**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of                 | *  | WC Docket No. 02-340         |
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| National Exchange Carrier        | ** |                              |
| Association, Inc.                |    |                              |
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| Tariff FCC No. 5, Transmittal    | *) |                              |
| No. 951                          | ** |                              |
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**ORDER**

**Adopted: October 31, 2002 Released: October 31, 2002**

**Direct Case Due by:** November 21, 2002

**Oppositions to Direct Case Due by:** December 5, 2002

**Rebuttal Due by:** December 12, 2002

By the Chief, Pricing Policy Division:

# INTRODUCTION

1.  In this order, we designate for investigation, pursuant to sections
    204 and 205 of the Communications Act of 1934, as amended (the
    Act),[^1] certain issues regarding the rates, terms, and conditions
    in tariff Transmittal No. 951 that the National Exchange Carrier
    Association, Inc., (NECA) filed to become effective September 5,
    2002.[^2] We suspended Transmittal No. 951 for five months on
    September 4, 2002, and initiated this investigation.[^3] As
    discussed below, we designate issues relating to NECA's provisions
    for security deposits contained in tariff Transmittal No. 951 for
    investigation to ensure that the proposed tariff provisions are not
    unjust, unreasonable, or unreasonably discriminatory in violation of
    sections 201 and 202 of the Act.[^4]

# Background 

2.  A brief overview of the Commission's policies concerning security
    deposits and treatment of uncollectibles would be useful to the
    discussion of the issues presented by the present tariff revisions.
    Existing incumbent local exchange carrier (LEC) interstate access
    tariffs contain protections for uncollectibles. In 1984, the
    Commission rejected incumbent LECs' proposed security deposit tariff
    language and instead permitted dominant LECs to require security
    deposits from: (1) those carriers that have a proven history of late
    payments to the LEC; and (2) those carriers that have no established
    credit.[^5] These provisions since have become a standard term in
    interstate access tariffs.[^6] In 1987, the Commission addressed a
    BellSouth proposal to reduce the notice it must give to terminate
    service for nonpayment to 15 days from 30 days. The Commission
    allowed a 15-day notice period only if the customer received its
    bill within three days after the billing date.[^7]

3.  The Commission's ratemaking policies for incumbent LECs also account
    for interstate uncollectibles and provide for their recovery through
    interstate access charges. For rate-of-return carriers,
    uncollectibles are reflected in the rate base that they use to
    calculate the 11.25% allowed rate of return. An increase in
    uncollectibles will result in higher rates the following year. Upon
    a proper showing of an extraordinary rise in uncollectibles,
    rate-of-return carriers may file mid-term corrections to raise their
    rates to target an 11.25% rate of return.[^8]

4.  Under NECA's current tariff, it may require deposits from a customer
    that has a proven history of late payments or lacks established
    credit.[^9]

5.  Under NECA's proposed revisions, additional security deposits may be
    required 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."[^10] 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.[^11] The revisions would
    also shorten from thirty to ten days the notice period after which
    the company can refuse to process new orders or discontinue
    service.[^12] Finally, the revisions provide that, if the company
    requires a deposit from a customer that has a specified term plan
    commitment, it will waive the termination liability charges if it
    terminates the service.[^13]

6.  As justification for this revision, NECA states that it is essential
    that incumbent local exchange carriers (LECs) participating in
    NECA's tariff 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.[^14]
    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."[^15] On August 28, 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.[^16] On September 3, 2002, NECA filed its reply.[^17]

# issues designated for investigation 

## Basis for Requiring a Deposit from a Customer 

### Background

7.  Under NECA's proposed revisions, additional security deposits may be
    required 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."[^18]

8.  Several carriers petitioned against NECA's Transmittal No. 951.[^19]
    These parties 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.[^20]

