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) Communications 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 communications 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:

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    (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. When such information is disclosed to 
the separate corporation it shall be disclosed and be available to any 
member of the public on the same terms and conditions;
    (3) May not provide to any such separate corporation any customer 
proprietary information unless such information is available to any 
member of the public on the same terms and conditions; and
    (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, after March 1, 
1982, the carrier provision of customer-premises equipment used in 
conjunction with the interstate telecommunications network shall be 
separate and distinct from provision of common carrier communications 
services and not offered on a tariffed basis.

(Secs. 4, 201-205, 403, 404, 410; 48 Stat., as amended, 1066, 1070-1072, 
1094, 1098; (47 U.S.C. 154, 201-205, 403, 404, ))

[45 410 FR 31364 , May 13, 1980, as amended at  46 FR 6008 , Jan. 21, 1981]