Before the

Federal Communications Commission

**Washington, D.C. 20554**

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| In the Matter of                 | * | CCB/CPD No. 01-23            |
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| MAG Access Charge Tariff Filings | * |                              |
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**ORDER**

**Adopted: December 28, 2001 Released: December 31, 2001**

By the Chief, Competitive Pricing Division:

# Introduction

1.  In October 2001, the Commission adopted the *Rate-of-Return Access
    Charge Reform Order*, which reformed the interstate access charge
    regime and interstate universal service support for incumbent local
    exchange carriers (LECs) subject to rate-of-return regulation.[^1]
    To implement the reforms adopted in that order, rate-of-return
    carriers were required to file revised interstate access charge
    tariffs, effective on January 1, 2002.[^2] Under the Communications
    Act of 1934, as amended (the Act), and the Commission's rules, such
    tariffs must be filed with the Commission at least 15 days before
    their effective date.[^3] Thus, rate-of-return carriers, either
    individually or through the National Exchange Carrier Association
    (NECA), filed revised tariffs on or before December 17, 2001. In
    order to ensure that all rate-of-return carriers have complied with
    the access charge reforms adopted by the Commission, we suspend for
    one day and set for investigation the revised rates for interstate
    access services filed by the carriers listed in Appendix A.[^4]

# Background

2.  *Rate-of-Return Access Charge Reform Order*. In the *Rate-of-Return
    Access Charge Reform Order*, the Commission adopted comprehensive
    interstate access charge and universal service reforms for
    rate-of-return carriers. Among other things, the Commission revised
    several of the access charge rules contained in Part 69 of its
    rules, effective January 1, 2002. LECs subject to rate-of-return
    regulation must revise their existing interstate access tariffs to
    implement the rule changes. Specifically, the revisions increased,
    as of January 1, 2002, the residential and single-line business
    subscriber line charge (SLC) cap and the multi-line business SLC cap
    to \$5.00[^5] and \$9.20 per line, respectively, or if less than the
    cap, the monthly cost per line.[^6] Carriers may assess one
    multi-line business SLC for Basic Rate Interface (BRI) Integrated
    Services Digital Network (ISDN) service and five multi-line business
    SLCs for Primary Rate Interface (PRI) ISDN service.[^7] Limited SLC
    deaveraging is permitted. Carriers must recover their contributions
    to support universal service from a separately stated charge to be
    assessed on end users, rather than through access charges.[^8] Line
    port costs must be reallocated from local switching to the common
    line category.[^9] Carriers may shift 30 percent of their local
    switching costs to the common line category in lieu of conducting a
    cost study.[^10] ISDN line port costs in excess of basic analog line
    port costs are to be recovered through a new rate element.[^11] The
    costs recovered through the transport interconnection charge (TIC)
    are to be reallocated among all the access categories, subject to a
    specific dollar limit equal to the TIC revenues for the twelve
    months ending June 30, 2001.[^12] These cost reallocations require
    reassignment of certain costs from specified interstate access
    categories to the common line category. Many rate-of-return LECs
    file their own traffic-sensitive tariffs, but participate in the
    NECA common line tariff. Therefore, the line port costs and certain
    TIC costs of LECs that file their own traffic-sensitive tariffs must
    be removed from the LECs' revenue requirement and included in the
    NECA common line pool's revenue requirement.

3.  *GCI v. ACS Holdings*. In addition to the reforms adopted in the
    *Rate-of-Return Access Charge Reform Order*, the Commission's
    decision issued earlier this year in *GCI v. ACS Holdings*[^13] may
    have implications for this tariff filing. There, the Commission
    found, *inter alia*, that ATU, an incumbent LEC wholly owned and
    controlled by ACS Holdings, (1) improperly exceeded its prescribed
    rate-of-return in violation of the Act;[^14] (2) improperly assigned
    the costs of internet service provider (ISP) traffic to the
    interstate jurisdiction for separations purposes, rather than the
    intrastate jurisdiction, contrary to Commission orders;[^15] and (3)
    counted each minute of an intraoffice call as one dial equipment
    minute (DEM), rather than two,[^16] contrary to section 36.125(a)(3)
    of the Commission's rules.[^17] The Commission directed ATU to
    assign to the intrastate jurisdiction for separations purposes the
    traffic-sensitive costs of carrying ISP traffic, and to count DEMs
    for intraoffice calls in the manner described in the order.[^18] The
    Commission also awarded damages, with prejudgment interest, to GCI
    for ATU's overearnings.[^19]

