**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

Implementation of the )

Pay Telephone Reclassification and ) CC Docket No. 96-128

Compensation Provisions of the )

Telecommunications Act of 1996 )

**FIFTH ORDER ON RECONSIDERATION AND ORDER ON REMAND**

**Adopted:** October 17, 2002 **Released:** October 23, 2002

By the Commission:

Page

I. Introduction [2](#introduction)

II\. Background [3](#background)

III\. Discussion [5](#discussion)

A. Rate Reconsiderations [6](#rate-reconsiderations)

1\. Reconsideration of Number of Calls
[6](#reconsideration-of-number-of-calls)

2\. 1+ Calls [8](#calls)

3\. Reconsideration of the 24 Cent Rate
[9](#reconsideration-of-the-24-cent-rate)

4\. Reconsideration of Interest Component
[11](#reconsideration-of-interest-component)

5\. Revised Compensation Calculation
[12](#revised-compensation-calculation)

B. Allocation of Per-Phone Compensation Rate
[12](#allocation-of-per-phone-compensation-rate)

1\. Allocation Methodology [12](#allocation-methodology)

2\. Allocation to Resellers [20](#allocation-to-resellers)

3\. Retroactive Ratemaking [21](#retroactive-ratemaking)

C. Early and Intermediate Period Issues
[22](#early-and-intermediate-period-issues)

1\. Early Period [22](#early-period)

2\. Refund of Payments Collected Under the 28.4 Cent Rate
[24](#refund-of-payments-collected-under-the-28.4-cent-rate)

D. Payment Mechanisms [30](#payment-mechanisms)

1\. Payments Between Carriers and PSPs
[30](#payments-between-carriers-and-psps)

2\. Interest Applied to Late Payments
[34](#interest-applied-to-late-payments)

3\. WorldCom Petition Regarding Inmate Calls
[35](#worldcom-petition-regarding-inmate-calls)

4\. Asset Valuation and Targeted Blocking
[35](#asset-valuation-and-targeted-blocking)

IV\. Procedural Matters [38](#procedural-matters)

A. Effective Date [38](#effective-date)

B. Final Paperwork Reduction Act Analysis
[38](#final-paperwork-reduction-act-analysis)

C. Supplemental Final Regulatory Flexibility Act Analysis on
Reconsideration
[38](#supplemental-final-regulatory-flexibility-act-analysis-on-reconsideration)

V. Ordering Clauses [38](#ordering-clauses)

**APPENDIX A -- iNTERIM ALLOCATION LIST**

**APPENDIX B -- INTERMEDIATE ALLOCATION LIST**

**APPENDIX C -- POST-INTERMEDIATE ALLOCATION LIST**

**APPENDIX D \-- NON-CARRIER RECIPIENTS OF PAYPHONE CALLS**

**APPENDIX E -- PETITIONS FOR RECONSIDERATION AND CLARIFICATION**

**APPENDIX F -- RULES**

**APPENDIX G -- SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ACT ANALYSIS**

# Introduction

1.  In the *Fourth Order on Reconsideration and Order on Remand*[^1] in
    this proceeding, the Commission resolved some of the issues
    necessary to address the remand of the Commission's *First Report
    and Order* by the United States Court of Appeals for the D.C.
    Circuit. [^2] This order finishes the work we began in the *Fourth
    Reconsideration Order* by resolving how monthly per-phone
    compensation owed to payphone service providers (PSPs) is to be
    allocated among interexchange carriers (IXCs) and local exchange
    carriers (LECs).[^3] This order also resolves how certain offsets to
    such payments shall be handled, the valuation of payphone assets
    transferred by LECs to a separate affiliate or operating division,
    and other issues raised by parties in petitions for reconsideration
    of our *Third Report and Order*[^4] and our *Fourth Reconsideration
    Order.* By completing its work of responding to the remand by the
    D.C. Circuit, the Commission clears the way for PSPs, LECs and IXCs
    to resolve per-phone compensation owed for periods as far back
    as 1996. After many Commission orders, reconsideration petitions,
    and extensive litigation on these issues, the Commission finally
    closes a long-open chapter in the history of payphone compensation.
    In this Order, we provide a measure of finality regarding these
    questions in a way that most reasonably advances the basic policy
    directives for the provision of payphone services established by
    Congress under section 276 of the Telecommunications Act of 1996[^5]
    (the "1996 Act"): (1) promoting a competitive payphone market; (2)
    ensuring the widespread deployment of payphones for the benefit of
    the general public; and (3) ensuring that PSPs receive fair
    compensation for every call made using their payphones.

# Background

2.  The foundation of our authority to regulate per-call and per-phone
    compensation is section 276 of the Act, which significantly altered
    the landscape for the provision of payphone service. Prior to the
    enactment of section 276 in 1996, incumbent LECs recovered the cost
    of providing payphone services, at least in part, through the
    inclusion of charges for the recovery of such costs in their
    intrastate and interstate regulated rate structures. Independent
    providers of payphone service, however, had no such regulated cost
    recovery mechanism. To redress this imbalance and level the playing
    field for the provision of payphones, section 276(b)(1)(B) directed
    the Commission to prescribe regulations to "discontinue the
    intrastate and interstate carrier access charge payphone service
    elements and payments . . . and all intrastate and interstate
    payphone subsidies from basic and exchange access revenues." The
    Commission did so in the *First Report and Order*.[^6] Section
    276(b)(1)(A) of the Act further required the Commission to replace
    this legacy of cost recovery favoring incumbent LEC providers with a
    "per-call compensation plan to ensure that all payphone service
    providers are fairly compensated for each and every completed
    intrastate and interstate call using their payphone . . . ."

3.  The Commission's task in implementing this latter directive is
    complicated by the fact that there are several different types of
    calls that may be placed from a payphone and therefore must result
    in compensation to the owner of the phone pursuant to section 276.
    First, a payphone user may place a local call for which he deposits
    money into the phone. The deposited money provides the per-call
    compensation for such local coins calls, as explained in the *First
    Report and Order*. Users may also call a toll-free number,[^7] dial
    an access code, or use a pre-paid calling card without placing any
    money into the payphone. These coinless calls present a different,
    and more difficult, compensation issue. Because no money is
    deposited by the caller when making access code, subscriber
    toll-free or calling card calls, the owner of the payphone does not
    receive direct compensation for the costs associated with the use of
    its payphone from the end user, and must thus receive compensation
    from some other source. Although a "caller pays" system could be
    technically feasible for these types of calls, section 226 of the
    Act prohibits the Commission from adopting compensation rules for
    interstate access code calls that would require advance payment by
    consumers.[^8] We have thus held that the Congressional intent
    underlying this prohibition, and the express language of section
    226, precludes us from implementing section 276 through a "caller
    pays" system for coinless calls.[^9] Accordingly, in the *First
    Report and Order*, we decided that the "primary economic
    beneficiary" of the call, the IXC, would be responsible for paying
    per-call compensation.[^10]

4.  In that order, we expressed the view that, ultimately, the market
    should determine the amounts paid for any given call, but recognized
    that carriers and PSPs did not have equal economic bargaining
    positions because the Act prohibits PSPs from blocking calls made
    from their phones.[^11] This prohibition obligates the PSP to
    provide full service to the carrier, but gives the carrier no
    economic incentive to pay for the service it receives. There have
    also been technical hurdles to ensuring per-call compensation. At
    the time section 276 was enacted into law, many telephone companies
    lacked the necessary hardware and software to track calls in order
    to determine who owed what money to whom. At this point, the vast
    majority of payphones now transmit the appropriate coding
    digits.[^12]

5.  In the *First Report and Order* and subsequent orders issued over
    the following six years, we set forth various "default" compensation
    rates to govern dial around compensation in the absence of an agreed
    upon rate, acknowledging that, in practice, the default rate is the
    de facto rate in the industry given the lack of economic incentives
    for parties to negotiate. Our first two rates were reversed by the
    D.C. Circuit, and the third one was upheld.[^13] The different rates
    that have prevailed at different times give rise to two separate
    periods of payphone compensation.

6.  We will refer to the first period as the "Interim Period," which
    began on the effective date of the *First Report and Order*,
    November 7, 1996, and ended on October 6, 1997. Because call
    tracking did not then exist, the Commission ordered compensation to
    be paid on a per-phone, rather than a per-call basis. We calculated
    that 131 calls were placed from the average payphone per-month, and
    each PSP was entitled to a default rate of 35 cents per-call. This
    yielded a per-phone compensation of \$45.85 per-month, to be paid
    collectively by the carriers. The Commission determined that all
    carriers with toll revenue exceeding \$100 million would pay a share
    of the compensation, pro rated by the ratio of their toll revenue to
    total industry revenue.

7.  In *Illinois*, the D.C. Circuit reversed three critical aspects of
    that regime. First, it held that the 35 cent compensation rate was
    arbitrary; second, it held that it was arbitrary to exclude smaller
    carriers from responsibility for paying compensation; and third, it
    held that toll revenues were not a rational ground on which to base
    the pro rata per-company compensation responsibility.[^14] Thus, the
    D.C. Circuit required the Commission to establish an appropriate
    per-call compensation rate going forward, and also required the
    Commission to reexamine aspects of its methodology for per-phone
    compensation during the Interim Period.

8.  On remand, the Commission addressed its first charge by establishing
    a new per-call rate of 28.4 cents.[^15] We have referred to the
    period during which that rate was in effect as the "Intermediate
    Period," beginning on October 7, 1997 and ending on April 20, 1999.
    In *MCI*, the D.C. Circuit held that the 28.4 cent rate was
    arbitrary. The court did not vacate the rate, but simply remanded
    for further proceedings.[^16] The 28.4 cent rate was thus in effect,
    and the Intermediate Period lasted, until a new per -call rate of 24
    cents was calculated in the *Third Report and Order*. The D.C.
    Circuit upheld this rate in *APCC*.[^17] With regard to the
    Intermediate Period, the *Third Report and Order* determined that
    the per-call compensation rate should have been 23.8 cents per-call,
    derived by reducing the 24 cent rate by 0.2 cents for the cost of
    FlexANI technology, which was not payable during the Interim and
    Intermediate Periods.[^18] The *Third Report and Order* thus
    required PSPs to refund to carriers the difference between the 28.4
    cents actually paid and the proper rate of compensation during the
    Intermediate Period of 23.8 cents. Several parties have asked for
    reconsideration of that conclusion.[^19]

9.  As noted above, the *Fourth Reconsideration Order* resolved certain
    issues relating to Interim Period compensation. Specifically, the
    Commission determined that the per-phone per-month compensation rate
    would be \$33.892, calculated by taking the per-call compensation
    rate of 24 cents set in the *Third Report and Order*, deducting cost
    components of 0.2 cents for FlexANI and 0.9 cents for interest
    payable on account of regularly delayed payments, and then
    multiplying the resulting 22.9 cent rate by a revised estimate of
    148 compensable calls per-phone per-month.[^20] The Commission
    reserved resolution of how payment could be allocated to carriers
    pending receipt of further information.[^21] Parties filed petitions
    for reconsideration of the decisions reached in the *Fourth
    Reconsideration Order*.

# Discussion

10. Parties have raised a number of questions regarding the calculation
    and resulting amount of per-phone compensation, as well as the
    mechanics of rendering payment, in petitions for reconsideration of
    the *Third Report and Order* and the *Fourth Reconsideration Order*.
    Thus, even if we resolved the issues remanded by the D.C. Circuit,
    we would be unable to provide any sort of finality to the industry
    unless we also resolved these other pending issues. By resolving all
    of these issues in a single comprehensive order, we provide this
    finality and create the preconditions necessary for carriers to
    render compensation to PSPs that have been underpaid, and for PSP in
    turn to provide compensation to carriers that have overpaid.

11. First, we dispose of a number of pending petitions for
    reconsideration of decisions that are directly relevant to
    establishing a fair per-phone compensation rate. Specifically,
    we (1) deny those petitions that ask us to change the per-call
    compensation rate and the average number of subscriber toll-free and
    access code calls, (2) deny the Regional Bell Operating Company
    ("RBOC") Coalition petition asking us to include 1+ calls as
    compensable calls, (3) deny the Colorado Payphone Association's
    ("CPA's") petition asking us to reconsider the 24 cent per-call
    compensation rate, (4) reconsider our decision regarding the removal
    of the interest rate component from the per-call compensation rate
    for the purpose of calculating compensation owed for the Interim and
    Intermediate Periods and (5) recalculate the per-call compensation
    rate for purposes of calculating per-phone compensation for the
    Interim Period and the Intermediate Period.

12. Second, having disposed of pending questions regarding the
    underlying compensation rate, we set forth a methodology for
    allocating per-phone compensation among carriers, and thus complete
    the work we started in the *Fourth Reconsideration Order*. In doing
    so, we also explicitly deny petitions for reconsideration asking us
    to establish alternative ways of calculating compensation for the
    Interim and Intermediate Periods.

13. Third, having established a mechanism for allocating fair per-phone
    compensation, we dispose of issues raised in petitions for
    reconsideration that complicate the payment of such compensation for
    the Interim and Intermediate Periods. We affirm that, in the *First
    Report and Order*, the Commission terminated its earlier proceedings
    related to whether compensation should be paid under TOCSIA.[^22]
    Accordingly, as a matter of law, there is no lingering obligation on
    this Commission to allocate some additional amount of compensation
    for 1992 to 1996 (the period during which TOCSIA predated section
    276). We also affirm our decision in the *Third Report and Order*
    that PSPs must refund the difference between payments they received
    during the Intermediate Period at the 28.4 cent compensation rate
    and payments recalculated at the 23.8 cent rate.

14. Fourth, we dispose of several issues raised in petitions for
    reconsideration related to mechanisms for rendering compensation and
    refunds owed. We reaffirm our decision, made first in the *Third
    Report and Order* and affirmed in the *Fourth Reconsideration
    Order*, that payments, refunds and any adjustments shall only be
    made between carriers and PSPs, and we decline to adopt an
    alternative method proposed by APCC that would require carriers to
    balance payments against each other. We affirm our decision in the
    *Third Report and Order* that refunds for overpayments are payable
    by PSPs first through an offset against amounts owed for the Interim
    and Intermediate Periods. We also clarify the process by which such
    offsets may be made and also the process which may be used, in the
    absence of any such offset or if such offset proves insufficient, to
    allow carriers to offset against future payments to PSPs. We also
    deny petitions for reconsideration of our decision in the *Fourth
    Reconsideration Order* to apply the IRS-prescribed interest rate for
    payments of compensation and refunds for the Interim and
    Intermediate Periods. Finally, in response to WorldCom's petition
    for clarification of certain issues related to compensation for
    inmate calls, we note that the *Fourth Reconsideration Order* was
    sufficiently clear and limited so as to address WorldCom's apparent
    concern.

15. Fifth, having disposed of all issues necessary to resolve payment of
    per-phone compensation for the Interim and Intermediate
    Periods,[^23] we dispose of three remaining issues. As required by
    the D.C. Circuit's remand of the *First Report and Order*, we allow
    LECs to use net book value when valuing payphone assets transferred
    by LECs to a separate affiliate or operating division. We also deny
    the petition for reconsideration by CPA asking us to require
    carriers to implement targeted call blocking. Finally, we establish
    that this Order will be effective 30 days after it is published in
    the Federal Register.

## Rate Reconsiderations

### Reconsideration of Number of Calls

16. In the *Fourth Reconsideration Order*, based on additional data
    submitted to us by commenters, the Commission altered the
    calculation of per-phone compensation for the Interim Period by
    increasing the estimated number of compensable calls (access code
    and subscriber toll-free calls) placed from the average payphone
    from 131 to 148.[^24] In their reconsideration petitions, Sprint and
    WorldCom argue that per-phone compensation should be based on the
    131 monthly compensable calls estimated by the Commission in
    1996.[^25] WorldCom further argues that, for periods beyond the
    Interim Period, we should reduce the monthly estimate by a set
    factor.[^26] We disagree with these arguments and deny the petitions
    accordingly.

17. As an initial matter, we agree with the RBOC Coalition that
    retaining the 131 call estimate was evaluated and rejected by the
    Commission in the *Fourth Reconsideration Order*.[^27] The primary
    reason we did so was because the Commission had available to it more
    reliable data than was originally available to the Commission when
    it first adopted the 131 call estimate in 1996. The 131 call
    estimate used in the *First Report and Order* was based on data
    compiled over a very short time frame (one to three months) during a
    period prior to the Interim Period.[^28] By contrast, the estimates
    relied upon in the *Fourth Reconsideration Order* were based on data
    from time periods of up to one year and reflects actual usage during
    the Interim Period, the key time frame at issue here. None of the
    commenters provides us any persuasive reason why, assuming we
    otherwise use the same methodology as we used in the *First Report
    and Order*, it is unreasonable for us to use more reliable data in
    order to better ensure that PSPs receive fair per-phone
    compensation.

18. Sprint argues that we should revisit the *First Report and Order's*
    methodology for determining the estimated monthly call volume, as it
    believes taking a straight average of the data is incorrect and the
    data needs to be weighted.[^29] The Commission is not, however,
    obligated to now revisit this methodology. While the D.C. Circuit
    did reverse the *First Report and Order's* methodology for
    allocating per-phone compensation among carriers, and also rejected
    the Commission's limit of the obligation to carriers with more than
    \$100 million in toll revenues,[^30] it did not disturb the
    Commission's methodology for determining the monthly estimate of
    calls. The *Fourth Report and Order* does nothing more than apply
    this same methodology again with benefit of a larger, more reliable
    dataset. Given that we have now considered and applied this
    methodology twice, petitioners' arguments ask us to revisit, a third
    time, this same methodology, and we decline to do so.

19. Even if we were obligated to entertain Sprint's arguments, we would
    affirm that the methodology is reasonable. Although Sprint makes
    various arguments that the underlying call volumes were unreliable,
    we agree with APCC and the RBOC Coalition that the call volume data
    used was "fairly representative of the average payphone" and "the
    most accurate available indication of average monthly dial-around
    call volumes at independent payphones."[^31] As we noted above, the
    data used was certainly more reliable than the data used in the
    *First Report and Order.* Moreover, we would emphasize the fact that
    this was the most accurate *available* data: while Sprint has been
    highly critical of estimates supplied by others in this proceeding,
    it never availed itself of the substantial experience it has
    providing payphone service through its LEC operations at various
    locations throughout the country and failed to submit any payphone
    call estimates of its own in this proceeding. Nor has any other
    party attempted to provide data that even purports to represent an
    accurate estimate of monthly call volumes from a broadly
    representative sample of payphones.

20. Furthermore, we disagree with Sprint that our use of a straight as
    opposed to weighted average is somehow fatally flawed. The data
    submitted by commenters represents both independent and RBOC
    payphones, with the RBOCs submitting data from a substantially
    larger number of payphones. As we explain in further detail
    below,[^32] however, during the periods in question RBOC payphones
    were predominantly "dumb" payphones deployed in lower volume areas,
    while independent PSPs were predominantly "smart" payphones deployed
    in higher volume areas. Thus, to the extent a weighted average would
    give substantially more weight to the RBOC estimates, it would
    underestimate the volumes for independent PSPs.[^33] Accordingly, it
    is reasonable for us to continue to use a straight average in order
    to give equal weight and credence to all of the data submitted. This
    is particularly the case where, as we noted in the *Fourth
    Reconsideration Order,* the data fell within a relatively small
    range.

21. We note that Sprint's argument that we now use a weighted average
    conflicts with its request we use the 131 call estimate. As we
    explained above, this estimate was also based on a straight average,
    but Sprint fails to explain why we should reject a more reliable
    dataset in favor of a less reliable dataset, but use the same
    methodology anyway. This contradiction in Sprint's arguments only
    highlights the fact that while Sprint has explored every argument
    possible to undermine the Commission's chosen approach for
    estimating monthly call volumes, it has failed to provide any more
    reasonable way of estimating monthly call volumes or otherwise
    providing for per-phone per-month compensation.

22. We also disagree with WorldCom that we must adopt a factor that
    would account for a decline in calls for periods beyond the
    Intermediate Period. We agree with the RBOC Coalition that WorldCom
    has not provided evidence of any such decline that would allow us to
    determine some reasonable factor, and the record in this proceeding
    does show that, at least for the Intermediate Period, per-phone call
    volumes may have actually increased.[^34] Moreover, for both the
    Intermediate Period and after the Intermediate Period, while it is
    entirely possible that monthly call volumes per payphone have
    declined, WorldCom has not provided us with sufficient argument or
    data to create anything approaching a reasonable factor: in its
    petition, it simply asks for some "annual percent decline factor,"
    and provides an example of 10%, then subsequently alleges in its
    comments that the decline is on the order of 2.7% a year.[^35] We
    could not reasonably adopt some sort of decline factor on this
    record and will not do so at this time.

### 1+ Calls

23. In its petition for reconsideration of the *Fourth Reconsideration
    Order*, the RBOC Coalition asks that the Commission require carriers
    to compensate PSPs for 1+ calls made during the Interim Period for
    which the PSPs were "not otherwise compensated."[^36] The RBOC
    Coalition states that its desired result follows from the
    Enforcement Bureau's decision in *Illinois Bell v. One Call
    Communications*, and apparently asks us to add some amount of
    additional compensation to the per-phone compensation we require in
    this Order. We decline to grant this broad request in this Order.
    The *Fourth Reconsideration Order* did not address this matter, and
    as such it is not properly before us on petition for reconsideration
    of that order. Aside from these procedural defects, however, the
    RBOC Coalition's request, which is made in three brief sentences in
    an 8-page petition, simply does not provide us with enough detail or
    data to justify the imposition of a potentially significant
    additional compensation requirement at this time: it provides us
    with neither an estimate of the number of calls at issue nor any
    explanation as to when a PSP can appropriately consider a call
    "otherwise compensated." Accordingly, it would be both inappropriate
    and imprudent to grant the RBOC Coalition's request for a general
    increase in the amount of compensation to be paid.

24. We do, however, believe it is necessary to further explain the
    operation of *Illinois Bell*. In *Illinois Bell*, the Enforcement
    Bureau held that 1+ calls are not exempt from the Commission's
    per-call compensation requirements if PSPs do not otherwise receive
    compensation for these calls.[^37] While the carrier owing
    compensation in the case argued that 1+ calls were not typically
    compensated through per-call dial around compensation, the
    Enforcement Bureau reasoned that payphone revenue can derive from a
    variety of sources, including coins "deposited into the payphone,
    through commission payments on operator service calls, or from
    compensation mandated by the FCC or the states."[^38] The
    Enforcement Bureau noted that this Commission's orders limit
    statutorily-mandated, per-call compensation to completed calls that
    do not produce revenue from other sources, such as access code calls
    and toll-free number calls, but this limitation did not mean that
    PSPs were not entitled to per-call compensation for other types of
    non-revenue-generating calls. Thus, with respect to 1+ calls, the
    Enforcement Bureau concluded that, because the complainants had not,
    in fact, received coin revenue for the 1+ calls carried on the
    carrier's network, the PSPs were owed compensation for the otherwise
    uncompensated 1+ calls, given that the Commission's orders did not
    purport to supercede the explicit requirements of section 276.[^39]

25. While we deny the RBOC Coalition's petition on this issue, we
    nevertheless affirm that the Enforcement Bureau's reading of
    *Illinois Bell* is an appropriate reading of the requirements of
    section 276. Accordingly, if a PSP demonstrates specific numbers of
    uncompensated 1+ calls, application of section 276 may well result
    in additional compensation. Thus, although we do not grant the RBOC
    Coalition's general request to increase the call estimates, we do
    not preclude PSPs from seeking compensation for uncompensated 1+
    calls on a case-by-case basis, consistent with the principles
    expressed in *Illinois Bell* and our other orders implementing
    section 276.

