47 U.S.C. § 272 — Separate affiliate; safeguards

submitted 92 years ago by Pub. L. 104-104 to r/title-47-TELECOMMUNICATIONS · 1,190 words · no verdicts yet

in plain englishAI-generated · not legal advice

This telecom law makes Bell operating companies run certain services — manufacturing, long-distance calling, and information services — through a legally separate affiliate. That affiliate must keep separate books, staff, and finances, and deal with the Bell company at arm's length. The rules include audits, nondiscrimination duties, and a sunset date for most requirements.

(a) Separate affiliate required for competitive activities (1) In general — A Bell operating company that is a local exchange carrier subject to section 251(c)'s requirements cannot provide certain services (listed in paragraph (2)) unless it does so through one or more affiliates that are legally separate from the regulated phone company and that meet subsection (b)'s requirements. (2) Services for which a separate affiliate is required — Those services are: (A) manufacturing activities, as defined in section 273(h); (B) starting interLATA telecommunications service, except for certain incidental, out-of-region, or previously authorized services described elsewhere in this title; and (C) interLATA information services, except for electronic publishing and alarm-monitoring services as defined elsewhere. (b) Structural and transactional requirements — The required separate affiliate must: (1) operate independently from the Bell company; (2) keep its own books, records, and accounts, separate from the Bell company's, in a form the FCC prescribes; (3) have its own officers, directors, and employees, different from the Bell company's; (4) not obtain credit in a way that would let a creditor go after the Bell company's assets if the affiliate defaults; and (5) conduct all its business with the Bell company at arm's length, in writing, and open to public inspection. (c) Nondiscrimination safeguards — In dealing with this affiliate, a Bell operating company (1) cannot treat the affiliate better than any other company when providing or buying goods, services, facilities, and information, or when setting standards, and (2) must account for all dealings with the affiliate using accounting principles the FCC designates or approves. (d) Biennial audit — (1) A company with a required separate affiliate must obtain and pay for an independent joint federal/state audit every two years, checking whether it followed this section's rules, especially the separate-accounting requirements in subsection (b). (2) The auditor sends the results to the FCC and to each state commission where the audited company provides service; those results are made available for public inspection, and any party can submit comments on the final report. (3) For these audits: (A) the independent auditor, the FCC, and state commissions can access the financial records needed to verify relevant transactions; (B) the FCC and state commissions can see the auditor's working papers and supporting materials; and (C) state commissions must set up procedures to protect any proprietary information submitted to them. (e) Fulfillment of certain requests — A Bell operating company and its section 251(c) affiliate must: (1) fill outside companies' requests for telephone exchange service and exchange access within no longer a period than it takes to serve itself or its own affiliates; (2) not provide facilities, services, or information about its exchange access to its own affiliate unless it makes the same available to other interLATA providers in that market on the same terms; (3) charge its affiliate — or count against itself, if using the access for its own services — an amount no less than it charges unaffiliated long-distance carriers for the same access; and (4) may provide interLATA or intraLATA facilities or services to its interLATA affiliate only if it makes the same available to all carriers at the same rates and terms, with costs properly allocated. (f) Sunset — (1) Most of this section's requirements, other than subsection (e), stop applying to a Bell company's manufacturing and interLATA telecommunications services three years after that company (or any Bell operating company affiliate) is authorized to provide interLATA service under section 271(d), unless the FCC extends that three-year period by rule or order. (2) Those same requirements stop applying to interLATA information services four years after February 8, 1996, unless the FCC extends that four-year period. (3) Nothing in this subsection limits the FCC's separate authority under other parts of this chapter to require safeguards consistent with the public interest. (g) Joint marketing — (1) A required affiliate cannot market or sell the Bell company's telephone exchange services unless the Bell company also lets other companies offering similar service do the same marketing and selling. (2) A Bell company cannot market or sell its affiliate's interLATA service within a state until it is authorized to provide interLATA service in that state under section 271(d). (3) This kind of joint marketing and sale is not considered a violation of the nondiscrimination rules in subsection (c). (h) Transition — For any activity a Bell operating company was already engaged in on February 8, 1996, it has one year from that date to come into compliance with this section's requirements.

the actual law source: uscode.house.gov ↗public domain

(a) Separate affiliate required for competitive activities

(1) In general

A Bell operating company (including any affiliate) which is a local exchange carrier that is subject to the requirements of section 251(c) of this title may not provide any service described in paragraph (2) unless it provides that service through one or more affiliates that—

(A)

are separate from any operating company entity that is subject to the requirements of section 251(c) of this title; and

(B)

meet the requirements of subsection (b).

(2) Services for which a separate affiliate is required

The services for which a separate affiliate is required by paragraph (1) are:

(A)

Manufacturing activities (as defined in section 273(h) of this title).

(B)

Origination of interLATA telecommunications services, other than—

(i)

incidental interLATA services described in paragraphs (1), (2), (3), (5), and (6) of section 271(g) of this title;

(ii)

out-of-region services described in section 271(b)(2) of this title; or

(iii)

previously authorized activities described in section 271(f) of this title.

