DA 01-2107

September 11, 2001

**COMMON CARRIER BUREAU SEEKS COMMENT ON UPDATING LINE COUNTS AND OTHER
LIMITED INFORMATION USED IN CALCULATING HIGH-COST UNIVERSAL SERVICE
SUPPORT FOR NON-RURAL CARRIERS FOR 2002**

**PLEADING CYCLE ESTABLISHED**

**CC Docket No. 96-45**

**Comment Date: 15 days from publication in the Federal Register**

**Reply Comment Date: 21 days from publication in the Federal Register**

On October 21, 1999, the Commission adopted two orders completing
implementation plans for a new high-cost universal service support
mechanism for non-rural carriers.[^1] The mechanism provides support
based on the forward-looking economic cost of providing services
eligible for support, as determined by the Commission's universal
service cost model.[^2] The Commission also emphasized the importance of
updating the inputs used in the cost model as technology and other
conditions change.[^3] On December 8, 2000, the Bureau released an order
updating line count input data used in the model for determining support
amounts for 2001.[^4] Consistent with the Bureau and Commission
precedent, we seek comment in this Public Notice on how line count and
other discrete input values should be updated for purposes of
determining support for 2002.

*Line Counts*. Line counts are used for two general purposes in the
high-cost support mechanism for non-rural carriers. First, line counts
are used in the Commission's cost model to estimate the forward-looking
costs of providing supported services for businesses and households in a
geographic area. Second, line counts are used to calculate support based
on those costs and target that support to high-cost areas. In the *Line
Counts Update Order*, the Bureau updated line counts by using year-end
1999 line counts filed July 31, 2000, as input values for estimating
average forward-looking costs for the year 2001.[^5] Support amounts for
2001 were also adjusted every quarter using wire center line count data
reported by the carriers on a quarterly basis.[^6]

In order to estimate the cost of providing service for all businesses
and households within a geographic area,[^7] line counts also need to be
allocated to specific classes of service in the cost model.[^8] In the
*1999 Data Request*, the Bureau requested, *inter alia*, that non-rural
carriers submit year-end 1998 wire center line count data allocated to
the classes of service used in the model.[^9] For purposes of
calculating forward-looking costs and determining support for 2001, in
the *Line Counts Update Order*, the Bureau concluded that line counts
should be allocated to the classes of service used in the model based on
the line count data filed pursuant to the *1999 Data Request*.[^10]
Moreover, because line counts reported by non-rural carriers include
only switched lines, the Bureau recognized in the *Line Counts Update
Order* that it could not divide year-end line counts into the *1999 Data
Request* to determine the growth rate of special lines. As a result, the
Bureau divided the 1999 ARMIS special access lines among wire centers in
the same proportion as the special lines from the *1999 Data Request* to
estimate line count growth.

We seek comment on updating line count data in the universal service
cost model consistent with the updated framework adopted in the *Line
Counts Updates Order*. We specifically seek comment on whether to update
line count input values with year-end line counts filed July 31, 2001,
in order to estimate average forward-looking costs for 2002*.*[^11] We
also seek comment on whether to adjust support amounts each quarter
using wire center line count data reported by carriers each quarter. In
addition, we seek comment on whether to apply the methods adopted in the
*Line Counts Update Order* for allocating line counts to classes of
service in order to calculate support in 2002. In particular, we seek
comment on whether line counts should be allocated to the classes of
service used in the model based on the line count data filed pursuant to
the *1999 Data Request*. Because line counts reported by non-rural
carriers include only switched lines, we also seek comment on whether to
divide the 2000 ARMIS special lines access lines among wire centers in
the same proportion as the special lines from the *1999 Data Request* to
estimate special line count growth. Finally, we seek comment on whether
to apply the method adopted in the *Line Counts Update Order* for
matching line count data to wire centers used in the model for
calculating support in 2002.

