Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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**ORDER AND ORDER ON RECONSIDERATION**

**Adopted: December 18, 2001 Released: December 18, 2001**

By the Common Carrier Bureau:

# INTRODUCTION

1.  Consistent with action taken last year, we update line count input
    values for the high-cost universal service support mechanism for
    non-rural carriers for purposes of calculating and targeting support
    amounts for the year 2002.[^1] Specifically, we shall use updated
    line count data in the universal service cost model to estimate
    non-rural carriers' forward-looking economic costs of providing the
    services supported by the federal high-cost mechanism. In addition,
    non-rural support amounts will continue to be adjusted each quarter
    to account for line growth based on the wire center line count data
    reported quarterly by non-rural carriers. We further update the
    company-specific data used in the model to calculate investment in
    general support facilities and switching costs. Moreover, for
    purposes of calculating support for the year 2002, we will continue
    to utilize, at this time, a version of the model in Turbo-Pascal
    computer language. Additional time is needed to analyze the Delphi
    version, as well as alternative programming languages such as
    Visual-Basic, which commenters have recommended for use in the
    model. Finally, we deny a petition for reconsideration by Sprint
    Corporation (Sprint) of the Common Carrier Bureau's (Bureau)
    December 8, 2000 Order (*2001 Line Counts Update Order*).

# LINE COUNTS

## Background

2.  On October 21, 1999, the Commission adopted two orders completing
    implementation of its high-cost universal service support mechanism
    for non-rural carriers.[^2] 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. 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.

3.  In the *Twentieth Reconsideration Order*, the Commission clarified
    that the cost model would use the line count input values (year-end
    1998 line counts) adopted by the Commission in October 1999 for
    purposes of estimating average forward-looking costs for the year
    2000.[^3] The Commission also confirmed that support for 2000 would
    be calculated using wire center line count data reported by
    non-rural carriers on a quarterly basis.[^4] On December 8, 2000, in
    the *2001 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] Because the number of line counts continually change, the
    Bureau noted that updating line counts would ensure that the model
    accounts for changes in costs due to changes in line counts.[^6] The
    *2001 Line Counts Update Order* also stated that support amounts for
    2001 would be adjusted every quarter using wire center line count
    data reported by non-rural carriers on a quarterly basis.[^7]

4.  In order to estimate the cost of providing service for all
    businesses and households within a geographic area,[^8] line counts
    also need to be allocated to specific classes of service in the cost
    model.[^9] 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.[^10] For purposes of calculating forward-looking costs and
    determining support for 2001, in the *2001 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 data provided by the *1999 Data
    Request*.[^11] Moreover, because line counts reported by non-rural
    carriers include only switched lines, the Bureau recognized in the
    *2001 Line Counts Update Order* that it could not divide year-end
    line counts into the data provided by 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.

5.  Non-rural carriers filed year-end 2000 wire center line count data
    on July 31, 2001.[^12] On September 11, 2001, we sought comment on
    updating the line counts used in the cost model with these year-end
    2000 data for purposes of determining support amounts for the year
    2002.[^13] We also sought comment on whether to apply the method
    used in the *2001 Line Counts Update Order* for allocating line
    counts to the classes of service used in the model based on the line
    count data filed pursuant to the *1999 Data Request*.[^14] Because
    line counts reported by non-rural carriers include only switched
    lines, we also sought comment on whether to divide the 2000 ARMIS
    special access lines among wire centers in the same proportion as
    the special lines from the *1999 Data Request* to estimate special
    line growth. Finally we sought comment on whether to apply the
    method used in the *2001 Line Counts Update Order* for matching line
    count data to wire centers used in the model for calculating support
    for 2002.

## Discussion

6.  Consistent with the framework adopted in the *Twentieth
    Reconsideration* *Order* and the *2001 Line Counts Update Order*, we
    conclude the cost model should use year-end 2000 line counts filed
    July 31, 2001, as input values for purposes of estimating average
    forward-looking costs and determining support for the year 2002. We
    also conclude 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*. We further conclude that
    special access line counts should be allocated on the basis of the
    *1999 Data Request* data and trued-up to 2000 43-08 ARMIS special
    line counts.

