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                                Before the
                     Federal Communications Commission
                          Washington, D.C. 20554
                                                                           

In the Matter of       )     
      )
Petitions for LATA Association Changes  )     CC Docket No. 96-158
by Independent Telephone Companies      )
      )     File Nos.  NSD-LM(A)-97-27 
      )     NSD-LM(A)-97-28
      )

MEMORANDUM OPINION AND ORDER


Adopted:  July 23, 1997                       Released:  August 6, 1997   

By the Commission:

I.      INTRODUCTION
     
 1.  Two independent telephone companies (ITCs or Petitioners) have filed petitions with
the Commission requesting a change in the local access and transport area (LATA) association
of certain of their exchanges.  When the LATAs were created, most independent exchanges were
classified as "associated" with a particular LATA and BOCs were only allowed to provide service
within a LATA and the associated exchanges.  The ITCs state that their exchanges are currently
associated with the Amarillo LATA, but that as part of an effort to upgrade service, they plan
to route traffic for these exchanges through a BOC switch in the Lubbock LATA.  They state that
in order for the BOC to carry this traffic, a change in LATA association is required. 
Southwestern Bell Telephone Company (SWBT) filed a statement supporting the ITC petitions
and requesting a modification of the Lubbock LATA, pursuant to Section 3(25) of the Act, to
permit this change in association.
  
 2.  For the reasons discussed below, we grant Petitioners' requests for a change in LATA
association.  In addition, we modify the Lubbock LATA to permit this change.  Finally, we
provide guidelines for future LATA association requests.  

II.      BACKGROUND

A.    LATA Associations Under the Consent Decree

 3.  On August 24, 1982, the United States District Court for the District of Columbia
(Court) entered an order (Consent Decree) that required AT&T to divest its ownership of the Bell
Operating Companies (BOCs).  The Court divided all Bell territory in the continental United
States into geographic areas called LATAs.  Under the Consent Decree, the BOCs were
permitted to provide telephone service within a LATA (intraLATA service), but were not
permitted to carry traffic across LATA boundaries (interLATA service).  InterLATA traffic was
to be carried by interexchange carriers. 

 4.  The LATAs did not cover territory served by independent telephone companies
(ITCs).  The Court, however, noted that there were often joint operating arrangements between
independent exchanges and neighboring BOC facilities.  For example, BOCs often switched
traffic between their end offices and the end offices of the independents, which then carried the
traffic to its final destination.  If all of this traffic were considered interLATA, BOCs could not
participate in these arrangements and significant and costly network rearrangements would have
been necessary.  To prevent the need for such rearrangements, the Court classified most
independent exchanges as "associated" with a particular BOC LATA.  Traffic between a BOC
LATA and an associated exchange was treated as intraLATA, and thus could be carried by the
BOC, while traffic between a BOC LATA and an unassociated exchange was treated as
interLATA, and thus could not be carried by the BOC.  The ITCs, themselves, were not subject
to the restrictions imposed by the Consent Decree, and could carry traffic regardless of whether
that traffic crossed LATA boundaries. 

 5.  The Court subsequently received more than a hundred additional requests involving
LATA associations, including requests for new associations, disassociations, and changes in
association from one LATA to another.  The Court developed a streamlined process for
answering such requests both because of the large number of requests involved and because most
of the requests were non-controversial.  Under this process, the ITC would submit its request
to the Department of Justice (DOJ).  DOJ would review the request and then submit the request
to the Court along with DOJ's recommendation.  The requests were typically filed because an
ITC planned to upgrade its network in a manner that would require routing traffic through a BOC
switch in a different LATA.  The Court generally granted these requests if the changes in
associations would avoid the need for expensive network reconfiguration and would not endanger
competition.  In granting requests for a change in LATA association, the Court also allowed the
continuation of existing ELCS routes between the independent exchange and the original LATA.

