**\
§ 61.3 Definitions.**\
\
\
(a) ***Act***. The Communications Act of 1934 (48 Stat. 1004; 47 U.S.C.
chapter 5), as amended.\
\
(b) ***Actual Price Index (API***). An index of the level of aggregate
rate element rates in a basket, which index is calculated pursunt to §
61.46.\
\
(c) ***Association***. This term has the meaning given it in § 69.2(d).

\(d\) ***Average Price Cap CMT Revenue per Line Month.*** Price Cap CMT
Revenue per Month as of July 1,2000 (adjusted to remove Universal
Service Contributions assessed to Local Exchange Carriers pursuant to
54.702) using 1999 base period demand, divided by the base period demand
number of lines as of July 1, 2000. In filing entities with multiple
study areas, if it becomes necessary to calculate the Price Cap CMT
Revenue Per Line for a specific study area, then the Price Cap CMT
Revenue Per Line for that study area is determined as follows, using
base period demand revenues (adjusted to remove Universal Service
Contributions assessed to Local Exchange Carriers pursuant to 54.702),
Base Factor Portion (BFP) and 1999 base period lines as of July 1, 2000
:

*PriceCapCMTRevenuePerLine~StudyArea~* *=*

*PriceCapCMTRevenue~FilingEntity~* *(BFP~StudyArea~*
*BFP~FilingEntity~)* *Lines~StudyArea~*

Nothing in this definition precludes a price cap local exchange carrier
from continuing to average rates across filing entities containing
multiple study areas, where permitted under existing rules.

Average Price Cap CMT Revenues Per Line may be adjusted after July 1,
2000 to reflect exogenous costs pursuant to 61.45(d).

Average Price Cap CMT Revenues Per Line may also be adjusted pursuant to
61.45 (b)(1)(iii).

\(e\) ***Average Traffic Sensitive Charge.*** ***The Average***
***Traffic*** ***Sensitive Charge*** ***is the sum of the following two
components***

***1.*** The Local Switching component will be calculated by dividing
the proposed Local Switching revenues (Local Switching, LS trunk ports,
Information Surchage, and STP Port) by the base period Local Switching
MOUs.

2\. The Transport component will be calculated by dividing the proposed
Transport revenues (Switched Direct Trunk Transport, Signaling for
Switched Direct Trunk Transport, Entrance Facilities for Switched Access
traffic, Tandem Switched Transport, Signaling for Tandem Switching and
TIC) by ILEC only base period Transport Minutes of Use (MOUs) (including
meet-point billing arrangements for jointly-provided interstate access
by an incumbent LEC and any other LEC).

For the purposes of determining whether the average traffic sensitive
charge has reached the target rate, the calculations should include all
the relevant revenues and minutes for services provided under generally
available tariffs and services provided under contract tariffs. If in
the future an access customer can use UNEs (defined as network elements
required to be unbundled pursuant to Part 51) in lieu of switched access
service for service other than to its local service end user, the
revenues and demand for UNEs used to provide switched access services
would be included in the calculation of the ATS rate. To the extent that
UNEs are used to provide interstate access for CLEC end users for whom
the CLEC is not also providing local service, the ILEC will measure such
traffic or obtain from the CLEC a CLEC self-report of that demand and
associated revenues.

\(f\) ***Band***. A zone of pricing flexibility for a service category,
which zone is calculated pursuant to § 61.47.\
\
(g) ***Base period***. For carriers subject to §§ 61.41-61.49, the
12-month period ending six months prior to the effective date of annual
price cap tariffs. Base year or base period earnings shall exclude
amounts associated with exogenous adjustments to the PCI for the lower
formula adjustment mechanism permitted by § 61.45(d)(1)(vii).\
\
(h) ***Basket.*** Any class or category of tariffed service or charge:\
\
(1) Which is established by the Commission pursuant to price cap
regulation;\
\
(2) The rates of which are reflected in an Actual Price Index; and\
\
(3) The related revenues of which are reflected in a Price Cap Index.\
\
(i) ***Change in rate structure***. A restructuring or other alternation
of the rate components for an existing service.\
\
(j) ***Charges.*** The price for service based on tariffed rates.\
\
(k) ***Commercial contractor***. The commercial firm to whom the
Commission annually awards a contract to make copies of Commission
records for sale to the public.\
\
(l) ***Commission***. The Federal Communications Commission.\
\
(m) ***Concurring carrier***. A carrier (other than a connecting
carrier) subject to the Act which concurs in and assents to schedules of
rates and regulations filed on its behalf an issuing carrier or
carriers.\
\
(n) ***Connecting carrier***. A carrier engaged in interstate or foreign
communication solely through physical connection with the facilities of
another carrier not directly or indirectly controlling or controlled by,
or under direct or indirect common control with, such carrier.\
\
(o) ***Contract-based tariff***. A tariff based on a service contract
entered into between a non-dominant carrier and a customer, or between a
customer and a price cap local exchange carrier which has obtained
permission to offer contract-based tariff services pursuant to Part 69,
Subpart H, of this chapter.\
\
(p) ***Corrections***. The remedy of errors in typing, spelling, or
punctuations.\
\
(q) ***Dominant carrier***. A carrier found by the Commission to have
market power (i.e., power to control prices).\
\
(r) ***GDP Price Index (GDP-PI).*** The estimate of the \"Fixed Weight
Price Index for Gross Domestic Product, 1987 Weights\" published by the
United States Department of Commerce, which the Commission designates by
Order.\
\
(s) ***GNP Price Index (GNP-PI***). The estimate of the \"Fixed-Weighted
Price Index for Gross National Product, 1982 Weights\" published by the
United States Department of Commerce, which the Commission designates by
Order.\
\
(rt ***Issuing carrier***. A carrier subject to the Act that publishes
and files a tariff or tariffs with the Commission.

\(u\) ***Line Month.*** Line demand per month multiplied by twelve.

\(v\) ***Local Exchange Carrier***. Any person that is engaged in the
provision of telephone exchange service or exchange access as defined in
section 3(26) of the Act.\
\
(w) ***New service offering.*** A tariff filing that provides for a
class or sub-class of service not previously offered by the carrier
involved and that enlarges the range of service options available to
ratepayers.\
\
(x) ***Non-dominant carrier***. A carrier not found to be dominant.\
\
(y) ***Other participating carrier***. A carrier subject to the Act that
publishes a tariff containing rates and regulations applicable to the
portion or through service it furnishes in conjunction with another
subject carrier.

\(z\) ***Local Switching Pooled Revenue***, for certain qualified
companies, is the amount of additional Local Switching reductions in the
July 2000 Annual filing allowed to be moved and recovered in the Common
Line Basket as outlined in Section 61.48 (m).

(aa) ***Price Cap CMT Revenue.*** The maximum total revenue a filing
entity would be permitted to receive from End User Common Line charges,
Presubscribed Interexchange Carrier charges (PICCs), Carrier Common Line
charges (including Marketing). Price Cap CMT Revenue also includes
residual interconnection charge revenues collected through PICC charges,
but it does not include the local exchange carrier universal service
contributions as of July 1, 2000. The Price Cap CMT revenue does not
include the Local Switching Pooled revenue outlined in 61.3 (z), above.