### Discussion

9.  The initial issue designated for investigation is whether the
    revised security deposit provisions applicable to interstate access
    customers are reasonable and not so vague as to permit carriers
    participating in the NECA tariff to discriminate unreasonably among
    interstate access customers, whether they be interexchange carriers,
    competitive LECs, or business end-user subscribers. The interstate
    access market has two distinct characteristics -- carriers
    participating in the NECA tariff must provide access services to
    IXCs and competitive LECs requesting such service, and those
    carriers must use access services of carriers participating in the
    NECA tariff to originate or terminate many of their interstate
    calls. The proposed revisions to the security deposit terms
    significantly alter the balance between the carriers participating
    in the NECA tariff and their interstate access customers with
    respect to the risks of nonpayment of interstate access bills that
    was struck in the early 1980s when access charges were instituted.
    The revisions raise the question whether circumstances have changed
    so as to warrant the imposition of additional security deposits. The
    tariff also raises concerns about whether the tariff language
    clearly and unambiguously sets forth a standard that can be
    objectively administered in a nondiscriminatory manner. We therefore
    direct NECA to respond to the matters discussed below and provide
    the requested information in its direct case.[^21] Nonetheless, NECA
    may, as part of its direct case, seek to justify its expansion of
    the instances in which security deposits may be required of
    interstate access customers.

10. The increased security deposits proposed in Transmittal No. 951
    appear to address the same risk as the proposed increase in
    traffic-sensitive and special access rates proposed in Transmittal
    No. 952 to reflect a higher allowance for uncollectibles. NECA shall
    address why both forms of relief are necessary, or what
    modifications to either form of relief could be made if the other
    proposed tariff revision were allowed to take effect.

11. As part of its direct case, NECA shall explain why it believes its
    rates do not adequately compensate its carrier participants for the
    risk of uncollectibles. NECA's rates include a \$15,000 revenue
    requirement component for uncollectible debts. NECA is directed to
    submit the level of uncollectible debts from interstate access
    services and the actual return on investment for the years 1990 to
    the present. For the period from January 2000 to July 31, 2002, NECA
    shall also provide the totals of each of the individual defaults
    grouped into the following ranges: less than \$250,000;
    \$250,001-\$500,000; \$500,001-\$1,000,000; and more than
    \$1,000,000. For each range, NECA shall indicate the number of
    defaulting entities. NECA shall then address whether the variation
    in uncollectible levels for 2000 and 2001 is merely a normal
    fluctuation in uncollectibles, which would be covered by the
    business risks anticipated in the 11.25 percent authorized rate of
    return, or whether it reflects some long term trend that warrants
    expanded security deposits from customers meeting NECA's proposed
    standards. NECA shall also indicate the total dollar amount of
    security deposits held by its carrier participants that are
    attributable to interstate access services and the percentage
    relationship of that amount to average monthly interstate access
    billings. The changes in the security deposit provisions of NECA's
    interstate access tariff would increase customer-supplied funding as
    well as reduce the exposure of carriers participating in the NECA
    tariff to defaults. NECA should accordingly address what
    modifications should be made to its authorized rate of return to
    account for these changes to the capital and risk parameters.

12. To assist the Commission in understanding the increase in the level
    of uncollectibles, NECA should describe the billing and collection
    procedures used by carriers participating in the NECA tariff and
    explain any changes in those billing and collection procedures or
    the accounting treatment of disputed amounts on bills within the
    past two years that could have affected the levels of
    uncollectibles. NECA shall, to the extent it has the data, indicate
    the average length of time from the bill date until the bill is sent
    to the carrier customer and what percentage of those bills, by
    number of entities and by billed amount, is sent electronically. In
    addition, NECA shall provide the Commission, to the extent it has
    the data, with the number of customers that have been sent
    non-payment, discontinuance of service, or refusal of new orders
    letters in the past year and the average length of time from a
    bill's being delinquent until the letter was sent. To provide
    information on possible changes in customer behavior, NECA shall
    provide the Commission with the percent of carrier bills disputed,
    the percent of carrier-billed revenues disputed, and the percentage
    of the disputed amounts that were successfully disputed by the
    carrier for billing periods beginning with January 2000 to the
    present. NECA should also indicate if its carrier participants
    deduct disputed amounts from amounts billed for purposes of
    determining whether a carrier has complied with a deadline.

13. NECA shall indicate which services in its interstate access tariff,
    including the subscriber line charge and other common line services,
    are billed in advance and those that are billed in arrears. It shall
    indicate the percentage of interstate billings that are billed in
    advance, how this level has changed over the past five years, and
    how this change has affected the risk carriers participating in the
    NECA tariff face. In this connection, NECA should discuss whether
    different security deposit provisions should apply depending upon
    whether the service is billed in advance or billed in arrears. NECA
    shall also discuss the extent to which carriers participating in the
    NECA tariff have a debtor relationship with their customers and how
    that may affect those carriers' credit risk. NECA should indicate
    the amount of unpaid bills of defaulting customers that have gone
    into bankruptcy since January 2000 and the percentage of that amount
    that has been recovered through bankruptcy proceedings.