7.  [2000 Line Counts.]{.underline} We find that line count input values
    should be updated so that the model will take into account changes
    in costs that result from changes in line counts. In the *First*
    *Report and Order*, the Commission stressed that the model must
    estimate the cost of providing service for *all* businesses and
    households within a geographic area.[^15] Accurate line counts are
    essential in accomplishing this task. Moreover, if line count input
    values remained static, the model's cost estimates would fail to
    reflect the economies of scale generated by serving an increasing
    number of lines.[^16] Such a result would be inconsistent with the
    criteria adopted in the *First Report and Order* requiring that the
    cost model reflect the economies of scale of serving all lines
    within a geographic area.[^17]

8.  We also find that the lines reported by carriers on July 31, 2001
    (year-end 2000 line counts) are the appropriate data to use for
    updating the cost model's input values at this time. We disagree
    with AT&T's argument that we should use projected line counts to
    estimate costs for the year in which support is provided.[^18]
    Specifically, AT&T contends that using year-end line counts to
    calculate average per-line support levels and then using quarterly
    line count data to calculate a particular carrier's support amount
    creates a mismatch which distorts the amount of universal service
    support for which carriers are eligible.[^19] In the *2001 Line
    Counts Update Order*, we concluded that line counts projections do
    not resolve the "purported 'mismatch'" between year-end line counts
    and quarterly line counts. We reaffirm that using projected line
    counts to estimate costs is not a preferable alternative in solving
    the disparity between year-end data used to estimate forward-looking
    costs and quarterly data used to calculate support.[^20]

9.  For purposes of estimating the forward-looking costs of providing
    supported services in 2002, we will therefore use year-end 2000 line
    counts in the model. We will also adjust support amounts every
    quarter to reflect the lines reported by carriers, according to the
    methodology set forth in the *Twentieth Reconsideration Order*.[^21]
    We also recognize that the Commission plans to initiate a proceeding
    to study how often line counts and other input values should be
    updated.[^22]

10. Various commenters contend that, in addition to updating line count
    input values, we should also update customer location and road
    data.[^23] These commenters claim that updating only line counts
    ignores line growth in new areas, such as new homes built along new
    roads, which in turn may cause the model to understate the costs per
    line.[^24] Consistent with our action in the *2001 Line Counts
    Update Order*, we will not update customer location and road data at
    this time.

11. In the *2001 Line Counts Update Order*, the Bureau updated line
    counts without updating customer location data because, although
    updated line count data were available at that time, updated
    customer location data were not.[^25] The Bureau concluded that it
    should not postpone updating line count data until a new customer
    location data set is compiled. The Bureau determined that a
    substantial part of the costs associated with new lines would be
    included in the model's cost estimates because the majority of new
    residential lines are secondary lines.[^26] In addition, because the
    cost model uses road surrogate customer location data, many of the
    structure costs associated with new locations would also be included
    in the model's cost estimates. Even though certain costs associated
    with new customer locations may not be reflected in the model's cost
    estimates, the Bureau decided on balance to update line counts.
    Otherwise, the interval between model lines and reported lines would
    continue to grow without readjustment.[^27] Consistent with our
    findings in the *2001 Line Counts Update Order*, and because an
    updated customer location and road data set remains unavailable at
    this time, we find that it is best not to delay updating line counts
    until a new customer location and road data set are obtained.

12. Verizon notes that, since the *2001 Line Counts Update Order* was
    adopted, year 2000 Census road data and year 2000 customer location
    data have become available.[^28] Verizon suggests that the Bureau
    use these data to update the customer location and road data set
    used in the model.[^29] In the *2001 Line Counts Update Order*, the
    Bureau stated, "\[u\]ntil the Commission adopts new customer
    location data, all new lines should be treated as additional lines
    at existing locations in the model, with their additional costs
    included in the model's cost estimates."[^30] We recognize that this
    new source of year 2000 Census data may be useful in creating an
    updated customer location and road data set in the future.[^31] Such
    information, however, is not in a usable data set format for
    purposes of determining support for 2002.[^32] We therefore, defer
    the issue of using these data in the model until the Commission
    initiates a comprehensive proceeding to study revisions and changes
    to the model inputs and model platform.[^33] In the meantime, all
    new lines should be treated as if they were located at existing
    locations in the model.