(bb) ***Price Cap Index (PCI).*** An index of prices applying to each
basket of services of each carrier subject to price cap regulation, and
calculated pursuant to § 61.45.\
\
(cc) ***Price cap regulat***ion. A method of regulation of dominant
carriers provided in §§ 61.41 through 61.49.\
\
(dd) ***Price cap tariff filing***. Any tariff filing involving a
service subject to price cap regulation, or that requires calculations
pursuant to §§ 61.45, 61.46, or 61.47.\
\
(ee) ***Productivity factor***. An adjustment factor used to make annual
adjustments to the Price Cap Index to reflect the margin by which a
carrier subject to price cap regulation is expected to improve its
productivity relative to the economy as a whole.\
\
(ff) Rate. The tariffed price per unit of service.\
\
(gg) ***Rate incr***ease. Any change in a tariff which results in an
increased rate or charge to any of the filing carrier\'s customers.\
\
(hh) ***Rate level change***. A tariff change that only affects the
actual rate associated with a rate element, and does not affect any
tariff regulations or any other wording of tariff language.\
\
(ii) ***Regulations***. The body of carrier prescribed rules in a tariff
governing the offering of service in that tariff, including rules,
practices, classifications, and definitions.\
\
(jj) ***Restructured servi***ce. An offering which represents the
modification of a method of charging or provisioning a service; or the
introduction of a new method of charging or provisioning that does not
result in a net increase in options available to customers.\
\
(kk) ***Service Band Index (SBI).*** An index of the level of aggregate
rate element rates in a service category, which index is calculated
pursuant to § 61.47.\
\
(ll) ***Service category***. Any group of rate elements subject to price
cap regulation, which group is subject to a band.\
\
(mm) ***Supplement***. A publication filed as part of a tariff for the
purpose of suspending or cancelling that tariff, or tariff publication
and numbered independently from the tariff page series.

***(nn) Target Rate***. \$0.0055 for former Bell Operating Companies and
GTE. \$0.0065 for other price cap local exchange carriers.

(oo ***Tariff.*** Schedules of rates and regulations filed by common
carriers.\
\
(pp) ***Tariff publication, or publication***. A tariff, supplement,
revised page, additional page, concurrence, notice of revocation,
adoption notice, or any other schedule of rates or regulations filed by
common carriers.\
\
(qq) ***Tariff year***. The period from the day in a calendar year on
which a carrier\'s annual access tariff filing is scheduled to become
effective through the preceding day of the subsequent calendar year.\
\
(rr) ***Text change***. A change in the text of a tariff which does not
result in a change in any rate or regulation.\
\
(ss) ***United States.*** The several States and Territories, the
District of Columbia, and the possessions of the United States.\
\
(tt) ***Corridor service***. \"Corridor service\" refers to interLATA
services offered in the \"limited corridors\" established by the
District Court in United States v. Western Electric Co., Inc., 569 F.
Supp. 1057, 1107 (D.D.C. 1983).\
\
(uu) ***Toll dialing parity***. \"Toll dialing parity\" exists when
there is dialing parity, as defined in § 51.5 of this chapter, for toll
services.\
\
(vv) ***Loop-based services***. Loop-based services are services that
employ Subcategory 1.3 facilities, as defined in § 36.154 of this
chapter.\
\
(ww) ***Zone Average Revenue per Line***. The Price Cap CMT Revenue per
Line allocated to a particular state-defined zone used for deaveraging
of UNE loop prices. The Zone Average Revenue per Line is computed
according to the following formula:

> Zone Average Revenue per Line = (25% \* (Loop~Zone\ Price~ +
> Port~Price~) + U
>
> Where:

# U (Uniform Revenue per Line Adjustment) =

> (Price Cap CMT Revenue per line~Study\ Area~ x Base Period
> Lines~study\ area~) -- (25% x ((sum of Lines~UNE\ Zone~ x
> (Loop~zone\ price~ +Port ~Price~) ~UNE\ Zone~ x 12) for all zones))
> Base Period Lines~Study\ Area(s)~ ÷ 12 where:
>
> (Loop~zone\ price\ )\ UNE\ Zone~ = the UNE rates for unbundled loop
>
> (Port ~Price~)~UNE\ Zone~ = price for switch ports in that UNE zone.

**§ 61.41 Price cap requirements generally.\
**\
\
(a) Sections 61.42 through 61.49 shall apply as follows:\
\
(1) \[Reserved\]\
\
(2) To such local exchange carriers as specified by Commission order,
and to all local exchange carriers, other than average schedule
companies, that are affiliated with such carriers; and\
\
(3) On an elective basis, to local exchange carriers, other than those
specified in paragraph (a)(2) of this section, that are neither
participants in any Association tariff, nor affiliated with any such
participants, except that affiliation with average schedule companies
shall not bar a carrier from electing price cap regulation provided the
carrier is otherwise eligible.\
\
(b) If a telephone company, or any one of a group of affiliated
telephone companies, files a price cap tariff in one study area, that
telephone company and its affiliates, except its average schedule
affiliates, must file price cap tariffs in all their study areas.\
\
(c) The following rules apply to telephone companies subject to price
cap regulation, as that term is defined in § 61.3(cc), which are
involved in mergers, acquisitions, or similar transactions.\
\
(1) Any telephone company subject to price cap regulation that is a
party to a merger, acquisition, or similar transaction shall continue to
be subject to price cap regulation notwithstanding such transaction.\
\
(2) Where a telephone company subject to price cap regulation acquires,
is acquired by, merges with, or otherwise becomes affiliated with a
telephone company that is not subject to price cap regulation, the
latter telephone company shall become subject to price cap regulation no
later than one year following the effective date of such merger,
acquisition, or similar transaction and shall accordingly file price cap
tariffs to be effective no later than that date in accordance with the
applicable provisions of this part 61.\
\
(3) Notwithstanding the provisions of § 61.41(c)(2) above, when a
telephone company subject to price cap regulation acquires, is acquired
by, merges with, or otherwise becomes affiliated with a telephone
company that qualifies as an \'average schedule\' company, the latter
company may retain its \'average schedule\' status or become subject to
price cap regulation in accordance with § 69.3(i)(3) and the
requirements referenced in that section.\
\
(d) Local exchange carriers that become subject to price cap regulation
as that term is defined in § 61.3(cc) of this chapter shall not be
eligible to withdraw from such regulation.