### Reconsideration of the 24 Cent Rate

26. We deny CPA's petition for reconsideration of the 24 cent per-call
    compensation rate established by the *Third Report and Order*. CPA
    requests reconsideration of the 23.8 cent rates because it contends
    that the Commission: (1) inappropriately used a "stripped down"
    coinless phone model for the purpose of calculating payphone capital
    costs; (2) inappropriately used 11.25% as the appropriate interest
    rate; and (3) did not correctly calculate maintenance costs.[^40] We
    deny CPA's petition with respect to each of these factors.

27. As an initial matter, we note that the conclusions relevant to the
    first two factors were first raised, discussed, and decided in the
    *Second Report and Order* \-- we decided that each of these costs
    could be appropriately considered when reducing the coin rate to
    obtain a reasonable coinless rate.[^41] They were thus not only
    first decided in 1997, they were subject to petitions for
    reconsideration and comments filed after remand of that Order. CPA
    essentially argues that application of these factors in the "bottom
    up" calculation we established in the *Third Report and Order* gave
    CPA its first opportunity to ask for reconsideration of these
    factors.[^42] CPA has not, however, provided us any reason to
    reverse either of our decisions on these factors, after considering
    their substance for the third time. CPA's arguments have already
    been considered and rejected or they rely entirely on evidence
    available to it before the release of the *Third Report and Order.*
    With regard to the payphone model used for calculating capital
    costs, CPA only stated that it "disagreed" with our conclusion and
    reiterated arguments made by the RBOC Coalition that were rejected
    in the *Third Report and Order*. [^43]

28. With regard to using 11.25% as the appropriate interest rate for
    calculating an appropriate per-call factor, CPA argues that this
    rate of return drastically understates the cost of capital for a
    typical PSP, and that the appropriate cost of capital might be as
    high as 18%.[^44] CPA argued in its reply that "\[b\]ecause the cost
    of capital was used to make a subtractive adjustment to the local
    coin rate \[of \$0.35 in the Second Report and Order\], the use of
    the cost of capital actually worked in the PSPs' favor. PSPs cannot
    be faulted for failing to seek review of a determination that did
    not 'aggrieve' them." Accordingly, "it is only with the adopting of
    \[the cost-of-service\] methodology in the Third \[Report and
    Order\] that CPA and other PSPs have become 'aggrieved' by the
    Commission's use of an inadequate rate of return." [^45] CPA may be
    correct that it was not "aggrieved" when we applied the 11.25% rate
    in the *Second Report and Order*, but it fails to provide us any
    facts that could not also have been submitted while we were
    considering the *Third Report and Order*. Indeed, APCC made these
    very arguments while the Commission was considering the *Second
    Report and Order*, and after remand of that order again raised them
    as the Commission was considering the *Third Report and Order*.
    [^46] CPA's arguments thus constitute nothing more than a third
    attempt to prevail on this argument, and provide us no persuasive
    reason why we should disturb our earlier reasoning that, for the
    purpose of calculating an appropriate interest component for the
    per-call rate, the Commission should use a rate that corresponds to
    weighted average of debt and equity costs for the vast majority of
    payphones.[^47]

29. With regard to maintenance costs, the *Third Report and Order* took
    a weighted average cost for RBOC and non-RBOC payphone maintenance
    costs, and reduced this average by 38% to account for maintenance
    visits due to coin collection.[^48] CPA argues that the exclusion
    should have been 29% because the data we relied on shows that 9% of
    the costs were due to combined coin collection and maintenance
    visits.[^49] CPA's argument rests on the assumption that every
    combined coin collection and maintenance visit should be included in
    per-call compensation because every "visit would have been made
    regardless of whether coins were also collected."[^50] Thus, CPA
    demands that the entire 9% of combined visits be excluded as a
    whole. We are not persuaded that we should exclude this entire
    amount. The 38% exclusion was referenced in the *Second Report and
    Order*,[^51] and the proper calculation of maintenance costs was
    again subject to comment and reply after remand of that Order. CPA
    first raised objections to this exclusion only on reconsideration of
    the *Third Report and Order*, and based these objections on an
    analysis of the data that plainly could have been applied during the
    pendency of that order. It would thus be inappropriate for us to
    reconsider our decision based on CPA's late analysis. Even if it
    were appropriate for us to consider CPA's analysis, CPA has not
    shown that our conclusion was clearly erroneous or an unreasonable
    way of estimating maintenance costs, or provided us any more
    reasonable way of doing so. As AT&T and Sprint point out, many of
    those visits where maintenance was performed, along with coin
    collections, could have started out as coin collection only visits,
    and the collector, spotting some minor trouble, performed incidental
    repairs. [^52] We thus decline to reexamine the maintenance factor.

### Reconsideration of Interest Component

30. When the Commission established a per-call compensation rate of 24
    cents in the *Third Report and Order*, it calculated the marginal
    costs of providing payphone service, and included a cost component
    of 0.9 cents to quantify the time value of money lost during the
    typical four-month delay in payment to PSPs.[^53] When the
    Commission established a per-phone per-month compensation rate in
    the *Fourth Reconsideration Order*, the Commission calculated the
    per-month rate by first deducting this cost component of 0.9 cents
    from the 24 cent rate.[^54] In its petition for reconsideration of
    the *Fourth Reconsideration Order,* APCC argues that, for purposes
    of calculating per-phone compensation, we should not have removed
    the 0.9 cent payment delay cost component from the per-call
    compensation rate calculated by the *Third Report and Order*. APCC
    argues that we should have left the 0.9 cent component in the rate
    because the *Third Report and* Order did not specify that this
    component would be removed. APCC also argues that during the Interim
    Period and other periods payment was made on a quarterly basis, and
    removal of the 0.9 cents undercompensates and otherwise results in
    inequity to PSPs. AT&T and WorldCom oppose APCC's petition for
    reconsideration because they allege applying the IRS-prescribed
    interest rate to late payments, as we required in the *Fourth
    Reconsideration Order*, adequately compensates PSPs for any payment
    delays, including the four-month delay due to the traditional
    quarterly billing cycle of payphone compensation.

31. Upon reconsideration of this issue, we agree with APCC and restore
    the 0.9 cent component to compensation paid for the Interim and
    Intermediate Periods. As an initial matter, the text of the *Third
    Report and Order* supports APCC's interpretation that we intended to
    address interest because "PSPs \[had\] not received full
    compensation for \[the Interim\] period,"[^55] and thus that we
    intended only to resolve the rate applied to late payments but not
    reduce the per-call compensation rate for purposes of calculating
    Interim Period compensation. Furthermore, while the *Fourth
    Reconsideration Order* sought to, and did, clarify the interest rate
    that would be applied to late payments, it was unclear as to the
    date on which the IRS-prescribed interest rate would begin to
    accrue. Accordingly, confusion as to when to begin applying this
    rate led to the disputes in this proceeding -- PSPs argued that they
    are ultimately undercompensated, while carriers argued that PSPs are
    placed in a favored position. The only way to avoid these types of
    disputes is to set forth clear rules as to when the IRS-prescribed
    interest rate will begin to accrue, and adjust the interest
    component of the per-call, and thus per-phone, compensation rate
    accordingly.

32. As we explain in further detail below in affirming our decision to
    use the IRS-prescribed interest rate for late payments,[^56] the
    IRS-prescribed interest rate will accrue when payment would have
    been paid according to the quarterly system established by industry
    consensus and endorsed by this Commission in the *First Report and
    Order*.[^57] Accordingly, it is necessary to reinstate the 0.9 cent
    interest rate component to ensure that the per-call rate, for the
    purpose of calculating per-phone compensation during the Interim and
    Intermediate Periods, continues to reflect an assumed average delay
    in the rendering of payphone compensation. We thus grant APCC's
    petition for reconsideration on this issue.[^58]

### Revised Compensation Calculation

33. As we described above, In the *Fourth Reconsideration Order*, we
    determined that the per-phone per-month compensation rate would be
    \$33.892, calculated by taking the per-call compensation rate of 24
    cents set in the *Third Report and Order*, deducting cost components
    of 0.2 cents for FlexANI and 0.9 cents for interest payable on
    account of regularly delayed payments, and then multiplying the
    resulting 22.9 cent rate by a revised estimate of 148 compensable
    calls per-phone per-month. In this Order, however, we have
    reinstated the 0.9 cent interest rate component in response to
    APCC's petition for reconsideration, and otherwise denied petitions
    for reconsideration that would have impacted the per-call rate or
    the estimated number of calls per-month. Accordingly, we now
    calculate a per-phone compensation rate based on an assumed per-call
    rate of 23.8 cents, which represents the 24 cent rate calculated in
    the *Third Report and Order* reduced by \$0.002 for the FlexANI
    amount that was not payable during the Interim and Intermediate
    Periods.[^59] The per-call rate of 23.8 cents multiplied by the 148
    calls per-month affirmed above equals a per-phone per-month
    compensation rate for the Interim and Intermediate Periods of
    \$35.224. The compensation obligations as shown at Appendices A, B
    and C are calculated using this increased amount.

## Allocation of Per-Phone Compensation Rate

### Allocation Methodology

#### Background and Discussion of Alternative Methodologies

34. The *First Report and Order* established that, during the Interim
    Period, compensation would not be paid on a per-call basis, but
    would instead be paid on a per-phone basis.[^60] The Commission made
    IXCs collectively liable for the then applicable per-phone per-month
    payment,[^61] which required some method of allocating the payment
    burden among the various companies. The Commission also used annual
    toll revenue as a basis for allocation of payment responsibility
    between the carriers. Each carrier with toll revenue exceeding \$100
    million was responsible for its pro-rata share, based on the ratio
    of its toll revenue to that of the industry as a whole. In
    *Illinois*, the D.C. Circuit rejected the Commission's allocation
    methodology, finding no logical nexus between a carrier\'s annual
    toll revenue and its share of payphone-originated calls. The court
    also found it arbitrary to require Interim Period compensation only
    from carriers with annual toll revenue over \$100 million.[^62] We
    must now implement a new allocation methodology for per-phone
    compensation.

35. In addition to the initial *Notice of Proposed Rulemaking*,[^63] two
    public notices in this proceeding solicited comments on an
    appropriate methodology.[^64] We received numerous proposals, both
    in response to these notices and also as part of various parties'
    petitions for reconsiderations of the *Fourth Reconsideration
    Order*. Below, we describe some of these proposed methodologies.

36. AT&T proposes to allocate responsibility for per-phone compensation
    by using each carrier\'s proportionate share of the 1997 toll-free
    services market. Other carriers demonstrate that this approach is
    infeasible. Sprint, for example, argues that this approach suffers
    from the very flaw identified in the original methodology by the
    D.C. Circuit in *Illinois*: there is no necessary nexus between the
    toll-free market and the payphone market. AT&T's proposal also
    suffers from data availability problems. AT&T claims that data on
    each carrier\'s toll-free traffic is available from the industry
    SMS/800 database, but Sprint argues that carriers do not usually
    report separately toll-free service revenues. Sprint explains that
    there is no publicly reported carrier revenue data that can serve as
    a surrogate for the number of toll-free calls handled by each
    carrier. Moreover, WorldCom asserts that carriers do not report
    toll-free revenues to the Commission and do not release such revenue
    information publicly.[^65] Significantly, WorldCom states that it
    lacks the ability to determine billed revenues for its 1997
    toll-free service.[^66]

37. WorldCom proposes that the Commission allocate responsibility for
    per-phone compensation by subtracting private line revenues reported
    on the Universal Service Worksheet from reported toll service
    revenues.[^67] We agree with Sprint, however, that not all carriers
    participate equally in the market for commercial toll-free calls or
    the market for dial-around operator service calls.[^68] Sprint
    asserts that the Commission\'s allocation should reflect operational
    characteristics of particular carriers that heavily market
    dial-around operator services widely-used from payphones, such as
    1-800-COLLECT.[^69]

38. MCI Telecommunications Corporation (MCI) proposed an equal
    allocation for all carriers with annual toll revenues below \$100
    million, determined by taking their total percentage of toll
    revenues, applying this percentage to Interim Period compensation
    owed, and dividing responsibility for paying that amount evenly
    among all of the carriers.[^70] All such toll-revenue based
    approaches, however, lack the nexus required by the *Illinois*
    decision to the number of compensable dial around calls
    carried.[^71]

39. MIDCOM Communications suggests that the Commission receive reports
    from carriers and from PSPs of the total amount of toll-free and
    access code calls received and originated, and then undertake to
    itself reconcile this data and determine the amount owed to each
    PSP.[^72] Such an undertaking would not be possible given the sheer
    size of such a project. We are also persuaded that not all of the
    requisite data are available.

40. APCC proposes in essence that the Commission not conduct an
    allocation at all, but that it simply deem all payments that are
    owed to PSPs to be roughly equal to the payments that may be owed
    from PSPs and terminate all liabilities simultaneously.[^73] Even
    assuming we had reliable record evidence to allow us to make such a
    finding, doing so would fail to respond to the D.C. Circuit's remand
    in *Illinois*, which directs us to re-examine how to allocate the
    responsibility to pay per-phone compensation among carriers. APCC
    fails to provide us any persuasive reason how we could do so without
    acting in an arbitrary and capricious fashion, particularly in light
    of the fact that we have repeatedly held, and hold again in this
    Order,[^74] that payment obligations runs between individual
    carriers and individual PSPs and does not allow APCC's industry-wide
    solutions. We would also note that APCC's proposal only concerns
    independent PSPs, and even if we were to somehow be able to
    distinguish independent PSPs from ILEC-owned PSPs, we would still be
    left with the need to allocate payment obligations for ILEC-owned
    payphones. Thus, APCC's proposal is, at most a partial solution, and
    one that we cannot reasonably adopt.

41. Sprint proposed recently to base Interim Period compensation on a
    self-determination by each IXC owing compensation.[^75] Under
    Sprint's proposal, each IXC would independently assess its own data
    to ascertain the number of compensable access code and subscriber
    toll-free calls originating at payphones that it handled during a
    1998 sample period. There would thus be no "allocation" of the
    per-phone amount, but a series of independent estimates of
    compensation liability by each IXC.[^76] Generally, Sprint argues
    that this is a better approach than the methodology adopted under
    the *First Report and Order* because it is based on what Sprint
    characterizes as "actual" data.[^77] We decline to accept Sprint's
    approach for a number of reasons

42. First, Sprint's proposal does not adequately account for a
    significant portion of the payphones deployed and would result in
    undercompensation for those payphones it excludes. As discussed in
    numerous comments and FlexANI waiver requests in this proceeding, an
    IXC can identify a call as originating from a payphone only if it
    receives coding digits from the LEC's switch that specifically
    identify the originating line as a payphone line. Payphones that are
    hardcoded at the LEC's switch, also known as "dumb payphones," are
    capable of passing payphone-specific coding digits to the IXC. At
    the beginning of the 1998 sample period, however, approximately 40%
    of all payphones were "smart payphones," which are not hardcoded at
    the switch.[^78] Thus, these payphones do not pass payphone-specific
    coding digits to IXCs. While the LEC could correct this by
    installing a specific software package known as FlexANI on its
    switch,[^79] many LECs had not done so during the sample period
    proposed by Sprint. Thus, during much of the sample period proposed
    by Sprint, the IXC's would lack any "actual" data for smart
    payphones and would necessarily base their determination of
    compensation owed entirely on data received from dumb payphones. We
    could correct this flaw easily if we could assume that the volumes
    of calls originated from smart payphones were the same as volumes
    originated from dumb payphones, because we could then apply the same
    volumes to the per-call compensation amount and provide compensation
    for both types of payphones. The assumption necessary to make this
    correction is contradicted by the record. The RBOC Coalition has
    explained that smart payphones were typically located in high-volume
    areas, while dumb payphones were typically located in low-volume
    areas.[^80] Therefore, the net result of Sprint's proposal would be
    to undercompensate payphones making up 40% of the market.

43. Second, if, regardless of its flaws, we were to adopt Sprint's
    proposal, this methodology would have a disproportionate impact on
    independent PSPs. Independent PSPs deployed smart payphones
    exclusively, and few if any were connected to LEC switches where
    FlexANI had been deployed.[^81] Thus, even if Sprint's methodology
    would result in some measure of "fair" compensation to the LECs that
    deployed dumb payphones, the same could not be said with regard to
    independent PSPs.

44. Third, even if we could somehow overcome the above flaws, evidence
    provided by Sprint itself shows that it would be virtually
    impossible to ensure that PSPs received any kind of compensation
    from resellers who carry payphone-originated calls. Sprint argues in
    its Petition for Reconsideration of the *Fourth Reconsideration
    Order* that the "actual" data Sprint has at its disposal clearly
    excludes any data that would allow PSPs to discover the identity of
    resellers that owe them per-phone compensation: "Sprint has no
    information with which to track resellers' calls for the past period
    in question. Sprint took special care to preserve records for its
    own payphone compensation responsibilities, but it made no effort to
    gather records applicable to resellers' obligations and had no
    reason to believe it ever had to do so."[^82] If we accept that
    Sprint does not have this data, then we are at a loss to figure out
    how PSPs might otherwise learn the identities of the resellers and
    other IXCs to whom Sprint may have handed calls. As discussed below,
    we grant Sprint's Petition for Reconsideration of the *Fourth
    Reconsideration Order* regarding the obligation of resellers to pay
    per-phone compensation. Nevertheless, we do not believe it would be
    fair to adopt a methodology that would virtually assure that it
    would be impossible for PSPs to obtain the identities of, and thus
    per-phone compensation from, anyone but a relatively small number of
    facilities-based providers.

45. Fourth, some IXCs have advised us on the record that they failed to
    retain the payphone call data Sprint's proposal would require, even
    for their own operations.[^83] Thus, allowing per-phone compensation
    to be based on the data that any particular IXC chose to collect and
    retain would, most likely, again result in undercompensation of
    independent PSPs even if we could somehow correct for the
    disparities and gaps we have identified above.

46. Finally, there is no guarantee that the independent estimates of the
    various carriers will amount to the \$35.224 we have found that each
    PSP is entitled to per-phone, particularly in light of the problems
    with data retention and obtaining data regarding resellers noted
    above. Given the economic incentives, carriers estimating their own
    liability may well underestimate the number of calls they handled.
    The more payphone call data collected and retained by any carrier
    would increase its liability and would place it a disadvantage in
    relation to other carriers that failed to collect or retain this
    information. In this respect, it is important to note that Sprint's
    proposal does not provide any guidance as to how individual carriers
    would determine whether a call was "completed" and thus compensable.
    Thus, even if a carrier did have sufficient data to enable it to
    calculate compensation owed, Sprint's "honor system" approach would
    allow carriers to understate calls completed, at worst exacerbating
    underrecovery by the PSPs and at best simply opening the way to
    further disputes over compensation for past periods. For all of
    these reasons, we are not inclined to adopt Sprint's approach, given
    that it does not provide a reasonable way of ensuring fair
    compensation to PSPs, which is our statutory obligation under
    section 276.

47. Teleleasing Enterprises argues that a "fairer method of allocation
    would be to allocate the flat-rate Interim Period compensation based
    on the relative percentage of \[payphone\] calls."[^84] Cable &
    Wireless similarly argues that the Commission "must adopt a
    compensation plan that is apportioned on some factor which related
    to the number of payphone-originated calls received by the
    carrier,"[^85] While neither company provides a substantive
    recommendation about how to achieve such a result, this approach
    would directly address the D.C. Circuit's remand by establishing a
    clear nexus between the allocation and carrier responsibility, and
    would not suffer from the flaws of Sprint's approach.

#### Discussion

48. As the divergent proposals from interested parties make clear, there
    is no single answer to the allocation question. The best method
    would be to gather the actual data that would identify the total
    number of all compensable payphone calls handled by each carrier,
    but such data are not available, and given the technological
    limitations noted above likely never existed in the first place. The
    "perfect" allocation is thus impossible. We are thus forced to make
    a determination based on an *approximation* of the true data. We
    believe that actual data showing the routing of payphone calls from
    LEC switches to IXCs in time periods proximate to and consistent
    with the Interim Period and the Intermediate Period will allow us to
    construct an allocation that reasonably approximates the "true"
    allocation and will thus enable us to make a reasonable estimate of
    each carrier's liability for payment. We have conducted such an
    analysis and have set forth the results, showing each carrier's pro
    rata share of the per-phone payment, in a Table of Allocation
    located in Appendices A, B and C. In the succeeding paragraphs, we
    explain how we obtained and analyzed the data to generate the final
    result.

49. [Commission Data Request]{.underline}. By letters dated December 20,
    2001, the Common Carrier Bureau[^86] requested that the four RBOCs
    submit quarterly data on the routing of payphone calls to IXCs or
    other carriers during 1997, 1998 and October 1, 2000 through
    September 30, 2001. These periods were selected because payphone
    compensation is typically paid, and calling data collected, on a
    quarterly basis, and these data periods closely corresponded with
    the Interim Period, the Intermediate Period, and the most recent
    data available for the period after the Intermediate Period.
    Specifically, the Interim Period began on November 7, 1996, and
    ended on October 6, 1997. Thus, data from 1997 would provide calling
    patterns from the first full quarter of the Interim Period through
    the last quarter of 1997, thus allowing us to take into account an
    entire year and control for any seasonal variations. The
    Intermediate Period began on October 7, 1997, included the entire
    calendar year of 1998, and ended on April 20, 1999. Thus, data from
    1998 would provide an adequate sample period for the Intermediate
    Period because it would cover the majority of the Intermediate
    Period, and again the twelve-month period would be sufficient to
    reflect seasonal variations. For the post-Intermediate Period, it
    would have been necessary to wait until April 1, 2002 to obtain data
    for the entire calendar year of 2001, reconciled data on payphone
    calls originating in the fourth quarter of 2001 would only have been
    available on this date. Accordingly, the Bureau asked for the twelve
    month period beginning October 1, 2000 and ending on September 30,
    2001.

