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

Page 116 TITLE 47—TELECOMMUNICATIONS § 272 (3) Video programming services; other pro- gramming services The terms ‘‘video programming service’’ and ‘‘other programming services’’ have the same meanings as such terms have under section 522 of this title. (j) Certain service applications treated as in-re- gion service applications For purposes of this section, a Bell operating company application to provide 800 service, pri- vate line service, or their equivalents that— (1) terminate in an in-region State of that Bell operating company, and (2) allow the called party to determine the interLATA carrier, shall be considered an in-region service subject to the requirements of subsection (b)(1). (June 19, 1934, ch. 652, title II, § 271, as added Pub. L. 104–104, title I, § 151(a), Feb. 8, 1996, 110 Stat. 86.) Editorial Notes REFERENCES IN TEXT Section 153 of this title, referred to in subsec. (c)(1)(A), was subsequently amended and no longer con- tains a par. (47)(A). However, the term ‘‘telephone ex- change service’’ is defined elsewhere in that section. Section 254(h)(5) of this title, referred to in subsec. (g)(2), was redesignated section 254(h)(7) of this title by Pub. L. 106–554, § 1(a)(4) [div. B, title XVII, § 1721(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A–343. § 272. Separate affiliate; safeguards (a) Separate affiliate required for competitive ac- tivities (1) In general A Bell operating company (including any af- filiate) which is a local exchange carrier that is subject to the requirements of section 251(c) of this title may not provide any service de- scribed in paragraph (2) unless it provides that service through one or more affiliates that— (A) are separate from any operating com- pany entity that is subject to the require- ments of section 251(c) of this title; and (B) meet the requirements of subsection (b). (2) Services for which a separate affiliate is re- quired 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 tele- communications services, other than— (i) incidental interLATA services de- scribed 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 de- scribed in section 271(f) of this title. (C) InterLATA information services, other than electronic publishing (as defined in sec- tion 274(h) of this title) and alarm moni- toring services (as defined in section 275(e) of this title). (b) Structural and transactional requirements The separate affiliate required by this sec- tion— (1) shall operate independently from the Bell operating company; (2) shall maintain books, records, and ac- counts in the manner prescribed by the Com- mission 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 com- pany of which it is an affiliate; (4) may not obtain credit under any arrange- ment that would permit a creditor, upon de- fault, 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 affil- iate on an arm’s length basis with any such transactions reduced to writing and available for public inspection. (c) Nondiscrimination safeguards In its dealings with its affiliate described in subsection (a), a Bell operating company— (1) may not discriminate between that com- pany or affiliate and any other entity in the provision or procurement of goods, services, facilities, and information, or in the establish- ment of standards; and (2) shall account for all transactions with an affiliate described in subsection (a) in accord- ance 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 com- plied with this section and the regulations promulgated under this section, and particu- larly 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 Commis- sion and to the State commission of each State in which the company audited provides service, which shall make such results avail- able for public inspection. Any party may sub- mit comments on the final audit report. (3) Access to documents For purposes of conducting audits and re- views under this subsection— (A) the independent auditor, the Commis- sion, and the State commission shall have access to the financial accounts and records of each company and of its affiliates nec- essary to verify transactions conducted with that company that are relevant to the spe- cific activities permitted under this section and that are necessary for the regulation of rates; Page 117 TITLE 47—TELECOMMUNICATIONS § 273 (B) the Commission and the State commis- sion 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 protec- tion of any proprietary information sub- mitted 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 unaffili- ated entity for telephone exchange service and exchange access within a period no longer than the period in which it provides such tele- phone exchange service and exchange access to itself or to its affiliates; (2) shall not provide any facilities, services, or information concerning its provision of ex- change access to the affiliate described in sub- section (a) unless such facilities, services, or information are made available to other pro- viders of interLATA services in that market on the same terms and conditions; (3) shall charge the affiliate described in sub- section (a), or impute to itself (if using the ac- cess 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 facili- ties are made available to all carriers at the same rates and on the same terms and condi- tions, and so long as the costs are appro- priately allocated. (f) Sunset (1) Manufacturing and long distance The provisions of this section (other than subsection (e)) shall cease to apply with re- spect 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 oper- ating company affiliate is authorized to pro- vide 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 re- spect to the interLATA information services of a Bell operating company 4 years after Feb- ruary 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 con- strued to limit the authority of the Commis- sion under any other section of this chapter to prescribe safeguards consistent with the pub- lic interest, convenience, and necessity. (g) Joint marketing (1) Affiliate sales of telephone exchange serv- ices A Bell operating company affiliate required by this section may not market or sell tele- phone exchange services provided by the Bell operating company unless that company per- mits other entities offering the same or simi- lar service to market and sell its telephone ex- change services. (2) Bell operating company sales of affiliate services A Bell operating company may not market or sell interLATA service provided by an affil- iate required by this section within any of its in-region States until such company is author- ized 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 per- mitted under this subsection shall not be con- sidered to violate the nondiscrimination provi- sions 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 require- ments of this section. (June 19, 1934, ch. 652, title II, § 272, as added Pub. L. 104–104, title I, § 151(a), Feb. 8, 1996, 110 Stat. 92.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (f)(3), was in the original ‘‘this Act’’, meaning act June 19, 1934, ch. 652, 48 Stat. 1064, known as the Communications Act of 1934, which is classified principally to this chapter. For com- plete classification of this Act to the Code, see section 609 of this title and Tables. § 273. Manufacturing by Bell operating compa- nies (a) Authorization A Bell operating company may manufacture and provide telecommunications equipment, and manufacture customer premises equipment, if the Commission authorizes that Bell operating company or any Bell operating company affil- iate to provide interLATA services under sec- tion 271(d) of this title, subject to the require- ments of this section and the regulations pre- scribed thereunder, except that neither a Bell operating company nor any of its affiliates may engage in such manufacturing in conjunction with a Bell operating company not so affiliated or any of its affiliates. (b) Collaboration; research and royalty agree- ments (1) Collaboration Subsection (a) shall not prohibit a Bell oper- ating company from engaging in close collabo- ration with any manufacturer of customer premises equipment or telecommunications equipment during the design and development