14. If NECA believes that the risk of uncollectible debts has increased
    permanently, it should explain what accounts for this change,
    *e.g.*, the general economic climate or some structural change in
    the market. If the change is a structural one, are there methods
    other than the NECA proposal that would adequately address this
    additional risk, *e.g.*, is there a subset of carriers that can be
    identified that are the major cause of the increased risk?
    Alternatively, is there some means of accelerated billing that
    could, if there were a nonpayment, trigger the existing security
    deposit provisions and thus offer some additional protection to
    carriers participating in the NECA tariff ? NECA should also discuss
    any other steps, other than requiring additional security deposits,
    it might take to mitigate the risk. For example, could it adopt some
    form of advance payment for services currently billed in arrears
    and, if so, what modifications to its tariff and billing programs
    would be necessary? How difficult would such changes be to
    implement? NECA's tariff revisions increasing the security deposits
    would impose additional costs on carriers that may also be
    competitors of carriers participating in the NECA tariff at a time
    when access to capital markets is extremely limited. This could
    adversely affect the competitiveness of telecommunications markets.
    Thus, if some measures are necessary, an approach that has the
    fewest adverse effects on the competitive market while protecting
    the interests of carriers participating in the NECA tariff would be
    preferred.

15. NECA's proposed security deposit revisions also raise questions
    about whether they are sufficiently clear and unambiguous to
    preclude discriminatory or anticompetitive application. Section
    61.54(j) of the Commission's rules provides that "\[t\]he general
    rules (including definitions), regulations, exceptions, and
    conditions which govern the tariff must be stated clearly and
    definitely."[^22] Presently, Section 2.4.1(A) of the tariff allows
    NECA to obtain a deposit for a period of no more than two months
    estimated billings.[^23] Proposed Section 2.4.1(A)(1) would allow
    NECA to obtain a deposit for new service for a two month period due
    to a customer's late payments or lack of established credit.[^24] In
    addition, proposed Section 2.4.1(A)(2) would allow NECA to obtain a
    deposit or an additional deposit after service is established for no
    more than two months actual billings based on an average of the
    customer's most recent three months billing.[^25] How does the
    proposed Section 2.4.1(A)(1) work with the proposed Section
    2.4.1(A)(2)? Could NECA collect more than two months' deposit?

16. In addition, the revisions in proposed Section 2.4.1(A)(2) state
    that, "\[a\] deposit or an additional deposit may be required from a
    customer at any time following establishment of service
    when...."[^26] The term "may" gives NECA considerable discretion to
    enforce these provisions. Without definitive criteria in the tariff,
    what would prevent NECA companies from collecting a deposit from one
    customer and nothing from another customer given that both meet one
    of the criteria for deposits?

17. Proposed Section 2.4.1(A)(2) defines the type of funds for a deposit
    as "U.S. Federal Reserve Bank wire transfers, U.S. Federal Reserve
    notes (i.e., paper cash), and/or U.S. Postal Money Orders."[^27]
    Many customers may not be able to make these types of payments, but
    would be able to obtain irrevocable letters of credit from a
    financial institution. NECA should explain why it limited the type
    of funds it would accept for a deposit. Why would an irrevocable
    letter of credit from a financial institution be unacceptable for a
    deposit?

18. NECA's proposed tariff revisions provide that a security deposit may
    be required when 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."[^28] NECA has
    not shown that these factors are valid predictors of the likelihood
    of a customer paying its access bill, or that they are better
    predictors of whether a customer will pay its bills in the future
    than the customer's past payment history. As part of its direct
    case, NECA shall explain how each of these factors is a valid
    predictor of whether the carrier will pay its interstate access
    bill. NECA shall also explain how the provisions can be applied in a
    manner that will not produce arbitrary and/or discriminatory
    results. This is especially important because in some cases the
    entity upon which the carrier participating in the NECA tariff would
    impose the security deposit would also be a competitor. In this
    connection, NECA shall provide the Commission with information
    concerning the security deposits that carriers participating in the
    NECA tariff have required of any long-distance or competitive LEC
    affiliate. NECA shall also indicate how those affiliates would score
    under its proposed credit-rating procedures and what actions it
    anticipates carrier participants in the NECA tariff would take in
    response to that rating. NECA shall also indicate how its carrier
    participants would score under its credit-rating methodology. We
    note that most of these criteria relate to ratings for carriers and
    large businesses. NECA should discuss its intentions, if any, with
    respect to residential end users.