(C)

InterLATA information services, other than electronic publishing (as defined in section 274(h) of this title) and alarm monitoring services (as defined in section 275(e) of this title).

(b) Structural and transactional requirements

The separate affiliate required by this section—

(1)

shall operate independently from the Bell operating company;

(2)

shall maintain books, records, and accounts in the manner prescribed by the Commission which shall be separate from the books, records, and accounts maintained by the Bell operating company of which it is an affiliate;

(3)

shall have separate officers, directors, and employees from the Bell operating company of which it is an affiliate;

(4)

may not obtain credit under any arrangement that would permit a creditor, upon default, to have recourse to the assets of the Bell operating company; and

(5)

shall conduct all transactions with the Bell operating company of which it is an affiliate on an arm’s length basis with any such transactions reduced to writing and available for public inspection.

In its dealings with its affiliate described in subsection (a), a Bell operating company—

(1)

may not discriminate between that company or affiliate and any other entity in the provision or procurement of goods, services, facilities, and information, or in the establishment of standards; and

(2)

shall account for all transactions with an affiliate described in subsection (a) in accordance with accounting principles designated or approved by the Commission.

(d) Biennial audit

(1) General requirement

A company required to operate a separate affiliate under this section shall obtain and pay for a joint Federal/State audit every 2 years conducted by an independent auditor to determine whether such company has complied with this section and the regulations promulgated under this section, and particularly whether such company has complied with the separate accounting requirements under subsection (b).

(2) Results submitted to Commission; State commissions

The auditor described in paragraph (1) shall submit the results of the audit to the Commission and to the State commission of each State in which the company audited provides service, which shall make such results available for public inspection. Any party may submit comments on the final audit report.

(3) Access to documents

For purposes of conducting audits and reviews under this subsection—

(A)

the independent auditor, the Commission, and the State commission shall have access to the financial accounts and records of each company and of its affiliates necessary to verify transactions conducted with that company that are relevant to the specific activities permitted under this section and that are necessary for the regulation of rates;

(B)

the Commission and the State commission shall have access to the working papers and supporting materials of any auditor who performs an audit under this section; and

(C)

the State commission shall implement appropriate procedures to ensure the protection of any proprietary information submitted to it under this section.

(e) Fulfillment of certain requests

A Bell operating company and an affiliate that is subject to the requirements of section 251(c) of this title—

(1)

shall fulfill any requests from an unaffiliated entity for telephone exchange service and exchange access within a period no longer than the period in which it provides such telephone exchange service and exchange access to itself or to its affiliates;

(2)

shall not provide any facilities, services, or information concerning its provision of exchange access to the affiliate described in subsection (a) unless such facilities, services, or information are made available to other providers of interLATA services in that market on the same terms and conditions;

(3)

shall charge the affiliate described in subsection (a), or impute to itself (if using the access for its provision of its own services), an amount for access to its telephone exchange service and exchange access that is no less than the amount charged to any unaffiliated interexchange carriers for such service; and

(4)

may provide any interLATA or intraLATA facilities or services to its interLATA affiliate if such services or facilities are made available to all carriers at the same rates and on the same terms and conditions, and so long as the costs are appropriately allocated.

(f) Sunset

(1) Manufacturing and long distance

The provisions of this section (other than subsection (e)) shall cease to apply with respect to the manufacturing activities or the interLATA telecommunications services of a Bell operating company 3 years after the date such Bell operating company or any Bell operating company affiliate is authorized to provide interLATA telecommunications services under section 271(d) of this title, unless the Commission extends such 3-year period by rule or order.

(2) InterLATA information services

The provisions of this section (other than subsection (e)) shall cease to apply with respect to the interLATA information services of a Bell operating company 4 years after February 8, 1996, unless the Commission extends such 4-year period by rule or order.

(3) Preservation of existing authority

Nothing in this subsection shall be construed to limit the authority of the Commission under any other section of this chapter to prescribe safeguards consistent with the public interest, convenience, and necessity.

(g) Joint marketing

(1) Affiliate sales of telephone exchange services

A Bell operating company affiliate required by this section may not market or sell telephone exchange services provided by the Bell operating company unless that company permits other entities offering the same or similar service to market and sell its telephone exchange services.

(2) Bell operating company sales of affiliate services

A Bell operating company may not market or sell interLATA service provided by an affiliate required by this section within any of its in-region States until such company is authorized to provide interLATA services in such State under section 271(d) of this title.

(3) Rule of construction

The joint marketing and sale of services permitted under this subsection shall not be considered to violate the nondiscrimination provisions of subsection (c).

(h) Transition

With respect to any activity in which a Bell operating company is engaged on February 8, 1996, such company shall have one year from February 8, 1996, to comply with the requirements of this section.

Source credit: (June 19, 1934, ch. 652, title II, § 272, as added Pub. L. 104–104, title I, § 151(a), Feb. 8, 1996, 110 Stat. 92.)

history & why it existsrecord from the source credit

1934Enacted · Pub. L. 104-104 · 110 Stat. 92

A history note hasn’t been published yet. The record shows enactment by Pub. L. 104-104 on 1934-06-19.

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