms and conditions through their  X- xown negotiations.xzT {O-ԍ See, e.g., GTE Comments at 15; RTC Comments at 10; PacTel Comments at 9.x GTE urges the Commission not to specify particular methods of  x.infrastructure sharing that satisfy section 259 and explains that, "because each qualifying and  xzproviding LEC will have different network architectures and needs," any mutually agreedto  Xe- xarrangement, including but not limited to joint ownership, should be presumed to comply."e T yO"#- x,ԍ GTE Comments at 15. GTE generally urges the Commission to adopt rules that simply repeat the statutory language for each provision within subsection (b). GTE Reply Comments at 67.  xMCI states that the Commission may leave the terms of joint ownership to negotiation by the  X7- xparties.<7d T yOL'-ԍ MCI Comments at 8.< RTC suggests that agreements similar to those described in section 259 have long been"72 ,N(N(ZZ"  X- xin use in the industry.T yOy- x<ԍ RTC Comments at 10 (arguing that the only new requirement is that these agreements be filed with state commissions). In addition, RTC suggests that there is no reason not to allow joint  xownership to extend to the complete list of "public switched network infrastructure, technology,  X-information, and telecommunications facilities and functions" as set out in section 259(a).3 T {O-ԍ Id.3  X- ` xd101. ` ` Concurring with our tentative conclusion as offered in the NPRM, RTC advises  xthat, where a qualifying carrier makes a request to share infrastructure jointly owned by an  xincumbent LEC and one or more qualifying carriers, the joint owners would be treated as the  X_- xproviding incumbent LEC for the purposes of our infrastructure sharing regulations.3_T {O -ԍ Id.3 Some  XH- xparties claim that the Commission's accounting and separations rules, Part 32IHDT {O=-ԍ 47 C.F.R.  32 et seq.I and Part 36IHT {O-ԍ 47 C.F.R.  36 et seq.I of  xthe Commission's rules, need not be changed or need not be changed immediately to  X - xLaccommodate joint ownership under section 259. h T yO3-ԍ RTC Comments at 10; MCI Comments at 8; PacTel Comments at 9 (only addressing Part 32). RTC states that each carrier would simply  xallocate its investment, expense, and revenue according to its ownership interest as determined  X - xin the sharing agreement.b T {O-ԍ RTC Comments at 10; see also PacTel Comments at 9.b MCI further asserts that it anticipates that the scope of any joint  xownership projects likely to be undertaken before the Commission completes its proceeding  xmreforming Part 32 and Part 36 of its rules will be small. Thus, MCI argues that it is not  xjnecessary for the Commission to consider the accounting and separations implications of joint  X-ownership in this docket.< T yO-ԍ MCI Comments at 8.<  Xb-XxX` ` c.X Discussion (#  X4- ` xe102. ` ` The majority of commenters stated that the Commission should permit providing  xLECs and qualifying carriers to develop terms and conditions for joint ownership or operation  xZof public switched network infrastructure and services through their own negotiations. We agree  xwith this position. Joint ownership or operation of infrastructure and services is one method by  x<which carriers can share infrastructure pursuant to the requirements of section 259. We note that  xsection 259(b)(2) is permissive in nature and does not require providing LECs to engage in joint  xNownership or operation of infrastructure or services. We believe, given that section 259  xarrangements generally are only permitted between carriers that are not competing using the"3,N(N(ZZ"  xshared infrastructure and, further, that providing incumbent LECs are permitted to recover all  xcosts they incur as a result of providing the shared infrastructure, disincentives for cooperation  xZthat characterize a competitive situation are absent and, as a result, limited Commission regulation  xwith respect to joint ownership or operation of infrastructure or services is justified at this time.  xLFurther, we affirm our tentative conclusion that all joint owners should be treated as providing  x[incumbent LECs for purposes of our section 259 regulations. We believe that this requirement  xwill facilitate the provision of infrastructure to other qualifying carriers by making clear that joint owners cannot avoid their section 259 sharing obligations.  X1- ` `xf103. ` ` Finally, we conclude that the term "public switched network infrastructure and  X - xzservices" in section 259(b)(2) includes all of the elements listed in section 259(a) (i.e., public  xswitched network infrastructure, technology, information, and telecommunications facilities and  x?functions). As no commenter suggested a narrower reading of the term, we believe that  x{permitting carriers to jointly own or operate such elements or information will expand the  xZopportunities for parties to create infrastructure sharing arrangements. Further, we agree with the  xposition of MCI that the scope of joint ownership projects likely to be undertaken prior to the  xzCommission's completion of its proceeding reforming Part 32 and 36 of its rules is small, and  xthus it is not necessary for the Commission to consider at this time the accounting and separations implications of joint ownership arrangements pursuant to section 259.  X6-Xx 3.X` ` Section 259(b)(3) (#`  X-XxX` ` a.X Background (#  X- ` xg104. ` ` Section 259(b)(3) provides that neither the Commission nor any state shall treat  xincumbent LECs as "common carrier[s] . . . or as offering common carrier services with respect  xlto any infrastructure, technology, information, facilities, or functions made available to a  X- x\qualifying carrier in accordance with regulations issued pursuant to this section."CT yO-ԍ 47 U.S.C.  259(b)(3).C In the  xNPRM, the Commission sought comment on whether, and the extent to which, section 259(b)(3)  Xg- xLimposes limits on the obligations of providing LECs to qualifying carriers.:gXT yOp-ԍ NPRM at  22.: Notwithstanding  xthe directive of section 259(b)(3), we also sought comment on whether the section 259(a)  X9- xjrequirement that infrastructure sharing be made available "to any qualifying carrier" reflects an  X$-inherent nondiscrimination principle.Q$T yO"-ԍ 47 U.S.C.  259(a) (emphasis added).Q  X-XxX` ` b.X Comments (#  X - ` xh105. ` ` Most commenters agree that section 259(b)(3) prohibits the Commission and the  xstates from imposing any common carrier requirements with respect to any infrastructure"!4x,N(N(ZZ "  X- xtechnology, information, facilities or functions made available pursuant to section 259.T {Oy- xhԍ See, e.g., USTA Comments at 21; RTC Comments at 1011; Minnesota Coalition Comments at 3; BellSouth Comments 1314; Frontier Comments at 56. For  xLexample, USTA states that "the Congressional language could not be more clear [] providing  xLECs are to be treated as private carriers and need not provide the same capabilities on the same  X- xterms to all [qualifying carriers]."Z"T {O- xԍ USTA Comments at 21. See also GTE Comments at 16 ("Congress plainly knew how to impose a  xnondiscrimination requirement when it so intended. . . . The absence of an explicit nondiscrimination obligation in Section 259(b)(3) should be interpreted as precluding the Commission from imposing such a requirement."). Several incumbent LECs argue that a providing incumbent  xLEC should have the option to make tariffed offerings available under section 259, although it  X- xcannot be compelled to make such an offering.&ZDT {O - xԍ See GTE Comments at 1516; NYNEX Comments at 14; PacTel Comments at 11 (acknowledging that  xarrangements offered pursuant to tariff would be treated as regulated services and subject to common carrier requirements).& A number of commenters addressed the issue  xof whether the Commission should read an inherent nondiscrimination principle into section 259  xOand the vast majority of these commenters contend that there is no basis for such an  XH- x.interpretation."Hf T {O_- xԍ See, e.g., USTA Comments at 21; NYNEX Comments at 1314; RTC Comments at 1011; PacTel Comments  xat 11; Southwestern Bell (arguing that, because section 259 does not require the sharing of communications or  xwtelecommunications services, section 201 and corresponding prohibitions against unreasonable discrimination do not apply). BellSouth states: "Any such inference . . . would be contrary to the express  X1- xprovisions of section 259(b)(3) and must be rejected."F1P T yO2-ԍ BellSouth Comments at 1314.F BellSouth and USTA comment that the  xjlanguage in section 259(a) that requires sharing with "any qualifying carrier" does not suggest  xany nondiscrimination obligation, but simply indicates to whom infrastructure must be made  X - xavailable.X T yO}-ԍ BellSouth Comments at 14; USTA Comments at 21.X Several carriers also argue that, although section 259(b)(3) requires the Commission  xto ensure that incumbent LECs are not treated as common carriers with respect to any  xinfrastructure shared pursuant to section 259, it does not preclude providing incumbent LECs  X -from electing to offer infrastructure sharing on a tariffed basis, i.e., as common carriers.] z pT {O- x,ԍ See, e.g., GTE Comments at 16 n.24 (section 259(b)(7) states that tariffs, contracts, or other arrangements  xfor infrastructure sharing must be filed with the Commission or the state); PacTel Comments at 11 (Providing  xincumbent LECs should have the option of offering infrastructure sharing arrangements either as common carriage  xor private carriage. Arrangements offered pursuant to tariff would be treated as regulated services for Part 64  xpurposes and subject to common carriage requirements including nondiscrimination and expansion requirements.);  xNYNEX Comments at 14 (providing incumbent LECs should have the option to satisfy section 259 requests with existing common carrier offerings).]  X{- ` `xi106. ` ` In contrast, AT&T and Frontier suggest that the Commission should impose a  xlimited nondiscrimination principle that would enable competing qualifying carriers to obtain"d5 ,N(N(ZZ"  X- xysection 259 offerings on comparable terms. T yOy- xԍ AT&T Reply Comments at 6 n.13; Frontier Comments at 5 n. 13 (noting that the Commission should not expand this nondiscrimination principle any further). AT&T states that "it is inherently reasonable to  xrequire that [incumbent LECs] which enter into sharing agreements do so on nondiscriminatory  xterms to ensure that the [incumbent LECs] do not abuse their position to the detriment of  X- xsimilarly situated carriers."  T yO- x,ԍ AT&T Reply Comments at 6, n. 13 (claims that this interpretation is supported by section 259(b)(7) which requires incumbent LECs to file tariffs or contracts showing the terms and conditions of their sharing arrangements). MCI argues that "[a]ll carriers, including qualifying Section 259  xxcarriers, should be able to gain nondiscriminatory access to those facilities, services, etc., covered  X- xunder Part 51 of the Commission's rules."< xT yO -ԍ MCI Comments at 8.< MCI claims that the Commission need not be  xconcerned whether different terms and conditions concerning access to facilities negotiated under  xsection 259 are discriminatory because nondiscriminatory access to section 251 facilities will  xensure that qualifying carriers have nondiscriminatory access to the providing LEC's facilities  X1- xMneeded for them to maintain a competitive position against their potential rivals.3 1T {O-ԍ Id.3 Several  xKparties counter that discrimination is not a significant issue because most section 259 agreements  X - xwill be customized to reflect the unique needs of the qualifying carriers.6Z T {ON- xԍ See Minnesota Coalition Comments at 8; GTE Reply Comments at 9. See also RTC Comments at 11  x(imposing nondiscrimination provision will create disincentive for providing incumbent LECs to make sharing agreements available).6 BellSouth argues that  xjthe section 259(b)(4) requirement that sharing agreements be on just and reasonable terms that  xpermit qualifying carriers to fully benefit from the economies of scale and scope of the providing  X - xincumbent LEC are "likely to drive many agreements to a substantial degree of sameness."| T {O+-ԍ BellSouth Comments at 14. See also RTC Comments at 11; USTA Comments at 22.|  xZFinally, USTA states that there is nothing in section 259 to indicate that Congress was concerned  xabout qualifying carriers competing with one another, so there is no need for the Commission to  Xy-equalize the opportunities available to qualifying carriers under section 259.>yN T yOx-ԍ USTA Comments at 22.>  XK-XxX` ` c.X Discussion (#  X- ` xj107. ` ` We conclude that section 259(b)(3) encourages the establishment of infrastructure  xKsharing agreements by permitting providing incumbent LECs to negotiate agreements that satisfy  xthe precise needs of particular qualifying carriers without subjecting providing incumbent LECs  xto common carrier obligations with respect to the provisions of such agreements. As discussed  xbelow, section 259(b)(4) requires that infrastructure sharing agreements make infrastructure,  xtechnology, information, facilities or functions available to qualifying carriers on just and"6,N(N(ZZ"  xxreasonable terms and conditions. We believe that any agreement that treats one qualifying carrier  x=in a substantially different manner from another competing qualifying carrier would likely raise  xquestions concerning whether the terms and conditions of the less favorable agreements were just  xand reasonable. We note, moreover, that a LEC that does not qualify as a qualified carrier under  xsection 259 may still, of course, obtain from a providing incumbent LEC any services and  xelements available to it pursuant to section 251. We note that sections 201 and 251 expressly  xrequire rates set pursuant to those provisions not only to be just and reasonable, but also non X_- x[discriminatory or not unreasonably discriminatory.}_T yO-ԍ 47 U.S.C.  201 (not unreasonably discriminatory), 251 (nondiscriminatory).} Also, section 259 of the Act specifically  xzcarved out a special benefit for qualifying carriers that is unavailable to other nonqualifying  xcompetitive LECs. We note, however, that any collusive agreement between a providing LEC  xand a qualifying carrier, with the intent of restricting competitive entry into either the providing  xincumbent LEC's or the qualifying carrier's market, possibly would violate antitrust laws and  xxsubject both carriers to the appropriate legal sanctions. In addition, such agreements would likely  xbe against the public interest and be unjust and unreasonable and, therefore, invite Title II sanctions.  X- ` xk108. ` ` We do not believe that the record is sufficient at this time to permit the  xjCommission to decide whether providing incumbent LECs should be permitted to file tariffs for  Xb- xjinfrastructure sharing as common carrier services pursuant to section 259.bXT {Ok- xԍ See, e.g., GTE Comments at 16; PacTel Comments at 11; NYNEX Comments at 14 (providing incumbent LECs should have the option to satisfy section 259 requests with existing common carrier offerings). Section 259(b)(7)  x[specifically allows parties to file "tariffs," but the legal significance of such tariffs is difficult to  xdetermine given the section 259(b)(3) requirement that providing incumbent LECs not be treated  x|as common carriers or as offering common carrier services with respect to section 259  xinfrastructure sharing. Although some parties suggested that the Commission permit carriers to  xfile tariffs for infrastructure sharing, the record is not adequate to determine what the legal effect  X- x=of such tariffs would be, e.g., what obligations a providing incumbent LEC could be subject to  xafter a tariff was filed. We direct carriers that wish to pursue this matter to do so pursuant to our declaratory ruling provisions so that we may develop an adequate record on the issues.  X~-Xx 4.X` ` Section 259(b)(4) (#`  XP-XxX` ` a.X Background (#  X"- ` Pxl109. ` ` Section 259(b)(4) requires the Commission to adopt regulations to ensure that the  xiproviding LEC makes the "infrastructure, technology, information, facilities, or functions available  x.to a qualifying carrier on just and reasonable terms and conditions that permit such qualifying  xcarrier to fully benefit from the economies of scale and scope of such [providing] local exchange  xcarrier, as determined in accordance with guidelines prescribed by the Commission in regulations" 7,N(N(ZZ"  X- xyissued pursuant to this section."CT yOy-ԍ 47 U.S.C.  259(b)(4).C In the NPRM, the Commission sought comment on how to  x{ensure that qualifying carriers benefit fully from the economies of scale and scope of the  xproviding LEC. Specifically, we sought comment on whether section 259 conferred on the  xCommission authority to promulgate rules or guidelines to govern the price of "infrastructure,  xtechnology, information, facilities or functions" made available by providing LECs. We also  xsought comment on whether the Commission should establish other terms and conditions for  xZinfrastructure sharing agreements or whether the parties themselves and the state commission are  X_-better suited to establish such provisions.A_XT yOh -ԍ NPRM at  2324.A  X1-XxX` ` b.X Comments (#  X - ` xm110. ` ` Most commenting parties argue that questions about pricing are not implicated by  X - x>the requirements of section 259(b)(4)., T yO- x;ԍ BellSouth Comments at 1213; GTE Comments at 17 and Reply Comments at 7; NYNEX Comments at 14 x15 and Reply Comments at 78; PacTel Comments at 14 and Reply Comments at 56; RTC Comments at 11.  xSouthwestern Bell Comments at 13 and Reply Comments at 12; USTA Comments at 18; Oregon PUC Comments  xat 3 (the Commission has authority to promulgate rules or guidelines to govern price "only with respect to interstate facilities and functions"). , GTE argues that the section 252 pricing standards  X - x.referenced in section 251 are irrelevant to section 259.fX T yO- xԍ GTE Comments at 9 ("The fact that Congress specifically provided that such sharing arrangements were to  xbe between noncompeting carriers and did not repeat the unbundled elements and resale provisions in Section 251 shows that it intended Section 259 arrangements to be different.").f NYNEX agrees with GTE and argues  xthat Congress intended pricing of infrastructure furnished under section 259 to be a matter of  X - xxnegotiation between the parties.1X T yO- xyԍ NYNEX Reply Comments at 78; PacTel Comments at 1415 (national standards on pricing would be  xeconomically unreasonable because they would fail to take into account local conditions that may affect the costs of providing services).1 BellSouth argues that providing shared infrastructure at a rate  xbelow the providing LEC's costs would constitute a subsidy and is not contemplated by section  Xy- x\259.yT {O - x,ԍ BellSouth Comments at 13 n.29. See also US West Reply Comments at 3 ("[I]t is difficult to imagine a rule more likely to obstruct competitive entry than the one proposed by MCI."). MCI, however, contends that the phrase "fully benefit from economies of scale and  Xb- xscope" does implicate questions about pricing and, further, that the phrase requires a providing  x[LEC to make its facilities available to qualifying carriers at the providing LEC's [average] short X6-run incremental cost, without recovering profit or common costs."