Implementation of the Telecommunications Act of 1996: Accounting Safeguards Under the Telecommunications Act of 1996

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The Commission is issuing this Notice of Proposed Rulemaking which seeks comment on proposed measures to satisfy the accounting safeguards requirements, including those for affiliate transactions, of Sections 260 and 271 through 276 of the Telecommunications Act of 1996 (``1996 Act''). These sections outline the conditions under which incumbent local exchange carriers may offer telemessaging and alarm monitoring services and under which the Bell Operating Companies (``BOCs'') may manufacture and sell telecommunications equipment, manufacture customer premises equipment, offer interLATA telecommunications, information, electronic publishing and payphone services. Sections 271 through 274 and 276 of the 1996 Act generally prohibit the BOCs from subsidizing services permitted under those sections with revenues from regulated telecommunications services. Sections 260 and 275 generally prohibit incumbent local exchange carriers, including the BOCs, from subsidizing their telemessaging and alarm monitoring services with revenues from regulated telecommunications services. This action was intended to implement the accounting safeguards provision of the 1996 Act.