B.    LATA Associations under the Telecommunications Act of 1996

 6.  On February 8, 1996, the Telecommunications Act of 1996 (1996 Act) became law,
amending the Communications Act of 1934 (Act).  Pursuant to the 1996 Act, matters previously
subject to the Consent Decree are now governed by the Act.  Section 271(b)(1) of the Act
prohibits a BOC from providing "interLATA services originating in any of its  in-region  States"
until the BOC takes certain steps to open its own market to competition and the Commission
approves the BOC's application to provide such service.  "InterLATA service" is defined as
"telecommunications between a point located in a local access and transport area and a point
located outside such area," and thus would include traffic between an independent exchange and
a BOC LATA.  The Act does not specifically address LATA associations.  Section 271(f),
however, states that BOCs are not prohibited from engaging in an activity to the extent that such
activity was previously authorized by the Court.  Thus, BOCs may continue to provide service
to independent exchanges that were classified as "associated" with a LATA by the Court. 
Finally, 
Section 3(25)(B) of the Act provides that BOCs may modify LATA boundaries, if such
modifications are approved by the Commission.
 
III.    PLEADINGS

 7.  The petitions request a change in the association of Mid-Plains' Silverton exchange,
and Cap Rock's Turkey and Quitaque exchanges, from the Amarillo LATA to the Lubbock
LATA.  Petitioners state that they recently purchased these exchanges from GTE Southwest, Inc.
(GTE) and that these exchanges are currently served by a GTE access tandem.  They further state
that as part of an effort to upgrade service, Petitioners plan to re-route this traffic through their
own switching facilities.  Mid-Plains states that Silverton traffic is currently carried over copper
facilities using a Lenkurt Analog Carrier System and that it plans to re-route this traffic, via a
fiber optic cable, to its SS7-equipped switch at Kess, Texas.  This change will allow the
provision of Touch Tone and CLASSTM features, including Caller ID, to Silverton subscribers. 
Cap Rock states that the Turkey and Quitaque exchanges are currently served by "antiquated"
analog switch facilities and that it plans to re-route this traffic, via fiber optic cable, to its
CLASSTM 4/5 digital tandem switch at Spur, Texas.  This change will allow the provision of
digital remotes, toll ticketing, and equal access to subscribers in the Turkey and Quitaque
exchanges.  Petitioners emphasize that both the Kess and Spur switches will be routing traffic
through a SWBT tandem switch that is located in the Lubbock LATA.  Petitioners also state
that there are approximately 430 subscribers in the Silverton exchange and 591 subscribers in
Turkey and Quitaque. 

 8.  SWBT filed supplements to both the Mid-Plains and Cap Rock petitions.  These
supplements support the requests for a change in LATA association.  SWBT also requests a
modification of the Lubbock LATA boundary, pursuant to Section 3(25) of the Act, to permit this
change in association.

                             IV.  DISCUSSION

A.    General Considerations

 9.  Section 3(25) of the Act defines LATAs as those areas established prior to enactment
of the 1996 Act or established or modified by a BOC after such date of enactment and approved
by the Commission.  Section 271 of the Act prohibits a BOC from providing interLATA services
until such time as certain enumerated conditions are satisfied.  Because the Court allowed BOCs
to carry traffic between a LATA and an "associated" independent exchange, BOCs may continue
to carry such traffic pursuant to the grandfathering provisions of Section 271(f).  In order for an
ITC to route traffic through BOC facilities in an unassociated LATA, however, the statute
appears to require a BOC either to modify the LATA so that the route no longer crosses a LATA
boundary or to satisfy the requirements of Section 271. 

 10.  Petitioners have an immediate need to reconfigure their networks in a manner that
will involve routing traffic through a BOC LATA other than the one with which they are
currently associated.  None of the BOCs, however, have yet met the Section 271 requirements
and there is no time limit by which they must do so.  Thus, requiring the BOC to meet the
Section 271 requirements would not be the most expeditious way to ensure that the ITCs will be
able to reconfigure their networks in a timely manner.  Furthermore, the Section 271 requirements
were intended to ensure that BOCs do not prematurely enter into the interexchange market. 
Given the small number of access lines in the independent exchanges here, and the fact that
Petitioners will merely be switching their routing of traffic from one SWBT LATA to another,
it is highly unlikely that allowing this modification would reduce the BOC's motivation to open
its own market to competition.  Thus, requiring the BOC to meet the Section 271 requirements
before permitting such re-routing of traffic by the ITCs would not be necessary to further
Congress's intent to guard against competitive abuses.