13. [Class of Service Allocations.]{.underline} We find that using the
    methodology employed in the *2001 Line Counts Update Order*, which
    used year-end wire center line count data filed pursuant the *1999
    Data Request*, remains a reasonable method for allocating line
    counts to the classes of service used in the model. All commenters
    addressing this issue support this approach, although AT&T and
    WorldCom suggest that it would be preferable if the Bureau were to
    require incumbent local exchange carriers to submit their year-end
    line counts disaggregated into service type.[^34] We believe that
    the methodology employed in the *2001 Line Counts Update* *Order* is
    a preferable approach because it remains a reasonably accurate
    process for disaggregating line counts without imposing burdensome
    reporting requirements on carriers.[^35] For purposes of 2002
    support, we therefore shall allocate line counts to the classes of
    service used in the model by dividing the year-end 2000 lines
    reported by non-rural carriers into business lines, residential
    lines, payphone lines, and single line business lines for each wire
    center in the same proportion as the lines filed pursuant to the
    *1999 Data Request* (year-end 1998 lines).[^36]

14. We also find that estimating special line growth for purposes of
    calculating 2002 support can be accurately determined by dividing
    the 2000 ARMIS special access lines among wire centers in the same
    proportion as the special lines from the *1999 Data Request*. [^37]
    Because line counts reported by non-rural carriers include only
    switched lines, the Bureau recognized in the *2001 Line Counts
    Update Order* that it could not divide year-end line counts into the
    data provided by the *1999 Data Request* to determine the growth
    rate of special lines.[^38] As a result, the Bureau instead decided
    to divide 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.[^39] We find that this
    methodology continues to be a reasonable approach to estimating
    special line growth for calculating support for 2002.[^40]

15. [Matching Wire Centers.]{.underline} We will use the same
    methodology employed in the *2001 Line Counts Update Order* to match
    wire centers reported by carriers in their quarterly line count
    filings with wire centers found in the *1999 Data Request* and in
    the model's customer location data. AT&T argues that, because the
    year-end 2000 line count data also needs to be matched to wire
    centers in the cost model, the Bureau should require non-rural
    carriers to match their year-end line counts with those filed
    pursuant the *1999 Data Request*. We do not believe such a
    requirement is necessary at this time because year end line counts
    can be matched to those filed pursuant to the *1999 Data Request* by
    Bureau staff without imposing additional reporting requirements on
    incumbent local exchange carriers.

# Other INPUTS

16. [General Support Facilities.]{.underline} 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).[^41] GSF investment includes
    buildings, motor vehicles, and general purpose computers.[^42] 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. In the *2002 Line
    Counts Update Public Notice*, we sought comment on whether we should
    update the tables in the model with 2000 ARMIS data to estimate GSF
    investment.

17. We find that updating the tables used in the model with 2000 ARMIS
    data used to compute GSF investment will improve the model's cost
    estimates by taking into account the current costs of GSF investment
    associated with supported services. Although commenters generally
    support this inputs update,[^43] Verizon requests that the Bureau
    also revisit the current methodology established in the *Tenth
    Report and Order* which is used to estimate GSF investment.[^44]
    Verizon recommends that the Bureau expand the algorithm for
    estimating GSF investment to include other parameters, such as route
    length and the number of lines served.[^45] We find that altering
    the algorithm and inputs established in the *Tenth Report and Order*
    used to calculate GSF investment is beyond the scope of this
    proceeding and defer such issues to a future proceeding tailored to
    studying such platform changes.[^46]

18. [Switching.]{.underline} 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 1998 ARMIS Dial Equipment Minutes
    (DEM) data to determine the overall switch usage. Then, because the
    ARMIS DEM data do not distinguish between local and intrastate toll
    usage, the model uses 1997 traffic parameter data filed with the
    National Exchange Carrier Association (NECA) which, in addition to
    identifying intrastate and interstate switch usage, identifies the
    local DEM to compute the portion of non-interstate local usage.[^47]
    Therefore, the model currently uses data sources from different
    years to determine the portion of the switch used to direct
    intrastate traffic. In the *2002 Line Counts Update Public Notice*,
    we sought 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 sought
    comment on whether it would be more consistent to use only NECA
    traffic parameter data instead of obtaining these data from two
    sources.

