§  64.702   Furnishing of enhanced services and customer-premises equipment.

   (a) For the purpose of this subpart, the term enhanced service shall
   refer to services, offered over common carrier transmission facilities
   used in interstate communications, which employ computer processing
   applications that act on the format, content, code, protocol or similar
   aspects of the subscriber's transmitted information; provide the
   subscriber additional, different, or restructured information; or
   involve subscriber interaction with stored information. Enhanced
   services are not regulated under title II of the Act.

   (b) Bell Operating Companies common carriers subject, in whole or in
   part, to the Communications Act may directly provide enhanced services
   and customer-premises equipment; provided, however, that the Commission
   may prohibit any such common carrier from engaging directly or
   indirectly in furnishing enhanced services or customer-premises
   equipment to others except as provided for in paragraph (c) of this
   section, or as otherwise authorized by the Commission.

   (c) A Bell Operating Company common carrier prohibited by the
   Commission pursuant to paragraph (b) of this section from engaging in
   the furnishing of enhanced services or customer-premises equipment may,
   subject to other provisions of law, have a controlling or lesser
   interest in, or be under common control with, a separate corporate
   entity that furnishes enhanced services or customer-premises equipment
   to others provided the following conditions are met:

   (1) Each such separate corporation shall obtain all transmission
   facilities necessary for the provision of enhanced services pursuant to
   tariff, and may not own any network or local distribution transmission
   facilities or equipment.

   (2) Each such separate corporation shall operate independently in the
   furnishing of enhanced services and customer-premises equipment. It
   shall maintain its own books of account, have separate officers,
   utilize separate operating, marketing, installation, and maintenance
   personnel, and utilize separate computer facilities in the provision of
   enhanced services.

   (3) Each such separate corporation which provides customer-premises
   equipment or enhanced services shall deal with any affiliated
   manufacturing entity only on an arm's length basis.

   (4) Any research or development performed on a joint or separate basis
   for the subsidiary must be done on a compensatory basis. Except for
   generic software within equipment, manufactured by an affiliate, that
   is sold “off the shelf” to any interested purchaser, the separate
   corporation must develop its own software, or contract with
   non-affiliated vendors.

   (5) All transactions between the separate corporation and the carrier
   or its affiliates which involve the transfer, either direct or by
   accounting or other record entries, of money, personnel, resources,
   other assets or anything of value, shall be reduced to writing. A copy
   of any contract, agreement, or other arrangement entered into between
   such entities shall be filed with the Commission within 30 days after
   the contract, agreement, or other arrangement is made. This provision
   shall not apply to any transaction governed by the provision of an
   effective state or federal tariff.

   (d) A carrier subject to the proscription set forth in paragraph (c) of
   this section:

   (1) Shall not engage in the sale or promotion of enhanced services or
   customer-premises equipment, on behalf of the separate corporation, or
   sell, lease or otherwise make available to the separate corporation any
   capacity or computer system component on its computer system or systems
   which are used in any way for the provision of its common carrier
   communications services. (This does not apply to communications
   services offered the separate subsidiary pursuant to tariff);

   (2) Shall disclose to the public all information relating to network
   design and technical standards and information affecting changes to the
   telecommunications network which would affect either intercarrier
   interconnection or the manner in which customer-premises equipment is
   attached to the interstate network prior to implementation and with
   reasonable advance notification. Such information shall be disclosed in
   compliance with the procedures set forth in 47 CFR 51.325 through
   51.335.

   (3) [Reserved]

   (4) Must obtain Commission approval as to the manner in which the
   separate corporation is to be capitalized, prior to obtaining any
   interest in the separate corporation or transferring any assets, and
   must obtain Commission approval of any modification to a Commission
   approved capitalization plan.

   (e) Except as otherwise ordered by the Commission, the carrier
   provision of customer premises equipment used in conjunction with the
   interstate telecommunications network may be offered in combination
   with the provision of common carrier communications services, except
   that the customer premises equipment shall not be offered on a tariffed
   basis.

   [ 45 FR 31364 , May 13, 1980, as amended at  46 FR 6008 , Jan. 21, 1981;  63 FR 20338 , Apr. 24, 1998;  64 FR 14148 , Mar. 24, 1999;  66 FR 19402 , Apr.
   16, 2001]

   Effective Date Note:   At  64 FR 14148 , Mar. 24, 1999, § 64.702(b), (c)
   and (d)(2) were amended. These paragraphs contain information
   collection and recordkeeping requirements and will not become effective
   until approval has been given by the Office of Management and Budget.