970102.docx

MEMORANDUM
TO: JOE CUSICK
BIRDELLE BROWN
JIM LONG
BILL EASTLAKE
STEPHANIE MILLER
FROM:SUSAN HAMLIN
DATE:JANUARY 2, 1997
RE:EXEMPTIONS FOR CERTAIN RURAL TELEPHONE COMPANIES
According to § 251(f)(1)(A) of the 1996 Telecommunications Act, rural telephone companies are exempt from certain interconnection obligations.  Rural telephone company is defined according to the Act as a local exchange carrier that is operating in a service area of 10,000 inhabitants or less or provides telephone exchange service to fewer than 50,000 access lines or has 15% of its access lines in communities of 50,000 or more.  See § 153(47).  In Idaho, with the exception of U S WEST and GTE, all local exchange providers fall into the category of rural telephone companies pursuant to the 1996 Act.  251(f) provides the exemptions for rural telephone companies.  It states that the duty to negotiate to provide interconnection unbundled access resale and collocation as enumerated in 251(c) shall not apply to rural telephone companies, however, if a rural telephone company receives a bona fide request for interconnection and the state commission determines that such a request is not unduly economically burdensome, is technically feasible and consistent with 254 (universal service), then (c) will apply.  In other words 251(f)(1) grants rural telephone companies an exception from § 251(c) until the rural telephone company has received a bona fide request for interconnection, services, or network elements, and the state the state commission determines that the exemption should be terminated.  Section 251(s)(2) allows LECs the fear of 2% of the nation’s subscriber lines to ??? of state commission for a suspension or modification of any requirement of § 251(b) and (c).  Section 251(f) imposes a duty on state commissions to make determinations under this section and establishes the criteria and procedures for the state commissions to follow.  In the FCC first report and order for Docket No. 96-325, paragraph 278, the FCC states “we believe that Congress did not intend to insulate smaller, overall LECs from competition, and thereby prevent subscribers in those communities from obtaining the benefit of competitive local exchange service.  Thus, we believe that, in order to justify continued exemption once a bona fide request has been made, or to justify suspension, or modification of the Commission’s § 251 requirements, a LEC must offer evidence that application of those requirements
would be likely to cause undue economic burdens beyond economic burdens typically associated with efficient competitive entry.  State commissions will need to decide on a case-by-case basis whether such a showing has been made.”  Paragraph 278 at 559.
The FCC further states that given the procompetitive focus of the 1996 Act that rural LECs must prove to state commissions that they should continue to be exempt pursuant to 251(f)(1) once a bona fide request has been made.  Further that smaller companies must prove to state commissions pursuant to 251(f)(2) that suspensions or modifications of the requirements of 251(b) or (c) should be granted.  Further, it states that, it is appropriate to place the burden of proof on the party seeking to leave from otherwise applicable requirements.  Paragraph 279 at 560.  A rural company that falls within § 251(f)(1) is not required to make any showing until it receives a bona fide request for interconnections, services, or network elements.  The FCC declined in this order to establish guidelines regarding what constitutes a bona fide request.  Id. at 560.
Given the exemption standards set out in the 1996 Act, the commission should be aware of the intended boundary by new entrants into the local market.  For instance, in some applications for a Certificate of Public Convenience and Necessity, the service area is indicated “throughout the state of Idaho.”  However, upon further review of the application it indicates that the service territory is only U S WEST.  It is my opinion that an application for a Certificate of Public Convenience and Necessity is not a bona fide request for interconnection of rural telephone companies.  It is advised that orders approving a Certificate of Public Convenience and Necessity should be particular of the service area that it approves.  In other words, be conscientious of applications that request service  in rural telephone zones.
Susan Hamlin
vld:M:ruraltel.sh