4.  *Tariff Filings*. To implement the Commission's access charge
    reforms, effective January 1, 2002, Madison River Telephone Company,
    filed its revised rates on December 14, 2001, while all of the other
    rate-of-return LECs filed their revised rates on December 17, 2001.
    General Communication, Inc. (GCI) and AT&T Corp. (AT&T) filed
    petitions to suspend and investigate certain tariffs on December 21
    and 26, 2001, respectively.[^20] On December 28, 2001, the LECs
    listed in Appendix C filed replies to the petitions.

# DISCUSSION

5.  Because of the complex nature of the tariff filings, the
    interrelationship between certain individual carrier tariffs and the
    NECA tariffs, and the issues raised by GCI and AT&T in their
    petitions to suspend and investigate, we find that a one-day
    suspension is warranted pending investigation of the tariff
    revisions of the carriers listed in Appendix A, pursuant to section
    204 of the Act.[^21] Therefore, as explained below, we suspend for
    one day the revised rates for interstate access services filed by
    the carriers listed in Appendix A**.**

6.  We find that AT&T presents arguments in support of its petition to
    suspend and investigate the LECs' tariff filings that raise
    substantial questions of lawfulness warranting investigation of the
    LECs' tariffs listed in Appendix B.[^22] The issues raised by AT&T
    warranting investigation are whether: (1) certain LECs failed to
    correctly allocate line port costs from the local switching category
    to the common line category;[^23] (2) certain LECs misallocated TIC
    costs among the access categories;[^24] (3) the tariff filed by ACS
    of Anchorage, Inc. (ACS) is unlawful because it violates Commission
    rules and orders;[^25] and (4) several parties failed to submit cost
    support information sufficient to permit parties to review their
    tariffs.[^26]

7.  We also find that GCI presents arguments in support of its petition
    to suspend and investigate ACS' tariff that raise substantial
    questions of lawfulness warranting investigation of ACS'
    tariff.[^27] The issues raised by GCI warranting investigation are
    whether: (1) ACS improperly allocated ISP minutes to both the
    interstate and local jurisdictions in violation of the Commission's
    order in *GCI v. ACS Holdings*; and (2) ACS correctly reallocated
    line port costs from the local switching revenue requirement.[^28]

8.  In addition to the issues raised by AT&T and GCI, we have identified
    other issues that raise substantial questions of lawfulness
    warranting investigation of all of the LECs' tariffs. The rules
    require LECs to reallocate certain costs to other access categories
    pursuant to specified procedures; to establish new universal service
    and line port rate elements; to increase SLCs based on new, higher
    caps that include the cost of a common line as part of the cap
    setting mechanism; and to adjust the carrier common line charge to
    reflect each of these ratemaking changes. In some cases, it appears
    that the cost reallocations were not applied to the proper baseline
    revenue requirement amount. In other cases, local switching costs
    increase despite the fact that most LECs appear to reduce their
    local switching rates based on the use of thirty percent as the
    surrogate for estimating line port costs to be reallocated. Errors
    in these reallocations would affect the development of the common
    line revenue requirement, and thus the appropriate levels for
    charges recovering the common line revenue requirements.

9.  Accordingly, given the complex and interrelated nature of the
    different access charge revisions included in the tariff filings
    listed in Appendix A, we will suspend those filings in their
    entirety. The specific issues that will be the subject of the
    investigation will be identified in an upcoming designation order
    and may include, but may not be limited to, the issues identified in
    this order. We may also identify discrete issues that do not warrant
    further investigation.

