Sec.  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,  Sec. 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.