50. Each of the RBOCs subsequently provided the Bureau with aggregate
    call data listing the next destination past the RBOC switch of
    payphone calls placed from their payphones during the relevant time
    periods. In other words, we received a list of each destination and
    the number of payphone calls sent to that destination. Depending on
    the company and the quarter, some of the destinations were listed by
    name (i.e., MCI) and some were listed by carrier identification code
    ("CIC"), a four digit number that uniquely identifies the
    destination of the call.[^87]

51. The RBOC call data account for a total of nearly four billion
    payphone calls originating at more than 85 percent of the payphones
    in the United Sates, as of March 31, 1999.[^88] Accordingly, we have
    obtained a statistically relevant sampling that should give an
    accurate picture of the routing of calls made from payphones. From
    that data set, we can aggregate the figures to determine the total
    number of payphone calls received by each carrier in any given
    quarter covered by the sampling as well as the total number of calls
    placed. From there, it is a simple exercise to calculate each
    carrier's share of the total, and thus the proportion of the
    per-phone compensation that each carrier should rightfully bear. The
    resulting apportionment is directly tied to what we believe is a
    reliable estimate of the percentage of payphone calls received by
    each carrier. We describe below the methodology used to achieve our
    results.

52. As noted above, the RBOCs submitted quarterly data listing the
    number of calls placed to specified destinations. We combined the
    data from each RBOC as to each destination company. In addition,
    where the data were listed by CIC, and a destination carrier had
    multiple CICs, we added all of the numbers together for that
    particular carrier. As discussed above, we used the 1997 RBOC
    payphone call data for the Interim Period aggregations, the 1998
    RBOC payphone call data for the Intermediate Period aggregations and
    the 2000-2001 RBOC payphone call data for the Post-Intermediate
    Period aggregations. Once the basic aggregation was completed,
    however, we needed to adjust the data in various ways in order to
    obtain a reasonable allocation.

53. [Non-carriers]{.underline}. Some of the data submitted includes
    payphone calls routed to destinations that were not IXCs or other
    carriers. For example, one entity to which calls were routed was the
    Legal Aid Society of Orange County; another was J.C. Penney. The
    data set included such data because entities with dedicated private
    line service may be assigned CICs even though they are not
    "communications carriers" and thus should not be responsible for
    payphone compensation. In those circumstances, it was not possible
    to identify the carrier that should have paid for the call, and we
    have removed those calls from the data set. We have attempted to
    weed out such instances, and have included in Appendix D a list of
    the non-carrier CIC holders.[^89] The numbers involved do not have
    much effect on overall liability, however. We excluded 219,688 (out
    of nearly a billion) payphone calls in 1997, 284,972 (out of several
    billion) calls in 1998, and 67,022 (out of more than one billion)
    calls in 2001.

54. [Carrier Classification]{.underline}. In the *Fourth Reconsideration
    Order*, we decided that the Commission\'s Carrier Locator Reports
    ("CLRs") should be used to classify a carrier for purposes of
    determining its duty to pay.[^90] The data make clear, however, that
    calls are routed to more carriers than are listed in the CLRs.
    Carriers do not always serve a single role in the telecommunications
    industry. For example, Sprint is both an ILEC and an IXC; AT&T is an
    IXC and a CLEC; and Verizon is an ILEC, IXC and toll reseller. We
    agree with CompTel that \"\[i\]t is the act of carrying compensable
    calls, not the label the Commission places on a carrier, that
    determines whether a carrier owes compensation for payphone
    calls.\"[^91] Section 276 makes no distinction among providers of
    telecommunications services for the purpose of providing
    compensation and neither will we. In light of the data we have
    received after releasing the *Fourth Reconsideration Order*, we have
    accordingly reconsidered our decision to use such reports to
    distinguish IXCs from resellers and have instead based the
    allocation without regard to whether a company considers itself to
    be an IXC, a reseller, or some other type of provider of
    telecommunications services.

55. [LEC Payment Responsibility]{.underline}. In the *First Report and
    Order*, we decided that LECs must pay payphone compensation to the
    extent that they handle compensable payphone calls.[^92] For LECs,
    this can happen in two ways.[^93] The first instance is when a LEC
    terminates a compensable call that is both originated within its own
    service territory and not routed to another carrier for completion.
    The second instance is when a LEC also provides interexchange
    service and carries the call as would any other IXC. We make payment
    provisions for both types of payphone calls as follows.

56. First, the record in this proceeding indicates that incumbent LECs
    do, in fact, complete payphone calls that are not routed to other
    carriers, and the RBOC Coalition has in fact recognized that there
    is "no principled reason why LECs should be excluded" from the
    obligation to pay compensation."[^94] The RBOC Coalition has placed
    into the record of this proceeding compensable call volumes
    originating from their payphones amounting to 2.19% of all
    compensable payphone calls.[^95] The data has been on the record in
    this proceeding for over four years, represents 400,000 payphones
    from a geographically diverse group of RBOCs,[^96] and there has
    been no indication in the record that other incumbent LECs objected
    to this amount or alleged substantially different call percentages.
    We also note that this figure was derived from CIC-code based
    studies that are consistent with the allocation methodology adopted
    in this Order.[^97] We thus conclude that it is appropriate to
    allocate to both RBOC and non-RBOC incumbent LECs a percentage of
    the calls (2.19%) originating from payphones within their own
    service territories. Rather than making each ILEC remit payment to
    each PSP in the nation, however, we require each incumbent LEC to a
    PSP only if the PSP operates in the incumbent LEC's local exchange
    area.[^98] This percentage and the appropriate compensation rate are
    set forth at Appendices A, B and C.

57. Second, an examination of the RBOC data submitted in response to the
    Bureau's request shows that RBOCs themselves sometimes behaved as
    IXCs. For instance, SBC reported that it routed to Bell Atlantic
    Communications over 2.5 million payphone call attempts in 1998 so
    that Bell Atlantic could act as an IXC and transfer the call to the
    appropriate LEC. Where Bell Atlantic and other RBOCs have routed
    such calls from one LEC to another LEC, their routing of those calls
    was very different from their routing of calls that both originated
    and terminated within their own service territories. Instead of
    providing true local exchange service, these RBOCs were providing
    interLATA long distance service out-of-region. Further, there is no
    indication that the above-referenced 2.19% estimate provided by the
    RBOC Coalition in 1998 included any out-of-region payphone calls
    routed by the RBOCs. We therefore conclude that incumbent LECs owe
    compensation for calls where the incumbent LEC performed the
    function of an IXC, and that this compensation obligation should be
    allocated in a manner consistent with other payors of per-phone
    compensation, including IXCs. In other words, to the extent that the
    RBOC data show calls originating in an RBOC territory and were
    transferred to another incumbent LEC, that incumbent LEC owes
    per-phone compensation to all PSPs nationwide. The Allocation Table
    reflects compensable access code and subscriber toll-free calls
    routed by incumbent LECs acting in an IXC capacity, and specifies
    the amount of per-phone compensation to be paid by that incumbent
    LEC.

58. [Affiliation Obligations]{.underline}. In Appendices A, B and C, we
    identified payors obligated to pay per-phone compensation by the
    names of payors and carrier identification codes (CICs) provided by
    the RBOCs in the payphone call data submitted this spring. [^99] We
    hasten to add, however, that given consolidation and change in the
    telecommunications industry over the last several years, the payor
    names may fail to accurately identify current per-phone obligations
    imposed by this Order. Any failure on our part in the name
    identification in Appendices A, B and C should not be read to excuse
    full payment by any entity of its compensation obligation. The
    per-phone obligation ordered herein must be paid by each listed
    entity, or by its successors in interest, assigns, transferees or
    their entity legally responsible for the listed entity's obligations
    under this Order. [^100]

59. [Conclusion]{.underline}. As we have discussed, we recognize that
    the allocation data we have used do not result in a "perfect"
    allocation, but must also recognize that a perfect allocation is,
    and most likely has always been, impossible.[^101] We find, however,
    that the final data set provides an adequate sampling of the most
    objective payphone routing information available at this time and
    thus enables us to use the data as a fair proxy for call allocation.
    For 1997, the usable data account for almost one billion payphone
    calls, for 1998, more than two and a half billion, and for fiscal
    year 2001, more than one and a half billion calls. We think that,
    given the significant problems we identified with the various
    methodologies proposed by the parties and the lack of other data,
    our allocation is the best that could reasonably be derived in the
    circumstances.

### Allocation to Resellers

60. Sprint requests that the Commission reverse the determination in the
    *Fourth Reconsideration Order* that per-phone compensation should be
    paid to PSPs by IXCs and LECs, but not by resellers (with a right of
    recovery from resellers).[^102] We grant Sprint's petition to the
    following extent. As we have discussed above, the call data received
    from the RBOCs after the release of the *Fourth Reconsideration
    Order* lists carriers receiving calls by name and by CIC. Because
    many resellers have their own CICs, numerous resellers are included
    on these lists, and hence included on our allocation set forth at
    Appendices A, B and C. Accordingly, we have addressed at least part
    of Sprint's concern by including resellers as well as "first switch"
    carriers, without regard to the label borne by the carrier, and we
    explicitly hold that allocating compensation obligations among
    carriers through the use of this methodology replaces the more
    general statements we made in the *Fourth Reconsideration Order*
    about requiring first facilities-based carriers to bear the entire
    burden of per-phone compensation.[^103]

### Retroactive Ratemaking

61. We decline to grant ITC\^Deltacom's petition to exempt from Interim
    Period compensation obligations those carriers with revenues below
    \$100 million.[^104] The Commission attempted to do so in 1996, and
    this very approach was rejected by the D.C. Circuit in *Illinois*.
    [^105] ITC\^Deltacom offers no new argument that would convincingly
    overcome the court's holding.

62. ITC\^Deltacom argues that if the Commission expands, on remand, the
    Interim Period compensation obligation beyond the 24 companies
    listed in the *First Report and Order* such an extension would
    constitute impermissible retroactive rulemaking.[^106] This argument
    fails because the regime of the *First Report and Order* did not
    become final due to pending judicial review, and the *Illinois*
    decision clearly put all carriers on notice of potential liability.
    Notice of small carriers' potential obligation to pay Interim Period
    compensation was likewise provided in the initial NPRM in this
    proceeding. Accordingly, nothing we do in this order constitutes
    impermissible retroactive ratemaking -- it merely apportions an
    existing payment obligation among those entities to which we are
    required by the D.C. Circuit to apportion it.[^107] Moreover, the
    result that ITC\^Deltacom advocates would leave PSPs uncompensated
    for the eleven-month Interim Period and subsequent periods. If we
    were to excuse any but the 25 carriers listed in the *First Report
    and Order*, yet we could not require those 25 companies to bear more
    than their fair share, we would unavoidably violate the mandate of
    section 276 that PSPs be fairly compensated for each and every
    interstate or intrastate completed call originated from their
    phones.

63. ITC\^Deltacom further argues that it failed to keep records
    necessary to verify the compensation for which it is
    responsible.[^108] ITC\^Deltacom's argument that it should be
    exempted from the allocation methodology adopted by the *Fourth
    Reconsideration Order* because it cannot render traffic records is
    beside the point.[^109] The allocation methodology adopted herein
    does not depend on such records. We therefore deny ITC\^Deltacom's
    petition for reconsideration.

## Early and Intermediate Period Issues

### Early Period

64. Before considering whether we should reverse our order that PSPs
    must refund overcompensation paid to carriers during the
    Intermediate Period, we must address apparent confusion that has
    arisen regarding the Commission's consideration and disposition of
    payphone compensation for the period from June 1992 to November 1996
    (the "Early Period"). During the Early Period, the Commission,
    pursuant to its authority under section 226 of the Act, required
    carriers to pay compensation to independent PSPs for access code
    calls, but concluded that it lacked statutory authority to require
    carriers to compensate independent PSPs for subscriber toll-free
    calls, meaning toll-free calls placed to 8XX numbers that are not
    access codes.[^110] In *Florida Public Telecommunications
    Association v. FCC*, the D.C. Circuit found that the Commission in
    fact had such statutory authority and remanded to the Commission for
    further consideration.[^111] As we describe in further detail below,
    CPA and APCC have argued that, in weighing the equities of ordering
    the Intermediate Period refund, we must take into account
    compensation of independent PSPs during the Early Period. This
    argument has raised some confusion as to how and even whether the
    Commission disposed of the D.C. Circuit's *Florida* remand.[^112] We
    take this opportunity to clarify that the Commission addressed this
    remand fully in the *First Report and Order*.

65. In 1995, in accordance with the *Florida* remand, the Commission
    issued the *Second Further Notice* in its payphone compensation
    docket, CC Docket No. 91-35, soliciting comment as to whether the
    Commission should require compensation for access codes calls under
    section 226(e)(2).[^113] While the Commission was considering
    comments and replies received in response to the *Second Further
    Notice*, the 1996 Act became law. Subsequently, on June 4, 1996, the
    Commission adopted the *Notice of Proposed Rulemaking* in this
    docket,[^114] which ultimately led to the adoption of the *First
    Report and Order* on September 20, 1996.

66. In the *First Report and Order*, the Commission held that the
    requirement of section 276 that the Commission ensure fair
    compensation "for each and every completed intrastate and interstate
    call" superseded the compensation obligations established and
    previously considered in CC Docket No. 91-35.[^115] Accordingly, by
    establishing a compensation mechanism for "each and every intrastate
    and interstate call," including access code calls, the Commission
    squarely addressed and disposed of the issue remanded for its
    further consideration by the *Florida* decision. This was made clear
    by the Commission when it stated that "\[b\]ecause the compensation
    issues raised in the *Second Further Notice* \[in CC Docket No.
    91-35\] have been subsumed into this proceeding, we terminate that
    proceeding."[^116] The Commission was clearly aware of its
    responsibility to address the *Florida* remand and decide
    compensation for access code calls, and discussed the procedural
    history of its implementation of section 226 when it considered
    compensation for the Interim Period.[^117] Significantly, the
    Commission declined "to require that per-call compensation \[under
    section 276\] be paid retroactive to the date of the release of the
    *Notice*," but instead required compensation during the Interim
    Period to commence on the "effective date of the rules adopted in
    this proceeding."[^118] After this clear decision by the Commission
    to dispose of the *Florida* remand by establishing compensation
    mechanisms under section 276, no party petitioned for
    reconsideration or appealed the decision on the basis that section
    226 or the *Florida* decision instead somehow required the
    Commission to award compensation retroactively to the date section
    226 became effective or the date of the *Florida* decision.

67. Therefore, because the Commission disposed of the *Florida* remand
    in the *First Report and Order* and is under no obligation to
    reconsider or reexamine that decision, we confirm that the
    Commission is not now legally required to award further compensation
    to PSPs for calls handled during the Early Period. Moreover, as we
    have noted above with regard to the allocation methodology adopted
    in this Order, it has been hard enough to obtain data to develop a
    reasonable picture of compensation obligations to IXCs for 1996
    to 1997. Thus, quite aside from the fact that we have settled the
    legal issue of compensation for the Early Period, it would not be
    practicable to sort out with any certainty the amount of
    undercompensation from the Early Period and then determine the
    specific amounts of money given carriers would be required to
    reimburse specified PSPs.

### Refund of Payments Collected Under the 28.4 Cent Rate

#### Background and CPA Arguments

68. Although we have provided the procedural history of this docket
    above, in considering CPA's Petition for Reconsideration of our
    decision to order a refund of per-call compensation already paid by
    carriers during the Intermediate Period, it is useful to briefly
    recount how the rate for per-call compensation was established. In
    the *First Report and Order*, we established 35 cents as the default
    per-call compensation rate, based on what we believed to be the
    market price for the services of a payphone. We determined that the
    costs of subscriber toll-free and access code calls approximated the
    costs of a coin call, and the market rate for coin calls would
    therefore serve as a fair proxy for the market rate for coinless
    call compensation.[^119] In *Illinois*, the D.C. Circuit reversed
    and remanded, finding that our conclusion was contradicted by record
    evidence showing that the costs for the various types of calls were
    not similar.[^120] On remand, we calculated the cost differential
    between coin calls and coinless ones, and subtracted that amount
    from the 35 cent market rate for coin calls to establish a default
    market rate for coinless calls of 28.4 cents. Once again, in *MCI,*
    the court remanded, finding that it was not rational to derive a
    market rate for one type of call by subtracting a cost differential
    from the rate for another type of call.[^121] Importantly, however,
    it did not vacate the rate. On remand, we established the present
    23.8 cent rate, which the court upheld in *APCC*.[^122]

69. Because the court did not vacate the 28.4 cent rate, PSPs were
    entitled to collect 28.4 cents per-call for subscriber toll-free and
    access code calls during the Intermediate Period, even though the
    court had found that rate to have been the product of arbitrary
    decisionmaking. In the *Third Report and Order*, we decided to apply
    the 23.8 cent default rate retroactively to the Intermediate Period,
    and to require PSPs to refund the difference between the payments
    they received during the Intermediate Period at the 28.4 cent
    compensation rate and payments recalculated at the 23.8 cent
    rate.[^123] CPA requests reconsideration of that decision,
    contending that in the *Third Report and Order* the Commission did
    not perform the required balancing of equities prior to ordering a
    refund, and that the equities do not support that result.[^124]

70. CPA, supported by comments from APCC, raises three principal
    equitable points. First, it contends that in assessing the equity of
    refunds, the Commission must examine not only the Intermediate
    Period, but also the Early Period. As we discussed above, during
    that period, the Commission required carriers to pay compensation to
    independent PSPs for access code calls pursuant to section 226(e)(2)
    of the Act, but did not require compensation for subscriber
    toll-free calls. This decision was subsequently remanded by the D.C.
    Circuit in *Florida*, and handled prospectively in the *First Report
    and Order*. APCC estimates that, had the Commission prescribed
    compensation for subscriber toll-free calls, independent PSPs would
    have received compensation that far exceeds the maximum amount that
    independent PSPs would refund to carriers for the Intermediate
    Period.

71. Second, CPA and APCC contend that a refund would bestow a windfall
    on the carriers. CPA claims that the carriers have fully recovered
    (indeed, overrecovered) their compensation payments during the
    Intermediate Period at the 28.4 cent rate by passing them through to
    end users.[^125] APCC states that the Commission has already
    concluded that this is the case, pointing to the Commission's
    statement in the *Third Report and Order* that "IXCs have recovered
    from their customers the cost of compensating PSPs at a rate of
    \$.284 per call."[^126] In addition, CPA and APCC charge that IXCs,
    specifically AT&T, WorldCom and Sprint, overrecovered the cost of
    dial around compensation because they justified various general rate
    increases by reference to dial around compensation requirements and
    received a substantial reduction in access charge payments because
    of the removal of access charge subsidies for payphones.[^127]
    Therefore, CPA argues, carriers will reap an unfair windfall if
    awarded a refund.

72. Third, APCC contends that a refund is inappropriate because
    independent PSPs did not in fact recover the costs of their
    "marginal" payphones during the Intermediate Period, even while
    collecting the higher 28.4 cent rate.[^128] According to APCC,
    independent PSPs failed to recover their costs because the
    compensation rules at that time created an unworkable payment
    system,[^129] and because LECs failed to timely implement the
    FlexANI system necessary for IXCs to track compensable calls
    originating from independent PSPs.[^130] Related to this point, APCC
    also argues that if PSPs were required to refund a portion of
    per-call compensation paid during the Intermediate Period, WorldCom
    and Global Crossing would owe PSPs a significant amount of
    additional compensation, but PSPs would be net payors to AT&T for
    the Interim Period and would also be required to pay refunds to
    other IXCs for the Intermediate Period.[^131] Accordingly, APCC
    argues, PSPs would be undercompensated because they would be forced
    to pay certain IXCs but could not recover amounts owed from WorldCom
    and Global Crossing. APCC also argues that applicable case law
    requires the Commission to take into account bankruptcies that have
    occurred since the release of the *Third Report and Order*.[^132]

73. Opposing CPA and APCC's arguments, IXCs claim that the Commission
    has no choice but to order a refund, because 23.8 cents is the
    lawful rate and because the court of appeals mandated a
    refund.[^133] Additionally, AT&T, Sprint and WorldCom argue that
    Early Period undercompensation may not be considered because
    estimates of this liability are speculative, inflated and otherwise
    unsupportable[^134] and because the decision to prescribe Early
    Period compensation was discretionary with the Commission.[^135]
    IXCs also contend that the equities have been adequately balanced by
    postponing the date that refunds must be paid to carriers, and
    dispute CPA and APCC's claims that the carriers overrecovered for
    the compensation payments they paid during the Intermediate
    Period.[^136] Specifically, AT&T, Sprint and WorldCom argue that
    IXCs, in fact, underrecovered their costs of paying dial around
    compensation for several reasons: because they did not receive
    payphone-specific coding digits from a substantial percentage of
    payphones during the Interim and Intermediate Periods, they could
    not impose surcharges on calls originated from these phones and thus
    were unable to recover the cost of per-phone compensation from end
    users; when they could impose surcharges, they were unable to
    recover the administrative cost of payphone compensation and the
    cost of bad debt; to the extent IXCs have enjoyed lower access
    charges, these reductions have been passed through to end users; and
    APCC's arguments regarding general rate increases are speculative,
    inaccurate, and ignore the fact that IXCs made much broader rate
    reductions.[^137] MCI argued that IXCs were harmed by suppression of
    demand for dial-around calling caused by the higher compensation
    rate.[^138]

74. AT&T, WorldCom and Sprint also dispute APCC's argument about the
    impact of recent telecommunications industry bankruptcies, arguing
    that: APCC's arguments are irrelevant to IXCs that are not in
    bankruptcy; APCC's arguments would have the effect the effect of
    forcing certain IXCs to pay more to PSPs to make up for amounts
    bankrupt IXCs cannot pay, effectively making IXCs guarantors of dial
    around compensation; and PSPs will, in fact, still be able to setoff
    Interim Period compensation owed by bankruptcy companies against
    refunds and to the extent Interim Period payments are still owed
    that some recovery is nevertheless possible.[^139] These IXCs
    respond to APCC's arguments that the Commission must consider the
    impact of the bankruptcies by arguing that the *Third Report and
    Order*, at the time it was released, did not ignore the relevant
    facts at the time the refund was ordered, and that in any event any
    impact of the bankruptcies is based, at most, on "erroneous
    predictions regarding the possible impact of these recent bankruptcy
    proceedings."[^140]

#### Discussion

75. Our analysis of this issue begins with the terms of the court's
    remand in *MCI*. The court announced that it would "exercise \[its\]
    discretion to remand the \[28.4 cent rate\] for further explanation
    without vacating it."[^141] It proceeded to state that:

    Here, vacating the order would leave payphone service providers all
    but uncompensated for coinless calls made from their payphones, and
    disrupt the business plans they have made on the basis of their
    expectation of compensation. . . . We choose not to vacate the
    \$.284 rate *on the clear understanding that if and when on remand
    the Commission establishes some different rate of fair compensation
    for coinless payphone calls, the Commission may order payphone
    service providers to refund to their customers any excess charges
    for coinless calls pursuant to the current rate.* The Commission
    itself has acknowledged that it has the authority to adjust the
    compensation rate retroactively 'should the equities so dictate.' .
    . . It is clear that the Commission has the authority to order
    refunds where overcompen­sation has occurred, on the basis of the
    statutory provision permitting the Commission to take such actions
    'as may be necessary in the execution of its functions.' . . . In
    addition, the \[1996 Act\] requires the Commission to 'take all
    actions necessary (including any reconsideration)' to promulgate
    regulations to ensure fair compensation to payphone service
    providers. This language authorizes the Commission to order refunds
    where doing so is necessary to ensure fair compensation.[^142]

76. In the *Third Report and Order*, we cited that holding and concluded
    that "the current default compensation amount should apply . . .
    retroactively to the period between October 7, 1997 and the
    effective date of this order \[the period now referred to as the
    Intermediate Period\]."[^143] CPA and APCC claim that the court
    intended the Commission to order refunds only if required by the
    equities. The IXCs largely retort that the court's remand clearly
    required the Commission to order refunds in the event that the
    agency derived a rate lower than 28.4 cents.