*Other Model Inputs*. In addition to line counts, the model uses other
types of data that are updated annually under current Commission rules
and procedures. Among other things, the model uses company-specific
ARMIS data to calculate investment in general support facilities
(GSF).[^12] GSF investment includes buildings, motor vehicles, and
general purpose computers.[^13] A portion of GSF investment must be
added to the model's estimate of outside plant, switching, and transport
investment to adequately reflect the cost providing the supported
services. We seek comment on whether we should update the tables in the
model with 2000 ARMIS data to estimate GSF investment.

The model also uses company-specific data in determining switching
costs. A wire center's switch directs both interstate and intrastate
traffic. Universal service support, however, is only provided for the
portion of the switch used to direct intrastate traffic. Therefore, to
determine the amount of a wire center's switch that is eligible for
support, the model needs to determine the percentage of the switch used
to direct intrastate service. The model currently uses 1997 and 1998
traffic parameters from ARMIS and the National Exchange Carrier
Association (NECA)[^14] to determine the percentage of the switch
allocated to supported services and the switch port requirement for
interoffice transport. We seek comment on whether we should update the
tables in the model with currently available traffic parameters to
determine the percentage of switch allocated to supported services and
the switch port requirement for interoffice transport. In particular, we
seek comment on whether it would be more consistent to use the NECA data
as the sole source for traffic parameter data instead of obtaining these
data from two sources.

Pursuant to sections 1.415 and 1.419 of the Commission\'s rules, 47
C.F.R. §§ 1.415, 1.419, interested parties may file comments 15 days or
fewer from publication in the Federal Register, and reply comments 21
days or fewer from publication in the Federal Register. Comments may be
filed using the Commission\'s Electronic Comment Filing System (ECFS) or
by filing paper copies. *See Electronic Filing of Documents in
Rulemaking Proceedings*, 63 Fed. Reg. 24,121 (1998). Comments filed
through the ECFS can be sent as an electronic file via the Internet to
\<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only one copy of an
electronic submission must be filed. In completing the transmittal
screen, commenters should include their full name, Postal Service
mailing address, and the applicable docket or rulemaking number. Parties
may also submit electronic comments by Internet e-mail. To receive
filing instructions for e-mail comments, commenters should send an
e-mail to ecfs@fcc.gov, and should include the following words in the
body of the message, \"get form \<your e-mail address.\" A sample form
and directions will be sent in reply. Parties who choose to file by
paper must file an original and four copies of each filing. All filings
must be sent to the Commission\'s Secretary, Magalie Roman Salas, Office
of the Secretary, Federal Communications Commission, 445 12th Street,
S.W., Washington, D.C. 20554.

Parties also must send three paper copies of their filing to Sheryl
Todd, Accounting Policy Division, Common Carrier Bureau, Federal
Communications Commission, 445 Twelfth Street S.W., Room 5-A422,
Washington, D.C. 20554. In addition, commenters must send diskette
copies to the Commission\'s duplicating contractor, Qualex
International, Portals II, 445 12th Street, SW, Room CY-B402,
Washington, DC, 20554.

Pursuant to section 1.1206 of the Commission\'s Rules, 47 C.F.R. §
1.1206, this proceeding will continue to be conducted as a
permit-but-disclose proceeding in which *ex parte* communications are
permitted subject to disclosure. For further information, please
contact: Katie King, Accounting Policy Division, Common Carrier Bureau,
(202) 418-7400 or Thomas Buckley, Accounting Policy Division, Common
Carrier Bureau, (202) 418-7400.