# *EX PARTE* REQUIREMENTS

10. With the exception of the issues described below, this investigation
    is a permit‑but‑disclose proceeding and subject to the requirements
    of section 1.1206(b) of the rules.[^29] 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-sentence or two-sentence description of the views
    and arguments presented is generally required.[^30] Any person who
    makes a presentation in this proceeding regarding issues raised in
    *GCI v. ACS Holdings* must file a detailed summary in the record of
    this proceeding and in the record of *GCI v. ACS Holdings* and serve
    a copy on the parties to that proceeding (namely GCI and ACS). This
    procedure must be followed because *GCI v. ACS Holdings* is a
    restricted proceeding in which *ex parte* presentations are
    prohibited under section 1.1208 of the Commission's rules.

# ORDERING CLAUSES 

11. ACCORDINGLY, IT IS ORDERED that, pursuant to sections 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    pursuant to the authority delegated by sections 0.91 and 0.291 of
    the Commission\'s Rules, 47 C.F.R. §§ 0.91 and 0.291, the tariffs of
    the carriers identified in Appendix A, ARE SUSPENDED for one day and
    an investigation IS INSTITUTED.

12. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and 204(a) of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and
    204(a), and pursuant to the authority delegated by sections 0.91 and
    0.291 of the Commission's rules, 47 C.F.R. §§ 0.91 and 0.291, the
    carriers listed in Appendix A SHALL KEEP ACCURATE ACCOUNT of all
    amounts received that are associated with the rates that are subject
    to this investigation.

13. IT IS FURTHER ORDERED that each LEC required to suspend its tariff
    revisions for one day pursuant to this order MAY FILE a supplement
    advancing the currently scheduled effective date to December 31,
    2001, and then SUSPEND its tariff revisions for one day, until
    January 1, 2002. For this purpose, we waive sections 61.58 and 61.59
    of the

    Commission's rules, 47 C.F.R. §§ 61.58 and 61.59.

14. IT IS FURTHER ORDERED that each LEC required to suspend its tariff
    revisions pursuant to this order SHALL FILE a supplement within five
    business days from the release date of this order reflecting the
    suspension. Carriers should cite the "DA" number on the instant
    order as the authority for the filings.

15. IT IS FURTHER ORDERED that AT&T's petition to suspend and
    investigate the December 17, 2001 MAG Access Charge Tariff Filings
    IS GRANTED to the extent indicated herein and otherwise IS DENIED.

16. IT IS FURTHER ORDERED that GCI's petition to suspend and investigate
    the December 17, 2001 MAG Access Charge Tariff Filings IS GRANTED to
    the extent indicated herein and otherwise IS DENIED.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Tamara L. Preiss
>
> Chief, Competitive Pricing Division
>
> Common Carrier Bureau

