DA 99-2093

**Federal Communications
Commission**![](media/image1.png){width="1.1993055555555556in"
height="1.1881944444444446in"}

Common Carrier Bureau

Washington, D.C. 20554

# October 5, 1999

Ms. Caroline Vachier

Deputy Attorney General of New Jersey

124 Halsey Street

P.O. Box 45029

Newark, NJ 07101

Dear Ms. Vachier:

In a letter dated July 29, 1998, you submitted the following question to
the Federal Communications Commission's Common Carrier Bureau Chief:
"(W)hether it was the Commission's intention to require message units to
meet the New Services Test for the tariffs filed with the state utility
commissions." You state that the question was sent to you by New Jersey
Board Of Utilities' Administrative Law Judge Louis McAfoos, who is
presiding over several payphone matters pending before the New Jersey
Office of Administrative Law. Although we regret the delay in responding
to your letter, we understand that this issue is currently before Judge
McAfoos in a pending contested proceeding, and, as such, may assist the
Judge in rendering his decision.

In its [Payphone Reclassification Proceeding,]{.underline} CC Docket
No.96-128,[^1] the Commission determined that the rates assessed by
local exchange companies (LECs) for payphone services tariffed at the
state level must satisfy the requirements that the Commission applies to
new interstate access services proposed by incumbent LECs subject to
price cap regulation (the "new services test").[^2]

In the most current applicable Bell Atlantic-New Jersey, INC. tariff[^3]
for the provision of payphone service, which you provided us on
September 2, 1999, a Local Message is defined as "a communication from a
telephone to another telephone bearing the designation of a central
office within the local service area established from time to time by
the Company as the local service area for the exchange serving the
calling telephone."[^4] The same tariff states that one local message
unit constitutes an initial period of "five minutes or fraction
thereof."[^5] One local message unit also, according to the tariff,
applies to each overtime period, which is also defined as a duration of
"five minutes or fraction thereof."[^6] The tariffed charge for a
residence local message unit is

\$0.065 and the tariffed charge for a business local message unit is
\$0.066.[^7]

As the Commission stated in its November 8, 1996 *Order on
Reconsideration* in the [Payphone Classification
Proceeding]{.underline}, "Section 276 requires that the Commission take
all actions necessary to 'discontinueall intrastate and interstate
payphone subsidies from basic exchange and exchange access
revenues."[^8] In implementing this legislative objective, the
Commission required all LECs to provide tariffed, nondiscriminatory
payphone services (identical to the services they provide to their own
payphone operations) to enable independent payphone providers to compete
with the LECs on a level playing field. The tariffs for these LEC
payphone services (including any additional unbundled features or
functions) the Commission stated, "must be (1) cost based; (2)
consistent with the requirements of Section 276, with regard, for
example, to the removal of subsidies from exchange and exchange access
services; and (3) nondiscriminatory." [^9] The Commission drew no
distinctions based on rate structure, nor did it make any other
exceptions to the cost requirements. Thus, any payphone service rate,
flat or usage based, must be justified by cost support materials as
prescribed in 47 C.F.R. § 61.49(g), and must satisfy the price caps new
services test.[^10]

If you have any further questions, please do not hesitate to contact Jon
Stover in the Common Carrier Bureau's Competitive Pricing Division at
(202) 418-0390.

Sincerely yours,

Yog R. Varma Deputy Bureau Chief

Common Carrier Bureau

[^1]: *Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the* *Telecommunications Act of 1996*, CC
    Docket No. 96-128, *Report and Order*, 11 FCC Rcd 20541 (1996);
    *Order on Reconsideration*, 11 FCC Rcd 21233 (1996).

[^2]: *Implementation of the Payphone Reclassification and Compensation
    Provisions of the* *Telecommunications Act of 1996,* CC Docket
    96-128, *Order*, 12 FCC Rcd 21370 (Com.Car.Bur. 1997) (Payphone
    Limited Waiver Order).

[^3]: Bell Atlantic-New Jersey, INC., TARIFF B.P.U.-N.J. No. 2, Exchange
    and Network Services Issued: October 31, 1995, Seventh Revised Page
    35, Effective: January 1, 1996.

[^4]: Id. Section 5. 2. 2. LOCAL MESSAGES.

[^5]: Id.

[^6]: Id.

[^7]: Id.

[^8]: *Order on Reconsideration,* 11 FCC Rcd 21233 at ¶ 162.

[^9]: Id. at ¶ 163.

[^10]: *Amendment of Part 69 of the Commission's Rules Relating to the
    Creation of Access Charge Subelements for Open Network
    Architecture*, CC Docket No. 89-79, *Report and Order & Order on
    Further Reconsideration & Supplemental Notice of Proposed
    Rulemaking*, 6 FCC Rcd 4524, 4531 (1991).