&62T yO%- x<ԍ MCI Comments at 9. MCI also argues that, to the extent the facilities in question are included in section  {O%- x251, the shortrun pricing standard should be the prices for unbundled network elements set out in Local Competition  {O&- xxFirst Report and Order, adjusted for exclusion of profits and common costs. See also MCI reply comments at 6.  {Ou'- xhCf. ALTS Comments at 4 (arguing that a qualifying carrier should pay according to the section 251 pricing standards"u',N(N('" where it uses shared infrastructure outside its universal service territory).  "68X,N(N(ZZH"Ԍ X- ` ԙxn111. ` ` Parties disagreeing with MCI's view argue that, even if pricing standards are  ximplicated in section 259(b)(4), the incremental cost standard MCI suggests would not be  xappropriate. USTA argues that the "fully benefit" language means a qualifying carrier should be  xyable to realize the cost, per subscriber, that the providing LEC enjoys because of its economies  X- xof scope and scaleAXT yO-ԍ USTA Comments at 1921.A and that the relevant costs are the actual costs of the providing incumbent  X- xLEC.ET yO& -ԍ USTA Comments at 20. E NYNEX argues that it would be appropriate for the pricing of shared infrastructure to  x<recover a pro rata share of fully allocated costs, based on actual accounting costs including a fair  X_- xrate of return on investment reflecting business risk, etc.MZ_xT {O - xYԍ NYNEX Comments at 14. See also NYNEX Reply Comments at 8. ("[I]t should not be assumed that prices  xnegotiated under Section 259 would be less than or equal to TELRIC, or for that matter bear any necessary relation to pricing under Sections 251252.").M PacTel argues that the full benefits  xof economies of scale and scope are conferred whenever the qualifying carrier compensates the  x<providing LEC the lowest amount that fully compensates the providing LEC for all relevant costs,  xwhich should include actual costs, a fair amount of shared costs and overheads, as well as a  xproper return on the providing LEC's investment and that this amount should be less than the  X - xMstandalone cost of the shared infrastructure if it were provided by the qualifying carrier. T yO7- x;ԍ PacTel Comments at 15. PacTel also argues here that limiting the providing LEC's return on investment to a specific rate of return in inappropriate for noncommon carrier services and inconsistent with negotiated agreements.   xSouthwestern Bell says that meeting the "fully benefit" mandate requires that the qualifying  xcarrier pay a price that just compensates the providing LEC for all additional costs it incurs due  xto infrastructure sharing including: variable costs and any arrangementspecific fixed costs that  xarise from infrastructure sharing; a reasonable return to capital, including a risk premium; and the  Xy- xopportunity costs of engaging in infrastructure sharing, if any.Py T yO-ԍ Southwestern Bell Comments at 1213. P Several of these parties assert  xthat the pricing standard they would suggest, if a pricing standard were determined to be implied  xby the "fully benefit" language of section 259(b)(4), is a standard that would also be consistent  x^with the section 259(b)(1) prohibition against requiring "economically unreasonable"  X-agreements." T {OP!- xJԍ USTA Comments at 20; PacTel Comments at 15; and see Southwestern Bell Comments at 13; Southwestern  x-Bell Reply Comments at 13 ("At a price equal to shortrun incremental cost, as MCI proposes, the sharing LEC  xiwould be compensated only for all costs directly attributable to that unit of production, but it would not properly compensate the sharing LEC for the shared and common costs associated with providing the infrastructure.").   X- ` xo112. ` ` Concerning terms and conditions other than price that could affect whether and  x{how a qualifying carrier can "fully benefit" from the economies of scale and scope of the  xproviding incumbent local exchange carrier, RTC states that "[a]vailability, timeliness,"9l,N(N(ZZ"  x\functionality, suitability, and other operational aspects are [also] intended as benefits to be  X- xexpected from infrastructure sharing."= T yOb-ԍ RTC Comments at 11.= BellSouth argues that prices charged customers is the  xNappropriate context in which to consider the "fully benefit" language and, further, that a  x.qualifying carrier should be considered to fully benefit from the providing LEC's economies of  x\scale or scope "if the sharing arrangement causes it to incur costs that allow it to charge its  xcustomers prices reasonably comparable to those charged by the providing LEC for comparable  Xx-services."Y!xXT yO -ԍ BellSouth Comments at 1213 (footnote omitted).Y  XJ- ` nxp113. ` ` In sum, with the exception of MCI and, to some extent, ALTS, commenting parties  x=from industry argue that the Commission need not issue pricing guidelines or requirements, or  xother specific requirements, to define "fully benefit from the economies of scale and scope of  X - x[the] incumbent local exchange carrier."*" T yO- xԍ BellSouth Comments at 13; GTE Comments at 1718 ("The rules should . . . presume that any voluntarily  xnegotiated arrangements satisfy the statutory standard."); NYNEX Comments at 14 ("[T]his area is best left to the  x;negotiation process, and the Commission's rules should simply codify the language of the Act."); PacTel Comments  x,at 15 and Reply Comments at 6; RTC Comments at 11 ("[T]he Commission should not institute pricing rules when  xthere is no indication that they are needed and the appropriate price will depend on the facts and circumstances of  yO-the negotiated agreement."); Southwestern Bell Comments at 13. #x6X@`7bX@#* These parties are of the general view that appropriate  xterms and conditions, including compensation of the providing LEC by the qualifying carrier, will result from negotiations among the parties to infrastructure sharing agreements. x  X - ` xq114. ` ` Several parties argue that section 259 does not confer on the Commission authority  xto promulgate pricing rules. BellSouth observes: "As other provisions of the Act make clear,  xwhere Congress believed pricing standards under the 1996 Act were warranted, Congress  Xd- xjprovided for them explicitly. Section 259 contains no such provisions."#Dd` T {Ou- xԍ BellSouth Comments at 12. See also PacTel Comments at 14 (section 259 does not give the Commission  xwauthority to establish pricing standards "expressly or by implication," and that to decide otherwise would both ignore  xhthe "contrary implication from the requirement that the Commission ensure conditions which promote cooperation  {O- xbetween the parties" and "be ludicrous" because Congress "did not require [see section 252(a)(1)] such intrusive  xbehavior even for competing carriers."); NYNEX Comments at 15 (citing the Senate floor debate on the Conference  x0Report (February 1, 1996) and, specifically, Senator Hollings entering into the Congressional Record  xJ"Telecommunications Bill Resolved Issues" 23 (Infrastructure Sharing), which notes that "parties may negotiate the rates for such sharing.").  More generally, the  xMinnesota Coalition argues: "Clearly, Congress intended that requests made under section 259  X6- not impose the duties of a common carrier on the incumbent LEC . . . ."c$6lT yOS$-ԍ Minnesota Coalition Comments at 3 (emphasis in original).c  X -XxX` ` c.X Discussion (# ":$,N(N(ZZ"Ԍ X- ` _xr115. ` ` Section 259(b)(4) requires that the Commission "ensure that providing LECs make  xzsuch infrastructure, technology, information, facilities, or functions available to a qualifying  xcarrier on just and reasonable terms and conditions that permit such qualifying carrier to fully  xbenefit from the economies of scale of [the providing LEC] as determined in accordance with  X- xguidelines prescribed by the Commission in regulations issued pursuant to this section."C%T yO-ԍ 47 U.S.C.  259(b)(4).C We  xbelieve that economies of scale and scope affect costs, and that costs incurred by a supplier  xLgenerally are relevant to the prices charged by that supplier. To this extent, the "fully benefit"  xylanguage of section 259(b)(4) appears to implicate questions concerning pricing. We conclude,  xhowever, that, although the Commission may have the authority to establish pricing guidelines pursuant to section 259, we do not need to address that issue at this time.  X - ` xs116. ` ` Although the Commission reserves the question of pricing authority, we conclude  xthat it is not necessary at this time for the Commission to adopt pricing regulations because we  x-believe that the negotiation process, along with the dispute resolution, arbitration, and complaint  xprocesses will ensure that qualifying carriers fully benefit from the economies of scale and scope  xof providing incumbent LECs. We conclude that, because section 259 requires that a qualifying  xcarrier not use infrastructure obtained pursuant to a section 259 agreement to compete with the  xyproviding incumbent LEC, and as stated above, a providing incumbent LEC may recover all the  xcosts it incurs as a result of providing shared infrastructure pursuant to a section 259 agreement,  xparties will be able to negotiate agreements beneficial to both, in accordance with the goals of  X4- xsection 259.d&4XT {O=-ԍ See also Discussion at Section III. A., supra.d In these circumstances, an incumbent LEC that receives from a qualifying carrier  xya request to share infrastructure under section 259 does not face the same incentives to charge  x<excessive prices or to set other unreasonable conditions for the use of its infrastructure that arise  xin the competitive situations in which section 251 applies. Moreover, in the specific  xcircumstances in which section 259 applies, we believe that the unequal bargaining power  xbetween qualifying carriers, including new entrants, and providing incumbent LECs is less  xrelevant than it is in the more general competitive situation since the incumbent LEC has less  x.incentive to exploit any inequality for the sake of competitive advantage. We believe that it is  x1sufficient at this time to codify in our rules the requirements of section 259(b)(4) that  x[infrastructure be made available on just and reasonable terms that permit a qualifying carrier to  xNfully benefit from the economies of scale and scope of the providing incumbent LEC. If,  xhowever, parties are unable to reach satisfactory agreements, they may seek assistance through  xeither the dispute resolution, arbitration, or complaint processes before the Commission. We reserve the right to revisit this issue if the need becomes apparent.  X- ` pxt117. ` ` We also agree with RTC that terms and conditions of infrastructure sharing  xagreements relating to availability, timeliness, functionality, suitability, and other operational  xaspects are also relevant to whether or not the qualifying carrier fully benefits from the  xeconomies of scale and scope of the providing LEC. Consistent with our conclusion concerning"";&,N(N(ZZ!"  x[pricing, we believe that the negotiation process will ensure that qualifying carriers obtain "just  xand reasonable" terms and conditions that permit such carriers to fully benefit from the economies of scale and scope of the providing incumbent LEC.  X-Xx 5.X` ` Section 259(b)(5) (#`  Xv-XxX` ` a.X Background (#  XH- ` xu118. ` ` Section 259(b)(5) requires the Commission to establish conditions that promote  X1- xjcooperation between incumbent LECs to which this sections applies and qualifying carriers.C'1T yO -ԍ 47 U.S.C.  259(b)(5).C  xIn the NPRM, the Commission sought comment on whether a good faith negotiation standard is  x<required to promote cooperation between providing LECs and qualifying carriers. We tentatively  x=concluded that, because agreements pursuant to section 259 must be between noncompeting  xcarriers, detailed national rules may not be necessary to promote cooperation. We further  xproposed not to create any new procedures to resolve disputes that may arise involving section  x259, but to rely instead on informal consultations between the parties and the Commission, and,  xif necessary, the existing declaratory ruling procedures and the complaint process, including  Xy-settlement negotiations and alternative dispute resolution.:(yXT yO-ԍ NPRM at  25.:  XK-XxX` ` b.X Comments (#  X- ` xv119. ` ` Many parties, including RTC and USTA, support the Commission's tentative  xconclusion that detailed national rules are not necessary to promote cooperation between  X- x]providing incumbent LECs and qualifying carriers.R)ZT yO- xԍ RTC Comments at 11 (urging the Commission not to adopt detailed rules "in the absence of a demonstrated  {OP- xneed"); USTA Comments at 3. See also Castleberry Telephone Company et al. Comments at 4; NYNEX Comments at 34; US West Comments at 3.R Stressing a need for flexibility, the  xMinnesota Coalition indicates that, "[w]hile definitive rules might minimize disputes, they would  xalso minimize opportunities for parties to craft arrangements that are appropriate for their specific  X- x<circumstances."* T {Oe -ԍ Minnesota Coalition Comments at 9. See also RTC Comments at 11; GTE Comments at 2, 18. Other parties suggest that noncompeting carriers have historically been able  X- x\to achieve useful interconnection agreements without national rules.+T {O"- xԍ See, e.g., Castleberry Telephone Company et al. Comments at 34; Southwestern Bell Reply Comments at 12. A number of these  xcommenters would have the Commission issue broad guidelines and simply restate the statutory  Xe- x@language of section 259 in the Commission's rules, to the greatest extent possible.e,e T {O '-ԍ See, e.g., RTC Comments at 11; US West Comments at 8.e "e< ,,N(N(ZZ"  xAlternatively, there are several parties that ask the Commission to adopt detailed rules regarding  X- x|one or more of the issues raised in the NPRM.-"T {Ob- xԍ See MCI Comments at 910; NCTA Reply Comments at 3 ("Unless the rules adopted under Section 259 are  xconformed to the requirements of Section 251, the [incumbent LECs] will attempt to use infrastructure sharing  x,agreements in ways that would thwart competition in both providing carrier and qualifying carrier markets."); Octel Reply Comments at 4 (urging the Commission to adopt rules to protect proprietary information). For example, MCI suggests that the  xLCommission adopt the national rules making unbundled elements available pursuant to Part 51  xLof the Commission's rules as a "lowerbound standard" for qualifying carriers to obtain access  X-to infrastructure under section 259..T {O - xxԍ MCI Comments at 910. But cf. PacTel Reply Comments at 56 (encouraging Commission to reject calls for national price rules for section 259).  Xv- ` xw120. ` ` Both MCI and the Minnesota Coalition conclude that a "good faith negotiation  xstandard" is not necessary to promote cooperation between qualifying carriers and providing  XH- xincumbent LECs./H T yO- xԍ MCI Comments at 10; Minnesota Coalition Comments at 910 (explaining that a "good faith" standard is not needed where providing incumbent LECs will not be "required to provide facilities at a loss"). A number of parties comment that the Commission's existing declaratory  X1- x>ruling and complaint processes are adequate to resolve any disputes.Q0\1d T {OF- xhԍ See, e.g., RTC Comments at 11; PacTel Comments at 9 (the Commission or states can be involved if parties  {O- xcannot reach agreement); USTA Comments at 34; NYNEX Comments at 15 (noting availability, inter alia, of informal consulting process).Q Alternatively, the  xMinnesota Coalition asserts that state commissions should play the primary role in resolving  X -disputes under section 259.>1Z T {O<- xԍ Minnesota Coalition Comments at 12. See also Castleberry Telephone Company et al. Comments at 4  x("Disputes involving Section 259 agreements can be taken to the State Commission's for resolution on a case by case basis as needed.").>  X -XxX` ` c.X Discussion (#  X - ` xx121. ` ` We conclude that it is unnecessary at the present time for the Commission to  xestablish detailed national rules to promote cooperation in the area of infrastructure sharing. We  xbelieve that, because there is a requirement that infrastructure sharing arrangements not be used  Xb- xto compete with the providing incumbent LECs,b2bT {O!-ԍ See Discussion at Section III. C. 6., infra.b and because providing carriers are permitted  XK- xto recover the costs associated with infrastructure sharing,b3K<T {O8$-ԍ See Discussion at Section III. C. 1., supra.b sufficient incentives exist to  xencourage lawful cooperation between carriers. As previously discussed in Section III. B. 3.,  X- xsupra, we agree with NYNEX that informal consultation with the Commission, along with the  xCommission's complaint process, will likely be adequate to ensure that infrastructure sharing"=3,N(N(ZZ("  x agreements further the purposes stated in section 259(a). Indeed, if we have any concerns  xregarding cooperation between providing incumbent LECs and qualifying carriers it is that these  xkparties cooperate so as to achieve lawful objectives, for example, infrastructure sharing that  X- xZreflects the limitations on the scope of such agreements imposed by section 259,n4T {O4-ԍ See Discussion at Section III. B. 1., supra, at  50.n and that does  X- xKnot unlawfully constrain the interconnection rights of nonqualifying competitive carriers.n5ZT {O-ԍ See Discussion at Section III. B. 1., supra, at  59.n We  x-are confident, however, that the availability of the Commission's declaratory ruling and complaint  xprocesses, both to parties and to competitors, will ensure that any problems in this regard will be brought to our attention expeditiously.  X1- ` xy122. ` ` We also conclude that the adoption of a good faith negotiation standard would  X - xpromote cooperation between providing incumbent LECs and qualifying carriers.g6 T {O-ԍ See also Discussion at Section III. B. 4., supra.g We do not  xLattempt to determine here every action that might be inconsistent with the duty to negotiate in  xjgood faith, but we believe that certain minimum standards can offer the parties some guidance.  x0We decide that, at a minimum, the duty to negotiate in good faith means that parties are  x-prevented from intentionally misleading or coercing other parties into reaching an agreement that  xthey would not otherwise have made. In addition, we conclude that intentionally obstructing  xjnegotiations also would constitute a failure to negotiate in good faith. To the extent that some  xjguidance may be appropriate, we believe that the examples concerning the duty to negotiate in  xigood faith offered in the Commission's local competition rules illustrate the types of practices that  XK-may evidence a failure to meet a good faith standard.q7K~T {Oz-ԍ See Local Competition First Report and Order at  150156.q  X-Xx 6.X` ` Section 259(b)(6) (#`  X-XxX` ` a.X Background (#  X- ` Rxz123. ` ` Section 259(b)(6) states that the Commission's regulations must not require  xinfrastructure sharing "for services or access which are to be provided or offered to consumers  X- xyby the qualifying carrier" in the providing LEC's telephone exchange area.C8T yOT!