EBS Government Affairs wanted to give you an update on our meeting at the
FCC last Thursday, April 26.  Also contained is a brief discussion of
current FCC proceedings, what we are doing to be better informed and some
suggested actions.

Sue Nord, Stephen Burns (DC Office), Lara Leibman and I met with the
following people from the Common Carrier Bureau of the FCC:

Jane Jackson, Chief, Competitive Pricing Division
Rich Lerner, Deputy Chief, Competitive Pricing Division
Jay Atkinson, Chief Economists, Common Carrier Bureau
Tom Beers, Deputy Chief, Industry Analysis Division
Michelle Carey, Chief, Policy and Program Planning Division
Tim Peterson, Deputy Chief, Accounting Safeguards Division

The purpose of the meeting was to do an introduction of EBS and explain our
overall business strategy, to establish a point of contact with the various
divisions of the FCC Common Carrier Bureau, and to solicit some information
relative to the pending proceedings at the FCC.  The biggest take-away from
the meeting was that we impressed upon them the effect the issues before
them (EELs, Access to High Capacity Circuits) will have on carriers
entering the market who want to provide high-speed data and content
services to large customers, as well as to the development of a bandwidth
trading environment.

Because of the appointment of the new chairman, Powell, and the pending
appointments of three new commissioners, the division heads were very
uncertain about policy direction at the FCC in the near term.

They seemed interested in Enron as different than most carriers.  They
suggested that we pursue filing ex-parte written comments in the EELs
proceeding specifically addressing how the usage restrictions on EELs would
affect Enron's ability to provide the referenced services.  We will be
developing a draft of the EELs ex-parte communication this week.  They also
informed us of an EELs Task Force at the FCC, with whom we will make
contact within the week to arrange a meeting.  They didn't seem to
discourage us from requesting the elimination of the usage restrictions,
although they did indicate that Powell favors the usage restrictions.  With
that, we should regard the elimination of usage restrictions as a
long-shot.

In addition to EELs, there are other FCC proceedings about which we are
gathering information.  They include the ILEC's (Bell South, Verizon and
SBC) petition to remove high capacity circuits as UNEs, a collocation
proceeding and a new intercarrier compensation proceeding.

The ILEC petition for a declaratory ruling by the FCC that high-capacity
circuits (loop and transport) are no longer required to be provided as UNEs
is pending.  There has been a motion to dismiss filed, but we haven't
obtained a copy as of yet.  There is an opportunity to file comments by
June 10.  We will be doing some background on whether we will want to file
in conjunction with other groups or singularly.  We will definitely be
soliciting your feedback on the substance of the comments.  We will keep
you informed of important developments.

There is an open collocation proceeding.  We were told at the meeting that
there is still an opportunity to file comments.  This proceeding   will
address CLEC cross-connections within the central office, types of
equipment that can be collocated within the CO, and varieties of
collocation that must be offered (i.e. caged, cageless, virtural, etc.).
We will have to examine the importance of this case relative to the outcome
of the EEL proceeding and our current analysis of special access versus
UNEs.

On Friday, the FCC issued a notice of proposed rulemaking (NPRM) dealing
with intercarrier compensation.  This will deal with the compensation that
ILECs and CLECs pay to one another to terminate local voice traffic on the
other's network.  It will also address the access charges that local
carriers (ILECs and CLECs) charge long-distance providers to terminate
long-distance traffic.  It is possible that special access pricing may also
be at issue.  The focus may be the disparity in pricing between UNEs and
special access service.  If the usage restrictions on EELs are removed, I
would think that the importance of addressing pricing disparities between
special access and UNEs will be elevated.  We will monitor this proceeding
for opportunities to weigh in as well.

Finally, we expect the Industry Analysis Division to come out with report
about the penetration of internet access in the US.  This may be of
interest, but may not require any involvement.

If you have any questions or comments on this memo, feel free to contact
me.