77. We believe that the court plainly expected the Commission to order a
    refund. The court stated its "clear understanding" of that outcome.
    Although the court stated that the Commission "may," not "shall,"
    order refunds, we think that the word is best interpreted as
    describing the Commission's power to order the remedy that the court
    had in mind and not simply as giving the agency an open-ended choice
    in the matter. The discussion of the Commission's equitable
    authority was necessary to the court's holding because if the agency
    lacked any power to order refunds, it would not be able to implement
    the court's expected remedy. We thus do not read the passage as
    expressing the view that refunds were to be made only if the
    Commission found it equitable to do so. Nevertheless, as our power
    to order refunds is rooted in a measure of equitable discretion, we
    think it appropriate to examine the equitable arguments raised by
    the parties. We undertake the inquiry with the understanding that we
    will enforce the court's expectation of refunds unless the equities
    make a compelling case to the contrary.

78. This understanding is informed by and consistent with precedent in
    this area. Although we are constrained from engaging in retroactive
    ratemaking by ordering refunds of lawful rates already paid, courts
    have recognized that it is within the discretion of an agency to
    order a refund when necessary to correct legal error, and even
    suggested that the equities weigh in favor of refunds in such a
    situation. Thus, the D.C. Circuit has concluded that "\[t\]here is .
    . . a strong equitable presumption in favor of retroactivity that
    would make the parties whole. As \[the D.C. Circuit\] has stated,
    'when the Commission commits legal error, the proper remedy is one
    that puts the parties in the position they would have been in had
    the error not been made.'"[^144] The D.C. Circuit has more recently
    stated that "administrative agencies have greater discretion to
    impose their rulings retroactively when they do so in response to
    judicial review, that is, when the purpose of retroactive
    application is to rectify legal mistakes identified by a federal
    court."[^145] While other cases have indicated that a presumption in
    favor of refunds might only apply in cases of direct conflict with
    the explicit requirements of a statute,[^146] the *MCI* decision
    would clearly appear to favor a presumption of a refund for reasons
    consistent with both lines of cases: first, the court did not vacate
    the rate because it did not want to leave PSPs "all but
    uncompensated," but had nevertheless plainly held the rate to be
    unlawful and took pains to point out the Commission's authority to
    order a refund in such circumstances; second, the court cited the
    basic requirements of the Act in noting that the Commission was
    authorized to order refunds "where doing so is necessary to ensure
    fair compensation."

79. CPA's principal equitable argument is that the lack of compensation
    for subscriber toll-free calls during the Early Period justifies
    overcompensation during the Intermediate Period. The amount of money
    PSPs did not collect in the Early Period, they assert, far outweighs
    the amount of refunds to be made for Intermediate Period
    overpayment. We find that those circumstances do not provide a
    strong equitable case against refunds for several reasons. First, as
    discussed above, the PSPs had no clear entitlement to payment for
    toll-free calls made during the Early Period. Rather, the governing
    statute at the time required the Commission only to "consider" such
    payment. With the passage of section 276, the matter became
    effectively moot and, as noted above, that matter is now final and
    not subject to further challenge. Thus, we are not inclined to allow
    PSPs to retain the overcompensation of the Intermediate Period.
    Second, even if the PSPs had established some right to payment, it
    is impossible to establish with any specificity who owes what to
    whom for the Early Period.[^147] We do not find it equitable to
    require the carriers that would be due refunds to foot the bill for
    an amount of money that has been unspecified and unallocated among
    parties. Third, to require carriers to forego refunds to which they
    are otherwise entitled because of possible undercompensation in a
    prior period (as to which the parties had no notice that they could
    ultimately be held liable) directly implicates the prohibition on
    retroactive ratemaking, and as such we can place little equitable
    weight on this factor.

80. CPA also argues that carriers should not receive a refund because
    they have already recovered from their customers the full 28.4 cent
    compensation amount, and a refund would amount to double recovery.
    APCC also argues that IXCs have in fact overrecovered dial around
    compensation, taking into account general rate increases and the
    benefit of lower access charges. CPA and APCC have failed to make a
    compelling case that the refund should be reversed on the basis of
    alleged recovery or overrecovery. While CPA claims and the record
    indicates that at least some IXCs recovered per-call compensation
    from their customers in the form of increased rates or surcharges,
    evidence of this recovery is largely limited to allegations
    regarding a few IXCs and it is not entirely clear that even these
    IXCs passed through all compensation. We think it unfair to deny an
    expected recovery to all carriers because of potential, unspecified
    overrecovery on the part of some.[^148] Regardless of the extent of
    pass-throughs to customers, however, we think that all of the
    carriers were reasonably entitled to rely on the *MCI* opinion to
    form a legitimate expectation that they would receive refunds, and
    were certainly reasonably entitled to do so after this Commission
    ordered a refund in the *Third Report and Order*. In a market with
    unregulated prices, the carriers were entitled to charge their
    customers a surcharge for per-call compensation or, indeed, to raise
    the retail rate to any level they think the market will bear. But
    the recovery of the surcharge does not undermine the legitimacy of
    the expectation that the carriers would eventually recover a refund
    because they paid an unlawful rate during the Intermediate Period.
    Carriers may have set their base rates or made other business plans
    in reliance on such an expectation, and we will not disturb those
    expectations because of the possibility of an appearance of double
    recovery. Indeed, the concept of double recovery is not particularly
    meaningful in a market where prices are not regulated.[^149]

81. With regard to APCC's arguments about overrecovery as a result of
    general rate increases and reduction of access charges, we again
    note that APCC's evidence in this regard is limited to a few IXCs,
    and does not purport to represent equitable factors applicable to
    the large number of carriers responsible for dial around
    compensation. Moreover, these arguments by APCC, and rejoinders by
    IXCs, illustrate very well that it is virtually impossible to come
    up with a reasonable and equitable resolution by conflating the
    questions in this proceeding with industry-wide cost recovery and
    rate questions. While APCC argues that the IXCs have overrecovered
    because of various benefits from dial around compensation, the IXCs
    respond that they have underrecovered because they have been unable
    to pass on payphone-specific surcharges, passed on savings from
    general access charges, and generally lowered other rates. These
    kind of universal balancing tests of amounts that may or may not
    have been recovered by IXCs provide very little illumination as to
    whether it is equitable for any given PSP to retain unlawful
    compensation paid by any given IXC and ignore our repeated
    statements that because payphone compensation obligations run from
    specific carriers to specific PSPs,[^150] we are not inclined to
    adopt industry-wide solutions that would obviate specific payment
    obligations. At most, the under- and overrecovery arguments, most of
    which were made late in this proceeding, tend to cancel each other
    out and thus have no bearing on the equitable analysis we conduct
    here.

82. Finally, the PSPs' failure to recover the entire amount to which
    they were due during the Intermediate Period does not equitably
    justify allowing the PSPs to keep overpayments made during that time
    period. The underrecovery may have been due to many reasons:
    problems in collecting compensation from resellers; delays in
    implementing FlexANI technology to facilitate per-call compensation;
    refusal by some carriers to pay compensation during the Intermediate
    Period; and so on. The underrecovery does not, however, appear to
    have been the result of non-payment or significant underpayment by
    those carriers that actually made regular payments of the 28.4 cents
    per-call. In that circumstance, canceling the refund in order to
    assure greater compensation to PSPs would effectively penalize the
    very companies who fulfilled their obligations in the first place.
    That outcome is neither equitable nor, in light of the holding in
    *Illinois* that we may not require one company to bear another one's
    expenses, lawful. Section 276 requires us to ensure that per-call
    compensation is fair, which implies fairness to both sides. We take
    note as well of current litigation in which PSPs are currently
    engaging against various companies (such as resellers) to recover
    underpayments during the Intermediate Period.[^151] Any recovery in
    such lawsuits would mitigate the financial shortfall, and make it
    even more unfair to require additional payments from the carriers
    who have already paid their share. To the degree that the payment
    shortfall was due to problems with FlexANI installation, PSPs are
    entitled to recover per-phone compensation for any period in which
    FlexANI was not installed at the LEC switch, which further mitigates
    the underpayment.

83. In this regard, we reject APCC's arguments that recent
    telecommunications bankruptcies require us to reconsider our earlier
    decision to require a refund. As a threshold matter, PSPs have been
    on notice since the *Third Report and Order* was released in
    February, 1999, and arguably since the release of the D.C. Circuit's
    *MCI* decision in 1998, that they would be required to pay refunds
    as soon as Interim Period compensation was decided. Notwithstanding
    pending reconsiderations of this decision, no action of this
    Commission has given PSPs any reasonable basis to believe they would
    not ultimately be responsible for this payment. Accordingly, to the
    extent we consider APCC's arguments regarding bankruptcy at all, we
    give them very little weight given that the bankruptcies in question
    occurred well after PSPs were on notice that the 28.4 cent rate was
    unlawful and they would be required to pay a refund. In any event,
    we do not believe that the bankruptcies justify allowing PSPs to
    retain overpayments. APCC argues that a shortfall in collection from
    WorldCom and Global Crossing will necessarily result in actual
    compensation that falls below the level of compensation the
    Commission has deemed adequate, which will violate the terms of
    Section 276. We disagree for several reasons. First, the amount of
    any shortfall is far from clear and will not be determined until the
    end of the bankruptcy proceedings. It may turn out that PSPs collect
    most, if not all, of the money they are owed. It is thus premature
    for us to allow PSPs to retain overcharges based on the possibility
    that there might be revenue shortfalls. Second, we agree with the
    IXCs that reconsidering the refund because of recent bankruptcies,
    would unfairly shift the burden of paying outstanding Interim Period
    per-phone compensation to IXCs that paid an unlawful Intermediate
    Period per-call rate. That outcome would be unfair and inequitable
    and would violate the principle established in the *Illinois* case.
    We decline to replace our current system of individual payment
    obligations with APCC's industry-wide solutions. Third, our actions
    in the various payphone orders have satisfied the requirements of
    Section 276. The statute requires us to implement a "per call
    compensation plan" and we have done just that by establishing a
    per-call rate that has been upheld in court.

84. We are cognizant that the payphone industry has been struggling in
    light of the pervasiveness of cell phones and that requiring refunds
    will impose a burden. But we simply cannot say that the burden
    should be borne instead by carriers (mostly IXCs), who themselves
    are suffering from a downturn in their industry. Upon a balancing of
    the equities, we decline to reconsider our earlier finding that PSPs
    will be required to pay refunds for the Intermediate Period.

## Payment Mechanisms

### Payments Between Carriers and PSPs

85. APCC's Petition for Reconsideration of the *Fourth Reconsideration
    Order* argues that the Commission must reconsider its decisions
    to (1) require payments and refunds for the Interim and Intermediate
    Period to take place between PSPs and carriers and (2) prohibit
    carriers from exercising self-help remedies by deducting refunds
    from future payments to PSPs and instead require carriers claiming
    refunds to bill PSPs.[^152] Most of APCC's arguments regarding
    mechanisms of payment have already been reviewed and decided by the
    Commission. Nevertheless, we recognize that PSPs should not be
    placed at an unfair disadvantage in this process, and that
    unrestrained claims against future payments to PSPs may have such an
    effect. Accordingly, while we deny APCC's petition with regard to
    both of its arguments, we nevertheless clarify the administration of
    retroactive payments as set forth below.

86. In the *Third Report and Order*, the Commission held that "IXCs may
    recover their overpayments to the PSPs at the same time as the PSPs
    receive payment from the IXCs for the Interim Period," and that, if
    the amount the IXC overpaid is larger than the amount owed to a PSP
    for the Interim Period, "the IXC may deduct the remaining
    overpayment from future payments to PSPs."[^153] This "true up" was
    designed to alleviate the immediate impact on PSPs of refunding
    carrier overpayments without the immediate resources to do so. After
    adoption of the *Third Report and Order*, APCC argued that the
    Commission should not require PSPs to refund overpayments, but
    should instead order underpaying carriers to compensate carriers
    that had overpaid during the Interim and Intermediate Periods.[^154]
    The *Fourth Reconsideration Order* did not disturb the payment
    mechanisms established under the *Third Report and Order.* Instead,
    it found that APCC's proposal would further complicate resolution of
    payment for the Interim Period and concluded that, in the absence of
    any other arrangement made with the agreement of the PSP,
    "retroactive adjustments are to be made only between carriers and
    PSPs."

87. APCC's petition for reconsideration of this decision makes two
    primary arguments. First, APCC argues that it would be unfair to
    impose a refund obligation on PSPs when they have no assurance of
    obtaining payments owed for these periods. Thus, APCC argues that

    it is a relatively simple matter for the Commission to determine the
    amount by which each IXC has been overpaid or underpaid for the
    Interim Period. Having made that determination, all the Commission
    needs to do is allocate to each underpaying IXC a pro rata share of
    the total owed to each overpaying IXC, and rule that the remaining
    underpayment should be paid to PSPs.[^155]

    AT&T counters that APCC's proposal exacerbates the problems of
    determining compensation owed by any given carrier, and Sprint
    argues that APCC's proposal would significantly increase the
    administrative difficulty of resolving payments.[^156]

88. Second, APCC argues that if the Commission does require resolution
    of payment between PSPs and carriers, "IXCs should be required to
    bill PSPs for the amount of the refund \[to the IXC\] and await
    payment, just as PSPs must do when collecting retroactive
    compensation from IXCs," and further that carriers should be
    required to verify disputed refund payments.[^157] Otherwise, APCC
    argues, carriers will simply deduct claimed refunds from future
    payments to PSPs and will have no incentive to resolve erroneous
    claims.[^158] AT&T, WorldCom and Sprint argue that APCC provides no
    basis for the Commission to reverse its decision, and AT&T in
    particular argues that deduction of amounts owed from future
    payments to PSPs is a common business practice in international
    settlement arrangements and retail businesses.[^159]

#### Payments Between Carriers and PSPs

89. With regard to APCC's proposal to require underpaying carriers to
    compensate overpaying carriers, it is necessary to first point out
    that APCC's arguments amount to little more than disagreement with a
    decision that has been made and already affirmed. APCC has already
    had the opportunity to make its arguments during consideration of
    the *Third Report and Order* and again during the pendency of the
    *Fourth Reconsideration Order*. APCC and other parties have taken
    advantage of this opportunity, and the Commission has now held twice
    that payment and refund obligations for the Interim Period run
    between PSPs and carriers.

90. While we are thus under no obligation to consider or address yet
    another iteration of APCC's arguments, we recognize that payment of
    payphone compensation has a long and complicated history, and in
    light of APCC's most recent proposal it is useful to clarify the
    basis for our decision to require payments and refunds to take place
    between PSPs and carriers.

91. APCC is correct in pointing out that resolving payments and refunds
    among as many as 2,000 PSPs and hundreds of carriers is an
    extraordinarily complex process.[^160] A small number of carriers,
    however, account for the vast majority of per-call and per-phone
    compensation owed and payphone clearinghouses provide a mechanism
    for payment from these carriers to PSPs. Thus, the industry has
    developed mechanisms to handle compensation, despite the fact that
    there are numerous carriers and numerous PSPs.

92. In light of these facts, even if we were obligated to consider
    APCC's proposal, we would reject it. The effect of the *Fourth
    Reconsideration Order* and this Order is to determine an amount of
    per- phone compensation and allocate this amount among carriers
    obligated to pay it. We then leave it to carriers and PSPs to
    determine the specific amounts of compensation and refunds owed.
    APCC asks us, essentially, to accept its representations that only
    one or a very few carriers owe a net refund, and then conclude that
    we should abandon individual resolution of compensation for the
    Interim and Intermediate Periods in favor of ordering underpaying
    carriers to make the overpaying carriers whole. APCC's proposal is
    superficially simple, but ultimately unworkable. APCC's proposal
    would require us to manage the entire process, as we would need to
    take our allocation, multiply it by the total number of payphones
    for which compensation is owed, subtract out compensation each
    carrier may have already paid, and thus obtain net amounts for each
    carrier. We simply do not have the record or the resources to allow
    us to make these determinations. We have insufficient data in the
    record to allow us to obtain a reliable number of total payphones
    for which compensation is still owed, and insufficient data in the
    record that would allow us to determine how much most of the
    carriers listed on Appendix A may have already paid. Even if we did
    have sufficient data to do so, APCC makes no suggestion as to how we
    might equitably allocate payment obligations among underpaying
    carriers, and instead assumes that we can somehow equitably pro rate
    payment among carriers.

93. In sum, far from being a "relatively simple matter" to calculate and
    apply these payment obligations, APCC's proposal would require
    unprecedented regulatory intervention into the payment process and
    continuing management of it, is fraught with problems and provides
    no guarantee whatsoever of finality for the industry. Moreover, PSPs
    have now been on notice since the release of the *Third Report and
    Order* in February, 1999, that they would be required to offset
    refunds against compensation owed and have had adequate time to
    prepare for payment or otherwise settle this obligation. It would be
    irresponsible for us to discard this long-expected mechanism in
    favor of APCC's poorly-defined alternative.

94. Therefore, we deny APCC's petition for reconsideration to the extent
    it asks us to establish a carrier-to-carrier mechanism for resolving
    payments and refunds. We affirm the decisions in the *Third Report
    and Order* and *the Fourth Reconsideration Order* that payment of
    outstanding compensation for the Interim and Intermediate Periods,
    and payment of refunds, shall be made between carriers and PSPs. We
    do, however, reiterate our conclusion in the *Fourth Reconsideration
    Order* that we do not prohibit alternative arrangements between or
    among carriers with the agreement of the PSP.

#### Rendering Claims for Compensation and Refunds

95. In making its proposal that carriers should render bills when they
    claim refunds from PSPs, APCC argues that the Commission should not
    allow carriers to take advantage of an offset process.[^161] APCC
    believes such a process would allow carriers to use a self-help
    remedy of withholding future payments from PSPs, and that the
    carriers would have no incentive to resolve such disputes in a
    timely manner.[^162] In considering this question, we recognize that
    PSPs are often at a disadvantage in the per-call compensation
    process. For example, as we noted above, PSPs often do not have
    sufficient information to determine which carriers ultimately
    completes a given call, PSPs are prohibited from blocking calls, and
    carriers have few incentives at the present time to facilitate the
    move to a market-determined per-call compensation amount. The
    clearinghouse systems undoubtedly provide efficient resolution of
    per-call compensation for hundreds of PSPs, but can also exacerbate
    the PSPs' disadvantage by facilitating the self-help remedies
    described by APCC. The carriers commenting in this proceeding are
    correct that true ups, and other forms of offset, are an established
    and efficient means of resolving outstanding payment obligations
    between parties in commercial relationships. While offsets are thus
    the most efficient way to resolve refunds claimed against PSPs, we
    remain concerned that, in ordering a resolution of compensation owed
    for past periods, we may further disadvantage PSPs in obtaining
    future payments to which they are undoubtedly entitled. While we
    will not discard offset mechanisms in favor of APCC's proposed
    solution, we believe it is necessary to clarify how carriers and
    PSPs should handle the compensation and refund process.

96. Before doing so, however, we note that, aside from APCC's proposal,
    we have only received a few a comments as to how payment mechanisms
    might work. For example, the National Payphone Clearinghouse argues
    that handling past period could take as long as nine months,[^163]
    but we have little information in the record as to how PSPs and
    carriers might otherwise be able to render payment to one another.
    IXCs have argued that commercially standard practices should apply
    but apart from arguing for offsets have not provided many
    details.[^164] Thus, we are at something of a disadvantage in
    establishing enforceable or effective mechanism for rendering
    payments. Even assuming a large number of payments will be made
    through clearinghouses, payment mechanisms between specific carriers
    and PSPs may vary significantly and we have no assurance that
    exhaustive, and probably unrealistic, regulatory requirements will
    prove to be more efficient or timely than allowing the industry to
    manage these payments.[^165] Nevertheless, we also note that it
    appears much of the data necessary to calculate amounts owed -- for
    example, the number of calls handled by specific carriers, and the
    PSPs originating the calls -- has been available to carriers and
    clearinghouses for some time, and much of the methodology for
    compensation was settled by our *Fourth Reconsideration Order*. We
    thus anticipate that PSPs and carriers will be able resolve these
    disputes promptly and in the course of business, and note that the
    continuing obligation to pay interest on amounts owed by PSPs to
    carriers and vice versa will continue to provide parties with an
    incentive to render payment in a timely manner.

97. Accordingly, we provide the following guidelines to clarify the
    requirements of the *Third Report and Order*. As we establish below,
    this Order will be effective 30 days after it is published in the
    Federal Register. After this effective date, PSPs and carriers may
    render bills to one another or otherwise arrange for payment of
    outstanding Interim and Intermediate Period compensation obligations
    or refunds. They may use whatever commercially reasonable payment or
    dispute resolution processes to handle this process they may
    currently use in their dealings with one another or to which they
    may otherwise mutually agree, including clearinghouse processes. In
    accordance with the *Third Report and Order* that "IXCs may recover
    their overpayments to the PSPs at the same time as the PSPs receive
    payment from the IXCs for the Interim Period"[^166] we clarify that
    this means IXCs (or other carriers rendering payment) shall
    initially claim an offset for refunds of overpayments only against
    amounts claimed by the PSP for Interim and Intermediate Period
    compensation. Only after the carrier and the PSP have resolved the
    offset against this amount, "the IXC may deduct the remaining
    overpayment from future payments to PSPs."[^167] We further clarify,
    however, that IXCs (or other carriers claiming refunds) may only
    withhold *undisputed* amounts from future payments. Thus, any
    carrier wishing to deduct a refund out of future payments to PSPs
    may only do so after providing that specific PSP notice of the
    refund claimed, and allowing the PSP adequate time to dispute the
    claim. To the extent a PSP disputes any portion of the refund
    claimed, the carrier may not deduct that portion from any future
    payment until it resolves the dispute with the PSP. Again, carriers
    and PSPs may use existing commercially reasonable processes to
    handle these disputes and arrange for payment. The only requirement
    we place on these processes is that if a carrier is able to apply
    undisputed amounts against future payments, the carriers must allow
    PSPs to make payments of refunds over a reasonable number of future
    payments, subject to ongoing accrual of interest, if reasonably
    requested by the PSP.