19. NECA shall provide the Commission with data on the payment
    characteristics of defaulting interstate access customers during the
    year prior to the time the account was 90 days overdue from January
    1, 2000, to the present. NECA shall present the data in terms that
    will enable the Commission to identify patterns that may exist in a
    customer's payment practices prior to default that may permit
    alternatives to security deposits to be identified and evaluated.

20. Finally, we ask NECA to provide data, to the extent available, on
    the level of uncollectibles of other regulated utilities, or in the
    broader marketplace. It should also discuss the means those
    businesses use to address the risks of default, especially how they
    manage bad credit risks while continuing to provide goods or
    services to the customer.

## Application of Revised Deposit Requirements to Term Plan Customers

### Background

21. NECA's tariff revisions provide that "\[i\]f... the Telephone
    Company requires a deposit from an existing customer that has a term
    plan commitment(s) in place on or before September 5, 2002 under
    either an Optional Rate Plan and/or DSL Access Services Discount
    Pricing Arrangement... and such customer rejects the condition that
    continuation of its service(s) is contingent upon its provision to
    the Telephone Company of the required deposit, then upon
    discontinuance of the customer's service(s) and the resulting
    termination of the associated term plan commitment(s), the Telephone
    Company will waive the applicable termination liability charge(s)
    for each such term plan commitment terminated."[^29]

22. WorldCom asserts that NECA has not demonstrated substantial cause
    for a material change in a provision of a term plan, citing *RCA
    Communications, Inc.*[^30] WorldCom asserts that NECA has not shown
    that it has experienced any material change in its business
    circumstances, much less a change that would constitute an injury to
    carriers participating in the NECA tariff that would outweigh the
    existing customers' legitimate expectations of stability.[^31]
    Moreover, WorldCom states that the increase in uncollectibles is
    merely the normal effect of the business cycle, with only a
    negligible effect on NECA's financial performance.[^32]

### Discussion

23. The second issue designated for investigation is whether the
    imposition of revised security deposit provisions constitutes a
    material change to NECA's term contracts, and, if so, whether it is
    reasonable for NECA to apply the revised deposit provisions to term
    plans. If a carrier would have to provide a new or increased
    security deposit to NECA, its operating capital would be
    significantly reduced. This could affect other capital or loan
    commitments it had, potentially causing the carrier to need to
    restructure or terminate some services. This would be a serious
    destabilizing event in the competitive marketplace. We direct NECA
    to respond to the matters discussed below and provide the requested
    information in its direct case. Nonetheless, NECA may, as part of
    its direct case, seek to justify applying the revised security
    deposit provisions to term plans.

24. NECA shall explain in its direct case the reasons increased security
    deposits should be required of customers with existing term plans
    and how that is consistent with the Commission's decision in *RCA
    Communications, Inc.* This could have significant financial and
    competitive consequences for existing term plan customers that could
    also be competitors of carriers participating in the NECA tariff.
    NECA shall provide the Commission with data on the share of
    interstate access revenues that are received from services subject
    to term plans and, of that amount, what portion is attributable to
    services that are paid in advance. If the majority of term plans
    require prepayment, the risk to carriers participating in the NECA
    tariff would appear to be much less than if they were all paid in
    arrears. Moreover, we recognize that when customers' existing term
    plans expire carriers participating in the NECA tariff will be able
    to apply prevailing security deposit provisions to new plans taken
    by such carriers.