19. We conclude that we should update the tables in the model with the
    most recent traffic parameters available from NECA to determine the
    percentage of the switch allocated to supported services and the
    switch port requirement for interoffice transport. AT&T and WorldCom
    contend that the Bureau should not rely solely on NECA data to
    apportion switch costs to supported services.[^48] They argue that
    because the DEM data provided by NECA is one year older than the
    data in ARMIS, if the model used only NECA data, that would ignore
    the growth in minutes that occurs in the following year and lose the
    economies of scale that result from increases in minutes. We
    disagree. Although ARMIS data are more recent than NECA data, they
    are incomplete for purposes of determining local switch usage. As a
    result, ARMIS data would need to be combined with the prior year's
    NECA data to allocate the percentage of the switch to supported
    services. We believe such a mismatch in data could cause the model
    to distort local switching usage. We conclude, therefore, that a
    preferable alternative is to use only NECA data for switch
    allocation, which are only one year behind the ARMIS data but
    contain all the data necessary to serve as the sole source for
    switch apportionment.[^49] We will continue to use ARMIS traffic
    parameter data for estimating signaling costs.

# Model Platform

## Background

20. In the *Fifth Report and Order*, the Commission adopted the model
    platform to be used under its forward-looking cost mechanism in
    determining federal high-cost universal service support for
    non-rural carriers.[^50] When the Commission adopted the model
    platform, it anticipated it would review and adjust the model
    periodically.[^51] The Commission delegated to the Bureau "the
    authority to make changes or direct that changes be made as
    necessary and appropriate to ensure that the model platform of the
    federal mechanism operates as described in this Order."[^52]
    Consistent with this delegated authority, the Bureau has worked with
    interested parties to identify instances where the model is not
    working as intended and suggest appropriate modifications.
    Periodically, the Commission staff post updated versions of the cost
    model on the Commission's web site, along with an explanation.[^53]

21. Recently, under its delegated authority, the Bureau sought comment
    on updating the model's Turbo-Pascal computer programming language.
    Specifically, in a Public Notice released on June 20, 2001, the
    Bureau announced the posting of a version of the cost model in
    Delphi computer language on its web site.[^54] The Bureau sought
    comment on advantages of the Delphi version over the previously used
    Turbo-Pascal computer language, recommendations concerning
    improvements to the Delphi version, and whether it should use the
    Delphi version of the model for purposes of calculating support
    amounts for 2002.[^55]

## Discussion

22. We defer, until a later date, the question of whether and when to
    transition to the Delphi version of the forward-looking cost model.
    The Delphi version posted on the Commission's web site contained
    certain modifications, in addition to translation to the Delphi
    computer language.[^56] Commenters have noted that some of the cost
    estimates generated by this modified version of the cost model
    significantly differ with the results from the previous year's
    Turbo-Pascal version.[^57] This may warrant further investigation of
    whether the total amount of universal service support can vary
    substantially with small changes in inputs due to technical
    corrections to the model. In addition, numerous commenters have
    recommended use of the cost model in Visual Basic computer language
    in lieu of the Delphi version.[^58] They contend that Visual Basic
    is a preferable computer language because it is: (1) more widely
    used than Delphi; and (2) part of the cost model already uses Visual
    Basic and therefore, transition here would make the cost model more
    uniform. In order to permit an opportunity for further consideration
    and analysis of these issues, we will use a Turbo-Pascal version of
    the model, at present, to calculate support for non-rural carriers
    for calculating 2002 cost estimates. We anticipate that a number of
    technical corrections will ultimately be made to the cost model.
    Upon further examination of proposed modifications, we may revise
    our calculations of support for future quarters in 2002.

23. As a final matter, various commenters have also suggested the Bureau
    use this proceeding to make changes to the model platform and
    inputs.[^59] Such comments go beyond the scope of the Public Notices
    that are the subject of this Order, which sought comment on the
    narrow issues of whether to use a Delphi version of the
    forward-looking model for purposes of calculating support for 2002
    and whether to update certain inputs such as line counts. The
    Commission has anticipated initiating a separate proceeding to study
    improvements to the model's inputs and platform in a comprehensive
    manner.[^60] We therefore, defer such issues to such a future
    proceeding.