> **§ 61.42 Price cap baskets and service categories.\
> **\
> \
> (a)-(c) \[Reserved\]\
> \
> (d) Each local exchange carrier subject to price cap regulation shall
> establish baskets of services as follows:\
> \
> (1) A basket for the common line interstate access elements as
> described in §§ 69.115, 69.152, 69.154, and 69.157 of this chapter,
> and that portion of the interstate access element described in §
> 69.153 of this chapter that recovers common line interstate access
> revenues. For purposes of §§ 61.41 through 61.49 of this chapter, this
> basket shall be referred to as the \"common line basket.\"\
> \
> (2) A basket for traffic sensitive switched interstate access
> elements. For purposes of §§ 61.41 through 61.49 of this chapter, this
> basket shall be referred to as the \"traffic-sensitive basket.\"\
> \
> (3) A basket for trunking services as described in §§ 69.110, 69.111,
> 69.112, , 69.124, 69.125(b), 69.128 and 69.155 of this chapter, and
> that portion of the interstate access element described in § 69.153 of
> this chapter that recovers residual interconnection charge revenues.
> For purposes of §§ 61.41 through 61.49 of this chapter, this basket
> shall be referred to as the \"trunking basket.\"\
> \
> (4)(i) To the extent that a local exchange carrier specified in §
> 61.41(a) (2) or (3) offers interstate interexchange services that are
> not classified as access services for the purpose of part 69 of this
> chapter, such exchange carrier shall establish a fourth basket for
> such services. For purposes of §§ 61.41 through 61.49 of this chapter,
> this basket shall be referred to as the \"interexchange basket.\"\
> \
> (ii) If a price cap carrier has implemented interLATA and intraLATA
> toll dialing parity everywhere it provides local exchange services at
> the holding company level, that price cap carrier may file a tariff
> revision to remove corridor and interstate intraLATA toll services
> from its interexchange basket.\
> \
> (5) A basket for Special Access services as described in §§69.114,
> 69.126 of this chapter.\
> \
> (\
> (e)(1) The traffic sensitive switched interstate access basket shall
> contain such services as the Commission shall permit or require,
> including the following service categories:\
> \
> (i) Local switching as described in § 69.106(f) of this chapter;\
> \
> (ii) Information, as described in § 69.109 of this chapter;\
> \
> (iii) Data base access services;\
> \
> (iv) Billing name and address, as described in § 69.128 of this
> chapter;\
> \
> (v) Local switching trunk ports, as described in § 69.106(f)(1) of
> this chapter; and\
> \
> (vi) Signalling transfer point port termination, as described in §
> 69.125(c) of this chapter.\
> \
> (2) The trunking basket shall contain such Switched transport as the
> Commission shall permit or require, including the following service
> categories and subcategories:\
> \
> (i) Voice grade entrance facilities, voice grade direct-trunked
> transport, voice grade dedicated signalling transport,\
> \
> ;\
> \
> (iii) High capacity flat-rated transport, , including the following
> service subcategories:\
> \
> (A) DS1 entrance facilities, DS1 direct-trunked transport, DS1
> dedicated signalling transport, and; and\
> \
> (B) DS3 entrance facilities, DS3 direct-trunked transport, DS3
> dedicated signalling transport,;\
> \
> (;\
> \
> (v) Tandem-switched transport, as described in § 69.111 of this
> chapter; and\
> \
> (vi) Interconnection charge, as recovered in §§ 69.153 and 69.155 of
> this chapter.\
> \
> (vii) Signalling for tandem switching, as described in § 69.129 of
> this chapter.
>
> \(3\) The Special Access basket shall contain special access services
> as the Commission shall permit or require, including the following
> service categories and subcategories:
>
> \(i\) Voice grade special access, WATS special access, metallic
> special access, and telegraph special access services;
>
> \(ii\) Audio and video services;
>
> \(iii\) High capacity special access, and DDS services, including the
> following service subcategories:
>
> \(A\) DS1 special access services; and
>
> \(B\) DS3 special access services;
>
> \(iv\) Wideband data and wideband analog services;

\(f\) Each local exchange carrier subject to price cap regulation shall
exclude from its price cap baskets such services or portions of such
services as the Commission has designated or may hereafter designate by
order.\
\
(g) New services, other than those within the scope of paragraph (f) of
this section, must be included in the affected basket at the first
annual price cap tariff filing following completion of the base period
in which they are introduced. To the extent that such new services are
permitted or required to be included in new or existing service
categories within the assigned basket, they shall be so included at the
first annual price cap tariff filing following completion of the base
period in which they are introduced.

**§ 61.45 Adjustments to the PCI for Local Exchange Carriers.**\
\
\
(a) Local exchange carriers subject to price cap regulation shall file
adjustments to the PCI for each basket as part of the annual price cap
tariff filing, and shall maintain updated PCIs to reflect the effect of
mid-year exogenous cost changes.\
\
(b)(1)(i) Adjustments to local exchange carrier PCIs, in those
carriers\' annual access tariff filings, for the traffic-sensitive
basket described in § 61.42(d)(2), the trunking basket described in §
61.42(d)(3), and the Special Access basket described in § 61.42(d)(5),
shall be made pursuant to the following formula:

> *PCI~t~* *= PCI~t-1~\[1+w\[(GDP-PI - X) + Z/R\]*
>
> where the terms in the equation are described:
>
> GDP-PI = For annual filings only, the percentage change in the GDP-PI
> between the quarter ending six months prior to the effective date of
> the new annual tariff and the corresponding quarter of the previous
> year. For all other filings, the value is zero.
>
> X = For the Common Line,Traffic Sensitive, Trunking, for Annual
> Filings only, the factor set at the level of 6,5%. For the
> Interexchange Basket, for annual filings only, the factor is set at
> the level prescribed in subsection (b)(1)((v). For the Special Access
> Basket, the factor is set at the level prescribed in subsection
> (b)(1)(iv) For all other filings, the value is zero.
>
> Z = the dollar effect of current regulatory changes when compared to
> the regulations in effect at the time the PCI was updated to\
> PCI~t-1~, measured at base period level of operations.

Targeted Reduction = the actual possible dollar value of the (GDP-PI ‑
X) reductions that will be targeted to the Average Traffic Sensitive
Charge (as defined in paragraph 61.45(i)(3) of this chapter). The Common
Line Reductions will contain the "g" component to be applied to the MOU
portion of the Common Line revenues.

> Y = (new access rate ‑ access rate at the time the PCI was updated to
> PCI~t-1~) x (base period demand), summed for all access rate elements.
>
> R = base period quantities for each rate element \"I\", multiplied by
> the price for each rate element \"I\" at the time the PCI was updated
> to PCI~t-1~.
>
> w = R + Z, all divided by R (used for the common line, traffic
> sensitive, trunking, and special access baskets).
>
> w~ix~ = R ‑ (access rate in effect at the time the PCI was updated to
> PCI~t-1~ x base period demand) + Z, all divided by R.
>
> PCI~t~ = the new PCI value.
>
> PCI~t-1~ = the immediately preceding PCI value.