**APPENDIX A**

TARIFFS FILED BY RATE-OF-RETURN CARRIERS IN THE DECEMBER 17, 2001 MAG
ACCESS CHARGE TARIFF FILING PROCEEDING

FILER TRANSMITTAL \#

**Issued: December 14, 2001 Effective: January 1, 2002**

Madison River Telephone Company Transmittal No. 2

**Issued: December 17, 2001 Effective: January 1, 2002**

ACS of Anchorage Transmittal No. 6

Alltel Telephone Services Corporation Transmittal No. 95

Bay Springs Telephone Company Transmittal No. 82

Beehive Telephone Companies Transmittal No. 22

Bixby Telephone Company Transmittal No. 7

Blue Earth Valley Telephone Company Transmittal No. 4

Century Telephone Companies Transmittal No. 14

The Champaign Telephone Company Transmittal No. 3

Chariton Valley Telephone Corporation Transmittal No. 6

Chillicothe Telephone Company Transmittal No. 68

City of Brookings Municipal Telephone Department Transmittal No. 13

Contoocook Valley Telephone Company Transmittal No. 11

Dunkirk & Fredonia Telephone Company Transmittal No. 27

East Ascension Telephone Company Transmittal No. 4

Easton Telephone Company Transmittal No. 3

Eckles Telephone Company Transmittal No. 3

Elkhart Telephone Company Transmittal No. 58

Etex Telephone Cooperative Transmittal No. 7

Fidelity Telephone Company Transmittal No. 12

Geneseo River Telephone Company Transmittal No. 5

Great Plains Communications, Inc. Transmittal No. 75

Gridley Telephone Company Transmittal No. 4

GVNW Management Company Transmittal No. 179

Harrisonville Telephone Company Transmittal No. 23

Hills Telephone Company (Iowa) Transmittal No. 3

ICORE Transmittal No. 35

Illinois Consolidated Telephone Company Transmittal No. 111

James Valley Cooperative Telephone Company Transmittal No. 3

John Staurulakis, Inc. (JSI) Transmittal No. 63

Leaf River Telephone Company Transmittal No. 4

Lexcom Telephone Company Transmittal No. 5

McCook Cooperative Telephone Company Transmittal No. 2

Midstate Telephone Company Transmittal No. 5

Minnesota Lake Telephone Company Transmittal No. 3

Moultrie Independent Telephone Company Transmittal No. 11

National Exchange Carrier Association (NECA) Transmittal No. 919

NTELOS Transmittal No. 3

Puerto Rico Telephone Company Transmittal No. 43

Roseville Telephone Company Transmittal No. 85

Shell Rock Telephone Company Transmittal No. 3

Sioux Valley Telephone Company Transmittal No. 3

Smart City Telecommunications LLC Transmittal No. 6

Smithville Telephone Company Transmittal No. 4

South Central Telephone Association Transmittal No. 8

Southern Kansas Telephone Company Transmittal No. 10

Splitrock Telecom Cooperative Transmittal No. 4

Telephone Utilities Exchange Carrier Assoc. (TUECA) Transmittal No. 168

Tri-County Telephone Association Transmittal No. 7

TXU Communications Telephone Company Transmittal No. 7

Union Telephone Company Transmittal No. 71

Utelco, Inc. Transmittal No. 8

Virgin Islands Telephone Corporation Transmittal No. 45

Winterhaven Telephone Company Transmittal No. 9

**APPENDIX B**

TARIFFS FILED IN THE DECEMBER 17, 2001 MAG ACCESS CHARGE TARIFF FILING
PROCEEDING IDENTIFIED BY AT&T AS WARRANTING INVESTIGATION

FILER TRANSMITTAL \#

**Issued: December 17, 2001 Effective: January 1, 2002**

ACS of Anchorage Transmittal No. 6

ALLTEL Transmittal No. 95

Beehive Transmittal No. 22

CenturyTel Transmittal No. 14

ETEX Transmittal No. 7

Great Plains Transmittal No. 75

Harrisonville Transmittal No. 23

ICORE Transmittal No. 35

JSI Transmittal No. 63

Lexcom Transmittal No. 5

Madison River Transmittal No. 2

South Central Transmittal No. 8

Southern Kansas Telephone Co. Transmittal No. 10

Tri County Transmittal No. 7

TUECA Transmittal No. 168

**APPENDIX C**

REPLIES FILED IN THE DECEMBER 17, 2001 MAG ACCESS CHARGE TARIFF FILING
PROCEEDING

ALLTEL Communications, Inc.

Beehive Telephone Companies

CenturyTel, Inc. (for CenturyTel and TUECA)

Etex Telephone Coorperative, Inc.

Great Plains Communications, Inc.

ICORE, Inc.

John Staurulakis, Inc.

Lexcom Telephone Company

Madison River Telephone Company, LLC

South Central Telephone Association

Southern Kansas Telephone Company

Tri County Telephone Association, Inc.