# petition for reconsideration of Sprint corporation

## Background

24. On January 26, 2001, Sprint filed a Petition for Reconsideration of
    the *2001 Line Counts Update Order*.[^61] In its Petition for
    Reconsideration, Sprint requested that the Bureau or the Commission
    reconsider the Bureau's decision in the *2001 Line Counts Update
    Order* to update the model's line counts for purposes of determining
    support for 2001, without updating the customer location data set.
    Sprint requests that we issue a new order mandating that customer
    location data and road data be updated along with line counts.[^62]

## Discussion

25. We deny Sprint's petition for reconsideration of the *2001 Line
    Counts Update Order.* Specifically, after review of the arguments
    presented on reconsideration, we conclude that Sprint has not
    provided any new information or arguments that require us to alter
    our decision to update line counts without updating customer
    location data for purposes of calculating support for 2001. As we
    have explained above, in the *2001 Line Counts Update Order*,
    updated line count data were available for the model's inputs, but
    updated customer location data were not.[^63] Consequently, the
    Bureau concluded that, on balance, it was better to update the model
    with available line count data at that time than wait until a
    customer location data set could be obtained.[^64]

26. Relying on that same analysis and reasoning, as part of this Order,
    we have decided to use updated line count data in the universal
    service cost model for purposes of calculating support for non-rural
    carriers for 2002 without updating customer location data.[^65]
    Again, because an updated customer location and road data set
    remains unavailable for use at this time, we find that, on balance,
    it is best not to delay updating line counts for the reasons stated
    herein.[^66] In addition, we note that the Commission intends to
    initiate, at a later date, a proceeding to study proposed revisions
    and changes to the model inputs and model platform.[^67]

# ordering clauses

27. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in sections 1-4, 201-205, 214, 218-220, 254, 303(r), 403, and 410 of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154,
    201-205, 214, 218-220, 254, 303(r), 403, and 410, and section 1.108
    of the Commission's rules, 47 C.F.R. § 0.91(f), this ORDER IS
    ADOPTED.

28. IT IS FURTHER ORDERED that, pursuant to sections 4, 201-205,
    218-220, 303(r), and 405 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 154, 201-205, 218-220, 303(r), and 405 of the
    Communications Act of 1934, as amended, and sections 1.106 and 1.429
    of the Commission\'s rules, 47 C.F.R. §§ 1.106, 1.429, that the
    petition for reconsideration filed January 26, 2000, by Sprint
    Corporation is DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Carol E. Mattey

    Deputy Chief, Common Carrier Bureau

[^1]: *See Federal-State Joint Board on Universal Service*, CC Docket
    96-45, Order, 15 FCC Rcd 23960 (Com. Car. Bur. 2000) (*2001 Line
    Counts Update Order*).

[^2]: *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*, 258 F.3d 1191 (10th Cir.
    2001); *Federal-State Joint Board on Universal Service,
    Forward-Looking Mechanism for High Cost Support for Non-Rural LECs*,
    CC Docket Nos. 96-45, 97-160, Tenth Report and Order, 14 FCC Rcd
    20156 (1999) (*Tenth Report and Order*), *affirmed*, *Qwest Corp. v.
    FCC*, 258 F.3d 1191 (10th Cir. 2001).

[^3]: *See Federal-State Joint Board on Universal* Service, CC Docket
    No. 96-45, Twentieth Reconsideration Order, FCC 00-126, para. 8
    (rel. April 7, 2000) (*Twentieth Reconsideration Order*). These wire
    center line counts were generated by PNR Associates (now TNS
    Telecom) and trued-up to study area access line counts provided by
    carriers in their 1998 Automated Reporting Management Information
    System (ARMIS) filings. *See Tenth Report and Order*, 14 FCC Rcd at
    20186, para. 61.

[^4]: *See Twentieth Reconsideration Order*, FCC 00-126 at para. 17.

[^5]: *See id.* at para. 8. In the *2001* *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]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23964, para 11.
    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.

[^7]: *See id.* Non-rural carriers began filing quarterly wire center
    line counts for the first time on December 30, 1999.

[^8]: *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*).

[^9]: 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}.

[^10]: *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 (Com. Car.
    Bur. 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.

[^11]: *See Line Counts Update Order*, 15 FCC Rcd at 23966-67, 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).

[^12]: *See* 47 C.F.R. §§ 36.611, 54.307.

[^13]: *See 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*, CC
    Docket No. 96-45, Public Notice, DA 00-1825 (rel. Sept. 11, 2001)
    (*2002 Line Counts Update Public Notice*).