-ԍ 47 U.S.C.  259(b)(6).C In the NPRM, the  xCommission tentatively concluded that this provision encompassed any telecommunications or  x.information service offered by the providing LEC directly to consumers, or any access service  xzoffered to other providers which in turn offered services to consumers. We also tentatively  xconcluded that an incumbent LEC should not be required to share services or access, pursuant  xto section 259(b)(6), that would be used by the qualifying carrier to compete in the providing" >8,N(N(ZZ"  X- xLEC's telephone exchange service area.:9T yOy-ԍ NPRM at  26.: Because section 259(b)(6) does not mandate  xKinfrastructure sharing between competing carriers, we tentatively concluded that a providing LEC  xmay terminate an agreement in the event it discovers that the qualifying carrier is offering or  xproviding service or access in the providing LEC's service area. We also tentatively concluded,  xihowever, that the providing LEC has the burden of proving that the qualifying carrier is providing  xor offering services or access obtained pursuant to section 259 to consumers in the providing  Xv-LEC's telephone exchange area.::vXT yO -ԍ NPRM at  27.:  XH- ` Rx{124. ` ` We sought comment on how disputes concerning violations of the section  x259(b)(6) competition provision should be adjudicated by the Commission. We sought comment  xon whether sixty days was reasonable notice for a providing LEC to provide a qualifying carrier  xif a providing incumbent LEC seeks to terminate an infrastructure sharing arrangement for cause  xpursuant to section 259(b)(6). Finally, we sought comment on whether the term "services or  x.access" in section 259(b)(6) applies to all "public switched network infrastructure technology,  xinformation, and telecommunications facilities and functions" available pursuant to section 259(a),  xor whether section 259(b)(6) limits an incumbent LEC's right to deny agreements to only a  X-limited set of provisions, namely, "services or access."3;T {O)-ԍ Id.3  Xb-XxX` ` b.X Comments (#  X4- ` $x|125. ` ` Many commenters argue that the Commission must make clear that qualifying  X- xcarriers should not be able to use shared infrastructure to compete with the providing LEC.o<\zT {OH- xԍ See, e.g., GTE Comments at 19; NYNEX Comments at 16; PacTel Comments at 1011; Castleberry  {O- x-Telephone Company et al. Comments at 6 (if a qualifying carrier chooses to compete with the incumbent LEC, section 259 does not apply, but rather section 251 must be used).o  xGTE claims that the Commission should ensure that a qualifying carrier does not try to evade the  xsection 259(b)(6) restriction by permitting or enabling another carrier to resell facilities obtained  X- xithrough infrastructure sharing in the providing LEC's service area.==T yO' -ԍ GTE Comments at 19.= RTC agrees that a providing  xLEC need not share infrastructure where a qualifying LEC is offering service in the providing  xkLEC's exchange area, but claims that a providing LEC must not be able to escape its sharing  X- xobligations by expanding into a qualifying carrier's region.>". T yOr$- xԍ RTC Comments at 13; RTC Reply Comments at 89 (permitting providing LECs to terminate section 259  xagreements when the providing LEC initiates the competition collides with the statutory language because the  xinfrastructure sharing requirement apples to "incumbent LECs" and the providing LEC is not an incumbent in the  {O&- xqualifying LECs service area). But see MCI Comments at 10 (the providing LEC could then abrogate the terms of"&=,N(N(&"  xthe section 259 agreement simply by choosing to compete against the qualifying carrier). MCI also claims that an  xYabsolute prohibition on using a providing LECs facilities obtained under a section 259 agreement to compete against  xthe providing LEC would permanently lock the requesting carrier into a noncompetitive relationship with the  xproviding LEC. MCI Comments at 10. NYNEX claims that this possibility can be addressed in the negotiation process. NYNEX Reply Comments at 5. RTC suggests that the burden be"?x>,N(N(ZZQ"  x placed on the providing LEC to prove a violation of section 259(b)(6) via the Commission's  X-complaint process.=?xT yO-ԍ RTC Comments at 12.=  X- ` Bx}126. ` ` ALTS, on the other hand, argues that there is no requirement that a qualifying  xcarrier and a providing LEC not compete in order to implement section 259. ALTS claims that  xsection 259(b)(6) requires that carriers not be required to enter infrastructure agreements for any  x.services or access which qualifying carriers intend to offer to end users in the providing LECs  xterritory. ALTS suggests that this section in no way prohibits competition but rather simply  xrequires a qualifying carrier to either build its own infrastructure for that purpose, or else pay for  X1- xthe infrastructure under the section 251 pricing standard.@ 1T yO- xԍ ALTS Comments at 4; USTA Reply Comments at 1011 (nothing in section 259 precludes competition  xbetween parties to a section 259 agreement but rather merely requires qualifying carriers who wish to compete with  xproviding LECs to do so using their own infrastructure, infrastructure acquired from third parties, or infrastructure obtained via a section 251252 agreement). GTE states that section 259(b)(6)  x0must be read as encompassing any public switched network infrastructure, technology,  xinformation, and telecommunications facilities and functions that the qualifying carrier might  X - xobtain.=A T yO-ԍ GTE Comments at 19.= NYNEX claims that "services or access" refers not to any portion of the infrastructure  x=made available, but instead, to the qualifying carrier's offerings which result as a benefit of the  X -sharing.gB T {O-ԍ NYNEX Comments at 16; see also Ameritech Comments at 9.g  X- ` x~127. ` ` Several commenters urge the Commission to permit parties to decide, during the  xnegotiation process, the notice period that must be given prior to termination of a section 259  Xb- xagreement because of a violation of the noncompetition requirement in section 259(b)(6).C"bT {O% - x;ԍ  See, e.g., GTE Comments at 20; USTA Comments at 2324 (contracts will call for termination but a 60 day  xnotification requirement is acceptable); Ameritech Comments at 9 (if the qualifying LEC is able to obtain a  xxcorresponding capability under section 251, the end users are unlikely to need notice at all); Minnesota Coalition Comments at 10; PacTel Comments at 13 (sixty day notification requirement is adequate).  xRTC claims that a sixtyday notice should be provided to qualifying carriers and to the  xCommission. RTC argues that a qualifying carrier must be given an opportunity to discontinue  xany conduct inconsistent with section 259, explain why its conduct is not barred by the restriction  xon competitive use of shared infrastructure, or make alternative arrangements to supply the end"@C,N(N(ZZ"  X- xusers.%D T yOy- xԍ RTC Comments at 12. RTC suggests that the providing LEC should also not terminate until the qualifying  xI carrier has an opportunity to restructure the arrangement pursuant to section 251. RTC claims that the providing LEC  xshould not be permitted to discontinue the service if the shared infrastructure is not available pursuant to section 251 and the providing LEC cannot provide the required infrastructure to the affected end users. RTC comments at 13.% NCTA contends that the features and functions obtained by the qualifying carrier under  xsection 259 must be made available to competitive LECs competing in that qualifying carrier's  xmarket pursuant to section 251. NCTA claims that, otherwise, infrastructure sharing agreements  X-will become a vehicle for distorting competition in small and rural markets.CET yO -ԍ NCTA Reply Comments at 5.C  X-XxX` ` c.X Discussion (#  X_- ` x128. ` ` Section 259(b)(6) provides that an incumbent LEC shall not be required to "engage  xin any infrastructure sharing agreement for any services or access which are provided or offered  X1- xto consumers by the qualifying carrier in such [LEC's] telephone exchange area."CF1@T yO"-ԍ 47 U.S.C.  259(b)(6).C As an initial  xmatter, we agree with ALTS that section 259(b)(6) does not serve to prohibit competition  xybetween the providing incumbent LEC and qualifying carriers. Rather, section 259(b)(6) merely  xOestablishes a limitation on how qualifying carriers may use "public switched network  x.infrastructure, technology, information, and telecommunications facilities and functions" they  xLobtain pursuant to section 259(a). Where a qualifying carrier seeks to obtain "public switched  xKnetwork infrastructure, technology, information, and telecommunications facilities and functions"  xfrom an incumbent LEC, it may do so pursuant to section 259, but only if it does not use this  xinfrastructure, technology, information, and telecommunications facilities and functions to  xcompete with the incumbent LEC in the incumbent LEC's telephone exchange area. If a  xqualifying carrier does propose to use requested infrastructure, technology, information, and  xtelecommunications facilities and functions to compete with an incumbent LEC in the incumbent  x!LEC's telephone exchange area, the qualifying carrier must rely on section 251 to obtain  xcapabilities that are available pursuant to section 251. Moreover, a qualifying carrier may rely  xon section 251 even if it does not intend to compete with the incumbent LEC because, as a  xzfundamental matter, section 251(c) requires incumbent LECs to provide interconnection and  X- xaccess to unbundled network elements to all requesting telecommunications carriers, and such  xLinterconnection and access will predictably include at least some of the functionalities that are otherwise made available pursuant to section 259.  Xg- ` x129. ` ` In sum, we conclude that, for any services and facilities that are available pursuant  xto section 251, qualifying carriers may request such services and facilities from incumbent LECs  xLpursuant to either section 251 or 259. Carriers, however, must make such requests pursuant to  xsection 251 to the extent that the requested facilities will be used to provide service or access in  xthe providing incumbent LEC's telephone exchange area. We conclude that, with respect to any  xfacilities and information that may be beyond the scope of section 251, carriers are limited to the"AF,N(N(ZZ<"  xprovisions of section 259, including its limitation on using facilities and information to serve customers in the providing incumbent LEC's telephone exchange area.  X- ` }x130. ` ` Because we conclude that section 259(b)(6) mandates that providing LECs are not  xjrequired to share services or access that would be used to compete against the providing LEC,  xwe also find that section 259 agreements may be terminated by any party if the qualifying carrier  x>begins to use the section 259 facilities to compete with the providing incumbent LEC in the  xincumbent LEC's telephone exchange area. This could happen either as a result of the qualifying  xcarrier's decision to enter the incumbent LEC's telephone exchange area, or, in certain cases,  x-where the providing incumbent LEC expands its operations into the qualifying carrier's telephone  xexchange area. We agree with Ameritech that the right to deny or terminate sharing  X - x^arrangements extends to the full breadth of section 259 (i.e., public switched network  X - xinfrastructure, technology, information, and telecommunications facilities and functions),BG T yOg -ԍ Ameritech Comments at 9.B but  x.only to the extent that these facilities and functions would actually be used to provide service  xwithin the providing LEC's telephone exchange area. We conclude, however, that if a providing  xincumbent LEC seeks to terminate a sharing agreement as violating the restrictions in section  x259(b)(6), qualifying carriers should be given adequate notice to protect their customers against  xsudden changes in service. We agree with USTA that providing carriers should give qualifying  x-carriers sixty days notice prior to termination. We adopt these requirements to protect qualifying  xcarriers and their customers from sudden service disruptions and, nevertheless, to allow providing  x{carriers to terminate in a timely fashion agreements that are contrary to section 259(b)(6).  X- xFinally, we note our expectation that prudent parties will address such contingencies, i.e., changed  x\circumstances that might implicate section 259(b)(6), as terms of their infrastructure sharing agreements.  X- ` x131. ` ` We also conclude that a qualifying carrier may not make available any information,  xinfrastructure, or facilities it obtains from a providing incumbent LEC to any party that the  xqualifying carrier knows intends to use such information, infrastructure, or facilities to compete  xwith the providing LEC in the providing LEC's telephone exchange area. We believe that this  xwould result in an easy evisceration of the section 259(b)(6) requirement. If other carriers require  xthe use of such information or facilities, they may pursue their own section 259 arrangement with  xLthe providing LEC or, if the necessary facilities are available pursuant to section 251, they may  x=request a section 251 arrangement. We believe that this requirement will encourage the use of  xxinfrastructure sharing arrangements by ensuring that providing LECs will not be forced to provide  x=such arrangements to qualifying carriers that will in turn pass them on to carriers that compete with the providing carrier.  X!-Xx 7.X` ` Section 259(b)(7) (#`  X#-XxX` ` a.X Background (# "l$BXG,N(N(ZZF#"Ԍ X- ` x132. ` ` Section 259(b)(7) requires that incumbent LECs file with the Commission or state  xfor public inspection any tariffs, contracts, or other arrangements showing the conditions under  xwhich the incumbent LEC is making available public switched network infrastructure and  X- xfunctions.CHT yO4-ԍ 47 U.S.C.  259(b)(7).C In the NPRM, the Commission tentatively concluded that the filing requirement in  xsection 259(b)(7) refers only to agreements reached pursuant to section 259, because qualifying  xLcarriers obtaining interconnection or access to unbundled elements pursuant to section 251 or  xNpursuant to agreements entered into prior to the enactment of the 1996 Act are under an  X_- xKobligation to file agreements with the state commission.:I_XT yOh -ԍ NPRM at  28.: We further tentatively concluded that  xincumbent LECs should be required to file all tariffs, contracts, or other arrangements reached  xpursuant to section 259 with the appropriate state commission. We also sought comment on  xwhether an incumbent LEC must file agreements showing the rates, terms, and conditions under  xwhich such carrier is making available technology, information, and telecommunications facilities  xand functions listed in section 259(a) or whether section 259(b)(7) is limited only to public switched network infrastructure and functions.  X -XxX` ` b.X Comments (#  Xy- ` nx133. ` ` Both GTE and MCI supported the Commission's tentative conclusion that section  Xb- x259(b)(7) applies only to sharing agreements reached pursuant to section 259,TJbT yO-ԍ GTE Comments at 20; MCI Comments at 1112.T while RTC and  XK- xKthe Minnesota Coalition opposed this proposition.BKZKxT {Ot- xԍ Minnesota Coalition Comments at 6; RTC Comments at 1315. See also USTA Reply Comments at 4  x-("[existing] agreements which meet the obligations and provisions of Section 259 should not be subjected to the provisions of Sections 251 and 252").B The Minnesota Coalition suggests that an  xagreement between an incumbent LEC and a rural carrier or between two rural carriers, which  X- xcould be invalid under the standards of section 251, could be fully justified under section 259.LLT yOh-ԍ Minnesota Coalition Comments at 6.L  xRTC argues that neither the language of section 252 and 259 nor the legislative history support  X- xthe Commission's conclusions in the Local Competition First Report and Order.M* T yO - xwԍ RTC Comments at 1315 (suggesting that preexisting agreements first be examined under section 259 rather than section 252). A number  xof other parties commented on the tentative conclusion that a filing required by section 259(b)(7)  X- xkshould be made with the appropriate state commission.N\ T {O$- xԍ See, e.g., GTE Comments at 20 (all section 259 agreements should be filed with state commissions);  {O%- xMinnesota Coalition Comments at 12 (all section 259 agreements are required under the statute to be filed with state commissions); RTC Comments at 15 (filing should be made with Commission or state depending on jurisdiction). Some argue that the language of  xLsection 259(b)(7) is evidence that Congress did not intend to alter the dual jurisdiction scheme"CN,N(N(ZZ"  xin which the Commission exercises jurisdiction over interstate matters and the states exercise  X- xjurisdiction over intrastate matters.kOT {Ob-ԍ See, e.g., Oregon PUC Comments at 2; PacTel Comments at 13.k Parties agreed that section 259(b)(7) obligates LECs to file  x>all agreements showing the rates, terms, and conditions under which such carrier is making  xavailable any public switched network infrastructure, technology, information, and  X- xjtelecommunications facilities or functions pursuant to section 259.PZT {O- x;ԍ See GTE Comments at 2021 (seeing no apparent reason to draw a different conclusion); PacTel Comments at 13; RTC Comments at 15. MCI argues that section  x259(b)(7) filings should "disclose rates, terms, and conditions under which information, data  x>bases, and facilities are made available in order to evaluate specifically whether section 259  X_-agreements are indeed more favorable to the requesting carrier" than section 251 agreements.Q_T {O - xԍ MCI Comments at 12. But cf. GTE Reply Comments at 11 (suggesting there is no basis nor need for an evaluation process pursuant to section 259(b)(7)).  X1-XxX` ` c.X Discussion (#  X - ` x134. ` ` We affirm our tentative conclusion in the NPRM that section 259(b)(7), which  xrequires incumbent LECs to file with the Commission or the state all agreements showing the  xconditions under which the incumbent LEC is making available "public switched network  X - xinfrastructure and functions," refers only to agreements reached pursuant to section 259. We note  xthat qualifying carriers obtaining interconnection or access to unbundled elements pursuant to  xsection 251, or through agreements entered into prior to the enactment of the 1996 Act, are under  Xy- xka separate obligation to file such agreements with the appropriate state commission.RyT {O8-ԍ 47 U.S.C.  252(a). See also Local Competition First Report and Order at  165171. We  xinterpret the term "public switched network infrastructure and functions under this section" should  XK- x!be read to include all requirements listed in section 259(a) (i.e., public switched network  X6-infrastructure, technology, information, and telecommunications facilities and functions).@S6T yO-ԍ GTE Comments at 2021.@  X- ` x135. ` ` We also conclude that agreements reached pursuant to section 259 must be filed  xwith the appropriate state commission, or the Commission if the state commission is unwilling  xyto accept the filing, and that the agreement must be available for public inspection. These filed  xagreements must include the rates, terms, and conditions under which the providing carrier is  xmaking infrastructure available. As discussed above, we believe that this filing requirement will  xhelp ensure that all qualifying carriers obtain infrastructure at just and reasonable terms and  xconditions that are consistent with the public interest. Moreover, public filing promotes general  xscrutiny of section 259 agreements, including scrutiny by nonqualifying competitive carriers.  