  -----------------------------------------------------------------------

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> (b)(1)(ii) Notwithstanding the value of X defined in § 61.45(b)(1)(i),
> the X value applicable to the baskets specified in § 61.42(d)(1),(2),
> and (3), shall be 6.5%, to the extent necessary to reduce a tariff
> entity\'s Average Traffic Sensitive Charge to the Target Rate for the
> first time. Once an ILEC tariff entity's Average Traffic Sensitive
> Charge is equal to the Target Rate for the first time (the former
> NYNEX telephone companies may be treated as a separate tariff entity),
> then, except as provided in paragraph (2), X is equal to GDP-PI and no
> further reductions will be mandated.(i.e. if applying the full
> X-factor reduction for a given year would reduce the Average Traffic
> Sensitive Charge below the Target Rate, the amount of X-factor
> reduction applied that year will be the amount necessary to reach the
> Target Rate).
>
> For companies with separate tariff entities under a single Price cap,
> the following rules shall apply:
>
> \(A\) Targeting amounts as defined in 61.45 (i)(1) shall be identified
> separately, using the revenue for each of the tariff entities under
> the cap.
>
> \(B\) Each tariff entity shall only be required to use the amount of
> targeting necessary to get to the \$0.0055 or \$0.0065 Target Rate.
>
> (b)(1)(iii) Once the Tariff Entity's Average Traffic Sensitive Charge
> is achieved the X-factor for the Common Line basket will equal GDP-PI
> as long as GDP-PI is less than or equal to 6.5% and greater than 0%.
> If GDP-PI is greater than 6.5%, the X-factor for the Common Line
> basket will equal 6.5%, and all End User Common Line charges, rates
> and nominal caps,will be increased by the difference between GDP-PI
> and the 6.5% X-factor. If GDP-PI is less than 0, the X-factor for the
> Common line basket will be 0.\
> \
> (b)(1(iv) For the Special Access basket specified in § 61.42 (d)(5),
> the value of X shall be 3.0% for the 2000 Annual Filing. The X shall
> be 6.5% for the 2001, 2002 and 2003 Annual Filings. Starting in the
> 2004 Annual filing the X shall be equal to GDP-PI for the Special
> Access Basket.\
> \
> ((b)(1)(v)) Adjustments to local exchange carrier PCIs for the
> interexchange basket described in § 61.42(d)(4), in those carriers\'
> annual access tariff filings, shall be made pursuant to the following
> formula:\
> \
> *PCI~t~* *= PCI~t-1~\[1+w~ix~\[(GDP-PI - X) + Y/R+ Z/R\]*

where the terms in the equation are described section (b)(1)(i) above.\
\
\
(b)(2) Adjustments to local exchange carrier PCIs, in tariff filings
other than the annual access tariff filing, for the Common Line Basket
described in § 61.42(d)(1), for the traffic-sensitive basket described
in § 61.42(d)(2), the trunking basket described in § 61.42(d)(3), the
interexchange basket described in § 61.42(d)(4), and the Special Access
basket described in § 61.42(d)(5), shall be made pursuant to the
formulas set forth in paragraph (b)(1) of this section, except that the
\"w(GDP-PI-X)\" component of those PCI formulas shall not be employed.\
\
(c) Starting July 1, 2000, the common line basket will now be controlled
by the amount of CMT Revenue per line as of July 1, 2000, not a PCI
formula. This CMT revenue per line amount shall be adjusted for
exogenous treatment and hyper-inflation pursuant to Section
61.45(b)(1)(iii) and 61.45(d). The allowed revenues may change over time
to reflect changes in the base period demand.(\
\
\
\
\
\
(\
\
(d) The exogenous cost changes represented by the term \"Z\" in the
formula detailed in paragraphs (b) and (c) of this section shall be
limited to those cost changes that the Commission shall permit or
require by rule, rule waiver, or declaratory ruling.\
\
(1) Subject to further order of the Commission, those exogenous changes
shall include cost changes caused by:\
\
(i) The completion of the amortization of depreciation reserve
deficiencies;\
\
(ii) Such changes in the Uniform System of Accounts, including changes
in the Uniform System of Accounts requirements made pursuant to § 32.16
of this chapter, as the Commission shall permit or require be treated as
exogenous by rule, rule waiver, or declaratory ruling.\
\
(iii) Changes in the Separations Manual;\
\
(iv) Changes to the level of obligation associated with the Universal
Service Fund obligation described in Part 54 of this chapter;\
\
(v) The reallocation of investment from regulated to nonregulated
activities pursuant to § 64.901;\
\
(vi) Such tax law changes and other extraordinary cost changes as the
Commission shall permit or require be treated as exogenous by rule, rule
waiver, or declaratory ruling.\
\
(vii) Retargeting the PCI to the level specified by the Commission for
carriers whose base year earnings are below the level of the lower
adjustment mark, subject to the limitation in § 69.731 of this chapter
is waived for the tariff filing of July, 2000, but not for subsequent
years.\
\
(viii) Inside wire amortizations.\
\
(ix) The completion of amortization of equal access expenses.\
\
(2)(i) Local exchange carriers specified in § 61.41 (a)(2) or (a)(3)
shall also make such temporary exogenous cost changes as may be
necessary to reduce PCIs to give full effect to any sharing of base
period earnings required by the sharing mechanism set forth in the
Commission\'s Second Report and Order in Common carrier Docket No.
87-313, FCC 90-314, adopted September 19, 1990. Such exogenous cost
changes shall include interest, computed at the prescribed rate of
return, from the day after the end of the period giving rise to the
adjustment, to the midpoint of the period when the adjustment is in
effect.\
\
(ii) Local exchange carriers specified in § 61.41(a)(2) or (a)(3) shall
not be subject to the sharing mechanism set forth in the Commission\'s
Second Report and Order in Common Carrier Docket No. 87-313, FCC 90-314,
adopted September 19, 1990, with respect to earnings accruing on or
after July 1, 1997. This paragraph has no effect on any sharing
obligation of any local exchange carrier relating to earnings accrued
before July 1, 1997.\
\
(3) Local exchange carriers specified in § 61.41(a)(2) or (a)(3) of this
part shall, in their annual access tariff filing, recognize all
exogenous cost changes attributable to modifications during the coming
tariff year in the obligations specified in § 61.45(d)(1)(IV) as well as
those changes attributable to alterations in their Subscriber Plant
Factor and the Dial Equipment Minutes factor, and completions of inside
wire amortizations and reserve deficiency amortizations.\
\
(4) Exogenous cost changes shall be apportioned on a cost-causative
basis between price cap services as a group, and excluded services as a
group. Exogenous cost changes thus attributed to price cap services
shall be further apportioned on a cost-causative basis among the price
cap baskets.

\(5\) After July 1, 2000, exogenous adjustments will be recovered from
services other than those used to calculate the Average Traffic
Sensitive Charge.