[^14]: Section 36.611 of the Commission's rules requires carriers to
    file, for universal service support purposes, "working Exchange Line
    C&WF loops used jointly for exchange and message telecommunications
    service, including C&WF subscriber lines associated with pay
    telephones in C&WF Category 1, but excluding WATS closed end access
    and TWX service." *See* 47 C.F.R. § 36.611(h).

[^15]: *See First Report and Order,*12 FCC Rcd at 8912-16, para. 250
    (emphasis added).

[^16]: *See First Report and Order*, 12 FCC Rcd at 8915, para. 250.

[^17]: *See id*.

[^18]: *See* AT&T Comments at 2-5; *2001 Line Counts Update Order*, 15
    FCC Rcd at 23964, para. 10. AT&T concedes that until the Commission
    adopts some method of projecting model line counts to the year for
    which support is provided, we should use the year-end line count
    data filed by carriers on July 31, 2001.

[^19]: *See* AT&T Comments at 3. AT&T raised the same argument in last
    year's line counts proceeding. *See 2001 Line Counts Update Order*,
    15 FCC Rcd at 23964, para 10.

[^20]: *2001 Line Counts Update Order*, 15 FCC Rcd at 23964, para. 10.

[^21]: *See Twentieth Reconsideration Order*, FCC 00-126.

[^22]: *See 2000 Biennial Regulatory Review -- Comprehensive Review of
    the Accounting Requirements and ARMIS Reporting Requirements for
    Incumbent Local Exchange Carriers: Phase 2*, CC Docket Nos. 00-199,
    97-212, and 80-286, Report and Order, FCC 01-305, para. 45 n. 69
    (rel. Nov. 5, 2001); *Tenth Report and Order*, 14 FCC Rcd at 20170,
    para. 28; *2001 Line Counts Update Order*, 15 FCC Rcd at 23965,
    para. 11. *See also infra* para. 23.

[^23]: *See* BellSouth Comments at 2-3; Qwest Comments at 1; Verizon
    Comments at 1-3; Florida PSC Comments at 2-3. Any updates to the
    customer location data for the road surrogate algorithm would also
    include updated road data. Therefore, for purposes of this order, we
    find it unnecessary to distinguish between the two.

[^24]: *See* BellSouth Comments at 2-3; Qwest Comments at 1; Verizon
    Comments at 2.

[^25]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23965-66,
    para. 13. Moreover, the Bureau determined that until the model uses
    updated customer location data, all new lines would be treated as
    additional lines at existing locations, with their additional costs
    included in the model's costs estimates. *See id.* On January 26,
    2001, Sprint Corporation (Sprint) filed a petition for
    reconsideration of the *2001 Line Counts Update Order.* We deny
    Sprint's petition in Section V of this Order.

[^26]: The Bureau estimated that 65 percent of the increase in
    residential lines occurred at existing locations. *See 2001 Line
    Counts Update Order*, 15 FCC Rcd at 23695, para. 12. Moreover,
    Commission staff's more recent estimates attribute approximately 72
    percent of the increase in residential lines to additional lines at
    existing locations. In addition, as AT&T notes, costs may also be
    overstated due to the uses of surrogate data in place of real
    geocode data and the model's assumption that separate customers in
    one building (*i.e*., apartment buildings, condominiums, etc.) live
    at different locations. *See* AT&T Reply Comments at 3.

[^27]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23965-66,
    para. 13.

[^28]: *See* Verizon Comments at 3.

[^29]: *See id.*

[^30]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23965, para.
    12.

[^31]: *See also* Supporting Comments of Qwest Corp., Sprint
    Corporation's Petition for Reconsideration, filed Jan. 26, 2001. As
    stated *supra*, the Commission anticipates studying inputs updates
    in a future proceeding.

[^32]: Nor do we find it feasible, as suggested by AT&T, to require
    ILECs to provide geocode data or obtain geocode data from TNS Telcom
    (formerly PNR & Associates), in a timely manner for determining 2002
    support. *See* A&T Delphi Public Notice Comments at 10.

[^33]: *See infra* para. 23.