xAs noted above, we are relying on such competitive carriers to bring to our attention any"PD0 S,N(N(ZZ"  xiunlawful anticompetitive effects resulting from negotiated section 259 agreements pursuant to the  X-Commission's declaratory ruling and complaint procedures.TT {Ob-ԍ See Discussion at Section III. B. 3., supra, at  81 and Discussion at Section III. C. 5., supra, at  120.  X- D. xRequirements of Section 259(c)  X-x 1.` ` Background (#`  X_- ` x136. ` ` Section 259(c) states that "a local exchange carrier to which this section applies  x-that has entered into an infrastructure sharing agreement under this section shall provide to each  x<party to such an agreement timely information on the planned deployment of telecommunications  xservices and equipment, including any software or upgrades of software integral to the use or  X - xoperation of such telecommunications equipment."U ZT yO-#C\  P6Q/P#э#X\  P6G;/P# 47 U.S.C.  259(c). In the NPRM, we tentatively concluded that  X - x.section 259(c) obligations should apply only to the providing incumbent LECs.aV T yO-#C\  P6Q/P#э NPRM at  31.a We further  xlnoted that section 259(c) applies to providing incumbent LECs that have entered into an  x"infrastructure sharing agreement" and we tentatively concluded that the phrase "infrastructure  xisharing agreement" as used in section 259(c) should be construed to include agreements not only  xfor public switched network infrastructure, but also for "technology, information, and  Xy-telecommunications facilities and functions," i.e., all section 259 agreements.ZWyzT {O-#C\  P6Q/P#э Id.Z  XM- ` ox137. ` ` We noted in the NPRM that sections 259(c) and 251(c)(5) seem to serve similar  X6- xpurposes.:X6 T yO-ԍ NPRM at  29.: Section 251(c)(5) requires incumbent LECs to "provide reasonable public notice of  X- xchanges" that may affect the use of the incumbent LECs' facilities or networks.YT {Ol-#C\  P6Q/P##C\  P6Q/P#э 47 U.S.C.  251(c)(5); see also Local Competition Second Report and Order at  171. The  x<Commission has interpreted section 251(c) to require notice of such changes that might affect the  xability of parties which have obtained interconnection pursuant to section 251 to provide  X- xservice.Z. T {O!-#C\  P6Q/P##C\  P6Q/P#э See Id.ċ In the NPRM, we tentatively concluded that Congress intended section 259(c) to  x\provide similar notice to qualifying carriers of changes in the incumbent LECs' network that  X- x{might affect qualifying carriers' ability to fully benefit from section 259 agreements.8[ T yO%-ԍNPRM at  29.8 In  xaddition, we asked parties to address overlap between section 259(c) and other existing network"EP [,N(N(ZZ"  xdisclosure provisions, including sections 273(c)(1) and 273(c)(4), and the Commission's rules at  X-47 C.F.R.  64.702(d)(2) and 47 C.F.R.  68.110(b).:\T yOb-ԍ NPRM at  30.:  X- ` Bx138. ` ` In the NPRM, we sought comment on whether the Commission should require  X- xMproviding incumbent LECs to furnish any particular information as a minimum threshold.a]XT yO-#C\  P6Q/P#э NPRM at  34.a  xSpecifically, we asked parties to consider whether the Commission should require providing  xyincumbent LECs to disclose: 1) the date changes are to occur; 2) the location at which changes  xwill occur; 3) the type of changes; 4) the reasonably foreseeable impact of those changes,  xincluding pricing implications; and 5) a contact person to provide supplemental information. We  xjalso sought detailed comment on a variety of other issues, such as what constituted a planned  xdeployment such that the section 259(c) obligations would be triggered, and when any required  X - xinformation disclosure should take place.m^ T yO-#C\  P6Q/P#э NPRM at  32, 35, 33.m We also asked parties to comment on the need for  xenforcement mechanisms to ensure compliance with section 259(c) and on the need for safeguards  x[to ensure that competitivelysensitive, proprietary, or trade secret information of the providing  X -incumbent LEC is not compromised.:_ xT yO-ԍ NPRM at  36.:  X-x 2. ` ` Comments  Xb- ` x139. ` ` Both MCI and RTC agree that the phrase "infrastructure sharing agreement," as  XK- xused in section 259(c), is a generic term that covers all sharing under section 259.`KT {O-#C\  P6Q/P#э See MCI Comments at 13; RTC Comments at 16. RTC  xcomments that section 259(c)'s obligations fall solely on providing incumbent LEC, and no party  X- xsuggests that there should be any alternative interpretation, e.g., reciprocal requirements placed  x-on qualifying carriers. RTC, however, concludes that section 259(c) obligates not only providing  xLincumbent LECs that have entered into section 259 agreements, but also "potential" providing  xincumbent LECs. RTC argues that potential providing incumbent LECs should be required to  xadhere to the requirements of section 259(c) so that qualifying carriers can make decisions about  X-what sharing to request.=aT yO!-ԍ RTC Comments at 16.=  X~- ` x140. ` ` A number of commenters support the tentative conclusion in the NPRM that  xsection 259(c) should provide notice to qualifying carriers of changes in the incumbent LECs'  xnetwork that might affect qualifying carriers' ability to fully benefit from section 259"PF* a,N(N(ZZ"  X- xagreements.bT yOy-#C\  P6Q/P#э PacTel Comments at 17; MCI Comments at 12; RTC Comments at 15; NCTA Comments at 8. Assessing the disclosure requirements under sections 251(c)(5) and 259(c), NCTA  xnotes that, "[w]hile Section 259(c) may require slightly different requirements with respect to the  X- xprocess of providing notice thereunder, the contents of the disclosures should be the same."wcXT yO-#C\  P6Q/P#э NCTA Comments at 8 (footnote omitted).w  xIndeed, several parties comment that the information disclosed pursuant to section 259(c) would  X- xoverlap with the information currently disclosed under section 251(c)(5).dZT {O? - xw#C\  P6Q/P#э Id.; BellSouth Comments at 15; GTE Comments at 2122. But cf. NYNEX Comments at 1617 (stating that  x"[section 259(c)] requirement is separate and distinct from disclosure requirements under Section 251," without further explanation for the purpose of section 259(c)). For example, GTE  x-states that the disclosure rules in section 251(c)(5) are sufficient to ensure that qualifying carriers  Xx-have access to the information needed to make use of shared facilities.ex T {O3- x#C\  P6Q/P#э GTE Comments at 2122; GTE Reply Comments at 12. See also PacTel Comments at 1718 (also noting the availability of other disclosure requirements).  XJ- ` x141. ` ` The vast majority of the commenters discussing section 259(c) argue that the  X3- xCommission should not issues rules to implement this section.f3d T {OH- xh#C\  P6Q/P#э See, e.g., Ameritech Comments at 10; BellSouth Comments at 15; GTE Comments at 21; Southwestern Bell Comments at 14; USTA Comments at 25. Several parties comment that  xsection 259(c) does not contain a specific Congressional directive that the Commission issue  X - x{rules, as opposed to subsections (a), (b), and (d).g T yOt- x#C\  P6Q/P#э GTE Comments at 21; NYNEX Reply Comments at 11; Southwestern Bell Comments at 14; USTA Comments at 25. Indeed, GTE questions whether the  xyCommission has authority to adopt rules implement section 259(c) and comments that, "[w]hen  X -Congress expected implementing regulations, it stated so expressly."=h T yO-ԍ GTE Comments at 21.=  X - ` x142. ` ` Other parties maintain that no specific rules will be needed to implement section  x259(c) because the parties will be able to negotiate mutually acceptable terms for information  X{- xdisclosure.i\{T {O - x#C\  P6Q/P#э See, e.g., Ameritech Comments at 10 (suggesting that parties will negotiate detailed terms of notice depending  xon the particular infrastructure shared); Southwestern Bell Comments at 14 ("Commission's concerns over the details  {Od"-of providing information are unwarranted"). See also BellSouth Comments at 15. USTA states that "parties will negotiate terms concerning the content and frequency  Xd- xof 'timely information' required under this section."ejdT yO$-#C\  P6Q/P#э USTA Comments at 25.e Some parties urge the Commission not to  xadopt specific rules to implement this information disclosure section because it would duplicate"MGZj,N(N(ZZ"  X- xjthe existing network disclosure provisions which are already available to qualifying carriers.9kT {Oy- xi#C\  P6Q/P#э See, e.g., GTE Reply Comments at 12; PacTel Comments at 17; BellSouth Comments at 15 ("Qualifying carriers . . . will already have access to information . . . under existing disclosure requirements and vehicles.").9  xPacTel argues that additional disclosure rules would be unnecessary, unduly burdensome, and  X-confusing.gl"T yO-#C\  P6Q/P#э PacTel Comments at 18.g  X- ` Px143. ` ` In contrast, RTC encourages the Commission not to reduce sections 251, 259, 273  xand other existing disclosure requirements into a single, uniform network disclosure  Xv- xrequirement.dmvT yO -#C\  P6Q/P#э RTC Comments at 16.d RTC argues that, because section 259 contemplates relationships between non X_- x<competing carriers, its information disclosure rules will need to serve a different purpose.n_BT {OR- x#C\  P6Q/P#э Id. (section 259(c) "extends to how the providing [incumbent LEC] uses and plans to use its own facilities  {O-and its own services"). RTC  xargues that section 259(c) should go beyond mere notice of changes and should give qualifying  X1- xKcarriers an opportunity to take part in the providing incumbent LEC's decisionmaking process.o1T {O-#C\  P6Q/P#э Id. at 18 (contemplating a "coordinated deployment schedule").  xIn reply, several larger LECs respond that section 259 does not require joint planning, although  X - xparties should be allowed to negotiate such arrangements by mutual consent.p 0 T {O- x#C\  P6Q/P#э See PacTel Reply Comments at 9; GTE Reply Comments at 12 (RTC's proposal "demonstrates a misunderstanding of infrastructure sharing."); Southwestern Bell Reply Comments at 14. PacTel suggests  xzthat, under RTC's proposal, the providing incumbent LEC "could lose control of its network  X -planning which would be harmful to network efficiency for all customers."lq T yO-#C\  P6Q/P#э PacTel Reply Comments at 9.l  X - ` x144. ` ` MCI proposes that the Commission adopt the rules implementing section 251(c)(5)  X- x-as the "benchmark upon which Section 259 negotiations can build."rT {O[- x#C\  P6Q/P#э MCI Comments at 12. See Local Competition Second Report and Order at  165, et seq.; 47 C.F.R.  51.325, 51.327, 51.329, 51.331, 51.333, 51.335. MCI recommends that the  xCommission issue rules requiring providing incumbent LECs to provide public notice of changes  xxaffecting requesting carriers' performance or ability to provide service or affecting interoperability.  xMCI would further require providing incumbent LECs to disclose: 1) the date changes are to  xoccur; 2) the location at which changes will occur; 3) the type of changes; 4) the reasonably  xforeseeable impact of those changes; and 5) a contact person to provide supplemental  X- xzinformation. stT {O+&- x#C\  P6Q/P#э Id. at 1314 (also recommending the Commission adopt section 251(c)(5) requirements on make/buy point, timing of implementation of changes, and proprietary information).  In response, NYNEX rejects MCI's proposal as beyond the scope of section"Hs,N(N(ZZF"  X- x.259(c) and unnecessary.otT yOy-#C\  P6Q/P#э NYNEX Reply Comments at 1011.o A number of parties, including RTC, state that section 259(c) only  X-requires disclosure to parties to a sharing agreement.uXT {O-#C\  P6Q/P#э See, e.g., Ameritech Comments at 10; RTC Comments at 18.  X- ` x145. ` ` NCTA urges the Commission to adopt rules that restrict the contents of section 259  x<notice so that providing incumbent LECs do not share any more information under Section 259(c)  X- xKthan is made public pursuant to section 251(c)(5).vT {O( -#C\  P6Q/P#э NCTA Comments at 8. But cf. PacTel Reply Comments at 9. NCTA states that such a rule would prevent  x.neighboring LECs from obtaining an advantage over [competitive LECs] by giving both types  x\of carrier the same access to information regarding planned changes to an incumbent LEC's  XH- xnetwork.jwH|T yOu-#C\  P6Q/P#э NCTA Comments at 8.j USTA suggests that competitively sensitive, proprietary, or trade secret information  X1- x.is not required to be shared.>x1 T yO-ԍ USTA Comments at 25.> Nonetheless, according to USTA, the Commission should not  X -preclude the use of nondisclosure agreements.y T {Og- xwԍ Id. (arguing that nondisclosure agreements are consistent with the purpose of the statute because they enable  xthe providing incumbent LECs to make information available to assist the qualifying carriers in fulfilling their  {O- xuniversal service obligations without harming the providing incumbent LEC). See also RTC Comments at 19 (The  {O- xCommission should require nondisclosure agreements where competitively sensitive, proprietary, or trade secret information must be furnished to qualifying carriers.).  X -x 3. ` ` Discussion  X - ` _x146. ` ` We codify the requirements of section 259(c) in our rules, but we decline to adopt  xdetailed standards to implement section 259(c) at this time because we believe that parties will  xbe able to arrive at mutually acceptable terms for information disclosure through negotiation.  xLWhile we are concerned that failure to convey timely information as required by section 259(c)  x.would adversely impact qualifying carriers, we nonetheless are persuaded by the commenters'  xarguments that providing incumbent LECs and qualifying carriers have few, if any, incentives to  xwithhold information on planned deployments of new services and equipment. We believe that  xindividual circumstances of sharing agreements under section 259 will be dependent on the nature  xof the public switched network infrastructure, technology, information, and telecommunications  xfacilities and functions to be shared and that parties to such agreements will be in a better  xKposition to determine information disclosure needs in each particular situation. Given our general  xdesire to allow section 259 arrangements to develop as "the product of negotiation between the  xparties," we concur with Southwestern Bell that the "parameters of providing information on  xplanned deployments would seem to fall squarely within the negotiations of an infrastructure"IR y,N(N(ZZo"  X- xsharing agreement."rzT yOy-#C\  P6Q/P#э Southwestern Bell Comments at 14.r Having adopted an approach based on negotiations between parties, we  xydo not need to reach conclusions on many of the specific issues raised in the NPRM regarding specific terms, contents, and timing of notice pursuant to section 259(c).  X- ` Ax147. ` ` A number of commenters go further and essentially suggest that the Commission  X- x.is not authorized to adopt rules to implement section 259(c).{XT {O- xwԍ GTE Comments at 21. See also NYNEX Reply Comments at 11; Southwestern Bell Comments at 14; USTA Comments at 25. These parties point to specific  xxlanguage in subsections (a) and (b) that directs the Commission to issue regulations, and note the  x<absence of such language in subsection (c). We are not persuaded that the absence of a specific directive in subsection (c) prohibits the Commission from issuing interpretive regulations.  X - ` x148. ` ` Our decision not to adopt detailed interpretive regulations notwithstanding, we  xKbelieve that guidance is appropriate and adopt the tentative conclusion offered in our NPRM that  xproviding incumbent LECs should give notice to qualifying carriers of changes in the providing  xincumbent LECs' network that might affect qualifying carriers' ability to fully benefit from section  x259 agreements. Without adequate notice of changes to an incumbent LEC's network that affect  xa qualifying carrier's ability to utilize the shared public switched network infrastructure,  xKtechnology, information, and telecommunications facilities and functions, a qualifying carrier may  x]be unable to maintain a high level of interoperability between its network and that of the  xproviding incumbent LEC. At a minimum, we believe that it would be unreasonable to expect  x]qualifying carriers to be able to react immediately to network changes that the providing  xincumbent LEC may have spent months or more planning and implementing. Consistent with  xour conclusion that the terms of information disclosure should be the product of negotiation  x\between the parties, we conclude that there is no need to adopt any additional mechanisms  xMspecific to this section, at this time. Again, we reaffirm that parties may avail themselves of  x.guidance from the Commission, pursuant to our declaratory ruling and complaint processes, if disputes arise.  X- ` 2x149. ` ` We are not persuaded by commenters that suggest section 259(c) does not place  xany additional obligations on providing incumbent LECs. GTE argues that providing incumbent  x<LECs need not furnish any additional notice beyond that already required under section 251(c)(5)  xbecause all of the information obtained in section 259 is encompassed in section 251(c)(5).  xzNCTA urges the Commission to restrict the information that can be disclosed under section  X - x259(c) so that it does exceed the public notice provided under section 251(c)(5).| T yO#- xԍ NCTA Comments at 8 (expressing concern that competitive LECs will not have sufficient information about planned deployments to compete with qualifying carriers). We agree,  xhowever, with RTC that Congress included section 259(c) to address the unique situation of  x=carriers working in cooperative relationships. We believe that in certain circumstances parties  xmay agree that section 251(c)(5) or other network disclosure provisions will provide sufficient"J |,N(N(ZZ"  xinformation disclosure, yet it is not clear that parties will always reach such an agreement. With  xMregard to NCTA's concerns about anticompetitive behavior between neighboring LECs, we  X- xreaffirm our conclusions as described in Section III. B. 1., supra, that the continued applicability  xof the antitrust laws and the Commission's authority under Title II are more than sufficient to  X-address section 259 arrangements which are found to violate the public interest.Z}T {O-ԍ See, e.g., 47 U.S.C.  211.Z  Xx- ` x150. ` ` We believe that section 259(c) requires information disclosure only by providing  x{incumbent LECs that have entered into section 259 agreements. We note that no parties  xindicated that qualifying carriers should be subject to the information disclosure requirements of  x=section 259(c). While qualifying carriers must respond to changes in the providing incumbent  xLEC's network, the record contains no evidence that a qualifying carrier would make unilateral  xchanges in its network that would affect the providing incumbent LEC's network. In addition,  x<we raised the issue of whether the phrase "infrastructure sharing agreements," as used in section  x259(c), would apply to all Section 259 agreements or only in those involving "infrastructure."  xRTC and MCI, the only parties to comment on this issue, agreed that the phrase "infrastructure  X - xsharing agreement" is a generic term that covers all sharing under section 259.x~ ZT yO-#C\  P6Q/P#э RTC comments at 16; MCI Comments at 13.x We note that  xno other party indicated any contradictory interpretation. Accordingly, we conclude that the  xobligations to "provide timely information" in section 259(c) apply to providing incumbent LECs in all section 259 agreements.  