[^1]: *Multi-Association Group (MAG) Plan for Regulation of Interstate
    Services of Non-Price Cap Incumbent Local Exchange Carriers and
    Interexchange Carriers*, CC Docket No. 00-256, Second Report and
    Order and Further Notice of Proposed Rulemaking, FCC 01-304 (rel.
    Nov. 8, 2001) (*Rate-of-Return Access Charge Reform Order*).

[^2]: *Id*. *See* *December 17, 2001 MAG Access Charge Tariff Filings*,
    CCB/CPD No. 01-23, Order, DA 01-2748 (rel. Nov. 26, 2001). *See
    also* *MAG Plan for Regulation of Interstate Services of Non-Price
    Cap Incumbent Local Exchange Carriers and Interexchange Carriers*,
    CC Docket No. 00-256, Declaratory Ruling, DA 01-2871 (rel. Dec. 11,
    2001) (*Declaratory Ruling*) (clarifying the proper reallocation of
    the transport interconnection charge pursuant to 47 C.F.R. §
    69.415).

[^3]: 47 U.S.C. § 203(a); 47 C.F.R. § 61.58(e).

[^4]: ^?^ Appendix A lists the carriers and their suspended tariffs, and
    includes all rate-of-return carriers filing interstate access charge
    tariffs effective January 1, 2002. This one-day suspension allows
    the tariffs to become effective after the suspension, subject to
    potential refund obligations pending the outcome of our
    investigation. *See* *infra* paras. 11-14.

[^5]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at 22,
    para. 42.

[^6]: 47 C.F.R. § 69.104, as revised. *See* *Rate-of-Return Access
    Charge Reform Order*, FCC 01-304 at 26, para. 51.

[^7]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at 26,
    28-29, paras. 51, 56.

[^8]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at
    76-77, para. 177.

[^9]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at 42,
    para. 90.

[^10]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at
    42, para. 90.

[^11]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at
    44, para. 96.

[^12]: *See Rate-of-Return Access Charge Reform Order*, FCC 01-304 at
    37, 46, paras. 76, 103; *Declaratory Ruling*, DA 01-2871 at 2-3,
    paras. 3-5.

[^13]: *General Communication, Inc. v. Alaska Communications Systems
    Holdings*, 16 FCC Rcd 2834 (2001), *appeal docketed*, No. 01-1059
    (D.C. Cir.) (*GCI v. ACS Holdings*).

[^14]: *See GCI v. ACS Holdings*, 16 FCC Rcd at 2853-54, paras. 49-50.

[^15]: *See* *GCI v. ACS Holdings*, 16 FCC Rcd at 2840-50, paras. 16-39.

[^16]: *See GCI v. ACS Holdings*, 16 FCC Rcd at 2851, para. 43
    (explaining that carriers are required to count the holding time for
    both the originating *and* the terminating equipment, and thus a
    one-minute intraoffice call generates two DEMs, not one).

[^17]: 47 C.F.R. § 36.125(a)(3).

[^18]: *GCI v. ACS Holdings*, 16 FCC Rcd at 2863-64, paras. 75, 77, 79.

[^19]: *Id*.

[^20]: Petition of GCI (filed Dec. 21, 2001) (GCI Petition); Petition of
    AT&T Corp. (filed Dec. 26, 2001) (AT&T Petition).

[^21]: 47 U.S.C. § 204(a)(1).

[^22]: 47 U.S.C. § 204(a).

[^23]: *See* AT&T Petition at 3-5.

[^24]: *See* AT&T Petition at 5-8.

[^25]: *See* AT&T Petition at 10-13.

[^26]: *See* AT&T Petition at 5. In its petition, AT&T also argues that
    the Commission should modify the limitation on the amount of the TIC
    that must be reallocated to non-transport revenue requirement
    categories. *See* AT&T Petition at 13-15. This issue is beyond the
    scope of this proceeding and is more appropriately raised in a
    petition for reconsideration.

[^27]: 47 U.S.C. § 204(a).

[^28]: *See generally* GCI Petition at 2-17.

[^29]: 47 C.F.R. § 1.1206(b).

[^30]: 47 C.F.R. § 1.1206(b)(2).