[^34]: *See* AT&T Comments at 5-6; WorldCom Comments at 1. To the extent
    the Bureau uses such information in the model, AT&T requests that it
    be made publicly available. *See* AT&T Comments at 5. Because we are
    not adopting AT&T's proposal, it is unnecessary to address such a
    request. Moreover, for wire centers receiving support, quarterly
    wire center line count data to the limited extent that the number of
    lines in wire centers receiving support may be determined when the
    Commission releases per-line and total support amounts. *See
    Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Order, 15 FCC Rcd 8746 (2000). Line count data for wire
    centers not receiving support are available pursuant to the
    procedures set forth in the Commission's interim protective order.
    *See* *Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45, Interim Protective Order, 15 FCC Rcd 10,183 (Com. Car.
    Bur. 2000).

[^35]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23966, para.
    14. *See also* Verizon Comments at 1-2.

[^36]: For each wire center we determine the fraction of the USF loops
    reported July 31, 2001, that should be categorized as business
    lines, residential lines, payphone lines, and single line business
    lines for use in the model. These fractions are calculated using the
    *1999 Data Request* lines for each wire center as follows: (1) the
    numerator is the relevant category \-- business lines, residential
    lines, payphone lines, or single line business lines; and (2) the
    denominator is the sum of business lines, residential lines, and
    payphone lines. Single line business lines are not included in the
    denominator because they already are included in the number of
    business lines. *See 1999 Data Request* at 4. USF loops for each
    wire center are then multiplied by the fractions calculated from the
    matching wire center in the *1999 Data Request* data to determine
    the line counts inputs for the matching wire center in the model.

[^37]: Special access lines are dedicated lines that connect two or more
    end users without passing through a switch in a carrier's wire
    center.

[^38]: *See* *2001 Line Counts Update Order*, 15 FCC Rcd at 23966, para.
    16.

[^39]: *See id.*

[^40]: Although commenters generally support this approach, Verizon
    requests that the Bureau count special access lines differently in
    the model platform. Currently, the model uses that actual number of
    special access lines to account for costs due to growth but then
    uses voice grade equivalents to calculate final per-line costs.
    *See* Verizon Comments at 4. Such a methodology, contends Verizon,
    causes the model to understate the costs of providing universal
    service. Because Verizon's claim concerns a platform change, we
    defer such issues to a future proceeding. *See infra* para. 23.

[^41]: *See Tenth Report and Order*, 14 FCC Rcd at 20335-36, paras.
    409-10.

[^42]: *See Tenth Report and Order*, 14 FCC Rcd at 20335-36, para. 409.

[^43]: *See* AT&T Comments at 7-8; FPSC Comments at 3; WorldCom Comments
    at 1-2.

[^44]: *See* Verizon Comments at 5. For each study, the model calculates
    a GSF investment ratio for each GSF account by dividing the ARMIS
    investment for the account by the ARMIS total plant in service
    (TPIS) less GSF investment. Next, the model calculates a preliminary
    estimate for GSF investment for each account by multiplying the
    model's forward-looking estimate of TPIS costs by the GSF investment
    ratio calculated in step one. Finally, the model multiplies this
    preliminary estimate by a nationwide allocation factor to determine
    the portion of GSF investment related to the cost of providing
    services under the federal mechanism. By linking GSF investment to
    forward-looking estimates, Verizon claims the model incorrectly
    assumes the two factors are linked. Specifically, if the model
    reduces total plant in service due to the use of forward-looking
    data, Verizon suggests that the GSF will incorrectly decrease. As a
    result, Verizon suggests that the model's GSF investment algorithm
    should include "other parameters, such as route length and the
    number of lines served." *See* Verizon Comments at 5.

[^45]: *See* Verizon Comments at 5.

[^46]: *See infra* para. 23.

[^47]: 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).

[^48]: *See* AT&T Comments at 8-9; WorldCom 2-3.

[^49]: In addition, even if we used NECA data for switch apportionment,
    MCI WorldCom and AT&T argue that the Commission would still need to
    utilize other data that is contained in ARMIS. *See* MCI WorldCom
    Comments at 2-3; AT&T Comments at 8-9. These data include local call
    attempts, intraLATA toll messages, intrastate interLATA messages,
    and interstate interLATA messages. As a result, these commenters
    contend that eliminating the use of ARMIS DEM would not simplify
    data used in the model because other ARMIS data are used elsewhere.
    We disagree. The above data are not used for the switch
    apportionment component of the model, but rather are used to
    determine signaling which is part of the transport component of the
    model. Moreover, unlike the ARMIS data previously used for switch
    apportionment, the ARMIS data used for signaling are a complete data
    set that does not have to be supplemented from other sources.

