Before the

Federal Communications Commission

**Washington, D.C. 20554**

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| In the Matter of                 | * | WCB/Pricing No. 02-10        |
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| Sprint Local Telephone Companies | ) |                              |
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| Tariff FCC No. 3                 | * |                              |
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| Transmittal No. 192              | * |                              |
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**Order**

**Adopted: April 18, 2002 Released: April 18, 2002**

By the Chief, Pricing Policy Division:

# Introduction

1.  In this order we suspend for five months and set for investigation
    Sprint Local Telephone Companies (Sprint) Tariff FCC No. 3,
    Transmittal No. 192. This transmittal seeks to establish rate
    increases, over a two-year period, to recover extraordinary costs
    associated with the implementation of thousands-block number
    pooling.

# Background

2.  In its Number Resource Optimization *Third Report and Order*,[^1]
    the Commission sought to build on its efforts to ensure continued
    efficient use of the limited numbering resources of the North
    American Numbering Plan (NANP) so that these resources do not
    exhaust prematurely. In addition, the Commission sought to ensure
    that all carriers have the numbering resources necessary to compete
    in the telecommunications marketplace. The *Third Report and Order*
    specifically addressed the federal cost recovery for national
    thousands-block number pooling. The Commission concluded that many
    of the costs associated with thousands-block number pooling are
    ordinary costs for which no additional special recovery would be
    appropriate. The Commission also addressed specific cost recovery
    provisions for price cap local exchange carriers.

3.  On April 4, 2002, Sprint filed Transmittal No. 192, revising Tariff
    FCC No. 3, with a scheduled effective date of April 19, 2002. On
    April 11, 2002, WorldCom, Inc. (WorldCom) filed a petition to reject
    or, in the alternative, suspend and investigate the Sprint
    tariff.[^2] AT&T Corp. (AT&T) filed its petition seeking similar
    relief on April 11, 2002.[^3] Sprint filed its reply to the
    petitions of AT&T and WorldCom on April 15, 2002.[^4]

4.  AT&T asserts that Sprint claimed costs excluded by Commission rules
    or otherwise inappropriate for exogenous cost recovery.[^5] AT&T
    further argues that Sprint failed to demonstrate that
    thousands-block number pooling results in a net cost increase.[^6]
    WorldCom, in its petition, raises arguments similar to those raised
    by AT&T.[^7] In its reply, Sprint claims that it seeks only
    exogenous treatment of allowable costs[^8] and that it has
    demonstrated that thousands-block number pooling results in a net
    cost increase.[^9]

    **III. DISCUSSION**

5.  The *Third Report and Order* provides that any adjustment to price
    caps resulting from the Commission's thousands-block number pooling
    mandates shall be made as a claim for extraordinary exogenous
    adjustment. That order further states that LECs seeking
    extraordinary recovery of thousands-block number pooling costs in
    the form of an exogenous adjustment to their price cap formula must
    overcome a rebuttable presumption that no additional recovery is
    justified.[^10] This requirement places a relatively high burden on
    the carriers to demonstrate that costs incurred by implementing
    thousands-block number pooling, as discussed in the order, exceed
    the savings. Part of this burden includes justifying the carriers'
    cost savings calculation in a manner consistent with the discussions
    of those savings in the *Third Report and Order* and in preceding
    orders in the docket. Furthermore, the *Third Report and Order*
    provides substantial discussion and detail concerning the nature of
    the showings required and the issues that must be resolved to result
    in a carrier's rebutting the stated presumption.

6.  In particular, the *Third Report and Order* states that, "\[t\]o
    qualify for an exogenous adjustment, carriers must show that the
    costs for which extraordinary treatment is sought exceed the costs
    that would have been incurred had the carrier engaged in an area
    code split, overlay or other numbering relief that would otherwise
    have been required in the absence of pooling."[^11] That order also
    discusses and raises issues that must be addressed to support a
    showing that costs exceed cost savings. For example, the Commission
    stated:

    Unlike other mandates of the Commission, thousands-block number
    pooling may reduce network costs. Some commenters argued that
    savings associated with thousands-block number pooling are
    speculative or *de minimis*. Others argue that implementation of
    thousands-block number pooling will save substantial costs over
    current area code relief practices and could result in a cost
    savings. In the absence of carrier-specific evidence, we do not
    endorse either line or argument. However, as the Commission has
    already observed, to the extent that thousands-block number pooling
    postpones or avoids area code relief and ultimately the replacement
    of the existing NANP, all carriers and subscribers will
    benefit.[^12]