 11.  We conclude that LATA modifications to permit a change in LATA association
would best achieve the desired goal of allowing ITCs to reconfigure their networks in the
situation described above.  We find that we have the authority to grant such changes pursuant
to Sections 3(25) and 4(i) of the Act.  In addition, we note that the vast majority of independent
exchanges are currently classified as "associated" with a LATA.  LATA associations and
provisions for changing these associations have been in place since the LATAs were first created. 
We find that, at least while the BOCs are still subject to restrictions on the provision of
interLATA service, allowing the continuation of LATA "associations" and a procedure for
changing these associations will help avoid confusion in the industry and simplify the network
change process for ITCs.  Finally, LATAs were only intended to restrict the activities of the
BOCs, not the ITCs, and granting relief in this case will avoid any unnecessary limitations on
the Petitioners' ability to upgrade their interconnected networks.  
 
 12.  LATA modification to permit a change in association is both consistent with the
statute and serves the public interest.  Nothing in the statute or legislative history indicates that
a LATA cannot be modified for this purpose.  Furthermore, as explained above, changes in
LATA "association" to permit precisely the type of ITC reconfigurations at issue here were
regularly and routinely granted by the Court under the terms of the AT&T Consent Decree. 
Although Congress did not explicitly include corresponding authority when it amended the
Communications Act, Congress did acknowledge the possible need for changes to the LATA
boundaries in enacting Section 3(25).  In addition, nothing in either the statute or the legislative
history suggests a decision by Congress intentionally to eliminate the ability of an ITC to change
the LATA association of an independent exchange when such a change is necessary to permit
the latter to upgrade or reconfigure its network.  Thus we conclude that a broad reading of the
term "modify" in Section 3(25), to include modifications to permit a change in association, is
consistent with the statutory scheme and congressional intent.  Moreover, we will consider each
future request for changes in association carefully, weighing the need for the modification against
the potential harm from anticompetitive BOC activity.  

B.    Association Change Requests 

 13.  We find that the public interest will be served by granting Petitioners' requests for
a change in LATA association, along with a modification of the Lubbock LATA in order to
permit this change.  Mid-Plains and Cap Rock are small ITCs seeking to upgrade their networks
in order to improve service to subscribers.  Allowing Petitioners to route traffic through their own
facilities at Kess and Spur, and then through the SWBT tandem in Lubbock, will allow them to
improve service to their subscribers in an efficient manner.  Furthermore, the LATA boundaries
were only intended to restrict the activities of SWBT, not the ITCs, and granting relief here will
avoid any unnecessary limitations on Petitioners' ability to upgrade their own networks.  In
addition, permitting SWBT to carry this traffic will not have any significant adverse effect on
competition.  This is true both because of the small number of subscribers in the independent
exchanges involved, and because Petitioners are merely seeking to switch the LATA association
of these exchanges from one SWBT LATA to another.     

 14.  Accordingly, pursuant to Sections 3(25) and 4(i) of the Act, we change the
association of the Silverton, Turkey, and Quitaque exchanges from the Amarillo LATA to the
Lubbock LATA, and modify the Lubbock LATA to permit this change in association.  Because
the Silverton, Turkey, and Quitaque exchanges are now associated with the Lubbock LATA,
SWBT may provide the same services to these exchanges through the Lubbock LATA as it was
previously authorized to provide through the Amarillo LATA, and the provisions of the Act
governing intraLATA service will apply to such services.  The association between the
Silverton, Turkey, and Quitaque exchanges and the Amarillo LATA is terminated, service
between these exchanges and the Amarillo LATA will now be considered interLATA, and the
provisions of the Act governing interLATA service will apply to such services.  