X6- ` nx151. ` ` We further conclude that section 259(c) contemplates information disclosure only  xKto those qualifying carriers that have entered into section 259 agreements. We are not persuaded  x<that section 259(c) requires public notice that could be used as a resource for potential qualifying  xcarriers or that the obligations of section 259(c) should be placed on incumbent LECs that have  X- xnot entered into sharing agreements.QT yOu-ԍ MCI Comments at 12; RTC Comments at 16.Q We note that the plain language of section 259(c) requires  X- xdisclosure by a providing incumbent LEC that "has entered into an infrastructure sharing  X- xagreement . . . to each party to such an agreement" and we concur with USTA that section 259  xjdisclosure requirements are only for the benefit of the parties to the agreement. Nothing in the  xkstatute indicates to us that public notice is required. Further, as several parties have noted,  x=section 251(c)(5) places network disclosure obligations on all incumbent LECs and is available  XT- x<to the public, including potential qualifying carriers. Our Computer II rulesTzT {O"- xԍ See 47 C.F.R.  64.702, as interpreted in the Second Computer Inquiry ("all carrier rule"). See also  {OI#- xKAmendment of Section 64.702 of the Commission's Rules and Regulations, Memorandum Opinion and Order on  {O$- xYReconsideration, 84 FCC 2d 50, 8283 (1980), further recon., 88 FCC 2d 512 (1981), aff'd sub nom. Computer and  {O$- xCommunications Indus. Ass'n v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983) (Second  {O%-Computer Inquiry).  and Part 68 rulesT4 T {O- x;ԍ See, e.g., 47 C.F.R.  68.110(b) (notice of certain changes in telephone company communications facilities, equipment, operations or procedures). "TK",N(N(ZZ"  xalso provide for public availability of network information. In light of these factors, we see no  xLreason to expand the requirements in section 259(c) beyond the clear obligations on providing incumbent LECs to the qualifying carriers with which it has reached section 259 agreements.  X- ` x152. ` ` We disagree with RTC's assertion that section 259(c) requires providing incumbent  X- xLECs to involve qualifying carriers in their network planning process.X"T yO` - x#C\  P6Q/P#э RTC Comments at 18. Specifically, RTC asks the Commission to require that section 259(c) information  xdisclosure be provided prior to the make/buy point at which the providing incumbent LEC decides to manufacture itself, or to procure from an unaffiliated entity, products that affect telecommunications services or equipment.  While we believe that  xparties to an infrastructure sharing agreement may find such an arrangement useful, we conclude  xthat section 259(c) does not require the "coordinated deployment schedule" suggested by RTC.  xWe do not believe that section 259(c) was intended to insert qualifying carriers into the network  xyplanning and decisionmaking process of the providing incumbent LECs. At the same time, we  xynote that providing incumbent LECs may have obligations to coordinate network planning and  X - x\design under sections 251(a)@ BT yO-ԍ 47 U.S.C.  251(a).@, 256= T yO-ԍ 47 U.S.C.  256.=, 273(e)(3)C b T yO-ԍ 47 U.S.C.  273(e)(3).C and other provisions. Accordingly, we  xzconclude that section 259(c) does not include a requirement that providing incumbent LECs  xprovide information on planned deployments of telecommunications and services prior to the  X - xmake/buy point, i.e., the point at which a providing incumbent LEC decides to manufacture itself,  xor to procure from an unaffiliated entity, products that affect telecommunications services or  X- xequipment. As discussed more fully in Section III. B. 2., supra, we agree with USTA that  xlsection 259 does not generally require providing incumbent LECs to share competitively  xsensitive, proprietary, or trade secret information. To the extent that section 259 agreements do  x{involve such proprietary information, we believe that parties will be able to negotiate the appropriate use of nondisclosure agreements.  X - E.xQualifying Carriers Under Section 259(d)  X-x 1.` ` Background  X- ` Bx153. ` ` In the NPRM, we sought comment on the definition of a qualifying carrier as a  xtelecommunications carrier that "lacks economies of scale or scope, as determined in accordance  x=with regulations prescribed by the Commission pursuant to section 259(d)(1)." We noted that  xi"economies of scale" exist where a lower unit cost of production can be achieved by a production"iL ,N(N(ZZ"  X- xjprocess that is designed to produce a larger total quantity of a particular product or service.m\T yOy- xԍ Economies of scale exist where relatively large producers can supply their products at a lower average cost  {OA- xper unit than relatively small producers. See F.M. Scherer and Davis Ross, Industrial Market Structure and  {O -Economic Performance 97 (1990).m  x[We also noted that "economies of scope" exist where two or more products or services can be  X- xproduced at a lower total cost if they are produced jointly rather than separately.T yOo- xԍ Economies of scope exist where it is less costly for a single firm to produce a bundle of goods or services  {O7- xtogether than it is for two or more firms, each specializing in distinct product lines, to produce them separately. See,  {O - xe.g., John C. Panzar and Robert D. Willig, Economies of Scope, 71 American Economic Review of Papers and  {O - x<Proceedings 268 (1981); William J. Baumol, John C. Panzar, and Robert D. Willig, Contestable Markets and the  {O -Theory of Industry Structure 7179 (1982); Daniel F. Spulber, Regulation and Markets 114115 (1989). We requested  xcomment generally on how to determine whether a qualifying carrier lacks economies of scale  xjor scope and, in particular, on whether there is a relationship of economies of scale or scope to  X- xkcarrier size. We inquired if there are classes of carriers that would, per se, qualify as lacking  xeconomies of scale or scope and, in particular, whether a carrier's status as a "rural telephone  xcompany" under the definition established in section 3(37) should create such a presumption. We  xalso asked if the Commission should determine whether carriers lack economies of scale of scope  xat the holding company level or at some other level of organization. We inquired if an  x.incumbent LEC could be both a "qualifying" and a "providing" carrier for purposes of section  x<259, for different items falling within the definition of "public switched infrastructure, technology,  xinformation, and telecommunications facilities and function." Finally, we tentatively concluded  xthat a factor to be considered in whether an otherwise qualifying carrier lacks economies of scale  x/or scope is the cost of the investment that the carrier would incur to acquire on its own the  xrequested infrastructure, relative to the cost that it would incur to obtain the requested  X-infrastructure from the incumbent LEC.aT yO-ԍ NPRM at  37.#x6X@`7bX@#a  Xd- ` nx154. ` ` Section 259(d)(2) adds the additional requirement that a "qualifying carrier" is one  x-that "offers universal telephone exchange service, exchange access, and any other service that is  x<included in universal service, to all consumers without preference throughout the service area for  xywhich such carrier has been designated as an eligible telecommunications carrier under section  x.214(e)." We noted the recommendations of the FederalState Joint Board on universal service  xand, further, that the Commission, pursuant to section 254(a)(2), must issue its final decision and  xZrules on or before May 8, 1997. We stated that, consequently, the Commission need not consider  X-or construe section 259(d)(2) in this rulemaking.a4 T yO"-ԍ NPRM at  38.#x6X@`7bX@#a  X-x 2.` ` Comments "~M ,N(N(ZZ"Ԍ X- ` Ox155. ` ` Frontier notes that neither the Act nor the legislative history define what constitutes  X- xKa lack of economies of scale or scope.CT yOb-ԍ Frontier Comments at 23.C Those parties who comment on the textbook definitions  xof "economies of scale" and "economies of scope" cited in the NPRM restate the two definitions  X-either directlyKXT {O-ԍ See USTA Comments at 1213.K or implicitly.GT {OV-ԍ See MCI Comments at 15.G  X- ` x156. ` ` Regarding whether there is a necessary relationship of economies of scale or scope  xywith carrier size, comments suggest that there may be such a relationship but that the nature of  X_- xthe relationship is complex and inherently based on the facts of particular situations.>_|T {O - x<ԍ PacTel Comments at 16 ("Size is not an absolute correlative of economies of scale or scope."). See also  yOV- x;RTC Comments at 19 ("Size alone does not control whether the requested coprovision will increase the economies  xZof scale or scope for the requesting carrier."); Southwestern Bell Comments at 3 ("Any eligible carrier, regardless  x<of size, could conceivably lack economies of scale or scope for particular infrastructure in a specific service area  xrelative to another carrier."); USTA Comments at 12, n. 7 ("[T]he Commission is correct to note that a carrier could lack economies of scale or scope for only some facilities, but have economies of scale or scope for others.").> MCI  xxprovides an extensive discussion of the general relevance of size to economies of scale and scope  xin a discussion that indicates the practical complexities inherent in making any specific determination of the extent of either economies of scale or economies of scope.  3XxSize is related to the presence of economies of scale. Economies of scale exist  X - when output can be increased at a faster rate than costs are incurred. Being able  X - to serve market large enough to take advantage of this phenomenon is a necessary  X - qcondition for realizing economies of scale. Size economies may manifest  pthemselves at the plant, company, or holding company level. Economies of  X- ~financing are more likely to occur at the holding company level. Economies of  Xj- product and technological development may occur at the holding company and  XU- Pcompany level. Operational economies are more likely to occur at the plant level.   X)- QXxEconomies of scope exist when two or more products can be jointly produced,  delivered, or marketed at a lower combined cost than if they were produced,  X- delivered, or marketed separately. Economies of scope are more likely to occur  at the plant and company level, since these are the levels where production,  X- marketing, and distribution occur. Income is likely to be a condition necessary for  the realization of scope economies, since scope economies pertain to the  X- willingness of consumers to buy multiple, related products. That is more likely  X- 2to occur in markets populated by higher, rather than lower, household income.N T yO7&-ԍ MCI Comments at 15 (emphasis added).N "yN ,N(N(ZZ"Ԍ xԙMCI concludes with the observation that it is not aware of studies estimating the extent of scale  xand scope economies at different levels of aggregation (i.e., at the plant, company, and holding  X-company level).3T {OK-ԍ Id.3 Nor does any other party reference such studies.  X- ` px157. ` ` With respect to whether classes of carriers would, per se, qualify as lacking  xeconomies of scale or scope, BellSouth, in remarks generally representative of the LEC  xcommenters, argues that the Commission should resist the temptation to establish firm thresholds,  Xa- xsuch as any based on a carrier's size, as a means of defining qualifying carriers.aZT {Ol - xKԍ BellSouth Comments at 7; See also, e.g., Southwestern Bell Comments at 23 ("Congress did not specify  xYthat Section 259 would apply categorically to only one class of carriers and the Commission should not impose such  {O - xxa rule."). Cf. AT&T Comments at 3 ("[I]dentification of the particular carriers that satisfy this standard for any  xJspecific facility or set of facilities could entail a casebycase analysis of the carriers' and [incumbent LECs'] relative  xinvestment costs. Such a procedure would be incredibly burdensome for putative qualifying carriers, [incumbent  {OX- xLECs], and the Commission."). But see Frontier Comments at 3 ("As a starting point, the Commission should  xdeclare that nonrural telephone companies are categorically ineligible to request infrastructuresharing agreements.");  x;NCTA Comments at 3 ("The Commission should specify that a carrier may request network capabilities through an  xinfrastructure sharing agreement only if it (i) is a rural telephone company, as defined in the Communications Act,  xand (ii) serves, in combination with its affiliates, fewer than two percent of the Nation's subscriber lines installed in the aggregate nationwide."(footnote omitted)).  NCTA  xdisagrees strongly, asserting that Congress plainly did not intend for carriers as large as the BOCs  X3- xor GTE to be eligible to obtain infrastructure from other carriers under section 259.C3 T yO-ԍ NCTA Reply Comments at 8.C The  X - xmajority of commenting parties nevertheless support the concept of a rebuttable presumption. P T {O- xԍ See, e.g., AT&T Comments at 34 ("the Commission should . . . establish a rebuttable presumption that  xcarriers with certain size characteristics, in terms of number of lines served, lack economies of scale and scope and  xKthus are 'qualifying carriers' under Section 259(d)."); BellSouth comments at 6 ("BellSouth supports the proposal  {Ow- xsuggested in the Notice that the Commission rely on a rebuttable presumption as the initial means of designating a class of companies that lack economies of scope or scale.").  X - xkWith some qualification,@ T yO- xԍ AT&T Comments at 4; MCI Comments at 1516 ("[The discussion of economies of scope and scale] does  xwlend support for the Commission's suggestion that companies that have no corporate parent, that serve rural or low xincome areas not contiguous with a nonrural or non lowincome area it also serves, would automatically qualify as  xa Section 259 carrier, provided they also met the Section 214(e) criteria."); ALLTEL Comments at 3 ("[R]ural  xJtelephone companies (as defined under the Act) should not be subject to an FCC requirement to share infrastructure.  xAs an alternative, the Commission could adopt an approach under which a LEC would be required to serve as a  xproviding carrier only where its economies of scale and scope exceed those of the qualifying carrier by a specified degree."). most commenting parties further support the establishment of a" O ,N(N(ZZ# "  x[rebuttable presumption that companies meeting the definition of "rural telephone company" in  X-section 3(37) of that Act also meet the requirements of section 259(d)(1).|ZT yOb- xԍ ALLTEL Comments at 2; Ameritech Comments at 78; AT&T Comments at 34; BellSouth Comments at  {O*- x7; GTE Reply Comments at 14; Castleberry Telephone Company et al. Comments at 2; Minnesota Coalition Comments at 1011; NYNEX Comments at 1718; RTC Comments at 19; USTA Comments at 1213. |  X- ` x158. ` ` Many of the parties that support establishing a rebuttable presumption also  xcomment on various aspects of what should be rebuttable, and by whom. Southwestern Bell  xNnotes that even rural LECs may enjoy economies of scale and scope, and argues that an  Xv- xjincumbent LEC that has been requested to share must be allowed to rebut any presumption.IZvT {O - x<ԍ Southwestern Bell Reply Comments at 5; see also RTC Comments at 19 ("An [incumbent LEC] asked to  xshare infrastructure should be allowed to rebut that presumption . . . since the information to make the comparison will be primarily in its control.").I  xBellSouth asserts that the burden is on the requesting carrier to support its contention that it is  XH- xa qualifying carrier.BH T yO-ԍ BellSouth Comments at 8.B Some parties argue that telecommunications entities that are not rural  xmtelephone companies under the definition of Section 3(37) may nevertheless meet the  xrequirements of Section 259(d)(1) if they can demonstrate a lack of economies of scope or  X - xMscale." T {OR- xԍ See, e.g., AT&T Reply Comments at 3 ("In other circumstances, if a nonqualifying carrier can show that  x<a sharing arrangement with its affiliates for the services requested is economically unreasonable as contemplated  xunder section 259(b)(1), and that its economies of scale or scope would be greater if shared with the unaffiliated incumbent local exchange carrier ("ILEC"), the presumption can be reversed."). GTE argues, to similar practical effect, that the Commission must permit individual  xoperating units that do not meet the statutory definition of rural telephone company to  X -demonstrate that they are eligible to proceed under section 259 in a particular service area.E T yO-ԍ GTE Reply Comments at 14. E  X - ` x159. ` ` In contrast, NCTA would disqualify all nonrural telephone companies and require  xxany otherwise qualified rural telephone company to show that because it lacks economies or scale  xor scope "it is economically unreasonable for [it] to deploy the capability, feature or function  Xd- xsought in the agreement."fdT {O+ -ԍ NCTA Comments at 3. Contra RTC Reply Comments at 56.f Similarly, NYNEX argues that a telecommunications carrier,  XM- xincluding a rural telephone company, that is affiliated with a holding company does not lack  X8- xeconomies of scale or scope.8T yO#- xԍ NYNEX Reply Comments at 11 ("Notwithstanding certain commenters assertions, the FCC should permit such economies to be determined up to the holding company level." (footnotes omitted)). As noted earlier in this subsection, NCTA also opposes  xcompanies as large as the BOCs and GTE being able to qualify for sharing agreements under  X -section 259. x"P,N(N(ZZ "Ԍ X- ` px160.` ` Commenting parties generally agree that an incumbent LEC could be both a  X- x^"qualifying" and a "providing" carrier for purposes of section 259. T yOb- xԍ RTC Comments at 2021 ("The same LEC could, conceivably, be 'qualified' to request infrastructure sharing  xfrom one carrier and be required to serve as the providing [incumbent LEC] in response to a request for sharing by  x;another carrier. The relative cost to the requester for coprovision and selfprovision would be relevant to whether  xKit was 'qualified' with regard to a given request."); GTE Comments at 11 ("The Commission should . . . recognize  xthat a carrier may be both a providing LEC and a qualifying LEC under the Act. For example, a rural LEC may  xbe eligible as a qualifying carrier to share the facilities of a neighboring LEC to provide SS7based services.  xHowever, that same qualifying LEC may also have advanced technologies that a separate neighboring carrier may  x[wish to share. It is also possible that a carrier will have certain facilities in one service area, but lack them in  {O - xanother."). Cf. ALLTEL Comments at 23 ("[T]he Commission correctly notes . . . that the economies of scale and  xscope are relative, and not absolute, determinations; a small LEC which may be a 'qualifying carrier' visavis a vastly  xwlarger LEC could nevertheless be considered a providing carrier by another small or rural carrier. Rather than simply  xcompare the relative costs of deploying infrastructure between providing and qualifying carriers . . . [ALLTEL  xsuggests] that rural telephone companies . . . should not be subject to an FCC requirement to share infrastructure.").  {O - xBut see NCTA Comments at 3 n.10 (asserting that the Commission should not permit a carrier to be both a provider  yOV-and a recipient under section 259). #x6X@`7bX@# There is strong  xdisagreement among the parties, however, about whether the holding company or an operating  xentity is the appropriate level of organization at which to consider whether a carrier lacks  x=economies of scale or scope. AT&T, NYNEX, NCTA and apparently the Minnesota Coalition  X- x>argue that the holding company is the appropriate level to consider@L T yO- xԍ AT&T Comments at 45 ("Entities that hold multiple local telephone companies . . . clearly have exactly  xthose opportunities for economies of scale and scope that Section 259 reserves for 'qualifying carriers' that lack such  x<capabilities."); NYNEX Comments at 17 ("...seemingly small companies may have economies by virtue of their  xaffiliation with large holding companies."); NYNEX Reply Comments at 11 ("Clearly, a [qualifying carrier] can enjoy  xeconomies of scale or scope by virtue of its dealings with affiliates in regard to the procurement process, scientific  x research and development, etc.); NCTA Reply Comments at 89; Minnesota Coalition Comments at 1112 ("[A] large  xicarrier, such as an RBOC, AT&T or MCI, does not lack 'economies of scale or scope' even if a particular project could be provided at a lower cost through infrastructure sharing with an incumbent."). and MCI, GTE, RTC,  Xv-USTA, and apparently PacTel argue it is not.zvTT yO{- xԍ MCI Comments at 15 ("A telecommunications holding company may achieve financing economies, but these  xieconomies may dwarf in comparison to the diseconomies it might face if it were to serve an isolated, small, rural  xcommunity."); GTE Comments at 10; GTE Reply Comments at 13; RTC Comments at 1920; RTC Reply  xComments at 5; USTA Comments at 1314; USTA Reply Comments at 78 ("The language of the Act should not be altered to be applied only at the holding company level, as suggested by AT&T."); PacTel Comments at 16. z  XH- ` Px161. ` ` Several parties observe that the making of comparisons is inherent in considering  X1- xeconomies of scale and scope.j1T yO"- xZԍ GTE Reply Comments at 13 ("[T]he statute contemplates a comparison of economies of scale and scope  xbetween the providing LEC and the qualifying LEC; it does not articulate a particular standard which the qualifying  xZLEC must meet."); Southwestern Bell Comments at 3 ("Economies of scale and scope are not absolute measures,  {O>%- xbut rather are relative conditions that likely exist to varying degrees for all LECs."); USTA Comments at 1213. See  {O&-also MCI Comments at 16. j Only a few parties, however, discuss our tentative conclusion  xLthat the cost of the investment that the carrier would incur to acquire on its own the requested" Q,N(N(ZZB "  xinfrastructure, relative to the cost that it would incur to obtain the requested infrastructure from  x=an incumbent LEC, is a factor to be considered in whether a carrier lacks economies of scale or  X- xZscope. MCI notes that the total costs of production include costs other than investment costs.=T yOK-ԍ MCI Comments at 16.=  xSouthwestern Bell says that an analysis of relative investment costs could be used if there is  xinsufficient information to analyze both requesting and supplying firms' costs over a relevant  X- xrange of output.JXT yO-ԍ Southwestern Bell Comments at 3.J The Minnesota Coalition argues against our tentative conclusion, arguing that  Xv-project investment costs will be extremely difficult to determine.VvT yO -ԍ Minnesota Coalition Comments at 11. V  XH- ` x162. ` ` Parties addressing section 259(d)(2) generally comment that the statutory  x]qualification criteria are unproblematic since the underlying issues will be decided in the  X - xKuniversal service proceeding. xT {OC-ԍ See, e.g., AT&T Comments at 23; RTC Comments at 21. #x6X@`7bX@#э Nonetheless, two issues are raised. NYNEX, noting that section  xM259(d)(2) requires a qualifying carrier to make universal service offerings available "without  x=preference" throughout the service area for which it has eligibility status under section 214(e),  x-argues that the Commission should interpret section 259(d)(2) to mean the qualifying carrier must  X - xitself be an incumbent LEC in that area, and offer common carrier services on a facilities basis.i T yOy-ԍ NYNEX Comments at 1920.#x6X@`7bX@#i  X - xUSTA notes the relative timing of this docket and the universal service proceeding and asserts  xthat carriers need not await the outcome of the universal service proceeding to begin negotiating  x=section 259 agreements if they have already been subjected to carrier of last resort obligations  Xb-by the state in which they operate.AbT yO-ԍ USTA Comments at 1415.A x  X4-x 3.` ` Discussion  X- ` x163. ` ` Section 259(d)(1) directs the Commission to prescribe regulations that determine  xwhether a telecommunications carrier "lacks economies of scale or scope." In implementing this  x!directive we are mindful of section 259(b)(4), which directs the Commission to prescribe  xregulations ensuring that a qualifying carrier fully benefits from "the economies of scale and  xscope" of the incumbent LEC that makes shared infrastructure available to it. We decide that,  xywhile neither the Act nor the legislative history defines either of these terms, it is reasonable to  x\conclude that there is implicit in the two directives a comparison between carriers that have  x"greater" and "lesser" economies of scale or scope, and that a carrier that has lesser economies  XN- xof scale or scope may obtain the benefits of shared infrastructure from an incumbent LEC that  xhas greater economies of scale or scope. We therefore decide it is unnecessary to prescribe  x[regulations to define an absolute lack of economies of scale or scope. Further, we concur with" R* ,N(N(ZZ"  x/those commenters who observe that economies of scale or scope or their absence may characterize any firm, including a firm affiliated with a larger company. x  X- ` n x164. ` ` We therefore conclude that neither the plain language of section 259(d)(1) nor the  X- xrecord of this proceeding support establishing regulations that would excuse, per se, an incumbent  X- x=LEC from sharing its infrastructure because of the size of the requesting carrier, its geographic  Xx- xlocation, or its affiliation with a holding company. The record before us demonstrates that  xwhether a telecommunications carrier "lacks economies of scale or scope" depends on the facts  xof the particular situation, including the specific terms of the request to share infrastructure,  xwhether the incumbent LEC would incur lower costs to deploy that particular infrastructure than  x=would the qualifying carrier, and the benefits that the qualifying carrier would receive from the  xavailability, timeliness, functionality, suitability, and other operational aspects of the shared  X - x=infrastructure.g T {Og -ԍ See also Discussion at Section III. C. 4., supra.g One predictable result of this approach to defining section 259(d)(1) is that a  x=carrier may be entitled to share infrastructure with a particular incumbent LEC and, at the same time, be obligated to share infrastructure with one or more additional qualifying carriers.  X- ` x165. ` ` We decide that parties negotiating infrastructure sharing agreements should  xundertake the necessarily factbased evaluations of their relative economies of scale and scope  xLpertaining to the infrastructure that is requested to be shared. In the event that parties cannot  xachieve satisfactory results, they will have recourse to informal consultations with the  x\Commission and, if necessary, existing declaratory ruling procedures and the Commission's complaint process.  X- ` x166. ` ` We expect that many if not most requests for infrastructure sharing agreements  xproperly will be made by carriers whose customers reside predominantly, if not exclusively, in  xrural, sparselypopulated areas, because such carriers are more likely to lack economies of scale  xor scope in serving their customers. To facilitate the negotiation of infrastructure sharing  xagreements benefiting the customers of such carriers, we therefore adopt a rebuttable presumption  xthat a telecommunication carrier falling within the definition of "rural telephone company" in  xsection 3(37) of the Act lacks economies of scale or scope under section 259(d)(1), but we  XP- xexclude no carrier or class of carriers from attempting to show that they lack economies of scale  xor scope for purposes of section 259(d)(1). Thus, an incumbent LEC receiving a request from  xa rural telephone company seeking to qualify under section 259(d)(1) may rebut the presumption  xby demonstrating that the requesting company does not lack economies of scale and scope,  x relative to those of the incumbent LEC receiving the request, with respect to the requested  xinfrastructure. In so doing, the incumbent LEC may demonstrate the presence of any economies  xof scale or scope the rural telephone company may have, with respect to the requested  x<infrastructure, by virtue of any affiliations it may have within a holding company structure. Also,  xa carrier that does not meet the definition of section 3(37) may qualify under section 259(d)(1)  xby demonstrating to the incumbent LEC to which it directs its infrastructure sharing request a  Xj$- xrelative lack of economies of scale or scope with respect to the requested infrastructure. We are"j$SZ,N(N(ZZF#"  xconvinced that this approach will facilitate the negotiation of infrastructure sharing agreements  x-most likely to benefit customers served by carriers that lack economies of scale or scope, without  xexcluding any group of customers from the benefits of infrastructure sharing. We note that a  xrebuttable presumption was supported by most parties commenting in this proceeding. We also  xnote that parties may avail themselves of guidance from the Commission, pursuant to our  x[declaratory ruling and complaints processes, if disputes arise. As always, we expect parties to  xlmake good faith efforts to negotiate resolutions of such disputes prior to requesting our assistance.  X1- ` nx167. ` ` Although we expect that, in the ordinary course, most section 259 agreements will  xbe negotiated between small, particularly rural telephone companies and larger incumbent LECs,  xthere is nothing in the statutory language or legislative history to persuade us that Congress  X - x.intended such a per se restriction on who can qualify under section 259(d). We anticipate, for  X - xexample, that some carriers affiliated with larger carriers might be able to demonstrate that, for  xparticular elements of infrastructure, they also lack "economies of scale or scope" per the  x<requirements of section 259(d)(1). We do not believe that such carriers should be precluded from  xsecuring section 259 agreements upon a proper showing under section 259(d)(1). Nonetheless,  X}- xas we have indicated supra,p}T {O-ԍ Section III. A. See also Section III. B. 1., supra.p we have concerns about the effects on competitive entry as a result  xof the implementation of section 259 agreements. We expect that such agreements will not result  xin large companies effectively insulating particular markets from competitive entry. We  xemphasize that section 259, as articulated in this Report and Order, shall not be used to achieve such anticompetitive results.  X- ` x168. ` ` We affirm our conclusion that, because a separate proceeding is underway to  ximplement section 254 of the Act, the Commission need not consider or construe section  X- x259(d)(2) in this rulemaking.;ZZT {O- xԍ NPRM at  38. See also Joint Board Recommendation on Universal Service. Our conclusion encompasses  xNYNEX's suggestion that only facilitiesbased telecommunications common carriers should meet the requirements of section 259(d)(2).; Parties commenting in this proceeding generally agreed with this  x[conclusion. We observe that NYNEX's assertion that a telecommunications carrier must be an  xjincumbent LEC to meet the requirements of section 259(d)(2) would not appear to be mandated  xby the language of section 259(d)(2) and might be in direct conflict with the Act's objective to  x?open all telecommunications markets to competition. Section 259(d)(2) imposes specific  x/requirements on carriers. Such carriers will predictably include, but might not be limited to,  x-incumbent LECs. We also decline to adopt USTA's interpretation of section 259(d)(2) that would  xallow carriers subjected to carrier of last resort obligations to negotiate infrastructure sharing  X- xarrangements prior to the issuance of an order in the universal service rulemaking,|T {O<%- xԍ See Universal Service NPRM; see also Joint Board Recommendation on Universal Service (recommending eligibility criteria for carriers seeking universal service support). which will  xbe adopted no later than May 8, 1997. We observe that section 259(d)(2) references section"T,N(N(ZZ<"  x 214(e), which reserves designation authority to the states. Section 214(e)(1)(A), moreover,  xrequires that eligible telecommunications carriers shall "offer the services that are supported by  X- xZFederal universal support mechanisms under section 254(c) . . . ."FT yOK-ԍ 47 U.S.C.  214(e)(1)(A).F By definition, however, such  xMservices will not be identified until the Commission adopts an order in the universal service proceeding.  Xv- IV. PROCEDURAL ISSUES  X_-  XH-A. xFinal Regulatory Flexibility Act Analysis  X - ` x169. ` ` Pursuant to the Regulatory Flexibility Act of 1980, as amended, 5 U.S.C. Section  X -601 et seq., the Commission's final analysis in this Report and Order is attached as Appendix C.  X - B. xFinal Paperwork Reduction Act Analysis  X - ` x170. ` ` As required by the Paperwork Reduction Act of 1995, Pub. L. No. 104-13, the  xNPRM invited the general public and the Office of Management and Budget (OMB) to comment  X{- xon proposed information collection requirements contained in the NPRM.:{XT yO-ԍ NPRM at  55.: On January 22,  x[1997, OMB approved the proposed information collection requirements, as submitted to OMB,  XM- x]in accordance with the Paperwork Reduction Act.MT {O-ԍ Notice of Office of Management and Budget Action (OMB No. 3060-0755) (Jan. 22, 1997). In this Report and Order, we adopt  xinformation collection requirements that are subject to OMB review. These requirements are contingent upon approval by OMB.  X- V. ORDERING CLAUSES ă  X- ` Qx171. ` ` Accordingly, IT IS ORDERED that, pursuant to sections 4(i), 4(j), 201205, 259,  x303(r), 403 of the Communications Act of 1934, as amended by the 1996 Act, 47 U.S.C.   x/154(i), 154(j), 201205, 259, 303(r), 403, the rules, requirements and policies discussed in this  xReport and Order ARE ADOPTED and sections 59.1 59.4 of the Commission's rules, 47 C.F.R.  Xg- 59.1 59.4 ARE ADOPTED as set forth in Appendix B. "9Uz,N(N(ZZ"  X- ` x172. ` ` IT IS FURTHER ORDERED that the requirements and regulations established in  xLthis decision shall become effective upon approval by OMB of the new information collection  xzrequirements adopted herein, but no sooner than thirty days after publication in the Federal Register. x` `  FEDERAL COMMUNICATIONS COMMISSION x x` `  William F. Caton x` `  Acting Secretary" V,N(N(ZZ "  X-  APPENDIX A List of Commenters in Docket 96237 ă  X- Comments: ALLTEL Telephone Services Corporation (ALLTEL) Association for Local Telecommunications Services (ALTS) Ameritech AT&T Corp. (AT&T) BellSouth Corporation (BellSouth) Frontier Corporation (Frontier) GTE Service Corporation (GTE)  xNJackson Thornton & Company (on behalf of Castleberry Telephone Company, Ardmore  xjTelephone Company, Hopper Telecommunications Co., Inc., MonCre Telephone Cooperative,  x!Inc., New Hope Telephone Cooperative, Inc., Ragland Telephone Co., Inc., Blountsville  xTelephone Co., Inc., Bledsoe Telephone Cooperative, and Farmers Telephone Cooperative, Inc.)  X -(collectively, Castleberry Telephone Company et al.) MCI Communications Corporation (MCI) Minnesota Independent Coalition (Minnesota Coalition) National Rural Health Association* National Cable Television Association, Inc. (NCTA) NYNEX Telephone Companies (NYNEX) Octel Communications Corporation (Octel) Oregon Public Utility Commission (Oregon PUC) Pacific Telesis Group (PacTel) Rural Telephone Coalition (RTC) Southwestern Bell Telephone Company (Southwestern Bell) Sprint Corporation (Sprint) University of Alabama School of Medicine* United States Telephone Association (USTA) US WEST, Inc. (US West) x* Referred to CC Docket No. 9645  X"- Reply Comments: ALTS AT&T BellSouth GTE MCI NCTA NYNEX Octel PacTel RTC Southwestern Bell"%'W,N(N(ZZ%"ԌSprint USTA US West"X,N(N(ZZ"  X-| APPENDIX B FINAL RULES ă  X-  1. xPart 59 of Title 47 of the Code of Federal Regulations (C.F.R.) is added to read as follows:  X-<  PART 59 INFRASTRUCTURE SHARING ă  X_- Sec. 59.1 General Duty 59.2 Terms and Conditions of Infrastructure Sharing 59.3 Information Concerning Deployment of New Services and Equipment  X -59.4 Definition of "Qualifying Carrier"  x0AUTHORITY: Sections 4(i), 4(j), 201205, 259, 303(r), 403 of the Communications Act of  x1934, as amended by the 1996 Act, 47 U.S.C.  154(i), 154(j), 201205, 259, 303(r), 403, unless otherwise noted.  Xy- Sec. 59.1 ` ` General Duty (#`  xIncumbent local exchange carriers (as defined in 47 U.S.C. section 251(h)) shall make available  x[to any qualifying carrier such public switched network infrastructure, technology, information,  xand telecommunications facilities and functions as may be requested by such qualifying carrier  xfor the purpose of enabling such qualifying carrier to provide telecommunications services, or to  x=provide access to information services, in the service area in which such qualifying carrier has  X- x[ obtained designation as an eligible telecommunications carrier under section 214(e) of this title (47 U.S.C. 214(e)).  X- Sec. 59.2` ` Terms and Conditions of Infrastructure Sharing  x(a) An incumbent local exchange carrier subject to the requirements of section 59.1 shall not be  xrequired to take any action that is economically unreasonable or that is contrary to the public interest;  X - x(b) A n incumbent local exchange carrier subject to the requirements of section 59.1 may, but  x/shall not be required to, enter into joint ownership or operation of public switched network  xkinfrastructure, technology, information and telecommunications facilities and functions and services with a qualifying carrier as a method of fulfilling its obligations under section 59.1;  x(c) An incumbent local exchange carrier subject to the requirements of section 59.1 shall not  xbe treated by the Commission or any State as a common carrier for hire or as offering common  x!carrier services with respect to any public switched network infrastructure, technology,  xjinformation, or telecommunications facilities, or functions made available to a qualifying carrier in accordance with regulations issued pursuant to this section; "#'Y,N(N(ZZ%"Ԍ xy(d) An incumbent local exchange carrier subject to the requirements of section 59.1 shall make  X- xysuch public switched network infrastructure, technology, information, and telecommunications  X- x facilities, or functions available to a qualifying carrier on just and reasonable terms and pursuant  xto conditions that permit such qualifying carrier to fully benefit from the economies of scale and  xscope of such local exchange carrier. An incumbent local exchange carrier that has entered into  xjan infrastructure sharing agreement pursuant to section 59.1 must give notice to the qualifying carrier at least sixty days before terminating such infrastructure sharing agreement.  