(\
\
(f) The exogenous costs caused by new services subject to price cap
regulation must be included in the appropriate PCI calculations under
paragraphs (b) and (c) of this section beginning at the first annual
price cap tariff filing following completion of the base period in which
such services are introduced.\
\
(g) In the event that a price cap tariff becomes effective, which tariff
results in an API value (calculated pursuant to § 61.46) that exceeds
the currently applicable PCI value, the PCI value shall be adjusted
upward to equal the API value.\
\
(h) \[Reserved.\]\
\
\
( .\
\
\
\
( (i) (1) Price cap local exchange carriers that are recovering revenues
through rates pursuant to §§ 69.106, 69.108, 69.109, 69.110, 69.111,
69.112, 69.113, 69.118, 69.123, 69.124, 69.125, 69.129 or § 69.155 of
this chapter shall target, to the extent necessary to reduce the Average
Traffic Sensitive Charge to the Target Rate for the first time, any PCI
reductions associated with the dollar impact of the Common Line, Traffic
Sensitive, and Trunking baskets' GDP-PI and productivity factor, as
those items are described in paragraph (c)(6) of this section. In order
to calculate the actual dollars to transfer to the Trunking and Traffic
Sensitive baskets, carriers will first determine a "Targeted Revenue
Differential" by basket, and then determine the "Targeted Revenue
Differential" that will be transferred to the Trunking and Traffic
Sensitive baskets to reduce the Average Traffic Sensitive Charge to
\$0.0055 or \$0.0065, whichever is applicable. The Common Line, Traffic
Sensitive, and Trunking GDPPI-X Targeted amounts will be applied to the
Trunking and Traffic Sensitive Baskets. Those amounts shall not be used
to reduce Common Line PCI, and only reduce the PCIs in the Traffic
Sensitive and Trunking Baskets by the amount needed to reduce the ATS in
those baskets. Before determining the portion of Targeted Revenue
Differential that will be targeted to the reduction of the Average
Traffic Sensitive Charge, from the Common Line, Traffic Sensitive, and
Trunking baskets, price cap local exchange carriers shall first
calculate the Targeted Revenue Differential associated with the Common
Line, Traffic Sensitive, and Trunking baskets.

> \(i\) the price cap local exchange carrier shall use the following
> formula:
>
> Targeted Revenue Differential = R \* (GDP-PI - X) for the Marketing
> portion of the Common Line Basket, the Traffic Sensitive Basket and
> the Trunking Basket. The Common Line Targeted Revenue Differential =
> R~(less\ MOU\ R)~\*(GDPPI - X ), where R contains USAC receipts plus
> (R~(mou)~ )adjusted for "g"\*(GDPPI-X),
>
> Where g = For annual filings only, the ratio of minutes of use per
> access line during the base period, to minutes of use per access line
> during the previous base period, all minus 1.
>
> \(2\) Any such exogenous adjustments shall be reflected in the various
> PCIs and SBIs in the same manner as they would if there were no
> targeting. However, after July 1, 2000, exogenous adjustments will be
> recovered from services other than those used to calculate the Average
> Traffic Sensitive Charge.
>
> \(3\) Until a Tariff entity\'s Average Traffic Sensitive Charge equals
> the Target Rate for the first time, the aggregate reductions within a
> given tariff filing entity from application of the X-factor adjustment
> in the price cap formula across all of that entity\'s interstate price
> cap baskets outlined in Sections 61.42 (d)(1),(2) and (3) will be
> targeted to reduce the following rates for that tariff filing entity,
> in order of priority:
>
> \(i\) To the residual per minute Transport Interconnection Charge,
> until that rate is \$0.00; then
>
> \(ii\) To the Information Surcharge, until that rate is \$0.00; then
>
> \(iii\) To the Local Switching charge and Switched Transport charges
> until the tariff entity\'s Average Traffic Sensitive Rate equals the
> Target Rate for the first time. In making these reductions, the
> reductions to Local Switching rates as a percentage of total X-factor
> reductions must be greater than or equal to the percentage proportion
> of Local Switching revenues to the total sum of revenues for Local
> Switching, Local Switching Trunk Ports, Signalling Transfer Point Port
> Termination, Switched Direct Trunked Transport, Signalling for
> Switched Direct Trunked Transport, Entrance Facilities for switched
> access traffic, Tandem Switched Transport, and Signalling for Tandem
> Switching (i.e., Local Switching gets at least its proportionate share
> of reductions).
>
> \(4\) After an ILEC reaches the Target Rate level, the Average Traffic
> Sensitive Rate will be recalculated each Annual Filing following. This
> process will identify the new Average Traffic Sensitive Charge for the
> new base period level. Due to change in base period demand and
> inclusion of new services for that Annual Tariff filing, the absolute
> level of a tariff entity\'s Average Traffic Sensitive Charge may
> change. The resulting new Average Traffic Sensitive Charge level will
> be what that tariff entity will be measured against during that base
> period. For example, if a company was at \$0.0055 during the 2000
> Annual Filing, that level may change to \$0.0058 in the 2001 Annual
> filing due to demand and new services. Therefore, it will be the
> \$0.0058 that the tariff entity will be measured against for all
> non-annual filings. Likewise, if a company was at \$0.0055 during the
> 2000 filing, that level may change to \$0.0053 in the 2001 Annual
> Filing due to demand and new services. In that case, it will be at the
> \$0.0053 level that the tariff entity will be measured.

**§ 61.46 Adjustments to the API.**\
\
\
(a) Except as provided in paragraphs (d) and (e) of this section, in
connection with any price cap tariff filing proposing rate changes, the
carrier must calculate an API for each affected basket pursuant to the
following methodology:\
\
API~t~ = API~t-1~\[S ~1~ v~i~,(p~t~/p~t‑1~)i\]

where\
\
API\[t\] = the proposed API value,\
\
API\[t-1\] = the existing API value,\
\
P\[t\] = the proposed price for rate element \"i,\"\
\
P\[t-1\] = the existing price for rate element \"i,\" and\
\
v\[i\] = the current estimated revenue weight for rate element \"i,\"
calculated as the ratio of the base period demand for the rate element
\"i\" priced at the existing rate, to the base period demand for the
entire basket of services priced at existing rates.\
\
(b) New services subject to price cap regulation must be included in the
appropriate API calculations under paragraph (a) of this section
beginning at the first annual price cap tariff filing following
completion of the base period in which they are introduced. This index
adjustment requires that the demand for the new service during the base
period must be included in determining the weights used in calculating
the API.\
\
(c) Any price cap tariff filing proposing rate restructuring shall
require an adjustment to the API pursuant to the general methodology
described in paragraph (a) of this section. This adjustment requires the
conversion of existing rates into rates of equivalent value under the
proposed structure, and then the comparison of the existing rates that
have been converted to reflect restructuring to the proposed
restructured rates. This calculation may require use of carrier data and
estimation techniques to assign customers of the preexisting service to
those services (including the new restructured service) that will remain
or become available after restructuring.\
\
(d)(

The maximum allowable carrier common line (CCL) MOU charges shall be
computed pursuant to the following methodology:

> CCL~mou~ = CMT -- EUCL -- USAC -- VR -- PICC

where

CMT = Pricecap CMT Revenue as defined in § 61.3(aa).

EUCL = Maximum recoverable EUCL revenue based on charges established
pursuant to § 69.152.

USAC = USAC support for which the carrier qualifies under § 54.802.

VR = Voluntary Reduction pursuant to § 69.152(q)(8).

PICC = Maximum recoverable PICC revenue based on charges established
pursuant to § 69.153.

