DA-2817

December 4, 2001

**COMMON CARRIER BUREAU SEEKS COMMENT ON REMAND OF \$650 MILLION SUPPORT
AMOUNT UNDER INTERSTATE ACCESS SUPPORT MECHANISM**

**FOR PRICE CAP CARRIERS**

**PLEADING CYCLE ESTABLISHED**

**CC Docket Nos. 96-262, 94-1, 99-249, and 96-45**

**Comment Date: 30 days from publication in the Federal Register**

**Reply Comment Date: 45 days from publication in the Federal Register**

On May 31, 2000, the Federal Communications Commission adopted the
*CALLS Order*, which reformed the interstate access rate structure for
price cap carriers by removing implicit universal service support and
replacing it with explicit support.[^1] To accomplish this, the
Commission created a new universal service support mechanism called the
interstate access support mechanism.[^2] The Commission directed that
\$650 million annually be made available under the interstate access
support mechanism. The Commission concluded that this amount would
provide sufficient, but not excessive, support.[^3] In adopting this
amount, the Commission noted that \$650 million fell within a range of
proposed amounts submitted in the proceeding, and reflected agreement
among disparate interests, including interexchange carriers and price
cap carriers.[^4]

On September 10, 2001, the United States Court of Appeals for the Fifth
Circuit remanded the *CALLS Order* to the Commission for further
analysis and explanation regarding the establishment of the \$650
million amount.[^5] The court concluded that the Commission provided
inadequate justification for the support amount.[^6] Specifically, the
court concluded that the Commission "failed to exercise sufficiently
independent judgment in establishing the \$650 million amount," by
granting too much deference to the fact that many parties agreed that
\$650 million was an adequate support amount.[^7] The court recognized
that identifying a specific amount of explicit support to replace
implicit support is "an imprecise exercise," but held that the
Commission must better explain how it arrived at the \$650 million
amount.[^8] In particular, the court noted that the Commission should
better address the relevance of studies filed in the proceeding to the
establishment of the support amount, including the AT&T study using the
synthesis model, the ALTS and Time Warner studies, and other
studies.[^9] The court therefore directed that the Commission provide
further analysis and explanation justifying \$650 million as an
appropriate amount of support available under the interstate access
universal service support mechanism.[^10]

Accordingly, we seek further comment on the \$650 million support amount
available under the interstate access support mechanism. Specifically,
we seek comment on the uses of a cost model, including the Commission's
forward-looking high-cost model or the study submitted by AT&T in this
proceeding, to identify the appropriate amount available under the
interstate access support mechanism. We also seek comment on the use of
other studies or analyses to determine whether \$650 million is the
support amount that best serves the Commission's universal service
goals.

Pursuant to sections 1.415 and 1.419 of the Commission's rules,
interested parties may file comments 30 days or fewer from publication
in the Federal Register, and reply comments 45 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.[^11] 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, DC 20554.

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

Pursuant to section 1.1206 of the Commission's rules,[^12] this
proceeding will continue to be conducted in a permit-but-disclose
proceeding in which *ex parte* communications are permitted subject to
disclosure. For further information, please contact: Ted Burmeister,
Accounting Policy Division, Common Carrier Bureau, (202) 418-7400.

[^1]: *Access Charge Reform, Price Cap Performance Review for Local
    Exchange Carriers*, CC Docket Nos. 96-262 and 94-1, Sixth Report and
    Order, *Low-Volume Long-Distance Users*, CC Docket No. 99-249,
    Report and Order, *Federal-State Joint Board on Universal Service*,
    CC Docket No. 96-45, Eleventh Report and Order, 15 FCC Rcd 12962
    (*CALLS Order*), *aff'd in part, rev'd in part, and remanded in
    part*, *Texas Office of Public Util. Counsel et al. v. FCC*, 265
    F.3d 313 (5th Cir. 2001) (*TOPUC)*.

[^2]: *CALLS Order* at 13039-62, paras. 185-232.

[^3]: *Id*. at 13044-49 paras. 198-205.

[^4]: *Id.* at 13046-47 para. 202.

[^5]: *TOPUC*, 265 F.3d at 327-28. The court also reversed and remanded
    the Commission's adoption of a 6.5 X-Factor -- which, under the
    CALLS plan, determines the rate at which access charges are reduced
    to target levels \-- because the Commission failed to state a
    rational basis to support the 6.5 percent figure. *Id.* at 328-29.
    The Commission intends to rely on the existing record in this
    proceeding to address that issue on remand.

[^6]: *Id.* at 327-28.

[^7]: *Id.* at 328.

[^8]: *Id.*

[^9]: *Id.*

[^10]: *Id.*

[^11]: 47 C.F.R. §§ 1.415, 14.19. *See Electronic Filing of Documents in
    Rulemaking Proceedings*, 63 Fed. Reg. 24,121 (1998).

[^12]: 47 C.F.R. § 1.1206.