[^1]: *Federal-State Joint Board on Universal* Service, CC Docket 96-45,
    Ninth Report and Order and Eighteenth Order on Reconsideration, 14
    FCC Rcd 20432 (1999) (*Ninth Report and Order*), *reversed in part
    and remanded in part, Qwest Corp. v. FCC*, Nos. 99-9546, 99-9547 and
    00-9505, 2001 WL 864222 (10th Cir. Aug. 1, 2001); *Federal-State
    Joint Board on Universal Service, Forward-Looking Mechanism for High
    Cost Support for Non-Rural LECs*, Tenth Report and Order, CC Docket
    Nos. 96-45, 97-160, 14 FCC Rcd 20156 (1999) (*Tenth Report and
    Order*), *affirmed*, *Qwest Corp. v. FCC*, Nos. 99-9546, 99-9547 and
    00-9505, 2001 WL 864222 (10th Cir. Aug. 1, 2001).

[^2]: In general, the forward-looking cost model estimates the cost of
    serving customers located within a given wire center's boundaries.
    In order to accomplish this task, the model must calculate switch
    size, the lengths, gauge, and number of copper and fiber cables, and
    the number of digital loop carrier remote terminals required. These
    factors, in turn, depend on input values, such as line counts that
    are used to determine how many customers a wire center serves.

[^3]: *See Tenth Report and Order*, 14 FCC Rcd at 20170 ("We believe
    that the model, as used in the methodology we set out in the
    companion \[order\], is the best way to generate non-rural carriers'
    support amounts for the funding year beginning January 1, 2000. We
    also recognize, however, that the model must evolve as technology
    and other conditions change.").

[^4]: *Federal-State Joint Board on Universal Service*, CC Docket 96-45,
    Order, 15 FCC Rcd 23960 (Common Carrier Bur. 2000) (*Line Counts
    Update Order*).

[^5]: *See id.* at para. 8. In the *Line Counts Update Order*, the
    Bureau also decided to update line counts without updating customer
    location data because, although updated line count data were
    available at that time, updated customer location data were not. The
    Bureau determined that it should not postpone updating line count
    data until a new customer location data set is compiled.

[^6]: *Line Counts Update Order* at para. 11. Non-rural carriers began
    filing quarterly wire center line counts for the first time on
    December 30, 1999. These line counts reflected a carrier's lines as
    of June 30, 1999.

[^7]: *See Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45, Report and Order, 12 FCC Rcd 8776, para. 250 (1997)
    (*First Report and Order*).

[^8]: Specifically, the model uses lines that are divided into five
    service classes: total business lines, residential lines, special
    lines, payphone lines, and single line business lines. *See*
    LineCount table in hcpm/Db/hcpm.mdb at
    [www.fcc.gov/ccb/apd/hcpm]{.underline}.

[^9]: *See Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45*, Forward-Looking Mechanism for High-Cost Support for
    Non-Rural LECs*, CC Docket No. 97-160, Order, DA 99-1406 (rel. July
    19, 1999) (*1999 Data Request*). The *1999 Data Request* required
    non-rural carriers to file year-end 1998 wire center line count data
    for total business lines, special lines, payphone lines, and single
    line business lines, measured as voice grade equivalent analog or
    digital lines. In addition, the *1999 Data Request* sought
    information on facility (as opposed to voice grade equivalent) line
    counts for business and special lines.

[^10]: *See Line Counts Update Order* at para. 15. Specifically, the
    Bureau allocated line counts to the classes of service used in the
    model by dividing the year-end 1999 lines reported by non-rural
    carriers into business lines, residential lines, payphone lines, and
    single business lines for each wire center in the same proportion as
    the lines filed pursuant to the 1999 Data Request (year-end 1998
    lines).

[^11]: Because the number of line counts continually change, updating
    line count input values ensures the model takes into account changes
    in costs resulting from changes in line counts. For example, updated
    line counts enable the model's cost estimates to reflect the
    economies of scale generated by serving an increasing number of
    lines. *See Line Count Updates Order* at para. 9.

[^12]: *Tenth Report and Order*, 14 FCC Rcd at paras. 409-10.

[^13]: *Tenth Report and Order*, 14 FCC Rcd at para. 409.

[^14]: NECA provides quarterly reports on access minutes of use to the
    Commission, which are posted on the Commission's web site at
    [www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/neca.html](http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/neca.html).