(e)(1) In addition, for the purposes of paragraph (d) of this section,
Carrier Common Line Rates shall include existing originating premium,
originating non-premium, terminating premium and terminating non-premium
rates; and End User Common Line Rate used to calculate the CL\[MOU\] and
the EUCL\[MOU\] factors shall include, but not be limited to,
Residential and Single Line Business rates, Centrex rates, and the
Special Access surcharge.\
\
(2) For purposes of paragraph (d) of this section, \"each existing
Presubscribed Interexchange Carrier Charge\" shall include all the
charges specified in § 69.153 of this chapter.\
\
(g) The calculation of the API for the basket designated in §
61.42(d)(3) shall include any residual interconnection charge revenues
recovered pursuant to §§ 69.153 and 69.155 of this chapter.\
\
\
\
(i) In no case shall a price cap local exchange carrier include data
associated with services offered pursuant to contract tariff in the
calculations required by this section.

**§ 61.47 Adjustments to the SBI; pricing bands.**\
\
\
\[PUBLISHER\'S NOTE: 64 FR 46584, 46590, Aug. 26, 1999, effective Sept.
27, 1999, purported to remove and reserve paragraph (i)(1) in § 61.49.
However, this instruction could not be implemented, because the text
does not exist within the section. Upon calling the agency, it was
determined that the amendment should instead be implemented in § 61.47.
In accordance with the apparent intent of the agency, the amendment has
been implemented. It is expected that the agency will issue a correction
in the Federal Register.\]\
\
(a) In connection with any price cap tariff filing proposing changes in
the rates of services in service categories, subcategories, or density
zones, the carrier must calculate an SBI value for each affected service
category, subcategory, or density zone pursuant to the following
methodology:

SBI~t~ = SBI~t‑1~\[S~i~v~i~(p~t~/p~t‑1~)i\]

where\
\
SBI\[t\] = the proposed SBI value,\
\
SBI\[t-1\] = the existing SBI value,\
\
P\[t\] = the proposed price for rate element \"i,\"\
\
P\[t-1\] = the existing price for rate element \"i,\" and\
\
v\[i\] = the current estimated revenue weight for rate element \"i,\"
calculated as the ratio of the base period demand for the rate element
\"i\" priced at the existing rate, to the base period demand for the
entire group of rate elements comprising the service category priced at
existing rates.\
\
(b) New services that are added to existing service categories or
subcategories must be included in the appropriate SBI calculations under
paragraph (a) of this section beginning at the first annual price cap
tariff filing following completion of the base period in which they are
introduced. This index adjustment requires that the demand for the new
service during the base period must be included in determining the
weights used in calculating the SBI.\
\
(c) In the event that the introduction of a new service requires the
creation of a new service category or subcategory, a new SBI must be
established for that service category or subcategory beginning at the
first annual price cap tariff filing following completion of the base
period in which the new service is introduced. The new SBI should be
initialized at a value of 100, corresponding to the service category or
subcategory rates in effect the last day of the base period, and
thereafter should be adjusted as provided in paragraph (a) of this
section.\
\
(d) Any price cap tariff filing proposing rate restructuring shall
require an adjustment to the affected SBI pursuant to the general
methodology described in paragraph (a) of this section. This adjustment
requires the conversion of existing rates in the rate element group into
rates of equivalent value under the proposed structure, and then the
comparison of the existing rates that have been converted to reflect
restructuring to the proposed restructured rates. This calculation may
require use of carrier data and estimation techniques to assign
customers of the preexisting service to those services (including the
new restructured service) that will remain or become available after
restructuring.\
\
(e) Pricing bands shall be established each tariff year for each service
category and subcategory within a basket. Each band shall limit the
pricing flexibility of the service category, subcategory, as reflected
in the SBI, to an annual increase of a specified percent listed in this
paragraph, relative to the percentage change in the PCI for that basket,
measured from the levels in effect on the last day of the preceding
tariff year. For local exchange carriers subject to price cap regulation
as that term is defined in § 61.3(cc, there shall be no lower pricing
band for any service category or subcategory.\
\
(1) Five percent:\
\
(i) Local switching (traffic sensitive basket)\
\
(ii) Information (traffic sensitive basket)\
\
(iii) Database Access services (traffic sensitive basket)\
\
(iv) 800 Database Vertical Services subservice (traffic sensitive
basket)\
\
(v) Billing Name and Address (traffic sensitive basket)\
\
(vi) Local switching trunk ports (traffic sensitive basket)\
\
(vii) Signalling Transfer Point Port Termination (traffic sensitive
basket)\
\
(viii) Voice grade (trunking and Special Access basket)\
\
(ix) Audio/Video (Special Access basket)\
\
(x) Total High Capacity (trunking and Special Access baskets)\
\
(xi) DS1 subservice (trunking and Special Access baskets)\
\
(xii) DS3 subservice (trunking and Special Access baskets)\
\
(xiii) Wideband (Special Access basket)\
\
(2) Two percent:\
\
(i) Tandem-Switched Transport (Trunking basket)\
\
(ii) Signalling for Tandem Switching (Trunking basket)\
\
(3) Zero percent: Interconnection charge (Trunking basket)\
\
(f) A local exchange carrier subject to price cap regulation may
establish density zones pursuant to the requirements set forth in §
69.123 of this chapter, for any service in the trunking and Special
Access baskets, other than the interconnection charge set forth in §
69.124 of this chapter. The pricing flexibility of each zone shall be
limited to an annual increase of 15 percent, relative to the percentage
change in the PCI for that basket, measured from the levels in effect on
the last day of the preceding tariff year. There shall be no lower
pricing band for any density zone.\
\
(g)-(i)(1) \[Reserved\]\
\
(2) Effective January 1, 1998, notwithstanding the requirements of
paragraph (a) of this section, and subject to the limitations of §
61.45(j) if a local exchange carrier is recovering interconnection
charge revenues through per-minute rates pursuant to § 69.155 of this
chapter, any reductions to the PCI for the basket designated in §
61.42(d)(3) resulting from the application of the provisions of §
61.45(b) and the formula in § 61.44(b) and from the application of the
provisions of § 61.45 (i)(1) and (i)(2) shall be directed to the SBI of
the service category designated in § 61.42(e)(2)(vi).\
\
(3) Through December 31, 1997, the SBI reduction required by paragraph
(i)(1) of this section shall be determined by dividing the sum of the
dollar amount of any PCI reduction required by § 61.45(i)(1) by the
dollar amount associated with the SBI for the service category
designated in § 61.42(e)(2)(vi), and multiplying the SBI for the service
category designated in § 61.42(e)(2)(vi) by one minus the resulting
ratio.\
\
(4) Effective January 1, 1998, the SBI reduction required by paragraph
(i)(2) of this section shall be determined by dividing the sum of the
dollar amount of any PCI reduction required by § 61.45 (i)(1) and
(i)(2), by the dollar amount associated with the SBI for the service
category designated in § 61.42(e)(2)(vi), and multiplying the SBI for
the service category designated in § 61.42(e)(2)(vi) by one minus the
resulting ratio.

\(5\) Effective July 1, 2000, notwithstanding the requirements of
paragraph (a) of this chapter and subject to the limitations of §
61.45(i), if a local exchange carrier is recovering an Average Traffic
Sensitive Charge greater than the respective Target Rates of \$0.0055 or
\$0.0065, any reductions to the PCI for the Traffic Sensitive or
Trunking baskets designated in §§ 61.42(d)(2) and (3) resulting from the
application of the provisions of § 61.45(b), and the formula in §
61.45(b) and from the application of the provisions of §§ 61.45(i)(1),
and (i)(2) shall be directed to the SBIs of the service categories
designated in §§ 61.42(e)(1) and (2).

