**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the matter of                 | *  | Transmittal No. 951          |
|                                  | *) |                              |
| National Exchange Carrier        | ** |                              |
| Association, Inc                 |    |                              |
|                                  | *  |                              |
| Tariff FCC No. 5                 | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
+----------------------------------+----+------------------------------+

**ORDER**

**Adopted: September 4, 2002 Released: September 4, 2002**

By the Chief, Pricing Policy Division:

# INTRODUCTION

1.  Pursuant to section 204(a)(3) of the Communications Act of 1934, as
    amended,[^1] the National Exchange Carrier Association, Inc. (NECA)
    filed Transmittal No. 951 on August 21, 2002, revising certain
    provisions of its interstate access tariff, FCC No. 5, to become
    effective September 5, 2002. NECA's tariff revisions would amend the
    sections of its tariffs regarding security deposits to allow NECA to
    require security deposits in circumstances not covered by its
    existing tariffs. The filing also revises discontinuance of service
    provisions.

2.  Under NECA's current tariff, it may require deposits from a customer
    that has a proven history of late payments or lacks established
    credit. Under NECA's proposed revisions, it may require additional
    security deposits from a customer following establishment of
    services pursuant to certain new criteria. These criteria are: (1)
    the customer has established a proven history of late payments which
    is defined as two or more occurrences in the preceding twelve-month
    period during which the company received remittance after the
    payment date; (2) the customer's average monthly billing for the
    preceding three months has increased beyond the amount initially
    used to estimate the currently held security deposit, if applicable;
    and/or (3) the company becomes aware that the customer's credit
    worthiness is below a commercially acceptable level. A commercially
    acceptable level of credit worthiness for a customer or its parent
    company is defined as having a corporate debt securities rating with
    respect to any outstanding general debt obligations of at least BBB
    according to Standard and Poor's or an equivalent rating from other
    debt rating agencies. For a customer that does not issue debt
    securities, a commercially acceptable credit worthiness is defined
    as having a composite credit appraisal rating published by Dun &
    Bradstreet of at least "good" or a Paydex score as published by Dun
    & Bradstreet of at least "average." Security deposits would be
    returned to the customer under two conditions: (1) the deposit will
    be credited to the customer's account to satisfy any amounts due
    when the provision of service is discontinued and any remaining
    credit balance will be refunded to the customer; or (2) when the
    customer has established a history of prompt payments and has
    established commercially acceptable credit. The revisions would also
    shorten from thirty to ten days the notice period after which NECA
    can refuse to process new orders or discontinue service.

3.  As justification for this revision, NECA states that "\[i\]t is
    essential that incumbent local exchange carriers (ILECs)
    participating in Tariff F.C.C. No. 5 be able to protect their
    ability to obtain payment for the services that they are required to
    provide all customers, including access services to financially
    troubled carriers."[^2] NECA further states that it "has experienced
    an increase in uncollectibles that is unprecedented in its history"
    and that this puts "NECA pooling companies at significant risk for
    millions of dollars.[^3]

4.  On August 21, 2002, Sprint Communications Company, L.P. (Sprint) and
    WorldCom, Inc. (WorldCom) filed petitions to reject, or, in the
    alternative, to suspend and investigate NECA's tariff.[^4] On
    September 3, 2002, NECA filed its reply.[^5] In this Order we grant
    the petitions so far as they ask us to suspend and investigate the
    NECA tariff, and we suspend for five months and set for
    investigation NECA's revisions to its interstate access Tariff FCC
    No. 5.

# DisCUSSION

5.  We find that petitioners raise substantial questions regarding the
    lawfulness of NECA's tariff revisions that require further
    investigation. They question whether the revisions violate a
    Commission prescription, are unjust and unreasonable in violation of
    section 201(b) of the Act, are unreasonably discriminatory in
    violation of section 202(a) of the Act, and are impermissibly vague
    in violation of sections 61.2 and 61.54(j) of the Commission's
    rules.[^6] WorldCom further questions whether NECA has demonstrated
    substantial cause for a material change by a dominant carrier in a
    provision of a term plan.[^7] For these reasons, we conclude that
    substantial questions regarding the lawfulness of NECA's FCC Tariff
    No. 5, Transmittal No. 951 require further investigation, and we
    suspend it for five months. The specific issues that will be the
    subject of the investigation will be identified in an upcoming
    designation order and may include, but not be limited to, the issues
    identified in this paragraph. We may also, by order, identify
    discrete issues that do not warrant further investigation.

# *ex parte* requirements

6.  This investigation is a permit-but-disclose proceeding and is
    subject to the requirements of section 1.1206(b) of the Commission's
    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.[^8] Other rules
    pertaining to oral and written presentations are also set forth in
    section 1.1206(b).

# ordering clauses

7.  ACCORDINGLY, IT IS ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended,[^9] and through the
    authority delegated pursuant to sections 0.91 and 0.291 of the
    Commission's rules,[^10] Tariff FCC No. 5, Transmittal No. 951 of
    the National Exchange Carrier Association, Inc. IS SUSPENDED for
    five months and an investigation IS INSTITUTED.

8.  IT IS FURTHER ORDERED that the National Exchange Carrier
    Association, Inc. SHALL FILE a supplement within five business days
    from the release date of this order reflecting the suspension. The
    National Exchange Carrier Association, Inc. should cite the "DA"
    number on the instant order as the authority for the filing.

9.  IT IS FURTHER ORDERED that the petitions to reject, or, in the
    alternative, suspend and investigate filed by Sprint Communications
    Company, L.P. and WorldCom, Inc. 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]: 47 U.S.C. § 204(a)(3).

[^2]: National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951, Description and Justification at 1.

[^3]: *Id.* at 3.

[^4]: Petition of Sprint to Reject or Alternatively Suspend and
    Investigate (Aug. 21, 2002) (*Sprint Petition*); WorldCom Petition
    to Reject or, in the Alternative, Suspend and Investigate (Aug. 21,
    2002) (*WorldCom Petition*).

[^5]: National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951, Reply of National Exchange Carrier Association,
    Inc. (September 3, 2002).

[^6]: 47 U.S.C. § 201(b), 202(a); 47 C.F.R. §§ 61.2, 61.54(j). *See,
    e.g*., Sprint Petition at 1, 5, 6; WorldCom Petition at 2, 4, 5.

[^7]: *See* WorldCom Petition at 7-8.

[^8]: *See* 47 C.F.R. §1.1206(b)(2), as revised.

[^9]: *See* 47 U.S.C. § 204(a).

[^10]: *See* 47 C.F.R. §§ 0.91 and 0.291.