98. The above guidelines will help ensure that compensation is fair. We
    agree with APCC that if we allowed carriers to exercise such a
    self-help remedy without any restraint, we would place the carriers
    in a significantly better position in claiming refunds than we have
    placed PSPs in claiming amounts owed to them since 1996: PSPs will
    need to claim such amounts from carriers, who will have ample
    opportunity to dispute amounts owed and apply refunds before making
    any payment; PSPs would be forced to forego future payments owed for
    originating calls, and the carrier applying the offset would have
    little incentive to resolve the dispute in a timely manner. This can
    hardly be considered fair, and we agree with APCC that the payment
    process must take account of the possibility and clarify our orders
    to correct it, while still enabling carriers and PSPs to resolve
    payments in an efficient manner.

### Interest Applied to Late Payments

99. In the *Fourth Reconsideration Order*, we determined that the
    IRS-prescribed interest rate should apply to payment of Interim and
    Intermediate Period compensation, as well as to refunds owed by PSPs
    to carriers. The RBOC Coalition argues that while we could apply the
    IRS-prescribed interest rate to refunds, the interest rate necessary
    to compensate PSPs for compensation delay must be set at a rate that
    reflects the cost of capital of local exchange carriers,
    11.25%.[^168] WorldCom, Sprint and AT&T all oppose the RBOC
    Coalition's argument and argue that the IRS-prescribed interest rate
    should continue to apply.[^169]

100. The Commission fully considered and disposed of this issue in the
     *Fourth Reconsideration Order*. The RBOC Coalition has provided us
     with no new information or arguments as to why the rate of return
     for incumbent local exchange carriers should be applied
     indiscriminately, when we have clearly acknowledged that payments
     will flow not only from carriers to LEC-owned PSPs but also from
     carriers to independent PSPs and all PSPs to carriers.[^170] The
     Commission's intention by applying the IRS-prescribed interest rate
     is to reasonably capture the time value of money for all parties
     owed payment, and not to capture an appropriate rate for return on
     invested capital. Thus, we deny the RBOC Coalition's petition for
     reconsideration.

101. We do, however, clarify that because we have reinstated the 0.9
     cent interest rate component as described above,[^171] the
     IRS-prescribed interest rate will only begin to accrue after the
     date payment normally would have been rendered under the quarterly
     payment system applicable to payphone compensation. Consistent with
     our assumptions under prior orders,[^172] the IRS-prescribed
     interest rate for payments that should have been made for the first
     quarter of the year will begin accruing on July 2 of that same
     year, for the second quarter of the year on October 2 of that same
     year, for the third quarter on January 2 of the next year, and for
     the fourth quarter on April 2 of the next year.

### WorldCom Petition Regarding Inmate Calls

102. In the *Fourth Reconsideration Order,* we concluded that PSPs that
     provided inmate service during the Interim Period are entitled to
     per-call compensation from their presubscribed IXC, assuming they
     are not otherwise compensated for such calls.[^173] According to
     WorldCom, in contrast to inmate calls not otherwise compensated,
     "PSPs were fully entitled to be compensated for all other types of
     coinless calls, and were therefore able to comply with the
     Commission's one-year limit on the submission of compensation
     claims."[^174] The one-year limit referred to by WorldCom is the
     guideline set forth by the Commission in the *First Report and
     Order* that "\[c\]arriers should not refuse payment on timeliness
     grounds . . . for \[claims\] submitted by a PSP up to one year
     after the end of the period in question."[^175] Thus, WorldCom asks
     us to clarify that, with the exception of these inmate calls, PSPs
     may not now submit any new claims for any other type of coinless
     call once the one year deadline for submitting calls for
     compensation has passed.[^176] The only conclusion we made with
     regard to delayed submission of claims for per-call compensation in
     the *Fourth Reconsideration Order* was that PSPs could claim
     compensation for inmate services rendered during the Interim Period
     if the PSP was not otherwise compensated. We did not otherwise
     modify or amend our guidelines that other types of coinless calls
     should be submitted for compensation within one year. In light of
     the clear context of our discussion in the *Fourth Reconsideration
     Order*, it is not necessary for us to further clarify our holding.

### Asset Valuat**i**on and Targeted Blocking

#### Asset Valuation

103. In implementing section 276(b)(1)(B)'s mandate to remove subsidies
     from payphone operations,[^177] the Commission required the
     deregulation of payphone assets.[^178] Upon deregulation of
     payphone assets, LECs are allowed either to maintain their payphone
     assets in their books of account but reclassify the assets as
     nonregulated, or to transfer the payphone assets to a structurally
     separate affiliate.[^179] In the *First Report and Order*, the
     Commission stated that LECs that choose not to transfer their
     payphone assets to a separate affiliate may maintain these assets
     on their books at net book value.[^180] The Commission further
     stated that, under its affiliate transaction rules, if a LEC
     transfers its payphone assets to either a separate affiliate or an
     operating division that has no joint and common use of assets or
     resources with the LEC and maintains a separate set of books, the
     LEC must record the transfer of assets to the separate books at the
     higher of fair market value or net book value.[^181] The Commission
     concluded that fair market valuation will capture any appreciation
     in value of those assets, "thus ensuring that any eventual gains
     would accrue to the benefit of the ratepayers and shareholders."
     [^182]

104. In *Illinois*, the D.C. Circuit vacated and remanded the
     Commission's decision with respect to asset valuation, holding that
     the Commission's decision to require fair-market valuation of
     assets transferred to a separate subsidiary violated the principles
     of *Democratic Central Committee v. Washington Metropolitan Area
     Transit Commission.*[^183] Specifically, the court held that the
     Commission's requirement of fair market valuation effected a
     transfer of the value of shareholder assets to ratepayers. Applying
     *Democratic Central*, the court held that LEC shareholders were
     entitled to any increase in value in payphone assets because, under
     price caps, they had borne the risk of loss associated with
     them.[^184] The D.C. Circuit further held that any transfer of
     payphone assets to a separate affiliate is a one-time industry
     reform to which the Commission's asset transfer rules, which are
     aimed at "on-going" and "systematic" transfers between affiliates,
     simply do not apply.[^185]

105. Three parties filed comments relevant to this issue: the RBOC
     Coalition; the United States Telephone Association (USTA): and the
     Competitive Policy Institute (CPI). The RBOC Coalition and USTA
     support the net book value methodology. In addition to endorsing
     the court's conclusions, the RBOC Coalition pointed out that the
     net book value methodology has been used consistently by the
     Commission when detariffing CPE in the past.[^186] The RBOC
     Coalition also maintains that net book value for one time transfers
     of payphone assets is required by GAAP and endorsed by the
     courts.[^187] CPI contends that the Commission correctly decided
     that payphone assets that are transferred to a separate affiliate
     be transferred at the higher of net book value or fair market
     value.[^188] CPI also contends that the court relied on an
     "imperfect understanding of how price caps function" and thus
     incorrectly concluded that price caps shift the risk from the
     ratepayers to the shareholders.[^189] CPI lists five attributes of
     price cap regulation which, in its judgment, undermine the court's
     view that the advent of price cap regulation shifts the risk of
     loss entirely to shareholders.

106. Whatever the merits of CPI's arguments might be, we are constrained
     by the currently applicable holding of the D.C. Circuit to apply
     net book value. The court could not have been clearer that the
     Commission's affiliate transaction rules do not apply to the
     transaction in question, and also could not have been clearer that
     the potential risk borne by shareholders requires use of net book
     value under *Democratic Central*. The court's holding, however, was
     set forth in the specific context of the transfers at issue in the
     *First Report and Order.* Thus, to avoid confusion as to the reach
     of our implementation of the court's decision, we provide
     clarification as follows. If a LEC chooses to retain payphone
     assets, reclassification of these assets from regulated to
     nonregulated status must be consistent with section 32.32 and our
     Part 64 cost allocation rules. If a LEC chooses to make a one-time
     transfer of payphone assets to a nonregulated affiliate or
     operating division, then such a transfer would be recorded at net
     book value.[^190] We expressly limit this treatment to only such
     transfers as may be made pursuant to our implementation of section
     276(b)(1)(B), as it is only these types of transfers that could
     reasonably be considered the kind of one time industry reform
     contemplated by the D.C. Circuit.[^191]

#### Targeted Blocking

107. As the Commission explained in the Third Report and Order,
     "targeted call blocking refers to the technological ability of an
     IXC to not accept (or 'block') a dial-around access code call from
     one payphone while accepting calls from another payphone."[^192] In
     its Petition for Reconsideration of the *Third Report and Order*,
     CPA argues that the Commission erred when it did not require IXCs
     to implement targeted call blocking.[^193] Because CPA raises no
     new evidence or arguments not already considered, we deny CPA's
     petition on this issue.

108. CPA argues that the Commission failed to take a "critical step"
     towards realizing its goal of a deregulated market for per-call
     compensation, and should have required IXCs to implement targeted
     call blocking.[^194] CPA argues that even if targeted call blocking
     would impose huge costs on IXCs, the Commission was nevertheless
     "required" to order IXCs to implement targeted call blocking
     because the Commission found the technology "feasible" and
     "necessary to achieve a market solution," and "because it is
     crystal clear that the IXCs lack any incentive to make it happen on
     their own."[^195] IXCs have responded that targeted call blocking
     would impose significant costs on the industry, and Sprint argues
     that such a requirement is beyond the scope of this
     proceeding.[^196]

109. As is made clear from the *Third Report and Order*, CPA raises no
     new arguments or evidence sufficient to convince us that we should
     now impose targeted call blocking in response to its petition. The
     Commission was clearly aware that targeted call blocking existed at
     the time of the *Third Report and Order* and discussed the costs,
     incentives and market dynamics related to this technology and
     per-call compensation in exhaustive detail. After considering all
     of these factors, we did not impose any specific obligation to
     deploy this technology. CPA has not made any novel argument it
     could not have made during our consideration of the *Third Report
     and Order*, nor has CPA presented some new piece of evidence not
     previously available that would warrant reconsideration.

# Procedural Matters

## Effective Date

110. In publishing the *Fourth Reconsideration Order* in the Federal
     Register the Commission adopted an effective date of January 1,
     2003, although the text pf the *Fourth Reconsideration Order*
     omitted this date. Several parties take issue with this effective
     date and have petitioned for reconsideration or clarification of
     this date.[^197] To the extent that this omission created any
     confusion, we now clarify that the effective date of the *Fourth
     Reconsideration Order* and this Order shall be 30 days after the
     date that this Order is published in the Federal Register.

111. Accordingly, the requirements of the *Fourth Reconsideration Order*
     and this Order, when they take effect, will obligate carriers and
     PSPs to render compensation and refunds to one another for past
     periods. We are sensitive to the concerns of carriers that in
     setting an effective date, the Commission should allow sufficient
     time to manage the task of determining what amounts are to be paid
     to each PSP.[^198] We are, however, also sensitive to the fact that
     the compensation questions flowing from this Order have been
     pending at the Commission for some time. Moreover, there is no
     reason to prevent a PSP from calculating and rendering a bill for
     compensation if it is able to do so shortly after this Order is
     published. Indeed, allowing PSPs to do so will significantly
     advance the common interest of the Commission and all parties to
     this proceeding in accelerating resolution of payment for these
     periods. Furthermore, with the release of the *Fourth
     Reconsideration Order*, parties were put on notice that an
     allocation of financial responsibility would be forthcoming from
     the Commission. Thus, the obligations established in this Order
     should not constitute any kind of surprise for affected parties.
     For these reasons, we decline to defer the effective date of the
     compensation established in this Order until all Commission and
     court review is completed.[^199] Thus, once any PSP or carrier has
     performed the tasks necessary to render bills for compensation or
     refunds in accordance with this Order, the PSP or carrier may
     render such bills as soon is practicable after the effective date
     of this Order, provided that they observe the guidelines for
     resolution of offsets as set forth above.[^200]

## Final Paperwork Reduction Act Analysis

112. This decision has been analyzed with respect to the Paperwork
     Reduction Act of 1995, Pub. L. 104-13, and it contains no new or
     modified information collections subject to Office of Management
     and Budget review.

## Supplemental Final Regulatory Flexibility Act Analysis on Reconsideration

113. Pursuant to the Regulatory Flexibility Act of 1980, as amended,
     *see* 5 U.S.C. § 604, the Commission\'s Supplemental Final
     Regulatory Flexibility Analysis for this order is attached as
     Appendix G.

# Ordering Clauses

114. Accordingly, pursuant to the authority contained in 47 U.S.C. §§
     151, 154, 201-205, 215, 218, 219, 220, 226, 276 and 405, IT IS
     ORDERED that the policies, rules and requirements set forth herein
     ARE ADOPTED.

115. IT IS FURTHER ORDERED that the Commission\'s Consumer Information
     Bureau, Reference Information Center, SHALL SEND a copy of this
     Fifth Order on Reconsideration and Order on Remand, including the
     Supplemental Final Regulatory Flexibility Analysis, to the Chief
     Counsel for Advocacy of the Small Business Administration.

     FEDERAL COMMUNICATIONS COMMISSION

     Marlene H. Dortch

Secretary

APPENDIX A

**Interim Period Allocation List**

  -------------------------------------------- ------------- ---------------
  Name                                         Percentage    Amount

  AT&T Communications                          35.6752385%   \$12.56624601

  MCI                                          27.1012154%   \$9.54613210

  Sprint                                       11.8235636%   \$4.16473205

  WorldCom                                     11.7792597%   \$4.14912643

  LCI International                            2.5385089%    \$0.89416436

  Frontier Communications Services             2.3634942%    \$0.83251720

  ILEC 2.19%                                   2.1900000%    \$0.77140560

  Cable & Wireless                             0.9357654%    \$0.32961401

  Global Crossing Telecommunications           0.6794139%    \$0.23931675

  Switched Service Communications              0.5008847%    \$0.17643164

  U.S. Long Distance                           0.4286315%    \$0.15098115

  Tel America                                  0.3227813%    \$0.11369647

  WorldCom Technologies                        0.2815205%    \$0.09916277

  Qwest                                        0.2801439%    \$0.09867788

  Long Distance Savers                         0.1505964%    \$0.05304608

  Frontier Communications-North Central Region 0.1446970%    \$0.05096805

  Pac-West Telecomm dba AmeriCall              0.1425208%    \$0.05020151

  Frontier Communications Int\'l, Inc.         0.1390850%    \$0.04899130

  Telco Communications Group dba Dial & Save   0.1360130%    \$0.04790920

  Bell Atlantic Communications                 0.1346397%    \$0.04742549

  Brooks Fiber Communications                  0.1134805%    \$0.03997236

  Business Telecom, Inc. (BTI)                 0.1101138%    \$0.03878650

  NETECH Comm. (US West)                       0.0989391%    \$0.03485029

  One Call Communications                      0.0986707%    \$0.03475578

  ATX Telecommunications Services              0.0941000%    \$0.03314579

  McLeodUSA                                    0.0938146%    \$0.03304526

  WorldXChange                                 0.0844956%    \$0.02976272

  American Network Exchange (AMNEX)            0.0666730%    \$0.02348490

  Broadwing Communications Services Inc.       0.0551409%    \$0.01942282

  American Telco                               0.0534454%    \$0.01882561

  WesTel                                       0.0517618%    \$0.01823259

  West Coast Telecommunications                0.0513034%    \$0.01807112

  OCI                                          0.0503072%    \$0.01772023

  Access Long Distance                         0.0448941%    \$0.01581348

  Total-Tel USA                                0.0442117%    \$0.01557311

  GST Call America                             0.0429595%    \$0.01513205

  NYNEX - Corridor                             0.0404028%    \$0.01423148

  US Long Distance                             0.0384286%    \$0.01353608

  Eastern Telecom International                0.0362242%    \$0.01275963

  Network Operator Services                    0.0351831%    \$0.01239290

  GTE Communications Corp.                     0.0344361%    \$0.01212976

  Shared Communications Services               0.0329638%    \$0.01161116

  Long Distance/USA (Sprint)                   0.0321199%    \$0.01131393

  DeltaCom L.D.S.                              0.0299628%    \$0.01055411

  Tandem Access for Database Query             0.0260948%    \$0.00919165

  The CommuniGroup Of KC                       0.0245338%    \$0.00864178

  Ameritel                                     0.0244719%    \$0.00861997

  US WATS                                      0.0237662%    \$0.00837141

  LONG DISTANCE OF MICHIGAN                    0.0231463%    \$0.00815304

  Consolidated Network                         0.0223181%    \$0.00786132

  Westinghouse Electric Corp.                  0.0210979%    \$0.00743153

  ICON Communications                          0.0205224%    \$0.00722881

  T-NETIX, Inc.                                0.0201631%    \$0.00710224

  Telecom\*USA (MCI)                           0.0186833%    \$0.00658099

  Teltrust                                     0.0178732%    \$0.00629566

  EconoPhone                                   0.0176599%    \$0.00622051

  Switch 2000                                  0.0158645%    \$0.00558811

  VarTec Telecom                               0.0153027%    \$0.00539021

  Chadwick Telephone                           0.0149991%    \$0.00528328

  One Star Long Distance                       0.0142973%    \$0.00503608

  Capital Telecommunications                   0.0142091%    \$0.00500501

  BN1 Telecommunications                       0.0141515%    \$0.00498473

  I-Link Communications                        0.0138405%    \$0.00487516

  American Telecommunications Enterprises      0.0137892%    \$0.00485709

  Touch America, Inc.                          0.0137339%    \$0.00483762

  U. S. Link                                   0.0134288%    \$0.00473015

  Nationwide Communications                    0.0133776%    \$0.00471211

  Deluxe Data Systems                          0.0132089%    \$0.00465272

  Long Distance Management                     0.0129085%    \$0.00454690

  Intermedia Communications                    0.0127663%    \$0.00449680

  XO Communications                            0.0127328%    \$0.00448501

  NATIONAL Telecom of Florida                  0.0122282%    \$0.00430726

  Feist Long Distance                          0.0122252%    \$0.00430620

  Intercontinental Communications Group (ICG)  0.0119296%    \$0.00420207

  American Long Lines                          0.0114326%    \$0.00402701

  Call America Business Comm. Corp.            0.0095168%    \$0.00335218

  IBM (Advantis)                               0.0091183%    \$0.00321183

  Valu-Line of Kansas                          0.0081410%    \$0.00286759

  General Communication                        0.0079124%    \$0.00278708

  North American Communications                0.0077779%    \$0.00273969

  Eastern Telephone Systems                    0.0077552%    \$0.00273169

  MFS Intelnet                                 0.0077267%    \$0.00272166

  Fox Communications                           0.0076554%    \$0.00269654

  Global Crossing Telemanagement               0.0073930%    \$0.00260412

  ATI Telecom                                  0.0073558%    \$0.00259101

  Hedges & Associates                          0.0073188%    \$0.00257797

  Cincinnati Bell Long Distance                0.0060972%    \$0.00214766

  Telemanagement Consultants Corp.             0.0060399%    \$0.00212750

  US Communications                            0.0059806%    \$0.00210660

  Network Plus                                 0.0057186%    \$0.00201433

  Action Telcom Co.                            0.0056086%    \$0.00197558

  GST Telecom                                  0.0055754%    \$0.00196386

  Ciera Network Systems                        0.0053358%    \$0.00187949

  Long Distance Discount                       0.0049896%    \$0.00175754

  Frontier Communications of the Great Lakes   0.0049638%    \$0.00174843

  Electric Lightwave                           0.0048339%    \$0.00170270

  Long Distance Wholesale Club (Excel)         0.0047378%    \$0.00166884

  Eclipse Communications                       0.0047049%    \$0.00165727

  ConQuest                                     0.0045662%    \$0.00160842

  CUSTOMER TELECOM NET dba CTN                 0.0045581%    \$0.00160555

  POPP Telcom                                  0.0045046%    \$0.00158671

  Off Campus Telecommunications                0.0043316%    \$0.00152577

  Long Distance Telephone Savers               0.0043164%    \$0.00152041

  PSP Marketing Group                          0.0042606%    \$0.00150076

  Telephone Assoc. Long Distance Svcs.         0.0038594%    \$0.00135945

  Broadwing Telecommunications Inc.            0.0038149%    \$0.00134377

  Cooperative Communications                   0.0037533%    \$0.00132206

  Cleartel Communications                      0.0036203%    \$0.00127523

  Austin Bestline                              0.0034801%    \$0.00122582

  KLP, Inc. dba Call-America                   0.0033858%    \$0.00119262

  United Communications                        0.0032397%    \$0.00114116

  Cherry Communications                        0.0032314%    \$0.00113822

  South Carolina Network                       0.0031970%    \$0.00112610

  The CommuniGroup                             0.0031261%    \$0.00110112

  Digital Network, Inc.                        0.0028377%    \$0.00099956

  IDS Long Distance                            0.0028330%    \$0.00099791

  Citizens Communications                      0.0025995%    \$0.00091563

  TCG                                          0.0024981%    \$0.00087993

  Arcada Communications                        0.0023550%    \$0.00082953

  American Tel Group                           0.0022940%    \$0.00080805

  Countdown Communications                     0.0022744%    \$0.00080114

  Long Distance USA                            0.0022334%    \$0.00078671

  MRC Telecommunications                       0.0022097%    \$0.00077833

  TCA Long Distance                            0.0021371%    \$0.00075277

  Norlight Telecommunications                  0.0020836%    \$0.00073392

  Global Crossing Bandwidth                    0.0017834%    \$0.00062817

  Capital Network Systems (AMNEX)              0.0016996%    \$0.00059868

  TransNet                                     0.0016856%    \$0.00059372

  LCC                                          0.0016652%    \$0.00058656

  Iowa Communications Network                  0.0016243%    \$0.00057216

  Parkway Communications                       0.0016207%    \$0.00057087

  TresCom U.S.A.                               0.0015496%    \$0.00054582

  Convergent Communications                    0.0015135%    \$0.00053311

  NEXTLINK                                     0.0013910%    \$0.00048996

  Cypress Telecommunications Corp. (Cytel)     0.0013087%    \$0.00046097

  Yavapai Telephone Exchange                   0.0012903%    \$0.00045451

  MVP Communications                           0.0011185%    \$0.00039398

  C-COM                                        0.0011021%    \$0.00038821

  United Telephone Co.                         0.0010314%    \$0.00036331

  US Comm. dba Southwest L.D.N.                0.0010174%    \$0.00035838

  CTS Telcom of Florida                        0.0010157%    \$0.00035776

  Telescan                                     0.0010114%    \$0.00035625

  Ionex Telecommunications                     0.0010013%    \$0.00035269

  Logix Communications                         0.0009404%    \$0.00033124

  Phonetel Technologies                        0.0009246%    \$0.00032569

  AT&T Canada Long Distance Services Co.       0.0009223%    \$0.00032489

  Mon-Cre Long Distance                        0.0009146%    \$0.00032217

  Connect America Communications               0.0008774%    \$0.00030905

  Concord Telephone Long Distance              0.0008735%    \$0.00030770

  WATS/800                                     0.0008587%    \$0.00030248

  Athena International                         0.0008516%    \$0.00029998

  First Financial Management Corp.             0.0008481%    \$0.00029873

  International Telcom, Ltd                    0.0008441%    \$0.00029734

  Sunshine Telephone Inc. dba SUNTEL           0.0008324%    \$0.00029319

  Keystone Telecom                             0.0008213%    \$0.00028929

  Powercom Corp.                               0.0008187%    \$0.00028838

  Midco Communications                         0.0007770%    \$0.00027368

  T-One Communications                         0.0007631%    \$0.00026880

  Star Tel, Inc.                               0.0007553%    \$0.00026604

  Eastern Telecom dba InterQuest               0.0007479%    \$0.00026343

  American Telesource International            0.0007413%    \$0.00026112

  Econo. Call Long Distance Services           0.0007150%    \$0.00025186

  TELUS Communications (Edmonton)              0.0006984%    \$0.00024599

  Telehop Communications                       0.0006840%    \$0.00024092

  KTNT Communications                          0.0006757%    \$0.00023802

  AT&T EasyLink Services                       0.0006601%    \$0.00023251

  Valuline Long Distance                       0.0006399%    \$0.00022538

  American Express Travel Related Services     0.0006270%    \$0.00022086

  Interlink Telecommunications                 0.0005725%    \$0.00020165

  US Link Long Distance                        0.0005406%    \$0.00019041

  Americall Communications                     0.0005347%    \$0.00018836

  Intl.800 Telecom dba Telecall Long Dist.     0.0005293%    \$0.00018645
  (EGLOBE)                                                   