7.  We find that Sprint's thousands-block number pooling transmittal
    raises substantial questions of lawfulness and warrants an
    investigation of this tariff.[^13] These questions include, but are
    not limited to, the following: whether Sprint has adequately
    demonstrated that its cost to implement thousands-block number
    pooling exceeds the cost savings as addressed in the *Third Report
    and Order*; whether all operations support systems (OSS) costs
    claimed by Sprint are eligible for recovery; and whether Sprint's
    Number Provisioning Administration Center (NPAC) cost analysis is
    unreasonable. We further find that the petitions of AT&T and
    WorldCom raise questions of lawfulness similar to those identified
    above, and further support the suspension and investigation of
    Sprint's Transmittal No. 192.

8.  After reviewing the transmittal, petitions, and reply, we conclude
    that Sprint's Transmittal No. 192 raises substantial questions of
    lawfulness warranting suspension and investigation. Sprint has not
    provided sufficient cost justification and other support to permit a
    full assessment of the reasonableness of the proposed charges. As
    proposed, Sprint does not meet its burden of proof necessary to
    rebut the Commission's presumption that no additional recovery is
    justified.

9.  We therefore suspend Sprint's Transmittal No. 192, in its entirety,
    for five months and set it for investigation. The specific issues
    that will be the subject of the investigation will be identified in
    an upcoming designation order and may include, but may not be
    limited to, the issues identified in this order.

# *EX PARTE* REQUIREMENTS

10. This investigation is a permit-but-disclose proceeding and subject
    to the requirements of section 1.1206(b) of the rules, 47 C.F.R. §
    1.1206(b), as revised. Persons making oral *ex parte* presentations
    are reminded that memoranda summarizing the presentations must
    contain a summary of the substance of the presentation and not
    merely a listing of the subjects discussed. More than a one- or
    two-sentence description of the views and arguments presented is
    generally required.[^14] Other rules pertaining to oral and written
    presentations are set forth in section 1.1206(b) of the Commission's
    rules.

    **V. ORDERING CLAUSES**

11. ACCORDINGLY, IT IS ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    through the authority delegated pursuant to sections 0.91 and 0.291
    of the Commission's Rules, 47 C.F.R. §§ 0.91 and 0.291, the
    revisions filed by Sprint Local Telephone Companies under
    Transmittal No. 192, ARE SUSPENDED for five months and an
    investigation IS INSTITUTED.

12. IT IS FURTHER ORDERED that Sprint Local Telephone Companies SHALL
    FILE a supplement within five business days from the release date of
    this order reflecting the suspension. The carrier should cite the
    "DA" number on the instant order as the authority for the filing.

13. IT IS FURTHER ORDERED that AT&T Corp.'s petition to reject or to
    suspend and investigate Sprint Local Telephone Companies Tariff FCC
    No. 3, Transmittal No. 192, and WorldCom Inc.'s petition to reject
    or, in the alternative, to suspend and investigate Sprint Local
    Telephone Companies Tariff FCC No. 3, Transmittal No. 192, ARE
    GRANTED to the extent indicated herein and otherwise ARE DENIED.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Tamara L. Preiss
>
> Chief, Pricing Policy Division
>
> Wireline Competition Bureau

[^1]: *Numbering Resource Optimization*, CC Docket Nos. 96-98 and
    99-200, Third Report and Order and Second Order on Reconsideration,
    17 FCC Rcd 252 (2001)(*Third Report and Order*).

[^2]: Petition of WorldCom, Inc., filed April 11, 2002 ("WorldCom
    Petition").

[^3]: Petition of AT&T Corp., filed April 11, 2002. AT&T filed two
    versions of its petition -- a "Redacted-Public Version" and a
    version marked "Confidential Information Included pursuant to
    Protective Order" ("AT&T Petition").

[^4]: Reply of Sprint Local Telephone Companies, filed April 15, 2002
    ("Sprint Reply").

[^5]: AT&T Petition at 4-16.

[^6]: *Id*. at 16-22.

[^7]: WorldCom Petition at 2-4.

[^8]: Sprint Reply at 4-9.

[^9]: *Id*. at 9-11.

[^10]: *Third Report and Order*, 17 FCC Rcd at 271.

[^11]: *Id.* at 271-272.

[^12]: *Id.* (footnotes omitted)*.*

[^13]: 47 U.S.C. § 204(a).

[^14]: *See* 47 C.F.R. § 1.1206(b)(2), as revised.