\(j\) The calculation of the SBI for the service category designated in
§ 61.42(e)(2)(vi) shall include any residual interconnection charge
revenues recovered pursuant to §§ 69.153 and 69.155 of this chapter.\
\
(k) In no case shall a price cap local exchange carrier include data
associated with services offered pursuant to contract tariff in the
calculations required by this section.

**47 CFR 61.48**\
§ 61.48 Transition rules for price cap formula calculations.\
\
\
(a)-(h) \[Reserved\]\
\
(i) Transport and Special Access Density Pricing Zone Transition Rules
\-- (1) Definitions. The following definitions apply for purposes of
paragraph (i) of this section:\
\
Earlier date is the earlier of the special access zone date and the
transport zone date.\
\
Earlier service is special access if the special access zone date
precedes the transport zone date, and is transport if the transport zone
date precedes the special access zone date.\
\
Later date is the later of the special access zone date and the
transport zone date.\
\
Later service is transport if the special access zone date precedes the
transport zone date, and is special access if the transport zone date
precedes the special access zone date.\
\
Revenue weight of a given group of services included in a zone category
is the ratio of base period demand for the given service rate elements
included in the category priced at existing rates, to the base period
demand for the entire group of rate elements comprising the category
priced at existing rates.\
\
Special access zone date is the date on which a local exchange carrier
tariff establishing divergent special access rates in different zones,
as described in § 69.123(c) of this chapter, becomes effective.\
\
Transport zone date is the date on which a local exchange carrier tariff
establishing divergent switched transport rates in different zones, as
described in § 69.123(d) of this chapter, becomes effective.\
\
(2) Simultaneous Introduction of Special Access and Transport Zones.
Local exchange carriers subject to price cap regulation that have
established density pricing zones pursuant to § 69.123 of this chapter,
and whose special access zone date and transport zone date occur on the
same date, shall initially establish density pricing zone SBIs and bands
pursuant to the methodology in § 61.47(h).\
\
(3) Sequential Introduction of Zones in the Same Tariff Year.
Notwithstanding § 61.47(h), local exchange carriers subject to price cap
regulation that have established density pricing zones pursuant to §
69.123 of this chapter, and whose special access zone date and transport
zone date occur on different dates during the same tariff year, shall,
on the earlier date, establish density pricing zone SBIs and pricing
bands using the methodology described in § 61.47(h), but applicable to
the earlier service only. On the later date, such carriers shall
recalculate the SBIs and pricing bands to limit the pricing flexibility
of the services included in each density pricing zone category, as
reflected in its SBI, as follows:\
\
(i) The upper pricing band shall be a weighted average of the
following:\
\
(A) The upper pricing band that applied to the earlier services included
in the zone category on the day preceding the later date, weighted by
the revenue weight of the earlier services included in the zone
category; and\
\
(B) 1.05 times the SBI value for the services included in the zone
category on the day preceding the later date, weighted by the revenue
weight of the later services included in the zone category.\
\
(ii) \[Reserved\]\
\
(iii) On the later date, the SBI value for the zone category shall be
equal to the SBI value for the category on the day preceding the later
date.\
\
(4) Introduction of Zones in Different Tariff Years. Notwithstanding §
61.47(h), those local exchange carriers subject to price cap regulation
that have established density pricing zones pursuant to § 69.123 of this
chapter, and whose special access zone date and transport zone date do
not occur within the same tariff year, shall, on the earlier date,
establish density pricing zone SBIs and pricing bands using the
methodology described in § 61.47(h), but applicable to the earlier
service only.\
\
(i) On the later date, such carriers shall use the methodology set forth
in paragraphs (a) through (d) of § 61.47 to calculate separate SBIs in
each zone for each of the following groups of services:\
\
(A) DS1 special access services;\
\
(B) DS3 special access services;\
\
(C) DS1 entrance facilities, DS1 direct-trunked transport, and DS1
dedicated signalling transport;\
\
(D) DS3 entrance facilities, DS3 direct-trunked transport, and DS3
dedicated signalling transport;\
\
(E) Voice grade entrance facilities, voice grade direct-trunked
transport, and voice grade dedicated signalling transport;\
\
(F) Tandem-switched transport; and\
\
(G) Such other special access services as the Commission may designate
by order.\
\
(ii) From the later date through the end of the following tariff year,
the annual pricing flexibility for each of the subindexes specified in
paragraph (i)(4)(i) of this section shall be limited to an annual
increase of five percent or an annual decrease of fifteen percent,
relative to the percentage change in the PCI for the trunking basket,
measured from the levels in effect on the last day of the tariff year
preceding the tariff year in which the later date occurs.\
\
(iii) On the first day of the second tariff year following the tariff
year during which the later date occurs, the local exchange carriers to
which this paragraph applies shall establish the separate subindexes
provided in § 61.47(h)(1), and shall set the initial SBIs for those
density pricing zone categories that are combined (specified in
paragraphs (i)(4)(i)(A) and (i)(4)(i)(C), (i)(4)(i)(B) and (i)(4)(i)(D),
and (i)(4)(i)(E) and (i)(4)(i)(G) of this section) by computing the
weighted averages of the SBIs that applied to the formerly separate zone
categories, weighted by the revenue weights of the respective services
included in the zone categories.\
\
(j). (l) *Traffic Sensitive Revenues*.

\(1\) In the July 1, 2000 Annual Filing Price Cap companies will reduce
the average Switched Access MOU rates in the industry by a total of
\$2.1 billion measured using the 1999 base period demand. This \$2.1
billion level is based on the participation of all Price Cap LECs. If
some Price Cap companies do not participate in the CALLS plan, estimates
of the reductions that would have been made by those companies, had they
participated in the CALLS Plan, will be included in the calculation of
the \$2.1 billion amount. These estimates are subject to revision after
companies that do not participate in CALLS have filed their rates. The
\$2.1 billion reduction will be the sum of the following components:

> \--any change in CCL Revenue resulting from:
>
> \--the removal from access of ILEC contributions to the Federal
> Universal Service Mechanisms
>
> \--ILEC receipts of Interstate Access USF
>
> \--SLC Cap increases
>
> \--Elimination of Primary and Non-Primary PICC rates
>
> Reductions in Traffic Sensitive Rates resulting from:

\-- The targeting application of GDPPI-X and any applicable "g" impacts

> \--Additional Switched Access reductions defined in (2) below
>
> \(2\) The remainder of the amount necessary to achieve the \$2.1
> billion reduction will be calculated as a percentage of Local
> Switching Revenues. Carriers can take these additional reductions
> against any of the Average Traffic Sensitive Charge rate elements,
> however a proportional share must be taken to Local Switching rates.

Notwithstanding paragraph (1), if removing amounts of Local Switching
minute of use revenues from the Traffic Sensitive would reduce the
Average Traffic Sensitive Charge for that Tariff Entity below the Target
Rate, then that Tariff Entity will remove only as much of the Local
Switching MOU revenues from the Traffic Sensitive Basket as is necessary
in order for the Average Traffic Sensitive Charge to equal the Target
Rate. The additional reduction necessary to achieve the \$2.1 billion
will not reduce a tariff entity below its target rate.