  Union Telephone Co.                          0.0004803%    \$0.00016918

  Western Telecom, Inc.                        0.0004568%    \$0.00016092

  Uni-Tel of Farmington                        0.0004503%    \$0.00015860

  Euronet Communications Corp.                 0.0004437%    \$0.00015629

  Show-Me Long Distance                        0.0004221%    \$0.00014869

  North American Telephone                     0.0004139%    \$0.00014579

  Dial-Net, Inc.                               0.0004132%    \$0.00014553

  USLINK                                       0.0004120%    \$0.00014512

  First Communications                         0.0004057%    \$0.00014292

  TelaMarketing Communications                 0.0003922%    \$0.00013815

  TXU Communications                           0.0003481%    \$0.00012261

  Shoreham Telephone                           0.0003353%    \$0.00011809

  U.S. Connect Corp.                           0.0003313%    \$0.00011669

  AT&T Global Network Services (AGNS)          0.0003161%    \$0.00011133

  Telephone Communications Corp.               0.0003080%    \$0.00010850

  Alternate Communications Technology          0.0003071%    \$0.00010817

  Baystar Satellite Paging                     0.0003000%    \$0.00010568

  JSM Tele-Page                                0.0002989%    \$0.00010527

  Systems 1000                                 0.0002880%    \$0.00010145

  Operator Service Co.                         0.0002539%    \$0.00008944

  Autumn Communications                        0.0002291%    \$0.00008070

  Call America/Palm Desert                     0.0002226%    \$0.00007842

  NACT                                         0.0002222%    \$0.00007827

  ACC Long Distance Corp.                      0.0001873%    \$0.00006597

  NTS Communications                           0.0001863%    \$0.00006564

  TTI Telecommunications                       0.0001830%    \$0.00006446

  Sound Communications West                    0.0001828%    \$0.00006439

  National Network Corp.                       0.0001826%    \$0.00006432

  ARCADA                                       0.0001798%    \$0.00006332

  PT-1 Communications                          0.0001798%    \$0.00006332

  LCI                                          0.0001658%    \$0.00005840

  TresCom U.S.A., Inc./TresCom Caribbean       0.0001524%    \$0.00005366

  Execulines of Sacramento                     0.0001521%    \$0.00005359

  Dancris Comm.                                0.0001441%    \$0.00005076

  Midcom of Arizona, Inc                       0.0001432%    \$0.00005043

  Digital Technologies                         0.0001397%    \$0.00004922

  Connect Americom Corp.                       0.0001359%    \$0.00004786

  Communications Options                       0.0001329%    \$0.00004680

  KRB Telecom                                  0.0001301%    \$0.00004584

  Connect America Corp.                        0.0001199%    \$0.00004224

  Oncor Communications                         0.0001195%    \$0.00004209

  Tele Tech                                    0.0001177%    \$0.00004147

  ECI Communications                           0.0001161%    \$0.00004088

  NTS Communications/GMW Co.                   0.0001116%    \$0.00003930

  Ameritech                                    0.0001110%    \$0.00003908

  Capsule Communications                       0.0001063%    \$0.00003743

  Telenet Comm. Corp.                          0.0001055%    \$0.00003717

  American Telecommunications Holding          0.0001038%    \$0.00003655

  Citilink of UT                               0.0001035%    \$0.00003647

  NTI                                          0.0001030%    \$0.00003629

  Business Discount Plan dba LD Discount Plan  0.0001007%    \$0.00003548

  Home Owners L.D. dba HOLD Billing Svcs.      0.0000993%    \$0.00003497

  QCC, Inc.                                    0.0000964%    \$0.00003394

  Tele-Sys., Inc.                              0.0000953%    \$0.00003357

  Telecom Affiliates                           0.0000894%    \$0.00003148

  USLink Long Distance                         0.0000871%    \$0.00003067

  Americom Communications                      0.0000859%    \$0.00003027

  L.D. Services                                0.0000839%    \$0.00002957

  Telecommunications Service Center            0.0000824%    \$0.00002902

  SWITCHED SERVICE                             0.0000820%    \$0.00002887

  Nuestra Telefonica                           0.0000715%    \$0.00002520

  Alternative Long Distance dba Money \$avers  0.0000636%    \$0.00002241

  Call Savers                                  0.0000592%    \$0.00002086

  Excel Telecommunications                     0.0000554%    \$0.00001950

  Asia International Services Corp.            0.0000554%    \$0.00001950

  WestCom Inc. (Western Telecom, Inc.)         0.0000501%    \$0.00001763

  ComCentral dba Southnet Services             0.0000467%    \$0.00001646

  ABC Telecom                                  0.0000465%    \$0.00001638

  Gulf Long Distance                           0.0000463%    \$0.00001631

  SouthTel Corp.                               0.0000461%    \$0.00001624

  Valu-Line of Amarillo                        0.0000456%    \$0.00001605

  TELECOM WEST                                 0.0000441%    \$0.00001554

  Sound Communication                          0.0000439%    \$0.00001546

  DeltaCom Long Distance Services              0.0000429%    \$0.00001510

  Hi-Rim Communications                        0.0000428%    \$0.00001506

  RSL COM U.S.A.                               0.0000421%    \$0.00001484

  Olympic Telecommunications                   0.0000419%    \$0.00001477

  Communication Cable Laying Co.               0.0000404%    \$0.00001421

  Atlantic Telephone Co.                       0.0000393%    \$0.00001385

  Integrated Systems Corp.                     0.0000373%    \$0.00001315

  FIRSTEL, INC                                 0.0000371%    \$0.00001308

  Access Services dba Pacific NW Telecom       0.0000365%    \$0.00001286

  Amerinet Communications                      0.0000348%    \$0.00001227

  International Cellular                       0.0000348%    \$0.00001227

  NYNEX                                        0.0000315%    \$0.00001109

  Coast to Coast Telecommunications            0.0000293%    \$0.00001032

  VarTec Telecom dba Clear Choice Communicat   0.0000277%    \$0.00000977

  CCC Communications Corp. (Z-TEL, Inc.)       0.0000267%    \$0.00000940

  International Telephone Corp.                0.0000264%    \$0.00000929

  Light Link Inc dba Taylor Comm. Grp.         0.0000260%    \$0.00000915

  R,D,&J Communications Mgmt.                  0.0000254%    \$0.00000896

  Sprint Canada, Inc.                          0.0000242%    \$0.00000852

  TEL-SPAN COMMUNICATIONS                      0.0000235%    \$0.00000826

  DeltaCom, Inc.                               0.0000235%    \$0.00000826

  BMG/TELEMANAGEMENT SYSTEMS (BMG)             0.0000230%    \$0.00000812

  Long Distance International                  0.0000221%    \$0.00000779

  Eclipse Telecommunications                   0.0000221%    \$0.00000779

  Telephone Assoc. dba Thief River Falls LD    0.0000217%    \$0.00000764

  Tel Serv                                     0.0000215%    \$0.00000757

  Roseville Telephone Co.                      0.0000210%    \$0.00000738

  Valu-Line of Longview                        0.0000208%    \$0.00000731

  Working Assets                               0.0000191%    \$0.00000672

  Souris River Telecommunications              0.0000188%    \$0.00000661

  EGLOBE INC dba INTL.800 TELECOM dba TELECAL  0.0000186%    \$0.00000654

  Call America of Riverside                    0.0000184%    \$0.00000646

  Independent Network Services                 0.0000173%    \$0.00000610

  TSC Communications                           0.0000172%    \$0.00000606

  Fone America                                 0.0000172%    \$0.00000606

  Primus                                       0.0000165%    \$0.00000580

  Commonwealth Telecom Services                0.0000164%    \$0.00000577

  WCS Operators                                0.0000163%    \$0.00000573

  WinStar                                      0.0000159%    \$0.00000558

  Hertz Technologies                           0.0000156%    \$0.00000551

  Iowa Network Services                        0.0000151%    \$0.00000533

  A & N Telecom                                0.0000147%    \$0.00000518

  Matrix Telecom                               0.0000146%    \$0.00000514

  Fones West Digital Systems                   0.0000141%    \$0.00000496

  Data & Electronic Services                   0.0000131%    \$0.00000463

  Payline Systems                              0.0000119%    \$0.00000419

  MIDCOM Communications                        0.0000109%    \$0.00000386

  Nationwide Emergency Telecomm. System        0.0000108%    \$0.00000382

  GST Net                                      0.0000107%    \$0.00000378

  Hi-Plains NTS Communications                 0.0000103%    \$0.00000364

  North County Communications Corp.            0.0000100%    \$0.00000353

  Intel Communications                         0.0000098%    \$0.00000345

  Coast International                          0.0000095%    \$0.00000334

  fONOROLA                                     0.0000093%    \$0.00000327

  ITC Networks                                 0.0000091%    \$0.00000320

  PDQ Communications Source                    0.0000086%    \$0.00000301

  Teleport Communications Group                0.0000084%    \$0.00000298

  Value Tel                                    0.0000080%    \$0.00000283

  The Furst Group                              0.0000078%    \$0.00000275

  NexGen 511                                   0.0000078%    \$0.00000275

  Telephone Express                            0.0000074%    \$0.00000261

  U S West Long Distance                       0.0000073%    \$0.00000257

  AUC Communications                           0.0000072%    \$0.00000253

  B.R. Communications                          0.0000072%    \$0.00000253

  U.S. Fibercom                                0.0000066%    \$0.00000231

  MetroLink                                    0.0000065%    \$0.00000228

  Budget Call Long Distance                    0.0000063%    \$0.00000220

  DTG Communications                           0.0000059%    \$0.00000209

  American Discount Telecommunications         0.0000057%    \$0.00000202

  U.S. Communications                          0.0000057%    \$0.00000202

  CEO Telecommunications                       0.0000055%    \$0.00000195

  NET-tel Corp.                                0.0000055%    \$0.00000195

  USN Communications                           0.0000052%    \$0.00000184

  EMI Communications Corp.                     0.0000051%    \$0.00000180

  Pacific Gateway Exchange                     0.0000051%    \$0.00000180

  Extelcom dba Express Tel                     0.0000050%    \$0.00000176

  Premier Long Distance Svcs.                  0.0000049%    \$0.00000173

  National Fibernet, Inc.                      0.0000049%    \$0.00000173

  ADDTEL Communications (SA Tel)               0.0000048%    \$0.00000169

  Affiliated Telecom Svcs.                     0.0000045%    \$0.00000158

  Comwest Communications                       0.0000045%    \$0.00000158

  TTE OF CHARLESTON                            0.0000044%    \$0.00000154

  CoreComm                                     0.0000044%    \$0.00000154

  Priority One Long Distance                   0.0000043%    \$0.00000151

  Digital Network Services                     0.0000043%    \$0.00000151

  Econ-A-Call Inc. of Hays                     0.0000043%    \$0.00000151

  National Telephone Communications            0.0000042%    \$0.00000147

  Manitoba Telephone System                    0.0000041%    \$0.00000143

  ALLTEL Communications, Inc.                  0.0000039%    \$0.00000136

  AmeriVision Communications                   0.0000039%    \$0.00000136

  Interstate Telecom Svcs.                     0.0000039%    \$0.00000136

  SBS/MCI                                      0.0000038%    \$0.00000132

  Call Technology Corp. of Philadelphia        0.0000035%    \$0.00000125

  METRONET Long Distance Communications        0.0000034%    \$0.00000121

  Tel-One                                      0.0000026%    \$0.00000092

  Century Telecommunications                   0.0000025%    \$0.00000088

  USP Communications                           0.0000025%    \$0.00000088

  Fibernet Telecommunications                  0.0000024%    \$0.00000084

  TelVue Corp.                                 0.0000024%    \$0.00000084

  Public Phone                                 0.0000023%    \$0.00000081

  Touch 1 Communications                       0.0000022%    \$0.00000077

  Trinet                                       0.0000022%    \$0.00000077

  ILD Telecommunications                       0.0000020%    \$0.00000070

  Global Tone Communications                   0.0000019%    \$0.00000066

  HOTEL CONNECT                                0.0000019%    \$0.00000066

  ONE-2-ONE Communications                     0.0000018%    \$0.00000062

  United Telephone Co. dba TELAMERICA L.D.     0.0000018%    \$0.00000062

  Telco Holdings                               0.0000016%    \$0.00000055

  Caribbean Telecommunications Consortium      0.0000016%    \$0.00000055

  Axces                                        0.0000016%    \$0.00000055

  Fiberline Network Communications             0.0000016%    \$0.00000055

  WorldCom dba Touch One Long Distance         0.0000016%    \$0.00000055

  Tel-Optic, Inc. dba Universal Network        0.0000016%    \$0.00000055
  Services                                                   

  MEANS Telcom                                 0.0000016%    \$0.00000055

  United Telephone Long Distance               0.0000016%    \$0.00000055

  LA CONEXION FAMILIAR, INC.                   0.0000014%    \$0.00000048

  Economy Telephone                            0.0000014%    \$0.00000048

  FiberNet Telemanagement                      0.0000013%    \$0.00000044

  Telecom One                                  0.0000011%    \$0.00000040

  National Brands dba Sharenet Communications  0.0000011%    \$0.00000040

  Empire One Telecommunications                0.0000011%    \$0.00000040

  American Long Distance Corp.                 0.0000010%    \$0.00000037

  T-NET (Cable & Wireless)                     0.0000010%    \$0.00000037

  North American Telephone Network, Inc.       0.0000010%    \$0.00000037

  Advanced Telecommunications Network          0.0000010%    \$0.00000037

  Blue Mountain Cellular dba CellularOne       0.0000010%    \$0.00000037

  American Long Distance Exchange              0.0000010%    \$0.00000037

  SB Communications                            0.0000010%    \$0.00000037

  MCI/1-800-COLLECT                            0.0000010%    \$0.00000037

  Telec Inc.                                   0.0000009%    \$0.00000033

  LECNet, Inc.                                 0.0000009%    \$0.00000033

  L.D. Network, Inc.                           0.0000008%    \$0.00000029

  Aliant Systems                               0.0000008%    \$0.00000029

  EATELNET                                     0.0000008%    \$0.00000029

  Trans National Communications                0.0000008%    \$0.00000029

  Preferred Telecom                            0.0000008%    \$0.00000029

  Star Tel of Abilene                          0.0000008%    \$0.00000029

  First Data Resources, Inc.                   0.0000008%    \$0.00000029

  Central Telephone Co.                        0.0000007%    \$0.00000026

  INFO-TEL, Inc.                               0.0000007%    \$0.00000026

  Commonwealth Telecom, Inc.                   0.0000007%    \$0.00000026

  Phoenix Network                              0.0000007%    \$0.00000026

  Vista Group International                    0.0000006%    \$0.00000022

  VALU-LINE OF ANGLETON                        0.0000006%    \$0.00000022

  Standard Long Distance                       0.0000006%    \$0.00000022

  EqualNet Corp.                               0.0000005%    \$0.00000018

  Farmers Long Distance                        0.0000005%    \$0.00000018

  Select Communications                        0.0000005%    \$0.00000018

  American Fiber Com                           0.0000005%    \$0.00000018

  REAMS COMMUNICATIONS dba VALULINE            0.0000005%    \$0.00000018

  U.S. Republic Communications                 0.0000005%    \$0.00000018

  The Switchboard                              0.0000005%    \$0.00000018

  Regency Long Distance                        0.0000005%    \$0.00000018

  Future Connect                               0.0000005%    \$0.00000018

  Xtracom                                      0.0000005%    \$0.00000018

  TresCom Puerto Rico                          0.0000005%    \$0.00000018

  U.S. Net                                     0.0000004%    \$0.00000015

  Thrifty Call                                 0.0000004%    \$0.00000015

  KDD America, Inc.                            0.0000004%    \$0.00000015

  ARC Networks                                 0.0000004%    \$0.00000015

  Interstate Operators                         0.0000004%    \$0.00000015

  J B Operators                                0.0000004%    \$0.00000015

  Metro One Telecommunications                 0.0000004%    \$0.00000015

  Comtel Tech                                  0.0000004%    \$0.00000015

  Telephone Support Systems                    0.0000004%    \$0.00000015

  Century Communications                       0.0000004%    \$0.00000015

  Group Long Distance                          0.0000004%    \$0.00000015

  Call America                                 0.0000004%    \$0.00000015

  BC Tel                                       0.0000004%    \$0.00000015

  The Phone Co.                                0.0000003%    \$0.00000011

  Century Long Distance                        0.0000003%    \$0.00000011

  STARTEC                                      0.0000003%    \$0.00000011

  Friendship Long Distance                     0.0000003%    \$0.00000011

  National Fiber Com                           0.0000003%    \$0.00000011

  Associated Network Partners                  0.0000003%    \$0.00000011

  Northern Arizona Communications Corp.        0.0000003%    \$0.00000011

  Northwest Telecom                            0.0000003%    \$0.00000011

  Progressive National Telephone Co.           0.0000003%    \$0.00000011

  World Wide Connect                           0.0000003%    \$0.00000011

  Digital Communications                       0.0000003%    \$0.00000011

  Gala Communications                          0.0000003%    \$0.00000011

  TeleHub Communications Corp.                 0.0000003%    \$0.00000011

  Fastline Communication Network               0.0000003%    \$0.00000011

  West River Long Distance                     0.0000003%    \$0.00000011

  Cable & Wireless (TDX)                       0.0000003%    \$0.00000011

  Fibernet, Inc.                               0.0000003%    \$0.00000011

  Incomnet Communications Corp.                0.0000002%    \$0.00000007

  Tel-Share                                    0.0000002%    \$0.00000007

  Coastal Long Distance Services               0.0000002%    \$0.00000007

  Colorado River Communications                0.0000002%    \$0.00000007

  TMC Long Distance dba Cherry Communications  0.0000002%    \$0.00000007

  Nationwide Long Distance                     0.0000002%    \$0.00000007

  Heritage Communications                      0.0000002%    \$0.00000007

  Savemore Network                             0.0000002%    \$0.00000007

  OPTICOM ONE CALL                             0.0000002%    \$0.00000007

  Alascom                                      0.0000002%    \$0.00000007

  BKC Telecommunications                       0.0000002%    \$0.00000007

  Network Billing & Collection                 0.0000002%    \$0.00000007

  Vortel Communications                        0.0000002%    \$0.00000007

  Rainier Cable                                0.0000002%    \$0.00000007

  St. Pierre Communication Network             0.0000002%    \$0.00000007

  PNG Telecomms. dba PowerNet Global Commu     0.0000002%    \$0.00000007

  BellSouth Long Distance                      0.0000002%    \$0.00000007

  Americatel                                   0.0000002%    \$0.00000007

  Basico Group                                 0.0000002%    \$0.00000007

  United Communications Assn., Inc.            0.0000002%    \$0.00000007

  Telamerica Communications                    0.0000001%    \$0.00000004

  Cellnet                                      0.0000001%    \$0.00000004

  CapRock Telemanagement                       0.0000001%    \$0.00000004

  Advanced Telecom, Inc.                       0.0000001%    \$0.00000004

  US TeleServices                              0.0000001%    \$0.00000004

  Execulines of North Central Region           0.0000001%    \$0.00000004

  National Telephone Exchange (PA)             0.0000001%    \$0.00000004

  SouthWest United Communication               0.0000001%    \$0.00000004

  National Tele-Sav Inc.                       0.0000001%    \$0.00000004

  Discount Long Distance of America            0.0000001%    \$0.00000004

  Sprint Local Telecommunications Division     0.0000001%    \$0.00000004

  Sam\'s Discount Long Distance                0.0000001%    \$0.00000004

  Scherers Communications Group                0.0000001%    \$0.00000004

  BT North America                             0.0000001%    \$0.00000004

  Mountainview Communications                  0.0000001%    \$0.00000004

  TELCO                                        0.0000001%    \$0.00000004

  OCOM Long Distance                           0.0000001%    \$0.00000004

  STANDARD TELCOM                              0.0000001%    \$0.00000004

  OmniCall                                     0.0000001%    \$0.00000004

  RANGER TELECOMMUNICATIONS                    0.0000001%    \$0.00000004

  Long Distance Assistance                     0.0000001%    \$0.00000004

  Roanoke & Botetourt Telephone Co.            0.0000001%    \$0.00000004

  Fairview Telecom                             0.0000001%    \$0.00000004

  Bluegrass Long Distance                      0.0000001%    \$0.00000004

  Valu-Line of St. Joseph                      0.0000001%    \$0.00000004

  Telelink                                     0.0000001%    \$0.00000004

  TeleCable Corp.                              0.0000001%    \$0.00000004

  Federal TransTel, Inc. (FTT)                 0.0000001%    \$0.00000004

  UI Long Distance                             0.0000001%    \$0.00000004

  Texustel                                     0.0000001%    \$0.00000004

  Continental Long Distance                    0.0000001%    \$0.00000004

  Marathon Communications                      0.0000001%    \$0.00000004

  Pioneer Telecom                              0.0000001%    \$0.00000004

  Starcom International Optics Corp.           0.0000001%    \$0.00000004

  TeleData International                       0.0000001%    \$0.00000004

  ZEPTEL                                       0.0000001%    \$0.00000004

  SouthEast Telephone, LTD.                    0.0000001%    \$0.00000004

  TRT Telecommunications Corp.                 0.0000001%    \$0.00000004

  Access-Plus                                  0.0000001%    \$0.00000004

  Apple Communications                         0.0000001%    \$0.00000004

  Allgood Taylor Telephone                     0.0000001%    \$0.00000004

  Guide Network International                  0.0000001%    \$0.00000004

  Xnet, Inc.                                   0.0000001%    \$0.00000004

  LDI Solutions                                0.0000001%    \$0.00000004

  Teleglobe USA                                0.0000001%    \$0.00000004

  Caribsat Telecommunications                  0.0000001%    \$0.00000004

  Innovative Telecom                           0.0000001%    \$0.00000004

  Bethany Telecom                              0.0000001%    \$0.00000004

  Westel Telecommunications, Ltd.              0.0000001%    \$0.00000004

  Cincinnati Bell Telephone                    0.0000001%    \$0.00000004

  World Access Communications Corp.(WACC)      0.0000001%    \$0.00000004

  BELL SOUTH BUSINESS SYSTEMS                  0.0000001%    \$0.00000004
  -------------------------------------------- ------------- ---------------

