SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL

     Re:  Petition for Forbearance of the Independent Telephone and
     Telecommunications Alliance (AAD File No. 98-43), and related proceedings (CC
     Docket No. 97-11, CC Docket No. 98-81, CC Docket No. 96-150, CC Docket No.
     98-117, WT Docket No. 96-162, CC Docket No. 96-149, CC Docket No. 96-61)
    
I am pleased to join my colleagues in granting some of the regulatory relief requested
in the forbearance petition filed by the Independent Telephone and Telecommunications
Alliance (ITTA) on behalf of mid-sized local exchange carriers.  Although I concur in the
results of most of these items (especially where regulatory relief is granted), I am, however,
compelled to dissent in part to three of the decisions, and I continue to be concerned about
the Commission's handling and analysis of forbearance requests under section 10 of the
Communications Act.

In these various items (some concern other ongoing rulemaking proceedings), we
address nine regulatory requirements from which ITTA, on behalf of mid-sized LECs,
requested forbearance.  We adopted seven different Orders in response to the petition (and
other petitions or notices).  In looking at these Orders as a package and individually, while
some relief is granted, I continue to be concerned that, where forbearance is denied, these
petitions are not being treated in a manner fully consistent with the intent and spirit of
section 10 of the Act.  While I concur with the outcome of most of these items -- since I
believe we are reaching the correct result -- I  do continue to question (along lines similar to
those I have expressed elsewhere) our means and methods for handling forbearance
petitions.

I must respectfully dissent, however, from the continued application of separate affiliate
requirements for the provision of in-region interexchange services and commercial mobile
radio services (CMRS) by mid-sized LECs.  My reasons are twofold.  First, I continue to be
uneasy with the degree to which reliance on this and similar regulatory devices is based on
speculation about anticompetitive behavior.  I fully understand that any analysis about
potentially harmful future conduct entails some assessment of likely conduct.  Historically,
the agency has stewarded the basic principle of nondiscrimination, resulting in regulatory
protections against cost misallocation and anticompetitive behavior flowing from control of
a "bottleneck" facility.  Our precedents, such as separate affiliate requirements, were rightly
premised on the existence of a true monopolist (sanctioned by the state) and the associated
risks.  In that environment, not only did the incumbent have monopoly power, there was no
prospect of competition nor any watchful present or future competitors.  These safeguards
were designed to protect consumers from the potential ill effects of such accumulated
power.


I believe, however, that much has changed.  The movement toward a competitive
environment means that we must take into fuller consideration the necessity, viability, and
the potentially distorting competitive consequences of old familiar regulatory devices. 
Thus, to the extent we must speculate about potential harm (to competition and consumers)
we must, too, factor in more fully the potential disciplining effects of both real competition
and potential competition.  I see a continued tendency to invoke the ancient mantra "to
protect against discriminatory this or that" as glib justification for continued regulatory
constraints.  I believe we must work harder and press more heavily on the traditional
rationales.  I do not believe we did so in this case.  Moreover, to do so will take time and
resources, which we do not have when forbearance petitions are presented for deliberation
with only a second or two left on the statutory shot-clock, as was the case here.

My second concern rests with the extent that the Commission expresses a tendency to
justify certain regulatory restrictions in the name of promoting or advancing competition. 
That alone, of course, may be worthy, but we are not free to do so in a manner that involves
intermediate judgements that differ from those reached by Congress.  Let me explain more
fully.

Prior to the 1996 Act, I believe both Judge Greene and the FCC did seek to create
limited competitive markets out of the monopoly provider's control and, concomitantly,
impose safeguards designed to keep the monopolist from thwarting fledgling competitors as
well as ensuring that core regulatory goals were not compromised by such competitive
forays.  These competitive excursions were limited and usually merely incremental voyages
into competitive service markets.  But, we must be reminded that the fundamental paradigm
remained regulation and central control over the most prized services.  The key point is that
Judge Greene and the Commission had a fairly wide birth to develop the conditions of their
market-opening efforts. 

The 1996 Act, however, altered the paradigm and structured the basic terms of
competition.  Competitive services were to become the rule, and regulated services the
limited exceptions.  By its act, Congress crafted a comprehensive competitive model,
designed specifically to supplant the MFJ.  In weaving this fabric, Congress made a number
of significant judgements.  The one most relevant here is that it concluded that, rather than
restrict the ILECs to regulated wholesale service, it allowed ILECs to compete at the retail
level as well.  This judgement may prove unwise or unworkable, but it is the one that
Congress chose.

Congress was not oblivious to the challenges or perils of allowing the ILECs to compete,
however, in long distance and other services while they still controlled many of the
necessary facilities and inputs that other competitors would need.  It addressed this problem
by crafting an access and interconnection regime (sections 251 and 252) that placed unique
duties and obligations on ILECs.  In addition, Congress recognized that different classes of
LECs required different levels of safeguards and incentives.  Bell Operating Companies
(BOCs), and they alone, are subject to sections 271 and 272.  ILECs have more duties and
obligations than CLECs, and so on.  Thus, whether one likes it or not, Congress
substantially addressed the dangers of "bottleneck control" and discriminatory incentives in
the Act.

As a consequence, I believe, the Commission is not as free (as it perhaps was prior to the
Act) to steward a transition to a competition regime different than that of the one chosen by
Congress.  Specifically, as it relates to the question of separate affiliates, we must be careful
not to impose regulatory requirements that in practical effect amount to wholesale/retail
separations, where Congress intended none.  (I note that in contrast to the carriers
petitioning here, BOCs are expressly subject to separate affiliates for some services).  For
this reason, I am uncomfortable with the analysis proffered to support continued separate
affiliate requirements.  We cite "bottlenecks" and "incentives" in what subtly (though
perhaps unintentionally) seems to me a preference for wholesale separation in a competitive
market.  By way of illustration, the Orders often speak of the importance of separate
affiliates to ensure that they obtain facilities on an "arm's length basis" and to ensure that all
competing in-region providers and other carriers have the same access (i.e., wholesale).

Though Congress made judgements about the competitive ground-rules, it did not endeavor
to sweep through our regulations and apply those judgments to each and every structural
requirement on the books.  Instead, it directed us to search out such rules and apply the new
paradigm.  To do so, it gave the Commission the twin engines of the biennial review and
forbearance. This is one reason I believe that section 10 is important in evaluating the
continued validity of separate affiliate requirements, not otherwise mandated by law, where
competitive conditions and/or other regulatory or enforcement mechanisms are already in
place. 

I believe that the petition before us raised substantial questions with regard to the need
for structural separation in light of present conditions.  Accordingly, I believe that in
response to ITTA's forbearance petition, we should have examined more carefully
alternative methods of enforcing core ILEC responsibilities to see if there wasn't a more
rational, limited approach.  For example, we should have explored including a sunset of the
structural separation requirement for in-region interexchange services like that available to
BOCs in section 272 and treating mid-sized LECs more like rural carriers under the CMRS
separate affiliate requirement. 

For these reasons, I respectfully dissent in part from these particular decisions.