[^50]: *Federal-State Joint Board on Universal Service*, CC Docket Nos.
    96-45, 97-160, Fifth Report and Order, 13 FCC Rcd 21,323 (rel. Oct.
    28, 1998) (*Fifth Report and Order*).

[^51]: *See Fifth Report and Order*, 13 FCC Rcd at 21329, para. 13.

[^52]: *See id*.

[^53]: *See, e.g., Common Carrier Bureau Announces Procedures for
    Releasing High-Cost Support Amounts for Non-Rural Carriers and
    Revised Model Results*, CC Docket Nos. 96-45 and 97-160, Public
    Notice, 15 FCC Rcd 15,559 (2000). The model and related files are
    located at
    [www.fcc.gov/ccb/apd/hcpm](http://www.ff.gov/ccb/apd/hcpm)). The
    technical explanation of all modifications made to date is available
    in the "history.doc" file.

[^54]: *Common Carrier Bureau Seeks Comment on Translation of Cost Model
    to Delphi Computer Language and Announces Posting of Updated Cost
    Model*, CC Docket No. 96-45, Public Notice (rel. June 20, 2001).

[^55]: *See id.* In July 31, 2001, the United States Court of Appeals
    for the Tenth Circuit affirmed use of the model to calculate
    forward-looking cost and deferred to the Commission's expertise in
    establishing the technical specifications of the model, such as the
    appropriate computer language for the model. *See Qwest Corp. v.
    FCC*, 258 F.3d 1191, 1205-06 (10th Cir. 2001). The court also upheld
    the Commission's authority to fix technical errors in the model
    without notice and comment. *See id.* at 1206-07.

[^56]: For example, the source code involving index values that refer to
    lookup tables for the cost of drop terminals, manholes, and service
    area interfaces (SAIs) was modified to retrieve a different term.
    Also, the location of drop terminals was adjusted to reflect the
    default value of 360 feet for grid cells containing customer
    locations. Finally, the size of SAIs was adjusted to account for
    cable sizes on both the distribution and feeder side of the
    interface.

[^57]: *See* BellSouth, Qwest, and Sprint Joint Delphi Public Notice
    Comments at 2.

[^58]: *See* BellSouth, Qwest, and Sprint Joint Delphi Public Notice
    Comments at 2; Verizon Delphi Public Notice Comments at 2.

[^59]: For example Roseville Telephone Company suggest the Bureau create
    a set of inputs tailored to mid-sized companies. *See* Roseville
    Comments at 7. Further, BellSouth, Qwest, and Sprint urge the
    Commission to modify its methodology to compute special access
    lines, and AT&T requests that the model platform be changed to
    reflect structure sharing between feeder and distribution
    facilities. BellSouth, Qwest, and Sprint Joint Delphi Public Notice
    Comments at 7; AT&T Delphi Public Notice Comments at 11-12.

[^60]: *See Tenth Report and Order*, 14 FCC Rcd at 20170, para. 28 ("We
    therefore have committed to initiating a proceeding to study how the
    model should be used in the future (*e.g.*, how inputs data should
    be updated) and how the model itself should change to reflect
    changing circumstances."); *2001 Line Counts Update Order*, 15 FCC
    Rcd at 23965, para. 11 ("We defer to a future proceeding the issue
    of how often line counts and other input values should be
    updated."). *See also* *supra* note 22.

[^61]: *In the Matter of Federal-State Joint Board on Universal
    Service*, CC Docket No. 96-45, Sprint Corporation's Petition for
    Reconsideration, filed Jan. 26, 2001.

[^62]: *See Sprint Petition for Reconsideration* at 7.

[^63]: *See 2001 Line Counts Update Order*, 15 FCC Rcd at 23965-66,
    para. 13; *supra* para. 11.

[^64]: The Bureau stressed that because carriers reported lines were
    updated for calculating support, the model's line input values
    should also be updated. Otherwise the time lag between the model
    inputs and reported lines would continue to grow without
    readjustment. *See 2001 Line Counts Update Order* 15 FCC Rcd at
    23965-66, para. 13.

[^65]: *See supra* paras. 10-12.

[^66]: *Id.*

[^67]: *See supra* note 22.