**APPENDIX B**

**Intermediate Period Allocation List**

  ---------------------------------------- --------------- ---------------
  Names                                    Percentages     Amounts

  AT&T Communications                      35.24391644%    \$12.41431713

  MCI                                      23.61161155%    \$8.31695405

  WorldCom                                 12.96694860%    \$4.56747797

  Sprint                                   12.51899810%    \$4.40969189

  Frontier Communications Services         3.92149599%     \$1.38130775

  LCI International                        2.37673530%     \$0.83718124

  ILEC 2.19%                               2.19000001%     \$0.77140560

  Cable & Wireless                         0.97917273%     \$0.34490380

  Switched Service Communications          0.49097550%     \$0.17294121

  Global Crossing Telecommunications       0.42983911%     \$0.15140653

  U.S. Long Distance                       0.42561847%     \$0.14991985

  LCI                                      0.33335911%     \$0.11742241

  Telco Communications Group dba Dial &    0.31307165%     \$0.11027636
  Save                                                     

  PT-1 Communications                      0.25384298%     \$0.08941365

  Business Telecom, Inc. (BTI)             0.23496687%     \$0.08276473

  Long Distance Savers                     0.21586112%     \$0.07603492

  Qwest                                    0.20372964%     \$0.07176173

  IXC Communication Services               0.19060904%     \$0.06714013

  Teltrust                                 0.18761125%     \$0.06608419

  One Call Communications                  0.14547001%     \$0.05124036

  EconoPhone                               0.14188411%     \$0.04997726

  ATX Telecommunications Services          0.12896413%     \$0.04542633

  WorldXChange                             0.10813630%     \$0.03808993

  Tel America                              0.10673413%     \$0.03759603

  American Network Exchange (AMNEX)        0.10326189%     \$0.03637297

  Bell Atlantic Communications             0.09986097%     \$0.03517503

  American Telco                           0.08260508%     \$0.02909681

  US Long Distance                         0.08048481%     \$0.02834997

  Total-Tel USA                            0.07600848%     \$0.02677323

  Cincinnati Bell Long Distance            0.06237390%     \$0.02197058

  WesTel                                   0.06191358%     \$0.02180844

  DeltaCom L.D.S.                          0.06105990%     \$0.02150774

  Consolidated Network                     0.05901859%     \$0.02078871

  OCI                                      0.05889480%     \$0.02074511

  Broadwing Communications Services Inc.   0.05419353%     \$0.01908913

  Network Operator Services                0.05175470%     \$0.01823007

  NETECH Comm. (US West)                   0.05022277%     \$0.01769047

  Pac-West Telecomm dba AmeriCall          0.04830760%     \$0.01701587

  Tandem Access for Database Query         0.04718756%     \$0.01662135

  GTE Communications Corp.                 0.04716124%     \$0.01661208

  Frontier Communications of the Great     0.04687323%     \$0.01651063
  Lakes                                                    

  NYNEX - Corridor                         0.04680553%     \$0.01648678

  McLeodUSA                                0.04342555%     \$0.01529621

  LONG DISTANCE OF MICHIGAN                0.04219019%     \$0.01486107

  The CommuniGroup Of KC                   0.04049647%     \$0.01426448

  Telecom\*USA (MCI)                       0.03835522%     \$0.01351024

  ACC Long Distance Corp.                  0.02988201%     \$0.01052564

  Network Plus                             0.02915011%     \$0.01026784

  Brooks Fiber Communications              0.02861186%     \$0.01007824

  U.S. WATS                                0.02782831%     \$0.00980224

  American Long Lines                      0.02735606%     \$0.00963590

  Access Long Distance                     0.02553887%     \$0.00899581

  Eclipse Communications                   0.02337135%     \$0.00823232

  VarTec Telecom                           0.02292436%     \$0.00807488

  One Star Long Distance                   0.02237160%     \$0.00788017

  American Telecommunications Enterprises  0.02223350%     \$0.00783153

  Long Distance/USA (Sprint)               0.02133906%     \$0.00751647

  T-NETIX, Inc.                            0.02082489%     \$0.00733536

  Nationwide Communications                0.02071495%     \$0.00729663

  Intercontinental Communications Group    0.02005349%     \$0.00706364
  (ICG)                                                    

  Westinghouse Electric Corp.              0.01984365%     \$0.00698973

  Capital Telecommunications               0.01917389%     \$0.00675381

  NATIONAL Telecom of Florida              0.01833703%     \$0.00645903

  GST Call America                         0.01707555%     \$0.00601469

  Feist Long Distance                      0.01695584%     \$0.00597252

  Frontier Communications-North Central    0.01678545%     \$0.00591251
  Region                                                   

  Intermedia Communications                0.01676333%     \$0.00590472

  WorldCom Technologies                    0.01625195%     \$0.00572459

  Cooperative Communications               0.01598441%     \$0.00563035

  Chadwick Telephone                       0.01517026%     \$0.00534357

  ATI Telecom                              0.01515622%     \$0.00533863

  BN1 Telecommunications                   0.01429701%     \$0.00503598

  Shared Communications Services           0.01403492%     \$0.00494366

  Long Distance Management                 0.01364685%     \$0.00480697

  Valu-Line of Kansas                      0.01352852%     \$0.00476528

  ConQuest                                 0.01224107%     \$0.00431179

  ICON Communications Corp.                0.01171125%     \$0.00412517

  Long Distance International              0.01170991%     \$0.00412470

  South Carolina Network                   0.01122426%     \$0.00395363

  Frontier Communications Int\'l, Inc.     0.00998360%     \$0.00351662

  Eastern Telephone Systems                0.00966809%     \$0.00340549

  Electric Lightwave                       0.00948198%     \$0.00333993

  North American Communications            0.00927736%     \$0.00326786

  Telemanagement Consultants Corp.         0.00921237%     \$0.00324496

  I-Link Communications                    0.00892608%     \$0.00314412

  Action Telcom Co.                        0.00888023%     \$0.00312797

  Citizens Telecom                         0.00857354%     \$0.00301995

  Deluxe Data Systems                      0.00841646%     \$0.00296461

  Hedges & Associates                      0.00834872%     \$0.00294075

  PSP Marketing Group                      0.00826651%     \$0.00291180

  Cleartel Communications                  0.00788966%     \$0.00277905

  Telebeam                                 0.00769037%     \$0.00270885

  Long Distance Discount                   0.00734681%     \$0.00258784

  Touch America, Inc.                      0.00694462%     \$0.00244617

  Cellnet                                  0.00654483%     \$0.00230535

  US Link Long Distance                    0.00626399%     \$0.00220643

  XO Communications                        0.00608506%     \$0.00214340

  West Coast Telecommunications            0.00578794%     \$0.00203875

  LCC                                      0.00517270%     \$0.00182203

  The CommuniGroup                         0.00471144%     \$0.00165956

  Austin Bestline                          0.00470626%     \$0.00165773

  CapRock Telemanagement                   0.00465249%     \$0.00163879

  Ameritel                                 0.00463064%     \$0.00163110

  FOX COMMUNICATIONS CORP.                 0.00449544%     \$0.00158347

  IDT Corp.                                0.00441009%     \$0.00155341

  Switch 2000                              0.00438008%     \$0.00154284

  MRC Telecommunications                   0.00423041%     \$0.00149012

  IDS Long Distance                        0.00415224%     \$0.00146258

  VarTec Telecom dba Clear Choice          0.00408850%     \$0.00144013
  Communications                                           

  General Communication                    0.00383755%     \$0.00135174

  Global Crossing Telemanagement           0.00370561%     \$0.00130526

  Excel Telecommunications                 0.00369988%     \$0.00130325

  Amerinet Communications                  0.00360841%     \$0.00127103

  US COMMUNICATIONS, INC.                  0.00350306%     \$0.00123392

  GTS Global Link                          0.00343038%     \$0.00120832

  US WATS                                  0.00316367%     \$0.00111437

  Call America Business Comm. Corp.        0.00311844%     \$0.00109844

  Americatel                               0.00300132%     \$0.00105719

  Coast to Coast Telecommunications        0.00289923%     \$0.00102122

  Iowa Communications Network              0.00280372%     \$0.00098758

  Capital Network Systems (AMNEX)          0.00277552%     \$0.00097765

  TCG                                      0.00275516%     \$0.00097048

  Coastal Telephone Co.                    0.00274736%     \$0.00096773

  MVP Communications                       0.00265973%     \$0.00093686

  Communications Options                   0.00250057%     \$0.00088080

  Norlight Telecommunications              0.00243746%     \$0.00085857

  TresCom U.S.A.                           0.00232207%     \$0.00081792

  Digital Network, Inc.                    0.00223911%     \$0.00078870

  Off Campus Telecommunications            0.00222471%     \$0.00078363

  GST Telecom                              0.00218679%     \$0.00077027

  Connect America Communications           0.00217267%     \$0.00076530

  KTNT Communications                      0.00203546%     \$0.00071697

  United Telephone Co.                     0.00201083%     \$0.00070830

  ATLANTIC CELL                            0.00198526%     \$0.00069929

  United Communications                    0.00196949%     \$0.00069373

  IBM (Advantis)                           0.00194129%     \$0.00068380

  Concord Telephone Long Distance          0.00189395%     \$0.00066712

  PhoneTel Technologies                    0.00186928%     \$0.00065843

  Eastern Telecom dba InterQuest           0.00179777%     \$0.00063325

  Ionex Telecommunications                 0.00165422%     \$0.00058268

  Cypress Telecommunications Corp. (Cytel) 0.00162880%     \$0.00057373

  KLP, Inc. dba Call-America               0.00161107%     \$0.00056748

  FRESH START COMMUNICATIONS               0.00157899%     \$0.00055618

  Parkway Communications                   0.00156769%     \$0.00055220

  SP Telecom                               0.00146132%     \$0.00051474

  Mon-Cre Long Distance                    0.00144332%     \$0.00050839

  Sunshine Telephone Inc. dba SUNTEL       0.00140869%     \$0.00049620

  TELUS Communications (Edmonton)          0.00137327%     \$0.00048372

  CCC GlobalCom Corp.                      0.00136758%     \$0.00048172

  TGEC Communications                      0.00128349%     \$0.00045210

  CTS Telcom of Florida                    0.00123434%     \$0.00043478

  POPP Telcom                              0.00123242%     \$0.00043411

  Midco Communications                     0.00118147%     \$0.00041616

  EMI Communications Corp.                 0.00116688%     \$0.00041102

  Coast International                      0.00103921%     \$0.00036605

  WATS/800                                 0.00103913%     \$0.00036602

  Valu-Line of Longview                    0.00101234%     \$0.00035659

  American Tel Group                       0.00100932%     \$0.00035552

  Arcada Communications                    0.00099292%     \$0.00034975

  Athena International                     0.00095229%     \$0.00033543

  Interlink Telecommunications             0.00092801%     \$0.00032688

  CEO TELECOMM (STAR TELECOMM INC)         0.00090459%     \$0.00031863

  Broadwing Telecommunications Inc.        0.00087624%     \$0.00030865

  T-One Communications                     0.00086753%     \$0.00030558

  Fibernet Telecommunications              0.00084713%     \$0.00029839

  First Financial Management Corp.         0.00084148%     \$0.00029640

  U.S. Connect Corp.                       0.00081999%     \$0.00028883

  Western Telecom, Inc.                    0.00080014%     \$0.00028184

  Connect Americom Corp.                   0.00078634%     \$0.00027698

  Telescan                                 0.00077979%     \$0.00027467

  Digital Technologies                     0.00077638%     \$0.00027347

  SouthTel Corp.                           0.00077410%     \$0.00027267

  Keystone Telecom                         0.00069907%     \$0.00024624

  Euronet Communications Corp.             0.00067698%     \$0.00023846

  WestCom Inc. (Western Telecom, Inc.)     0.00067687%     \$0.00023842

  Americall Communications                 0.00066004%     \$0.00023249

  C-COM                                    0.00064098%     \$0.00022578

  Convergent Communications                0.00063941%     \$0.00022523

  Ameritech                                0.00063117%     \$0.00022232

  TRESCOM                                  0.00060717%     \$0.00021387

  Autumn Communications                    0.00059317%     \$0.00020894

  Shoreham Telephone                       0.00058603%     \$0.00020642

  TransNet                                 0.00057438%     \$0.00020232

  AT&T Global Network Services (AGNS)      0.00056967%     \$0.00020066

  Star Tel, Inc.                           0.00056830%     \$0.00020018

  U. S. Link                               0.00054633%     \$0.00019244

  Dancris Comm.                            0.00054320%     \$0.00019134

  ATLANTIC CONNECTIONS                     0.00052002%     \$0.00018317

  Kelhorn Comm Inc.                        0.00050750%     \$0.00017876

  US Comm. Inc. dba SOUTHWEST L.D.N.       0.00050566%     \$0.00017811

  STAR TELECOM/ALLSTAR                     0.00048154%     \$0.00016962

  Alternate Communications Technology      0.00047511%     \$0.00016735

  Logix Communications                     0.00045773%     \$0.00016123

  Long Distance Wholesale Club (Excel)     0.00044612%     \$0.00015714

  Econo. Call Long Distance Services       0.00043271%     \$0.00015242

  Powercom Corp.                           0.00042537%     \$0.00014983

  Dial-Net, Inc.                           0.00040497%     \$0.00014265

  XTEL                                     0.00040043%     \$0.00014105

  AT&T EasyLink Services                   0.00037344%     \$0.00013154

  Baystar Satellite Paging                 0.00034720%     \$0.00012230

  North American Telephone                 0.00033359%     \$0.00011750

  Yavapai Telephone Exchange               0.00032767%     \$0.00011542

  Integrated Systems Corp.                 0.00032747%     \$0.00011535

  JSM Tele-Page                            0.00032676%     \$0.00011510

  Payline Systems                          0.00032351%     \$0.00011395

  TelaMarketing Communications             0.00031512%     \$0.00011100

  Valuline Long Distance                   0.00029570%     \$0.00010416

  Midcom of Arizona, Inc                   0.00028833%     \$0.00010156

  Citizens Communications                  0.00028589%     \$0.00010070

  Operator Service Co.                     0.00028366%     \$0.00009992

  Call America                             0.00027527%     \$0.00009696

  Uni-Tel of Farmington                    0.00025985%     \$0.00009153

  Telco Holdings                           0.00025911%     \$0.00009127

  Union Telephone Co.                      0.00025279%     \$0.00008904

  First Communications                     0.00024095%     \$0.00008487

  Telehop Communications                   0.00022149%     \$0.00007802

  Cherry Communications                    0.00021977%     \$0.00007741

  Tele-Sys., Inc.                          0.00018517%     \$0.00006522

  American Telesource International        0.00017886%     \$0.00006300

  Commonwealth Telecom Services            0.00017156%     \$0.00006043

  Intl.800 Telecom dba Telecall Long Dist. 0.00016776%     \$0.00005909
  (EGLOBE)                                                 