\(m\) Local Switching Pooled Revenues

\(1\) Priced cap companies are permitted to pool local switching
revenues in their common line basket under one of the following
conditions.

> \(i\) Any price cap company with reductions per line at the holding
> company level greater than the industry average at the holding company
> level may elect temporarily to pool the amount of the additional
> reductions above 25% of the Local Switching element revenues necessary
> to yield that carrier\'s proportionate share of a total \$2.1 billion
> reduction in switched access usage rates on July, 1, 2000. The basis
> of the reduction calculation will be R at PCI (t-1) for the upcoming
> tariff year. The reductions per line amounts will be calculated as
> follows:

(Total ATS Reduction / Base Period EUCL Lines)

\(A\) Pooled local switching revenue for each filing entity within a
qualifying holding company will continue for this condition until the
Average Traffic Sensitive (ATS) rate for the filing entity reaches the
applicable target rate. Pooled local switching revenue will be reduced
each year by the GDPPI-X, as long as that company's ATS is greater than
the ATS target. Pooled local switching revenue will be eliminated in the
same tariff filing when the filing entity ATS reaches the applicable
target rate.

> \(ii\) Mid-sized price cap carriers (.0065) with at least 20% of total
> holding company lines serving statutory \"rural\" study areas may
> elect to pool up to the following amounts:

(A) for a carrier's predominantly non-rural filing entities, the amount
    of the additional reductions to Average Traffic Sensitive Charge
    rates necessary to yield those filing entities\' proportionate share
    of a total \$2.1 billion reduction in switched access usage rates on
    July 1, 2000, to the extent such reductions exceed 25% of the Local
    Switching element revenues as of July 1, 2000 before application of
    price cap adjustments and other changes under the plan;

(B) for a carrier's predominantly rural filing entities, the amount of
    the additional reductions to Average Traffic Sensitive Charge rates
    necessary to yield those filing entities' proportionate share of a
    total \$2.1 billion reduction in switched access usage rates on July
    1, 2000;

\(2\) This section details the establishment and Allocation of Pooled
Local Switching Revenue to Common Line

> (i)The pooled local switching revenue for each filing entity is
> shifted to the common line basket within price caps. The pooled
> amounts are to be kept separate from CMT per line contained in the
> basket. Pooled local switching revenue will not be included in
> calculations to determine the eligibility for interstate access
> universal service funding.
>
> \(ii\) Pooled local switching revenue will be allowed to grow based on
> the total access lines in the filing entity.
>
> \(iii\) Pooled local switching revenue should be included in the total
> revenue for the common line basket in calculating the productivity
> reduction targeted to the traffic sensitive rate elements.

\(iv\) Alternative 1: Common line rate elements for each filing entity
shall first be set based on CMT revenue per line without regard to the
presence of pooled local switching revenue for each filing entity. This
includes, if the filing entity qualifies, the ability to de-average the
EUCL rates by zone when the minute of use and PICC rates have been
eliminated. Alternative 2: If the addition of the pooled amounts result
in a MLB PICC rate then the filing entity would not be allowed to
de-average the EUCL rates by zone.

> \(v\) If the rates generated without regard to the presence of pooled
> local switching revenue for multi-line business (MLB) PICC and/or MLB
> SLC are below the nominal caps of \$4.31 and \$9.20, respectively,
> pooled amounts can be added to these rate elements limited to the
> nominal caps.
>
> \(vi\) Pooled local switching revenue are first added to the MLB SLC
> until the rate equals the nominal cap (\$9.20) or the pooled local
> switching revenue are fully allocated. If pooled local switching
> revenue remains after applying amounts to MLB SLC, add pooled local
> switching revenue to MLB PICC until the rate equals the nominal cap
> (\$4.31) or the pooled local switching revenue are fully allocated.
> Unallocated pooled local switching may still remain. For companies
> pooling pursuant to 61A.48(m)(1)(i), these unallocated amounts may not
> be recovered from common line elements in any other filing entity.
>
> \(vii\) For companies pooling pursuant to 61A.48(m)(1)(ii), pooled
> local switching revenue that can not be allocated to the MLB PICC and
> MLB SLC rates within an individual filing entity may be allocated to
> other filing entities within the holding company, and collected by
> adding these amounts to multiline business PICC and SLC rates.
>
> \(x\) If pooled local switching is added to the MLB SLC for a filing
> entity that qualified to de-average SLCs without regard to pooled
> local switching, the resulting SLC rates can no longer be de-averaged.
> Filing entity average SLCs must be charged
>
> (xi)In subsequent filings, pooled local switching revenues that were
> allocated to another filing entity will be reallocated to the filing
> entity from where it originated. Allocation of pooled local switching
> revenue will be re-calculated with each filing.

\(n\) Establishment of the Special Access Basket, effective 7/1/2000

(1) On the effective date, the PCI value for the Special Access basket,
    as defined in 61.42(d)(5) shall be equal to the PCI for the Trunking
    basket on the day preceding the establishment of the Special Access
    basket.

(2) On the effective date, the API value for the Special Access basket,
    as defined in 61.42(d)(5) shall be equal to the API for the Trunking
    basket on the day preceding the establishment of the Special Access
    basket.

(3) Service Category, Subcategory, and Density Zone SBIs and Upper
    Limits

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(i) Interconnection, Tandem Switched Transport, and Signalling
    Interconnection will retain the SBIs and upper limits and remain in
    the Trunking basket.

(ii) Audio/Video and Wideband will retain the SBIs and upper limits and
     be moved into the Special Access basket.

(iii) For VoiceGrade, the SBIs and upper limits in both baskets will be
      equal to the SBIs and upper limits in the existing Trunking basket
      on the day preceding the establishment of the Special Access
      basket. VoiceGrade density zones in the Trunking basket will
      retain their indices and upper limits. VoiceGrade density zones
      will be initialized in the Special Access basket when services are
      first offered in them.

(iv) For High Cap/DDS, DS1, and DS3 category and subcategories, the SBIs
     and upper limits in both baskets will be equal to the SBIs and
     upper limits in the existing Trunking basket on the day preceding
     the establishment of the Special Access basket. SBIs and upper
     limits for services that are in both combined density zones and
     either DTT/EF or Special density zones will be calculated by using
     weighted averages of the indices in the affected zones.

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(A) For each DTT/EF-related zone remaining in the Trunking basket, the
    values will be calculated by taking the sum of the products of the
    DTT/EF revenues times the DTT/EF index (or upper limit) and the
    DTT/EF-related revenues in the combined zone times the combined
    index (or upper limit), and dividing by the total DTT/EF-related
    revenues for that zone.

(B) For each Special-related zone remaining in the Trunking basket, the
    values will be calculated by taking the sum of the products of the
    Special revenues times the Special index (or upper limit) and the
    Special-related revenues in the combined zone times the combined
    index (or upper limit), and dividing by the total Special-related
    revenues for that zone.