## Shortened Termination Period

### Background

25. The proposed tariff revisions provide that "\[i\]f a customer fails
    to comply with Section 2.4.1 following (Payment of Rates, Charges
    and Deposits), including the customer's failure to make payments on
    the dates and in the methods specified therein, the Telephone
    Company may, on ten (10) days written notice to the customer by
    Certified U.S. Mail, take the following actions: (1) refuse
    additional applications for service and/or refuse to complete any
    pending orders for service, and/or (2) discontinue the provision of
    service to the customer."[^33]

26. WorldCom argues that NECA's proposal to reduce the notice period for
    disconnections from 30 days to 10 days is unjust and
    unreasonable.[^34]

### Discussion

27. The third issue designated for investigation is whether NECA's
    proposal to reduce the notice required before termination of a
    service, or refusal to process an order, may occur from 30 days to
    10 days is just and reasonable. We direct NECA to respond to the
    matters discussed below and provide the requested information in its
    direct case. Nonetheless, NECA may, as part of its direct case, seek
    to justify the reduced notice provisions in its proposed tariff
    revision.

28. As part of its direct case, NECA shall explain why it believes that
    the increased security deposit provisions it proposes are inadequate
    and why it needs shortened notice periods as well; or, conversely,
    why a shortened notice period would not be adequate by itself. NECA
    shall also submit information for the most recent twelve months, to
    the extent it possesses such data, as to the timeliness of the
    billings of carriers participating in the NECA tariff. In this
    connection, it shall address the relationship of the billing date to
    the delivery date (indicating the percentage of bills and billed
    amounts that were delivered electronically). It shall also discuss
    the appropriateness of prescribing the time within which a bill must
    be presented to the customer if a shortened notice period were to be
    allowed in order to permit the customer sufficient time to review
    the bill and pursue its dispute rights under the tariff. In
    particular, NECA should address whether the carriers participating
    in its tariff could meet the three-day requirement the Commission
    adopted in 1987.[^35]

# PROCEDURAL MATTERS

## Filing Schedules

29. This investigation is designated WC Docket No. 02-340. The National
    Exchange Carrier Association, Inc., is designated a party to this
    investigation. NECA shall file its direct case no later than
    November 21, 2002. The direct case must present NECA's position with
    respect to the issues described in this Order. Pleadings responding
    to the direct case may be filed no later than December 5, 2002, and
    must be captioned "Oppositions to Direct Case" or "Comments on
    Direct Case." NECA may file a "Rebuttal" to oppositions or comments
    no later than December 12, 2002.

30. An original and four copies of all pleadings shall be filed with the
    Secretary of the Commission. In addition, parties shall serve with
    three copies: Pricing Policy Division, Wireline Competition Bureau,
    445 12th Street, S.W., Room 5-A104, Washington, D.C. 20554, Attn:
    Julie Saulnier. Parties shall also serve with one copy: Qualex
    International, Portals II, 445 12th Street, S.W., Room CY-B402,
    Washington, D.C. 20554, (202) 863-2893. Members of the general
    public who wish to express their views in an informal manner
    regarding the issues in this investigation may do so by submitting
    one copy of their comments to the Office of the Secretary, Federal
    Communications Commission, 445 12th Street, S.W., Room TW-A325,
    Washington, D.C. 20554. Such comments should specify the docket
    number of this investigation, WC Docket No. 02‑340. Parties are also
    strongly encouraged to submit their pleadings via the Internet
    through the Electronic Comment Filing System at
    \<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 number,
    which in this instance is WC Docket No. 02‑340. Parties may also
    submit an electronic comment via Internet e-mail. To get 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.

31. Interested parties who wish to file comments via hand-delivery are
    also notified that effective December 18, 2001, the Commission will
    only receive such deliveries weekdays from 8:00 a.m. to 7:00 p.m.,
    via its contractor, Vistronix, Inc., located at 236 Massachusetts
    Avenue, NE, Suite 110, Washington, DC 20002. **The Commission no
    longer accepts these filings at 9300 East Hampton Drive, Capitol
    Heights, MD 20743.** Please note that all hand deliveries must be
    held together with rubber bands or fasteners, and envelopes must be
    disposed of before entering the building. In addition, this is a
    reminder that as of October 18, 2001, the Commission no longer
    accepts hand-delivered or messenger-delivered filings at its
    headquarters at 445 12th Street, SW, Washington, DC 20554.
    Messenger-delivered documents (*e.g.*, FedEx), including documents
    sent by overnight mail (other than United States Postal Service
    (USPS) Express and Priority Mail), must be addressed to 9300 East
    Hampton Drive, Capitol Heights, MD 20743. This location is open
    weekdays from 8:00 a.m. to 5:30 p.m. USPS First-Class, Express, and
    Priority Mail should be addressed to the Commission's headquarters
    at 445 12th Street, SW, Washington, DC 20554. The following chart
    summarizes this information:

+-----------------------------------+----------------------------------+
| **TYPE OF DELIVERY**              | > **PROPER DELIVERY ADDRESS**    |
+-----------------------------------+----------------------------------+
| Hand-delivered paper filings      | > 236 Massachusetts Avenue, NE,  |
|                                   | >                                |
|                                   | > Suite 110, Washington, DC      |
|                                   | > 20002 (Weekdays - 8:00 a.m. to |
|                                   | > 7:00 p.m.)                     |
+-----------------------------------+----------------------------------+
| Messenger-delivered documents     | > 9300 East Hampton Drive,       |
| (*e.g.*, FedEx), including        | >                                |
| documents sent by overnight mail  | > Capitol Heights, MD 20743      |
| (this type excludes USPS Express  | >                                |
| and Priority Mail)                | > (Weekdays - 8:00 a.m. to 5:30  |
|                                   | > p.m.)                          |
+-----------------------------------+----------------------------------+
| USPS First-Class, Express, and    | > 445 12^th^ Street, SW          |
| Priority Mail                     | >                                |
|                                   | > Washington, DC 20554           |
+-----------------------------------+----------------------------------+

32. All relevant and timely pleadings will be considered by the
    Commission. In reaching a decision, the Commission may take into
    account information and ideas not contained in pleadings, provided
    that such information, or a writing containing the nature and source
    of such information, is placed in the public file, and provided that
    the fact of reliance on such information is noted in the order.

## *Ex Parte* Requirements {#ex-parte-requirements .unnumbered}

33. 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.[^36] Other rules
    pertaining to oral and written presentations are also set forth in
    section 1.1206(b).

34. Interested parties are to file any written *ex parte* presentations
    in this proceeding with the Commission's Secretary, Marlene Dortch,
    445 12th Street, S.W., TW-B204, Washington, D.C. 20554, and serve
    with three copies: Pricing Policy Division, Wireline Competition
    Bureau, 445 12th Street, S.W., Room 5-A104, Washington, D.C. 20554,
    Attn: Julie Saulnier. Parties shall also serve with one copy: Qualex
    International, Portals II, 445 12th Street, S.W., Room CY-B402,
    Washington, D.C. 20554, (202) 863-2893.

## Paperwork Reduction Act {#paperwork-reduction-act .unnumbered}

35. This order designating issues for investigation contains no new or
    modified information collections subject to the Paperwork Reduction
    Act of 1995, Pub. Law 104-13.

# ORDERING CLAUSES {#ordering-clauses .unnumbered}

36. ACCORDINGLY, IT IS ORDERED that, pursuant to sections 4(i), 4(j),
    201-205, and 403 of the Communications Act, 47 U.S.C. §§ 154(i),
    154(j), 201-205, and 403, and pursuant to the authority delegated by
    sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. §§
    0.91, 0.291, the issues set forth in this Order ARE DESIGNATED FOR
    INVESTIGATION.

37. IT IS FURTHER ORDERED that the National Exchange Carrier
    Association, Inc., SHALL BE a party to this proceeding.

38. IT IS FURTHER ORDERED that the National Exchange Carrier
    Association, Inc., SHALL INCLUDE, in its direct case, a response to
    each request for information that it is required to answer by
    this Order.

    FEDERAL COMMUNICATIONS COMMISSION

    Tamara L. Preiss

    Chief, Pricing Policy Division

    Wireline Competition Bureau

[^1]: 47 U.S.C. §§ 204 and 205.

[^2]: National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951 (Aug. 21, 2002).

[^3]: *National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951,* Order, DA 02-2141 (WCB/Pricing, released Sept.
    4, 2002).

[^4]: 47 U.S.C. §§ 201 and 202.

[^5]: *Investigation of Access and Divestiture Related Tariffs*, Phase I
    Order, CC Docket No. 83-1145, 97 FCC 2d 1082, 1169 (1984).

[^6]: In general, existing tariffs also provide that deposits may not
    exceed the actual or estimated rates and charges for service for a
    two-month period.

[^7]: *Annual 1987 Access Tariff Filings,* Memorandum Opinion and Order,
    2 FCC Rcd 280, 304-05 (1987). BellSouth apparently never implemented
    this provision.