x(e) An incumbent local exchange carrier subject to the requirements of section 59.1 shall not be  xrequired to engage in any infrastructure sharing agreement for any services or access which are  xto be provided or offered to consumers by the qualifying carrier in such local exchange carrier's telephone exchange area; and  x(g) An incumbent local exchange carrier subject to the requirements of section 59.1 shall file  xwith the State, or, if the State has made no provision to accept such filings, with the Commission,  xfor public inspection, any tariffs, contracts, or other arrangements showing the rates, terms, and  xconditions under which such carrier is making available public switched network infrastructure, technology, information and telecommunications facilities and functions pursuant to this Part.  XK- Sec. 59.3` ` Information Concerning Deployment of New Services and Equipment  xAn incumbent local exchange carrier subject to the requirements of section 59.1 that has entered  x[into an infrastructure sharing agreement under section 59.1 shall provide to each party to such  xagreement timely information on the planned deployment of telecommunications services and  xequipment, including any software or upgrades of software integral to the use or operation of such telecommunications equipment.  X- Sec. 59.4 Definition of "Qualifying Carrier" For purposes of this Part, the term "qualifying carrier" means a telecommunications carrier that-- x(1) lacks economies of scale or scope; and   ^x(2) offers telephone exchange service, exchange access, and any other service that is  x<included in universal service, to all consumers without preference throughout the service area for  xywhich such carrier has been designated as an eligible telecommunications carrier under section 214(e) of this title." Z,N(N(ZZ"  X-) APPENDIX C ă  X-  FINAL REGULATORY FLEXIBILITY ACT ANALYSIS ă  X- `  1. 1. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)x1. ` ` As required by section 603 of the Regulatory Flexibility Act (RFA), 5 U.S.C.   x603, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed  xRulemaking, Implementation of Infrastructure Sharing Provisions in the Telecommunications Act  Xv- xmof 1996.f^vT {O- xԍ Implementation of Infrastructure Sharing Provisions of the Telecommunications Act of 1996, Notice of  {O- xProposed Rulemaking, CC Docket No. 96237, FCC 96456, 61 Fed. Reg. 63774 (rel. Nov. 22, 1996) (NPRM or  {O -Infrastructure Sharing NPRM).f The Commission sought written public comments on the proposals in the  X_- x Infrastructure Sharing NPRM including on the IRFA. The Commission's Final Regulatory  xFlexibility Analysis (FRFA) in this Report and Order conforms to the RFA, as amended by the  xSmall Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Pub. L. 104121, 110  X -Stat. 847 (1996). T yO- x<ԍ SBREFA was codified as Title II of the Contract With America Advancement Act of 1996 (CWAAA), 5  {O-U.S.C.  601 et seq.  X - ` x A. ` ` Need for and Objectives of this Report and Order and the Rules Adopted  X -Herein (#`  X - ` x2. ` ` The Commission, in compliance with section 259(a) of the Communications Act  xof 1934, as amended by the Telecommunications Act of 1996, promulgates the rules in this  xjReport and Order to ensure the prompt implementation of the infrastructure sharing provisions  xin section 259 of the 1996 Act. Section 259 directs the Commission, within one year after the  xdate of enactment of the 1996 Act, to prescribe regulations that require incumbent LECs to make  xicertain "public switched network infrastructure, technology, information, and telecommunications  xfacilities and functions" available to any qualifying carrier in the service area in which the  xqualifying carrier has requested and obtained designation as an eligible carrier under section  X-214(e).HT {O-#C\  P6Q/P#э 47 U.S.C.  259. See also 47 U.S.C.  214(e)(1).  X- ` x B.` ` Summary and Analysis of the Significant Issues raised by the Public  X-Comments in Response to the IRFA (#`  X~- ` ox3. ` ` The only party to comment on our IRFA, the Rural Telephone Coalition (RTC),  xzessentially argues that the Commission violated the RFA when we declined to include small  XP- x=incumbent LECs in our definition of the class of entities protected by the RFA.>PT yO$-ԍ RTC Comments at 631.> RTC argues  x[that small incumbent LECs that meet the SBA definition of "small entities" are among the class  xof carriers that will be affected by these rules either as providing incumbent LECs or as""[j ,N(N(ZZ"  X- xqualifying carriers.3T {Oy-ԍ Id.3 RTC argues that the Commission has engaged in a "meaningless exercise"  xdespite the fact that our IRFA included estimates of the number of small incumbent LECs potentially affected by the proposed rules and presented alternatives for comment by the public.  X- ` 2x4. ` ` We disagree. Because the small incumbent LECs subject to these rules are either  xdominant in their field of operations or are not independently owned and operated, consistent with  xour prior practice, they are excluded from the definition of "small entity" and "small business  X_- xxconcerns."_ZT {Oj - xԍ See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report  xand Order, CC Docket No. 9698, FCC 96325, 11 FCC Rcd 15499, 61 Fed. Reg. 45476 at  132830, 1342 (rel.  {O - x,Aug. 8, 1996) (Local Competition First Report and Order). We note that the U.S. Court of Appeals for the Eighth  {O - xCircuit has stayed the pricing rules developed in the Local Competition First Report and Order, pending review on  {O -the merits. Iowa Utilities Board v. FCC, No. 963321 (8th Cir., Oct. 15, 1996). Accordingly, our use of the terms "small entities" and "small businesses" does not  xencompass small incumbent LECs. Out of an abundance of caution, however, for regulatory  x.flexibility analysis purposes, we did consider small incumbent LECs within the IRFA and used  xthe term "small incumbent LECs" to refer to any incumbent LECs that arguably might be defined  X - xby SBA as "small business concerns."7 T {O-ԍ See id.7 We find nothing in this record to persuade us that our  xkprior practice of treating all LECs as dominant is incorrect. Thus, we conclude that we have fully satisfied the requirements and objectives of the RFA.  X - ` x C. ` ` Description and Estimate of the Number of Small Entities to which the Rules  X-adopted in the Report and Order in CC Docket No. 96237 will Apply (#`  Xb- ` Qx5. ` ` Section 259 of the 1934 Act, as added by the 1996 Act, establishes a variety of  XK- xinfrastructure sharing obligations.dKT yO-#C\  P6Q/P#э 47 U.S.C.  259.d Many of the obligations adopted in this Report and Order  X4- x.will apply solely to providing incumbent LECs which may include small business concerns.~44 T {O-#C\  P6Q/P#э See, e.g., 47 U.S.C.  259(a).~  x.The beneficiaries of section 259 infrastructure sharing agreements also affected by the rules  x adopted herein are the class of carriers designated as "qualifying carriers" under section  X- x259(d).l T yOf"-#C\  P6Q/P#э 47 U.S.C.  259(a), (d).l Such qualifying carriers must be telecommunications carriers, which, as defined in  x/section 3(44) of the Act, may include LECs, nonLEC wireline carriers, and various types of  X- xwireless carriers.fV T {O%-ԍ 47 U.S.C.  259(d). See also 47 U.S.C.  3(44).f Because section 259(d)(1) limits qualifying carriers to those carriers that  x"lack economies of scale or scope," it is likely that there will be small business concerns affected"\,N(N(ZZ"  X- xby the rules proposed in this NPRM. We note, however, that section 259(d)(2) makes the  xdefinition of "qualifying carriers" dependent on the Commission's decisions in the universal  X- xservice proceeding.t^T {OM-#C\  P6Q/P#э 47 U.S.C.  259(d)(2). See FederalState Joint Board on Universal Service, Notice of Proposed  {O-Rulemaking and Order Establishing Joint Board, CC Docket No. 9645, FCC 9693 (rel. Mar. 8, 1996)  {O-("Universal Service NPRM").t Until the Commission issues an order pursuant to the Universal Service  X- xNPRM that addresses related issues, it is not feasible to define precisely the number of  x/"qualifying carriers" that may be "small business concerns" or, derivatively, the number of  X- xincumbent LECs that may be "small business concerns."cZT {O2 -Ѝ See Universal Service NPRM; see also Joint Board Recommendation on Universal Service (recommending eligibility criteria for carriers seeking universal service support). We note that the Commission must complete a proceeding to implement the Joint Board's recommendations on or before May 8, 1997.c With that caveat, we attempt to  xyestimate the number of small entities both providing incumbent LECs and qualifying carriers that may be affected by the rules included in this Report and Order.  X7- ` ~x6. ` ` For the purposes of this analysis, we examined the relevant definition of "small  x\entity" or "small business" and applied this definition to identify those entities that may be  xyaffected by the rules adopted in this Report and Order. The RFA defines a "small business" to  xbe the same as a "small business concern" under the Small Business Act, 15 U.S.C.  632, unless  X - xthe Commission has developed one or more definitions that are appropriate to its activities. T {O-#C\  P6Q/P#Ѝ See 5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 5 U.S.C.  632).  x\Under the Small Business Act, a "small business concern" is one that: (1) is independently  xowned and operated; (2) is not dominant in its field of operation; and (3) meets any additional  X- xcriteria established by the Small Business Administration (SBA).nj T yO-#C\  P6Q/P#Ѝ 15 U.S.C.  632.n Moreover, the SBA has  xdefined a small business for Standard Industrial Classification (SIC) categories 4812  xA(Radiotelephone Communications) and 4813 (Telephone Communications, Except  XQ- xRadiotelephone) to be small entities when they have fewer than 1,500 employees.hQ T yO-#C\  P6Q/P#э 13 C.F.R.  121.201.h We first  xdiscuss generally the total number of small telephone companies falling within both of those  xcategories. Then, we discuss the number of small businesses within the two subcategories, and  xattempt to refine further those estimates to correspond with the categories of telephone companies that are commonly used under our rules.  X- ` x7. ` ` As discussed supra, and consistent with our prior practice, we shall continue to  xexclude small incumbent LECs from the definition of "small entity" and "small business  xconcerns" for the purpose of this IRFA. Because the small incumbent LECs subject to these  xxrules are either dominant in their field of operations or are not independently owned and operated,  xconsistent with our prior practice, they are excluded from the definition of "small entity" and"m] ,N(N(ZZ"  X- x"small business concerns."wT {Oy-ԍ See Local Competition First Report and Order at  132830, 1342.w Accordingly, our use of the terms "small entities" and "small  x businesses" does not encompass small incumbent LECs. Out of an abundance of caution,  xhowever, for regulatory flexibility analysis purposes, we will consider small incumbent LECs  xwithin this analysis and use the term "small incumbent LECs" to refer to any incumbent LECs  X-that arguably might be defined by SBA as "small business concerns."7ZT {O-ԍ See id.7  Xv-x` ` 1.  Telephone Companies (SIC 481) (#  XH- ` x8. ` ` Total Number of Telephone Companies Affected. The decisions and rules adopted  xherein may have a significant effect on a substantial number of small telephone companies  x.identified by the SBA. The United States Bureau of the Census (Census Bureau) reports that,  xat the end of 1992, there were 3,497 firms engaged in providing telephone service, as defined  X - x<therein, for at least one year. T {O- xԍ United States Department of Census, Bureau of the Census, 1992 Census of Transportation, Communications,  {OU-and Utilities: Establishment and Firm Size, at Firm Size 1123 (1995) ("1992 Census"). This number contains a variety of different categories of carriers,  xLincluding local exchange carriers, interexchange carriers, competitive access providers, cellular  xcarriers, mobile service carriers, operator service providers, pay telephone operators, PCS  x/providers, covered SMR providers, and resellers. It seems certain that some of those 3,497  xtelephone service firms may not qualify as small entities or small incumbent LECs because they  X{- xare not "independently owned and operated."C{HT yOt-ԍ 15 U.S.C.  632(a)(1).C For example, a PCS provider that is affiliated  xwith an interexchange carrier having more than 1,500 employees would not meet the definition  xof a small business. It seems reasonable to conclude, therefore, that fewer than 3,497 telephone  xservice firms are small entity telephone service firms or small incumbent LECs that may be affected by this Order.  X- ` nx9. ` ` Wireline Carriers and Service Providers. The SBA has developed a definition of  xsmall entities for telecommunications companies other than radiotelephone (wireless) companies  x(Telephone Communications, Except Radiotelephone). The Census Bureau reports that there were  X- x2,321 such telephone companies in operation for at least one year at the end of 1992.]T {O7!-ԍ 1992 Census, supra, at Firm Size 1123.]  xOAccording to the SBA's definition, a small business telephone company other than a  X- xradiotelephone company is one employing fewer than 1,500 persons.uj T yO$-ԍ 13 C.F.R.  121.201, Standard Industrial Classification (SIC) Code 4812.u Of the 2,321 non xradiotelephone companies listed by the Census Bureau, 2,295 companies (or, all but 26) were  x<reported to have fewer than 1,000 employees. Thus, at least 2,295 nonradiotelephone companies  xmight qualify as small incumbent LECs or small entities based on these employment statistics. ";^ ,N(N(ZZ"  xHowever, because it seems certain that some of these carriers are not independently owned and  xoperated, this figure necessarily overstates the actual number of nonradiotelephone companies  xthat would qualify as "small business concerns" under the SBA's definition. Consequently, we  xestimate using this methodology that there are fewer than 2,295 small entity telephone  xcommunications companies (other than radiotelephone companies) that may be affected by the proposed decisions and rules and we seek comment on this conclusion.  X_- ` ox 10. ` ` Local Exchange Carriers. Although neither the Commission nor the SBA has  xdeveloped a definition of small providers of local exchange services, we have two methodologies  xavailable to us for making these estimates. The closest applicable definition under SBA rules  xis for telephone communications companies other than radiotelephone (wireless) companies (SIC  X - xj4813) (Telephone Communications, Except Radiotelephone) as previously detailed, supra. Our  xalternative method for estimation utilizes the data that we collect annually in connection with the  x=Telecommunications Relay Service (TRS). This data provides us with the most reliable source  x=of information of which we are aware regarding the number of LECs nationwide. According to  xour most recent data, 1,347 companies reported that they were engaged in the provision of local  X- xxexchange services.|^T {O -#C\  P6Q/P#Ѝ Federal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  {O-Revenue: TRS Fund Worksheet Data, Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of  {O-Revenue) (Dec. 1996) ("TRS Worksheet").| Although it seems certain that some of these carriers are not independently  xjowned and operated, or have more than 1,500 employees, we are unable at this time to estimate  xwith greater precision the number of incumbent LECs that would qualify as small business  xconcerns under SBA's definition. Consequently, we estimate that there are fewer than 1,347  xsmall LECs (including small incumbent LECs) that may be affected by the actions proposed in  X!-this NPRM.  X- ` x 11. ` ` Our remaining comments are directed solely to nonLEC entities that may  xeventually be designated as "qualifying carriers." Section 259(d)(2) requires qualifying carriers,  X- xinter alia, to offer "telephone exchange service, exchange access, and any other service that is  xLincluded in universal service" within the carrier's service area per universal service obligations  X- xjimposed pursuant to section 214(e). As addressed supra, because section 259(d)(2) makes the  x>scope of potential "qualifying carriers" contingent upon the Commission's decisions in the  x universal service proceeding, we are unable to define the scope of small entities that might  XX- xKeventually be designated as "qualifying carriers."cZXT {O -Ѝ See Universal Service NPRM; see also Joint Board Recommendation on Universal Service (recommending eligibility criteria for carriers seeking universal service support). We note that the Commission must complete a proceeding to implement the Joint Board's recommendations on or before May 8, 1997.c Thus, the remaining estimates of the number  xof small entities affected by our rules based on the most reliable data for the nonLEC wireline  xiand nonwireline carriers may be overinclusive depending on how many such entities otherwise qualify pursuant to section 259(d)(2). "_,N(N(ZZ"Ԍ X- ` x 12. ` ` NonLEC wireline carriers. We next estimate the number of nonLEC wireline  xcarriers, including interexchange carriers (IXCs), competitive access providers (CAPs), Operator  xService Providers (OSPs), Pay Telephone Operators, and resellers that may be affected by these  xrules. Because neither the Commission nor the SBA has developed definitions for small entities  xspecifically applicable to these wireline service types, the closest applicable definition under the  xSBA rules for all these service types is for telephone communications companies other than  xradiotelephone (wireless) companies. However, the TRS data provides an alternative source of  xinformation regarding the number of IXCs, CAPs, OSPs, Pay Telephone Operators, and resellers  xjnationwide. According to our most recent data: 130 companies reported that they are engaged  x[in the provision of interexchange services; 57 companies reported that they are engaged in the  xprovision of competitive access services; 25 companies reported that they are engaged in the  xprovision of operator services; 271 companies reported that they are engaged in the provision of  xpay telephone services; and 260 companies reported that they are engaged in the resale of  X - xtelephone services and 30 reported being "other" toll carriers. T {OP-Ѝ TRS Worksheet, at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue). Although it seems certain that  x some of these carriers are not independently owned and operated, or have more than 1,500  xzemployees, we are unable at this time to estimate with greater precision the number of IXCs,  xCAPs, OSPs, Pay Telephone Operators, and resellers that would qualify as small business  X{- xconcerns under SBA's definition. Firms filing TRS Worksheets are asked to select a single  x.category that best describes their operation. As a result, some long distance carriers describe  xthemselves as resellers, some as OSPs, some as "other," and some simply as IXCs.  xConsequently, we estimate that there are fewer than 130 small entity IXCs; 57 small entity  xCAPs; 25 small entity OSPs; 271 small entity pay telephone service providers; and 260 small  xentity providers of resale telephone service; and 30 "other" toll carriers that might be affected by  X-the actions and rules adopted in this Report and Order.  