V.      FUTURE LATA ASSOCIATION REQUESTS 

 15.   The Common Carrier Bureau has authority to act on petitions for changes in LATA
association and connected modification of LATA boundaries, consistent with the principles
established in this order, pursuant to the delegation of authority contained in Sections 0.91 and
0.291 of the Commission's rules.  We conclude that the following set of guidelines will assist
the ITCs and BOCs in filing such petitions, and the Bureau in acting on these petitions.  First,
we request that each petition be filed by the ITC pursuant to the application filing requirements
set forth in Sections 1.742 and 1.743 of the Commission's rules.  Second, we ask that each
individual LATA association request be the subject of a separate petition.  Third, we request that
each petition be labeled "ITC Request for LATA Relief Between the [ITC exchange name(s)] and
the [LATA name]."  Finally, we request that each petition include the following information,
under separately numbered and labeled categories, as indicated below:  

(1)   Type of request (e.g., new association, disassociation, change of existing association);

(2)   Exchange information (provide name of the independent exchanges, LATAs and carriers
      involved; indicate the LATA, if any, with which the independent exchange is currently
      associated);  

(3)   Number of access lines or customers (for each independent exchange);

(4)   Public interest statement (provide a detailed statement explaining why granting the
      association request would serve the public interest.  Include a description of any planned
      network changes that will require routing ITC traffic through BOC facilities in a different
      LATA); 

(5)   Map (showing the exchanges and LATA boundaries involved and including a scale
 showing distance);    

(6)   ELCS Routes  (if the request is for a disassociation or change in LATA association,
      indicate whether there are any local calling routes between the independent exchange and
      the LATA with which it is currently associated; if there are such routes, list each of them
      and indicate whether they should be grandfathered);  

(7)   BOC supplement  (attach a supplement to the petition from the BOC(s) serving the
      affected LATA(s) requesting a modification of the LATA boundary, pursuant to Section
      3(25) of the Act, to permit the association change). 

A carrier will be deemed to have made a prima facie case supporting grant of a proposed
association change if the petition:  (1) states that the association change is necessary because of
planned upgrades to the ITC's network or service that will require routing traffic through a
different BOC LATA; (2) involves a limited number of access lines; and (3) includes a
statement from the affected BOC(s) requesting a LATA modification, pursuant to Section 3(25)
of the Act, to permit this change in association.  

 16.  We request that any LATA association requests filed with the Commission, but not
addressed in this order, be re-filed so that they comply with these guidelines.  Each petition will
be assigned a LATA modification (association) (LM(A)) file number and placed on public notice. 


                            VI.      CONCLUSION

 17.  For the reasons set forth above, we grant Petitioners' requests for a change in the
LATA association of certain independent exchanges and modify the Lubbock LATA to permit
this change.  We also provide guidelines for future LATA association requests.  These actions
serve the public interest because they will allow ITCs to provide upgraded services to consumers
in an efficient manner.

                        VII.      ORDERING CLAUSES

 18.  Accordingly, IT IS ORDERED, pursuant to Sections 3(25) and 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C.  153(25), 154(i), that the requests of
Mid-Plains Rural Telephone Cooperative, Inc. (Mid-Plains), File No. NSD-LM(A)-97-27, and Cap
Rock Telephone Cooperative, Inc. (Cap Rock), File No. NSD-LM(A)-97-28, for LATA
association changes ARE GRANTED.    

 19.  IT IS FURTHER ORDERED, pursuant to Sections 3(25) and 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C.  153(25), 154(i), that the requests of
Southwestern Bell Telephone Company (SWBT) for LATA modifications for the purpose of
permitting these changes in association ARE APPROVED.  

 20.  IT IS FURTHER ORDERED, pursuant to Sections 3(25) and 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C.  153(25), 154(i), that the association of
the Silverton, Turkey, and Quitaque exchanges is changed from the Amarillo, Texas LATA to
the Lubbock, Texas LATA.  The Lubbock LATA is modified to permit these changes in
association.  The Silverton, Turkey, and Quitaque exchanges are now associated with the
Lubbock LATA and SWBT may provide the same services to these exchanges through the
Lubbock LATA as it was previously authorized to provide through the Amarillo LATA.  The
association between the Silverton, Turkey, and Quitaque exchanges and the Amarillo LATA is
terminated and service between these exchanges and the Amarillo LATA will now be considered
interLATA.  

 21.  IT IS FURTHER ORDERED that pursuant to section 416(a) of the Act, 47 U.S.C.
 416(a), the Secretary SHALL SERVE a copy of this order upon the parties to this proceeding. 


      FEDERAL COMMUNICATIONS COMMISSION



      William F. Caton
      Acting Secretary