[^8]: *See* 47 C.F.R. § 69.3(b).

[^9]: NECA F.C.C. Tariff No. 5, Fourth revised page 2-26, section
    2.4.1(A).

[^10]: NECA F.C.C. Tariff No. 5, second revised pages 2-26.1-2-26.2 and
    original pages 2-26.3-2-26.4, section 2.4.1(A).

[^11]: NECA F.C.C. Tariff No. 5, original page 2-26.4, section
    2.4.1(A)(4).

[^12]: NECA F.C.C. Tariff No. 5, second revised page 2-9, section
    2.1.8(B).

[^13]: NECA F.C.C. Tariff No. 5, original page 2-26.3, section
    2.4.1(A)(2).

[^14]: National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951, Description and Justification at 1.

[^15]: *Id.* at 3.

[^16]: Petition of Sprint to Reject or Alternatively Suspend and
    Investigate (Aug. 28, 2002) (*Sprint Petition*); WorldCom Petition
    to Reject or, in the Alternative, Suspend and Investigate (Aug. 28,
    2002) (*WorldCom Petition*).

[^17]: National Exchange Carrier Association, Inc., Tariff FCC No. 5,
    Transmittal No. 951, Reply of National Exchange Carrier Association,
    Inc. (September 3, 2002).

[^18]: NECA F.C.C. Tariff No. 5, second revised pages 2-26.1-2-26.2 and
    original pages 2-26.3-2-26.4, section 2.4.1(A).

[^19]: Sprint and WorldCom allege that NECA's tariff filing violates a
    Commission prescription from 1984. *See* *supra*, note 5; Sprint
    Petition at 1-3; WorldCom Petition at 7. Even if Sprint and Worldcom
    are correct, a tariff investigation is a valid means of reviewing a
    Commission prescription. *Pacific Northwest Bell Telephone Company*,
    Revisions to Tariff FCC No. 9, Transmittal No. 159, Memorandum
    Opinion and Order (released Oct. 11, 1985).

[^20]: 47 C.F.R. §§ 61.2, 61.54(j). *See, e.g*., Sprint Petition at 1,
    5, 6; WorldCom Petition at 2, 4, 5.

[^21]: Because the issues presented in this tariff investigation are
    closely related to those raised in connection with NECA's
    Transmittal No. 952, which has also been suspended, we may use data
    submitted in response to the upcoming designation of issues relating
    to that transmittal in resolving this investigation. *National
    Exchange Carrier Association, Inc., Tariff FCC No. 5, Transmittal
    No. 952*, Order, DA 02-2263 (WCB/Pricing, released Sept. 13, 2002).

[^22]: 47 C.F.R. § 61.54(j).

[^23]: NECA F.C.C. Tariff No. 5, 5th Revised Page 2-26, section
    2.4.1(A).

[^24]: NECA F.C.C. Tariff No. 5, 2nd Revised Page 2-26.1, section
    2.4.1(A)(1).

[^25]: NECA F.C.C. Tariff No. 5, 2nd Revised Page 2-26.1, section
    2.4.1(A)(2).

[^26]: NECA F.C.C. Tariff No. 5, 2nd Revised Page 2-26.1, section
    2.4.1(A)(2).

[^27]: NECA F.C.C. Tariff No. 5, 2nd Revised Page 2-26.2, section
    2.4.1(A)(2).

[^28]: NECA F.C.C. Tariff No. 5, 5th Revised Page 2-26, section
    2.4.1(A).

[^29]: NECA F.C.C. Tariff No. 5, original page 2-26.3, section
    2.4.1(A)(2).

[^30]: *RCA Communications, Inc., Revisions to FCC Tariff Nos. 1 and 2,*
    CC Docket No. 80-766, Transmittal Nos. 191 and 273, Memorandum
    Opinion and Order, 94 FCC 2d 1338 (1983); *see, e.g*., WorldCom
    Petition at 7-8.

[^31]: WorldCom Petition at 7-8.

[^32]: *Id*.

[^33]: NECA F.C.C. Tariff No. 5, second revised page 2-9, section
    2.1.8(B).

[^34]: WorldCom Petition at 3-5.

[^35]: *See* *supra*, note 7.

[^36]: *See* 47 C.F.R. §1.1206(b)(2), as revised.