X- ` x 13. ` ` Radiotelephone (Wireless) Carriers: The SBA has developed a definition of small  xentities for Wireless (Radiotelephone) Carriers. The Census Bureau reports that there were 1,176  X- xsuch companies in operation for at least one year at the end of 1992.gZT {O-Ѝ 1992 Census, supra, at Firm Size 1123.g According to the SBA's  xdefinition, a small business radiotelephone company is one employing fewer than 1,500  Xm- xpersons.]mT yO -Ѝ 13 C.F.R.  121.201, (SIC Code 4812).] The Census Bureau also reported that 1,164 of those radiotelephone companies had  xMfewer than 1,000 employees. Thus, even if all of the remaining 12 companies had more than  x1,500 employees, there would still be 1,164 radiotelephone companies that might qualify as small  xjentities if they are independently owned and operated. Although it seems certain that some of  xthese carriers are not independently owned and operated, and, we are unable to estimate with  xgreater precision the number of radiotelephone carriers and service providers that would both  x-qualify as small business concerns under SBA's definition. Consequently, we estimate that there  xare fewer than 1,164 small entity radiotelephone companies that might be affected by the actions  X!-and rules adopted in this Report and Order. "!`|,N(N(ZZ "Ԍ X- ` ԙx 14. ` ` Cellular and Mobile Service Carriers: In an effort to further refine our calculation  x<of the number of radiotelephone companies affected by the rules adopted herein, we consider the  xcategories of radiotelephone carriers, Cellular Service Carriers and Mobile Service Carriers.  xNeither the Commission nor the SBA has developed a definition of small entities specifically  xapplicable to Cellular Service Carriers and to Mobile Service Carriers. The closest applicable  xdefinition under SBA rules for both services is for telephone companies other than radiotelephone  x(wireless) companies. The most reliable source of information regarding the number of Cellular  xService Carriers and Mobile Service Carriers nationwide of which we are aware appears to be  x-the data that we collect annually in connection with the TRS. According to our most recent data,  x792 companies reported that they are engaged in the provision of cellular services and 138  X - xcompanies reported that they are engaged in the provision of mobile services. T {O -Ѝ TRS Worksheet, at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue). Although it  xseems certain that some of these carriers are not independently owned and operated, or have more  xthan 1,500 employees, we are unable at this time to estimate with greater precision the number  xzof Cellular Service Carriers and Mobile Service Carriers that would qualify as small business  xconcerns under SBA's definition. Consequently, we estimate that there are fewer than 792 small  xentity Cellular Service Carriers and fewer than 138 small entity Mobile Service Carriers that  X-might be affected by the actions and rules adopted in this Report and Order.  Xf- ` ox15. ` ` Broadband PCS Licensees. In an effort to further refine our calculation of the  x>number of radiotelephone companies affected by the rules adopted herein, we consider the  xLcategory of radiotelephone carriers, Broadband PCS Licensees. The broadband PCS spectrum  xis divided into six frequency blocks designated A through F. As set forth in 47 C.F.R.  x24.720(b), the Commission has defined "small entity" in the auctions for Blocks C and F as  xa firm that had average gross revenues of less than $40 million in the three previous calendar  xzyears. Our definition of a "small entity" in the context of broadband PCS auctions has been  X- xzapproved by SBA.ZT {O-  ԍxSee Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No.93253, Fifth Report & Order, 9 FCC Rcd 5532, 558184 (1994). The Commission has auctioned broadband PCS licenses in Blocks A  x]through F. We do not have sufficient data to determine how many small businesses bid  xsuccessfully for licenses in Blocks A and B. There were 183 winning bidders that qualified as   small entities in the Blocks C, D, E, and F auctions. Based on this information, we conclude that  Xk-  the number of broadband PCS licensees affected by the decisions in the Infrastructure Sharing  XV-  jReport & Order includes, at a minimum, the 183 winning bidders that qualified as small entities in the Blocks C through F broadband PCS auctions.  X-   D. ` ` Description of Projected Reporting, Recordkeeping and other Compliance  X-  Requirements and Steps Taken to Minimize the Significant Economic of this   Report and Order on Small Entities and Small Incumbent LECs, Including  X -the Significant Alternatives Considered and Rejected (#` "!a,N(N(ZZ "Ԍ X-  16.` ` In this section of the FRFA, we analyze the projected reporting, recordkeeping, and   Lother compliance requirements that may apply to small entities and small incumbent LECs, and   we mention some of the skills needed to meet these new requirements. We also describe the   {steps taken to minimize the economic impact of our decisions on small entities and small   kincumbent LECs, including the significant alternatives considered and rejected. Overall, we   anticipate that the impact of these rules will be beneficial to small businesses since they may be   able to share infrastructure with larger incumbent LECs, in certain circumstances, enabling small   carriers to provide telecommunication services or information services that they otherwise might  XH-not be able to provide without building or buying their own facilities.gHT yO -#C\  P6Q/P#э 47 U.S.C.  259(a).g  X -` ` 1.  Section 259(a) (#  X -  17. ` ` Summary of Projected Reporting, Recordkeeping, and other Compliance  X -  Requirements. Regarding the scope of section 259(a), we allow the parties to section 259  X -  agreements to negotiate what "public switched network infrastructure, technology, information,  X -  and telecommunications facilities and functions" will be made available, without per se  X-  exclusions.XT {O-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. A., supra. In addition, we conclude that qualifying carriers should be able to obtain network   ifacilities and functionalities available under section 251 including lease arrangements and resale   .ԩ alternatively pursuant to section 251 or pursuant to section 259 (subject to the limitations in  XQ-section 259(b)(6)), or pursuant to both if they so choose.QT {O-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. B. 1., supra.  X#-  18. ` ` To the extent that there are small businesses that are providing incumbent LECs,   zthey will be required to make available "public switched network infrastructure, technology,   information, and telecommunications facilities and functions" to defined qualifying carriers. We   Lanticipate that compliance with such requests for infrastructure sharing may require the use of   legal, engineering, technical, operational, and administrative skills. At the same time, these rules   should create opportunities for small businesses that are qualifying carriers to utilize infrastructure   that might not otherwise be available. To obtain access to infrastructure from a providing   incumbent LEC, a qualifying carrier is required to pay the G"Eeconomic costs associated with the shared infrastructure.  X=-  @19. ` ` Steps Taken to Minimize the Significant Economic Impact of this Report and Order   xon Small Entities and Small Incumbent LECs, Including the Significant Alternatives Considered  X-  and Rejected. We reject proposals offered by those parties who would assert limitations that   zremove whole classes or categories of "public switched network infrastructure, technology,  X-  information and telecommunications facilities and functions" e.g., resale services and classes"b|,N(N(ZZ"  X-  >of nonnetwork information from the scope of section 259(a).dT {Oy-  ԍ See, e.g., GTE Comments at 4 ("Section 259 requires only the sharing of infrastructure, not services. When  yOC-  Congress intended to include services, it did so specifically . . . ."); Southwestern Bell Comments at i, 5; Sprint   Comments at 4 ("section 259 establishes requirements for the sharing of infrastructure, not the provision of service");  {O-  NCTA Comments at 4, n.13 (scope of section 259(a) should be no broader that section 251). But see RTC  {O-  Comments at 7; NCTA Comments at 4, n.13 (scope of section 259(a) should be no broader that section 251). See  {Og-also Infrastructure Sharing Report and Order Discussion at Section III. B. 1., supra.d Similarly, we declined to  X-  .exclude section 251provided interconnection elements from section 259 arrangements.HT {O-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. B. 1., supra. We   Lbelieve that the flexible approach that we adopt will give parties the ability to negotiate unique   zagreements that will vary based on individual requirements of parties in each case. Such an   approach is particularly important because as technology continues to evolve, definitions based   jon present network requirements seem likely to limit qualifying carriers' opportunities to obtain   <infrastructure unnecessarily. Further, we found no clear evidence of Congressional intent to limit the broad parameters of section 259(a).  X1-  B20. ` ` Overall, we believe that there will be a significant positive economic impact on   ]small entity carriers that as a result of section 259 agreements will be able to provide   advanced telecommunications and information services in the most efficient manner possible by   jtaking advantage of the economies of scale and scope of incumbent LECs. With regard to any   \small incumbent LECs that might receive requests for infrastructure sharing from qualifying   carriers, we believe that the statutory scheme imposed by Congress and adopted in our rules will   promote small business interests. First, we note that section 259(b)(1) protects providing   incumbent LECs small and large, alike from having to take any actions that are economically  Xy-  <unreasonable.yT {O-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. C., supra. Second, we note that, under our rules, an incumbent LEC may demonstrate that   the requesting carrier does not lack economies of scale and scope, relative to itself, with respect   to the requested infrastructure and, thus, may avoid infrastructure sharing obligations in certain  X4-situations.4l T {OQ-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. E., supra.  X-` ` 2.  Section 259(b) Terms and Conditions of Infrastructure Sharing (#  X-  21. ` ` Summary of Projected Reporting, Recordkeeping, and other Compliance  X-  Requirements. We require that providing LECs can recover their G"Eeconomic costs associated with   infrastructure sharing arrangements, and we conclude that market incentives already exist to   encourage providing and qualifying carriers to reach negotiated agreements that do so (section  X-  259(b)(1)). T {O/&-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. C. 1., supra. Congress directed in section 259(b)(4) that providing incumbent LECs make   Nsection 259 agreements available to qualifying carriers on just and reasonable terms and"ic ,N(N(ZZ"   conditions that permit such qualifying carrier to fully benefit from the economies of scale and   scope of such providing incumbent local exchange carriers. We decide that, although the   Commission has pricing authority to prescribe guidelines to ensure that qualifying carriers "fully   benefit from the economies of scale and scope of [the providing incumbent LEC]," it is not  X-necessary at this time to exercise this authority (section 259(b)(4)).T {O-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. C. 4., supra.  Xv-  ~22. ` ` We decide that section 259 agreements must be filed with the appropriate state   commission, or with the Commission if the state commission is unwilling to accept the filing,   jand must be made available for public inspection (section 259(b)(7)). Compliance with this rule will require legal and administrative skills.  X -  @23. ` ` Steps Taken to Minimize the Significant Economic Impact of this Report and Order   xon Small Entities and Small Incumbent LECs, Including the Significant Alternatives Considered  X -  Zand Rejected. We generally reject proposals that incumbent LECs should be required to develop,   purchase, or install network infrastructure, technology, and telecommunications facilities and   functions solely on the basis of a request from a qualifying carrier to share such elements when   such incumbent LEC has not otherwise built or acquired, and does not intend to build or acquire,  X}-  <such elements.}ZT {O-  wԍ MCI Comments at 7. Contra NYNEX Reply Comments at 10. See Infrastructure Sharing Report and Order  {OR-Discussion at Section III. C. 1., supra. Because the record did not indicate that there would exist any scale and scope   >benefits in situations where the providing incumbent LEC did not also use the facilities, we   iconcluded that such a result would be inappropriate. We believe that the approach that we adopt   <will enable small entity qualifying carriers to enjoy the benefits of section 259 sharing agreements without imposing undue burdens on providing incumbent LECs.  X-  24. ` ` Further, we decline to accept various proposals that the Commission adopt pricing  X-  schemes for infrastructure shared per section 259.T {OC-  ԍ See, e.g.,  MCI Comments at 7. Contra RTC Comments at 11. See Infrastructure Sharing Report and Order  {O -Discussion at Section III. C. 1. and 4., supra. Instead, we conclude that the negotiation   process, along with the available dispute resolution, arbitration, and formal complaint processes   available from the states and the Commission, will ensure that qualifying carriers fully benefit   from the economies of scale and scope of providing LECs. We believe that allowing providing   incumbent LECs including any small business to recover the G"Eeconomic costs associated with   Kinfrastructure sharing will encourage and facilitate infrastructure sharing agreements. We believe   >that such agreements will lead to mutual benefits for both qualifying carriers and providing incumbent LECs.  X -` ` 3.  Section 259(c) Information Disclosure Requirements "d,N(N(ZZ<"Ԍ X-  25. ` ` Summary of Projected Reporting, Recordkeeping, and other Compliance  X-  Requirements. The statute also requires incumbent LECs to provide "timely information on the   planned deployment of telecommunications services and equipment" to any parties to  X-  \infrastructure sharing agreements.T {O8-#C\  P6Q/P#э See Infrastructure Sharing Report and Order at Section III. D., supra. The rules we adopt herein require disclosure by each   =providing incumbent LEC for each of its section 259derived agreements and require that such   jnotice and disclosure are only for the benefit of the parties to a section 259derived agreement.   ZUnder our rules, providing incumbent LECs must provide notice of changes in their networks that   lmight affect qualifying carriers' ability to utilize the shared infrastructure. Should a small   Oincumbent LEC be subject to this requirement, we anticipate that it will require use of engineering, technical, operational, and administrative skills.  X -  @26. ` ` Steps Taken to Minimize the Significant Economic Impact of this Report and Order   xon Small Entities and Small Incumbent LECs, Including the Significant Alternatives Considered  X -  and Rejected. A number of parties suggest that the Commission need not adopt any new   disclosure rules pursuant to section 259(c) because other network disclosure provisions provide  X -  jsimilar notice of changes in the network.f ZT {O-ԍ See, e.g.,NYNEX Comments at 1617; GTE Comments at 12.f We conclude that specific notice of changes to an   incumbent LEC's network that affect a qualifying carrier's ability to utilize the shared   infrastructure, a qualifying carrier including small businesses will enable qualifying carriers,   including small entities, to maintain a high level of interoperability between its network and that of the providing incumbent LEC.  X%-  #27. ` ` We also decide that section 259(c) does not include a requirement that providing   incumbent LECs provide information on planned deployments of telecommunications and services   Zprior to the make/buy point. We conclude that section 259 does not require such mandatory joint   planning, but we note that providing incumbent LECs may have obligations to coordinate network planning and design under sections 251(a), 256, 273(e)(3) and other provisions.  X-` ` 4.  Section 259(d) Definition of Qualifying Carriers  Xm-  28. ` ` Summary of Projected Reporting, Recordkeeping, and other Compliance  XX-  xRequirements. We adopt a rebuttable presumption that carriers satisfying the statutory definition   of "rural telephone company" in section 3(37) also satisfy the qualifying criteria in section   259(d)(1) of lacking "economies of scale or scope," but we decide to exclude no class of carriers  X-  from attempting to show that they qualify under section 259(d)(1).T {O#-ԍ See Infrastructure Sharing Report and Order Discussion at Section III. E., supra. A carrier otherwise   |qualifying under section 259(d) therefore may be entitled to request and share certain   jinfrastructure and, at the same time, be obligated to share the same or other infrastructure. We   conclude that parties to section 259 negotiations can and will make the necessarily factbased   evaluations of their relative economies of scale and scope pertaining to the infrastructure that is"!e~,N(N(ZZ "   requested to be shared. Complying with the section 259 process set out in our rules may require small incumbent LECs and requesting small entities to use legal and negotiation skills.  X-  @29. ` ` Steps Taken to Minimize the Significant Economic Impact of this Report and Order   xon Small Entities and Small Incumbent LECs, Including the Significant Alternatives Considered  X-  Nand Rejected. We believe that the approach we take will facilitate negotiations between   requesting carriers and incumbent LECs. We expect that many if not most requests for   xinfrastructure sharing agreements will be made by carriers whose customers reside predominantly,  XL-  if not exclusively, in rural, sparselypopulated areas.LT {O -  ԍ See RTC Comments at 1920 (urging the Commission to adopt a rebuttable presumption in favor of "rural telephone companies"). At the same time, there is nothing in the  X5-  statutory language or legislative history to persuade us that Congress intended such a per se   restriction on who can qualify under section 259(d). Thus, we rejected proposals that we limit  X -  .qualifying carriers to those who meet the requirements of section 3(37).G "T {O-ԍ See NCTA Comments at 3.G We opposed these   =proposals because they would unduly limit the opportunities to engage in section 259 sharing   jagreements to those qualifying carriers located in particular geographic areas. We believe that   the approach that we have adopted will enable all small entity qualifying carriers to enjoy the benefits of section 259 sharing agreements without regard to their geographic location.  X- F.` ` Report to Congress  XQ-  30. ` ` The Commission shall send a copy of this Final Regulatory Flexibility Analysis,  X:-  along with this Report and Order, in a report to Congress pursuant to the Small Business   Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801 (a)(1)(A). A copy of this FRFA will also be published in the Federal Register.