  R,D,&J Communications Mgmt.              0.00015442%     \$0.00005439

  Telecommunications Service Center        0.00014881%     \$0.00005242

  TEL-SPAN COMMUNICATIONS                  0.00014720%     \$0.00005185

  NACT                                     0.00014709%     \$0.00005181

  American Express Travel Related Services 0.00014661%     \$0.00005164

  Gulf Long Distance                       0.00014575%     \$0.00005134

  IntelCom Group                           0.00013991%     \$0.00004928

  USLink Long Distance                     0.00013391%     \$0.00004717

  ECI Communications                       0.00012794%     \$0.00004507

  DeltaCom Long Distance Services          0.00012559%     \$0.00004424

  ComCentral dba Southnet Services         0.00012355%     \$0.00004352

  Brooke Telecom Co-operative              0.00012210%     \$0.00004301

  TresCom U.S.A., Inc./TresCom Caribbean   0.00012045%     \$0.00004243

  DeltaCom, Inc.                           0.00011053%     \$0.00003893

  Telephone Assoc. Long Distance Svcs.     0.00010523%     \$0.00003707

  TSC Communications                       0.00010488%     \$0.00003694

  QCC, Inc.                                0.00010276%     \$0.00003620

  Independence Telephone Co.               0.00010029%     \$0.00003533

  Citilink of UT                           0.00009598%     \$0.00003381

  Home Owners L.D. dba HOLD Billing Svcs.  0.00009225%     \$0.00003249

  Tele Tech                                0.00008876%     \$0.00003127

  Systems 1000                             0.00008186%     \$0.00002883

  ALLTEL Communications, Inc.              0.00008080%     \$0.00002846

  Oncor Communications                     0.00007911%     \$0.00002787

  Americom Communications                  0.00007739%     \$0.00002726

  Eclipse Telecommunications               0.00007597%     \$0.00002676

  NTS Communications                       0.00007499%     \$0.00002642

  TXU Communications                       0.00007323%     \$0.00002579

  L.D. Services                            0.00007001%     \$0.00002466

  PSA, Inc.                                0.00006915%     \$0.00002436

  International Cellular                   0.00006735%     \$0.00002372

  Capsule Communications                   0.00006440%     \$0.00002269

  Execulines of Sacramento                 0.00006425%     \$0.00002263

  ARCADA                                   0.00006366%     \$0.00002242

  Caribbean Telecommunications Consortium  0.00006240%     \$0.00002198

  Olympic Telecommunications               0.00006013%     \$0.00002118

  Global Crossing Bandwidth                0.00005907%     \$0.00002081

  ABC Telecom                              0.00005707%     \$0.00002010

  MIDCOM Communications                    0.00005570%     \$0.00001962

  Long Distance Telephone Savers           0.00005472%     \$0.00001927

  Business Discount Plan dba LD Discount   0.00005236%     \$0.00001844
  Plan                                                     

  International Telephone Corp.            0.00004773%     \$0.00001681

  NTI                                      0.00004722%     \$0.00001663

  Iowa Network Services                    0.00004648%     \$0.00001637

  TCA Long Distance                        0.00004632%     \$0.00001632

  Premier Long Distance Svcs.              0.00004617%     \$0.00001626

  Time Warner                              0.00004613%     \$0.00001625

  Communication Cable Laying Co.           0.00004338%     \$0.00001528

  Tel Serv                                 0.00004283%     \$0.00001509

  Intel Communications                     0.00003989%     \$0.00001405

  Axces                                    0.00003605%     \$0.00001270

  Lucky Dog Phone Co.                      0.00003585%     \$0.00001263

  Manitoba Telephone System                0.00003514%     \$0.00001238

  Telephone Communications Corp.           0.00003357%     \$0.00001183

  Atlantic Telephone Co.                   0.00003322%     \$0.00001170

  TTI Telecommunications                   0.00003267%     \$0.00001151

  Fone America                             0.00003020%     \$0.00001064

  Data & Electronic Services               0.00002938%     \$0.00001035

  Light Link Inc dba Taylor Comm. Grp.     0.00002851%     \$0.00001004

  NYNEX                                    0.00002793%     \$0.00000984

  RCC Network                              0.00002632%     \$0.00000927

  NET-tel Corp.                            0.00002440%     \$0.00000859

  Incomnet Communications Corp.            0.00002220%     \$0.00000782

  ITC Networks                             0.00002208%     \$0.00000778

  GST Net                                  0.00002185%     \$0.00000770

  AMERICAN TELECOMMUNICATIONS HOLDING      0.00002126%     \$0.00000749

  Matrix Telecom                           0.00002020%     \$0.00000712

  Show-Me Long Distance                    0.00002008%     \$0.00000707

  Working Assets                           0.00001847%     \$0.00000651

  T-NET (Cable & Wireless)                 0.00001800%     \$0.00000634

  NTS Communications/GMW Co.               0.00001765%     \$0.00000622

  Asia International Services Corp.        0.00001757%     \$0.00000619

  Touch 1 Communications                   0.00001679%     \$0.00000591

  TELECOM WEST                             0.00001632%     \$0.00000575

  Teleport Communications Group            0.00001455%     \$0.00000513

  MetroLink                                0.00001432%     \$0.00000504

  fNOROLA                                  0.00001424%     \$0.00000502

  AUC Communications                       0.00001408%     \$0.00000496

  WinStar                                  0.00001396%     \$0.00000492

  Call America of Riverside                0.00001369%     \$0.00000482

  Sprint Canada, Inc.                      0.00001357%     \$0.00000478

  LA CONEXION FAMILIAR, INC.               0.00001334%     \$0.00000470

  EqualNet Corp.                           0.00001294%     \$0.00000456

  BMG/TELEMANAGEMENT SYSTEMS (BMG)         0.00001294%     \$0.00000456

  MID ATLANTIC TELECOM                     0.00001267%     \$0.00000446

  National Network Corp.                   0.00001181%     \$0.00000416

  Primus (Primus Telecommunications)       0.00001134%     \$0.00000399

  Hi-Rim Communications                    0.00001106%     \$0.00000390

  Independent Network Services             0.00001083%     \$0.00000381

  The Phone Co.                            0.00001059%     \$0.00000373

  Century Telecommunications               0.00001059%     \$0.00000373

  Roseville Telephone Co.                  0.00001047%     \$0.00000369

  Tel-Share                                0.00000992%     \$0.00000350

  AmeriVision Communications               0.00000992%     \$0.00000350

  Call Savers                              0.00000988%     \$0.00000348

  Valu-Line of Amarillo                    0.00000981%     \$0.00000345

  AT&T Canada Long Distance Services Co.   0.00000969%     \$0.00000341

  TTE OF CHARLESTON                        0.00000969%     \$0.00000341

  Telec Inc.                               0.00000965%     \$0.00000340

  Coastal Long Distance Services           0.00000957%     \$0.00000337

  A & N Telecom                            0.00000906%     \$0.00000319

  PDQ Communications Source                0.00000879%     \$0.00000309

  Hi-Plains NTS Communications             0.00000843%     \$0.00000297

  EGLOBE INC dba INTL.800 TELECOM dba      0.00000843%     \$0.00000297
  TELECAL                                                  

  ADDTEL Communications (SA Tel)           0.00000765%     \$0.00000269

  DTG Communications                       0.00000741%     \$0.00000261

  Access Services dba Pacific NW Telecom   0.00000741%     \$0.00000261

  Uni Dial                                 0.00000722%     \$0.00000254

  Questar InfoComm                         0.00000710%     \$0.00000250

  Century Long Distance                    0.00000706%     \$0.00000249

  Southwestern Bell Telephone              0.00000686%     \$0.00000242

  Pacific Bell Interactive Media           0.00000675%     \$0.00000238

  Nationwide Emergency Telecomm. System    0.00000655%     \$0.00000231

  GCI Globalcom                            0.00000635%     \$0.00000224

  Priority One Long Distance               0.00000588%     \$0.00000207

  North County Communications Corp.        0.00000577%     \$0.00000203

  Souris River Telecommunications          0.00000577%     \$0.00000203

  National Telephone Communications        0.00000569%     \$0.00000200

  RSL COM U.S.A.                           0.00000569%     \$0.00000200

  North American Telephone Network, Inc.   0.00000561%     \$0.00000198

  USN Communications                       0.00000549%     \$0.00000193

  Extelcom dba Express Tel                 0.00000541%     \$0.00000191

  Telecom Affiliates                       0.00000530%     \$0.00000187

  Advanced Telecommunications Network      0.00000530%     \$0.00000187

  Global Tone Communications               0.00000522%     \$0.00000184

  US TeleServices                          0.00000510%     \$0.00000180

  CCC Communications Corp. (Z-TEL, Inc.)   0.00000510%     \$0.00000180

  CoreComm                                 0.00000486%     \$0.00000171

  Westcom Long Distance                    0.00000486%     \$0.00000171

  L.D. Network, Inc.                       0.00000467%     \$0.00000164

  FiberNet Telemanagement                  0.00000443%     \$0.00000156

  Alternative Long Distance dba Money      0.00000392%     \$0.00000138
  \$avers                                                  

  Dial Long Distance Billing Svcs.         0.00000388%     \$0.00000137

  Interstate Telecom Svcs.                 0.00000377%     \$0.00000133

  MCI/1-800-COLLECT                        0.00000373%     \$0.00000131

  Call Technology Corp. of Philadelphia    0.00000365%     \$0.00000128

  National Fibernet, Inc.                  0.00000357%     \$0.00000126

  Nuestra Telefonica                       0.00000353%     \$0.00000124

  Fiberline Network Communications         0.00000341%     \$0.00000120

  Affiliated Telecom Svcs.                 0.00000341%     \$0.00000120

  WCS Operators                            0.00000322%     \$0.00000113

  Microvoice Applications                  0.00000322%     \$0.00000113

  WorldCom dba Touch One Long Distance     0.00000318%     \$0.00000112

  B.R. Communications                      0.00000310%     \$0.00000109

  Public Phone                             0.00000298%     \$0.00000105

  American Discount Telecommunications     0.00000294%     \$0.00000104

  Budget Call Long Distance                0.00000294%     \$0.00000104

  SBS/MCI                                  0.00000290%     \$0.00000102

  U.S. Net                                 0.00000286%     \$0.00000101

  Thrifty Call                             0.00000282%     \$0.00000099

  Farmers Long Distance                    0.00000278%     \$0.00000098

  KRB Telecom                              0.00000275%     \$0.00000097

  Fones West Digital Systems               0.00000267%     \$0.00000094

  Hertz Technologies                       0.00000263%     \$0.00000093

  Vista Group International                0.00000255%     \$0.00000090

  Digital Network Services                 0.00000255%     \$0.00000090

  U.S. Fibercom                            0.00000255%     \$0.00000090

  Aliant Systems                           0.00000243%     \$0.00000086

  CellToll Corp.                           0.00000239%     \$0.00000084

  METRONET Long Distance Communications    0.00000227%     \$0.00000080

  EATELNET                                 0.00000204%     \$0.00000072

  United Telephone Long Distance           0.00000196%     \$0.00000069

  Trinet                                   0.00000192%     \$0.00000068

  ProCom, Inc.                             0.00000192%     \$0.00000068

  Tel-One                                  0.00000188%     \$0.00000066

  Escondido Telephone Co.                  0.00000188%     \$0.00000066

  HOTEL CONNECT                            0.00000184%     \$0.00000065

  International Telecommunication Corp.    0.00000180%     \$0.00000064

  America One Communications               0.00000165%     \$0.00000058

  Tel-Optic, Inc. dba Universal Network    0.00000153%     \$0.00000054
  Services                                                 

  Pacific Bell Communications              0.00000153%     \$0.00000054

  U.S. Communications                      0.00000149%     \$0.00000053

  The Furst Group                          0.00000141%     \$0.00000050

  Easton Telecom Services                  0.00000133%     \$0.00000047

  NTS/HI-PLAINS/MIDCOM AZ                  0.00000129%     \$0.00000046

  Telecom One                              0.00000126%     \$0.00000044

  U S West Long Distance                   0.00000126%     \$0.00000044

  Voice Technology Corp                    0.00000122%     \$0.00000043

  Comwest Communications                   0.00000110%     \$0.00000039

  Telephone Assoc. dba Thief River Falls   0.00000110%     \$0.00000039
  LD                                                       

  Horry Telephone Long Distance            0.00000110%     \$0.00000039

  INFO-TEL COMMUNICATIONS                  0.00000106%     \$0.00000037

  BC Tel                                   0.00000102%     \$0.00000036

  ONE-2-ONE Communications                 0.00000102%     \$0.00000036

  Pacific Gateway Exchange                 0.00000102%     \$0.00000036

  Long Distance Network                    0.00000102%     \$0.00000036

  Motorola Inc.                            0.00000102%     \$0.00000036

  Star Telecommunications                  0.00000102%     \$0.00000036

  National Telephone Exchange (PA)         0.00000098%     \$0.00000035

  Economy Telephone                        0.00000094%     \$0.00000033

  North State Telephone Long Distance Co.  0.00000094%     \$0.00000033

  National Tele-Sav Inc.                   0.00000090%     \$0.00000032

  SouthWest United Communication           0.00000090%     \$0.00000032

  Central Telephone Co.                    0.00000090%     \$0.00000032

  American Long Distance Corp.             0.00000090%     \$0.00000032

  Phoenix Network                          0.00000086%     \$0.00000030

  First Data Resources, Inc.               0.00000086%     \$0.00000030

  Trans National Communications            0.00000082%     \$0.00000029

  United Telephone Co. dba TELAMERICA L.D. 0.00000082%     \$0.00000029

  Telaplex Long Distance                   0.00000082%     \$0.00000029

  National Brands dba Sharenet             0.00000078%     \$0.00000028
  Communications                                           

  People\'s Telephone                      0.00000078%     \$0.00000028

  LECNet, Inc.                             0.00000075%     \$0.00000026

  NOS Communications                       0.00000075%     \$0.00000026

  Empire One Telecommunications            0.00000067%     \$0.00000023

  United States Cellular                   0.00000067%     \$0.00000023

  Associated Telenet                       0.00000067%     \$0.00000023

  Innovative Telecom                       0.00000063%     \$0.00000022

  RCN Long Distance                        0.00000063%     \$0.00000022

  North American Digicom Corp.             0.00000063%     \$0.00000022

  Discount Long Distance of America        0.00000059%     \$0.00000021

  Blue Mountain Cellular dba CellularOne   0.00000059%     \$0.00000021

  ARRIVA Communications                    0.00000059%     \$0.00000021

  TMC Long Distance dba Cherry             0.00000055%     \$0.00000019
  Communications                                           

  American Long Distance Exchange          0.00000055%     \$0.00000019

  TelVue Corp.                             0.00000055%     \$0.00000019

  Frontier Communications International    0.00000055%     \$0.00000019

  KDD America, Inc.                        0.00000051%     \$0.00000018

  Preferred Telecom                        0.00000051%     \$0.00000018

  MEANS Telcom                             0.00000051%     \$0.00000018

  HSS Vending Distributors                 0.00000051%     \$0.00000018

  Alo-USA Corp.                            0.00000051%     \$0.00000018

  Nationwide Long Distance                 0.00000047%     \$0.00000017

  U S P & C, Inc.                          0.00000047%     \$0.00000017

  Low Country Carrier dba Hargray L.D. Co. 0.00000047%     \$0.00000017

  Call America/Palm Desert                 0.00000043%     \$0.00000015

  Select Communications                    0.00000043%     \$0.00000015

  Chautauqua & Erie Communications         0.00000043%     \$0.00000015

  Poka-Lambro Telecommunications           0.00000043%     \$0.00000015

  Telecare                                 0.00000043%     \$0.00000015

  International Telcom, Ltd                0.00000039%     \$0.00000014

  STARTEC                                  0.00000039%     \$0.00000014

  Association Communications               0.00000039%     \$0.00000014

  Ben Lomand Communications                0.00000039%     \$0.00000014

  Sprint Local Telecommunications Division 0.00000035%     \$0.00000012

  American Fiber Com                       0.00000035%     \$0.00000012

  INFO-TEL, Inc.                           0.00000035%     \$0.00000012

  USP Communications                       0.00000035%     \$0.00000012

  PBC Long Distance                        0.00000035%     \$0.00000012

  Advanced Telecommunications              0.00000035%     \$0.00000012

  Advanced Telecom, Inc.                   0.00000031%     \$0.00000011

  U.S. Republic Communications             0.00000031%     \$0.00000011

  REAMS COMMUNICATIONS dba VALULINE LONG D 0.00000031%     \$0.00000011

  CoServ                                   0.00000031%     \$0.00000011

  Sam\'s Discount Long Distance            0.00000027%     \$0.00000010

  ARC Networks                             0.00000027%     \$0.00000010

  VALU-LINE OF ANGLETON                    0.00000027%     \$0.00000010

  Michigan Independent Network             0.00000027%     \$0.00000010

  Valley Telephone Long Distance           0.00000027%     \$0.00000010

  Scherers Communications Group            0.00000024%     \$0.00000008

  Heritage Communications                  0.00000024%     \$0.00000008

  Friendship Long Distance                 0.00000024%     \$0.00000008

  Interstate Operators                     0.00000024%     \$0.00000008

  TELCO                                    0.00000020%     \$0.00000007

  Mountainview Communications              0.00000020%     \$0.00000007

  BT North America                         0.00000020%     \$0.00000007

  The Basico Group                         0.00000020%     \$0.00000007

  Colorado River Communications            0.00000020%     \$0.00000007

  National Fiber Com                       0.00000020%     \$0.00000007

  J B Operators                            0.00000020%     \$0.00000007

  Westel Telecommunications, Ltd.          0.00000020%     \$0.00000007

  Atlas Communications & Telephone C.D.    0.00000020%     \$0.00000007

  Northern Communications                  0.00000020%     \$0.00000007

  Pencor/Palmerton                         0.00000020%     \$0.00000007

  RANGER TELECOMMUNICATIONS                0.00000016%     \$0.00000006

  OMNICALL COMMUNICATIONS CORPORATION      0.00000016%     \$0.00000006

  Standard TelCom                          0.00000016%     \$0.00000006

  Alascom                                  0.00000016%     \$0.00000006

  OPTICOM ONE CALL                         0.00000016%     \$0.00000006

  Savemore Network                         0.00000016%     \$0.00000006

  Northern Arizona Communications Corp.    0.00000016%     \$0.00000006

  Associated Network Partners              0.00000016%     \$0.00000006

  Standard Long Distance                   0.00000016%     \$0.00000006

  ABCO Communications                      0.00000016%     \$0.00000006

  Global Com                               0.00000016%     \$0.00000006

  Oneonta Telephone Co.                    0.00000016%     \$0.00000006

  360 ° Long Distance                      0.00000016%     \$0.00000006

  Verizon Select Services                  0.00000016%     \$0.00000006

  ITC Networks of Utah                     0.00000016%     \$0.00000006

  Southern New England Telephone (SNET)    0.00000016%     \$0.00000006

  NEXTLINK                                 0.00000012%     \$0.00000004

  Texustel                                 0.00000012%     \$0.00000004

  Fairview Telecom                         0.00000012%     \$0.00000004

  Long Distance Assistance                 0.00000012%     \$0.00000004

  Progressive National Telephone Co.       0.00000012%     \$0.00000004

  Northwest Telecom                        0.00000012%     \$0.00000004

  Comtel Tech                              0.00000012%     \$0.00000004

  Metro One Telecommunications             0.00000012%     \$0.00000004

  Commonwealth Telecom, Inc.               0.00000012%     \$0.00000004

  Bethany Telecom                          0.00000012%     \$0.00000004

  Covista, Inc.                            0.00000012%     \$0.00000004

  NetLinx Telecommunications Corp.         0.00000012%     \$0.00000004

  CFW NETWORK                              0.00000012%     \$0.00000004

  Nextel Communications                    0.00000012%     \$0.00000004

  Mid-Com Communications                   0.00000012%     \$0.00000004

  American Fibernet, Inc.                  0.00000012%     \$0.00000004

  Williams Communications                  0.00000012%     \$0.00000004

  Cellular One 800 & Long Distance         0.00000012%     \$0.00000004
  Services                                                 

  Telephone Systems of Georgia             0.00000012%     \$0.00000004

  TeleCable Corp.                          0.00000008%     \$0.00000003

  Telelink                                 0.00000008%     \$0.00000003

  Valu-Line of St. Joseph                  0.00000008%     \$0.00000003

  Bluegrass Long Distance                  0.00000008%     \$0.00000003

  OCOM Long Distance                       0.00000008%     \$0.00000003

  Vortel Communications                    0.00000008%     \$0.00000003

  BKC Telecommunications                   0.00000008%     \$0.00000003

  Gala Communications                      0.00000008%     \$0.00000003

  Digital Communications                   0.00000008%     \$0.00000003

  World Wide Connect                       0.00000008%     \$0.00000003

  Telephone Support Systems                0.00000008%     \$0.00000003

  The Switchboard                          0.00000008%     \$0.00000003

  Econ-A-Call Inc. of Hays                 0.00000008%     \$0.00000003

  Metro Telecomm. Svcs.                    0.00000008%     \$0.00000003

  Diamond Communications                   0.00000008%     \$0.00000003

  Long Distance by Cellular One            0.00000008%     \$0.00000003

  Econocom Long Distance                   0.00000008%     \$0.00000003

  Genesis Communications Int\'l            0.00000008%     \$0.00000003

  Infonet Long Distance                    0.00000008%     \$0.00000003

  Tel-Central of Jefferson City            0.00000008%     \$0.00000003

  Chibardun Telephone Cooperative          0.00000008%     \$0.00000003

  Guam Telephone Authority                 0.00000008%     \$0.00000003

  International Telemedia Associates       0.00000008%     \$0.00000003

  Cominex                                  0.00000008%     \$0.00000003

  Standard Communications Inc. dba SCI     0.00000008%     \$0.00000003

  Partners Telecom                         0.00000008%     \$0.00000003

  Sisk Communications                      0.00000008%     \$0.00000003

  Telecommunications Consultants           0.00000008%     \$0.00000003

  Valley Star-Tel                          0.00000008%     \$0.00000003

  Western Telenet                          0.00000008%     \$0.00000003

  Willamette Valley Telecom                0.00000008%     \$0.00000003

  GTE Telephone Operations                 0.00000008%     \$0.00000003

  Communication TeleSystems Intl. (CTS)    0.00000008%     \$0.00000003

  OCOM Corp.                               0.00000008%     \$0.00000003

  UI Long Distance                         0.00000004%     \$0.00000001

  Federal TransTel, Inc. (FTT)             0.00000004%     \$0.00000001

  St. Pierre Communication Network         0.00000004%     \$0.00000001

  Rainier Cable                            0.00000004%     \$0.00000001

  Network Billing & Collection             0.00000004%     \$0.00000001

  Fastline Communication Network           0.00000004%     \$0.00000001

  TeleHub Communications Corp.             0.00000004%     \$0.00000001

  Future Connect                           0.00000004%     \$0.00000001

  Regency Long Distance                    0.00000004%     \$0.00000001

  Telephone Express                        0.00000004%     \$0.00000001

  Firstel                                  0.00000004%     \$0.00000001

  Cincinnati Bell Telephone                0.00000004%     \$0.00000001

  HTC Communications                       0.00000004%     \$0.00000001

  American Consultants Alliance            0.00000004%     \$0.00000001

  Branson Telephone                        0.00000004%     \$0.00000001

  Community Long Distance                  0.00000004%     \$0.00000001

  Digi-Cell, Inc.                          0.00000004%     \$0.00000001

  DigiTel                                  0.00000004%     \$0.00000001

  Island Tel, PEI                          0.00000004%     \$0.00000001

  London Telecom Network Corp.             0.00000004%     \$0.00000001

  Meridian Telecom                         0.00000004%     \$0.00000001

  NETWORK ONE                              0.00000004%     \$0.00000001

  Northland Telephone Systems              0.00000004%     \$0.00000001

  PBT Communications                       0.00000004%     \$0.00000001

  TCAST Communications, Inc.               0.00000004%     \$0.00000001

  Telecon Communications Corp.             0.00000004%     \$0.00000001

  TELEFONICA LARGA DISTANCIA               0.00000004%     \$0.00000001

  TLD DE PUERTO RICO                       0.00000004%     \$0.00000001

  TransWorld Network Corp.                 0.00000004%     \$0.00000001

  U.S.Fiberline Communications             0.00000004%     \$0.00000001

  WBC Communications, Inc.                 0.00000004%     \$0.00000001

  WORLD-WIDE TELCO                         0.00000004%     \$0.00000001

  American Communications Technology       0.00000004%     \$0.00000001

  Western Telephone & Television           0.00000004%     \$0.00000001

  Cimco Communications                     0.00000004%     \$0.00000001

  Cellular XL Associates                   0.00000004%     \$0.00000001

  CityNet Communications                   0.00000004%     \$0.00000001

  Future Telephone Communications          0.00000004%     \$0.00000001

  Network Technologies                     0.00000004%     \$0.00000001

  Voyager Networks                         0.00000004%     \$0.00000001

  DIGITRAN CORP.                           0.00000004%     \$0.00000001

  CP-Tel Network Services, Inc.            0.00000004%     \$0.00000001

  CommNet Cellular                         0.00000004%     \$0.00000001

  Carrier Concepts International Corp.     0.00000004%     \$0.00000001

  Intelenet Commission                     0.00000004%     \$0.00000001

  METRO TELEPHONE                          0.00000004%     \$0.00000001

  U.S. TELE-COMM, INC.                     0.00000004%     \$0.00000001

  Citizens Long Distance                   0.00000004%     \$0.00000001

  TLD, Inc.                                0.00000004%     \$0.00000001

  Ameritech Communications                 0.00000004%     \$0.00000001

  BizTel Long Distance Telephone Co.       0.00000004%     \$0.00000001

  Redwood Long Distance                    0.00000004%     \$0.00000001

  Contact America                          0.00000004%     \$0.00000001

  MID MCND dba MIDCOM Communications       0.00000004%     \$0.00000001

  Off Campus Communications                0.00000004%     \$0.00000001

  Consolidated Comm. Public Services       0.00000004%     \$0.00000001

  Beehive Telephone Co.                    0.00000004%     \$0.00000001

  Hawaiian Telephone Co. (GTE)             0.00000004%     \$0.00000001

  Tel Serve                                0.00000004%     \$0.00000001

  Ray-Tel, Inc.                            0.00000004%     \$0.00000001
  ---------------------------------------- --------------- ---------------

**APPENDIX C**

**Post-Intermediate Period Allocation List**

  ------------------------------------------- -------------- ---------------
  Name                                        Percentage     Amount

  AT&T Communications                         33.69552735%   \$11.96865132

  MCI                                         17.02639727%   \$6.04777631

  Sprint                                      11.11485111%   \$3.94799511

  WorldCom                                    10.23852165%   \$3.63672289

  Global Crossing Telecommunications          7.15106942%    \$2.54005986

  Qwest                                       7.12891379%    \$2.53219018

  WCOM                                        3.45572976%    \$1.22747521

  ILEC 2.19%                                  2.19000000%    \$0.77788800

  Cable & Wireless                            0.87472581%    \$0.31070261

  Global Crossing                             0.73143840%    \$0.25980692

  Frontier Communications Services            0.67982311%    \$0.24147317

  Broadwing Communications Services Inc.      0.60573560%    \$0.21515729

  Telco Communications Group dba Dial & Save  0.57331218%    \$0.20364049

  Touch America, Inc.                         0.52556846%    \$0.18668192

  IDT Corp.                                   0.46487055%    \$0.16512202

  Business Telecom, Inc. (BTI)                0.41529492%    \$0.14751276

  LCI International                           0.38508503%    \$0.13678220

  WorldXChange                                0.24004960%    \$0.08526562

  PT-1 Communications                         0.19235182%    \$0.06832337

  McLeodUSA                                   0.18014775%    \$0.06398848

  One Call Communications                     0.16435648%    \$0.05837942

  ATX Telecommunications Services             0.16231652%    \$0.05765483

  Excel Telecommunications                    0.11654172%    \$0.04139562

  DeltaCom L.D.S.                             0.11205694%    \$0.03980263

  Network Plus                                0.09200160%    \$0.03267897

  Long Distance of Michigan (LDMI)            0.09124466%    \$0.03241010

  EconoPhone                                  0.08965730%    \$0.03184627

  Switched Service Communications             0.08282780%    \$0.02942043

  Intermedia Communications                   0.08202164%    \$0.02913409

  VERIZON (not Verizon IntraLATA - LEC)       0.07539638%    \$0.02678080

  Total-Tel USA                               0.06460627%    \$0.02294815

  Tel America                                 0.05266606%    \$0.01870698

  One Star Long Distance                      0.05075153%    \$0.01802694

  The CommuniGroup Of KC                      0.04547681%    \$0.01615336

  Tandem Access for Database Query            0.04360270%    \$0.01548768

  American Long Lines                         0.04159377%    \$0.01477411

  Logix Communications                        0.04139743%    \$0.01470437

  Bell Atlantic Communications                0.04136967%    \$0.01469451

  WesTel                                      0.03890862%    \$0.01382034

  NETECH Comm. (US West)                      0.03875592%    \$0.01376610

  US WATS                                     0.02990079%    \$0.01062076

  Cooperative Communications                  0.02482544%    \$0.00881800

  Pac-West Telecomm dba AmeriCall             0.02391389%    \$0.00849421

  Global Crossing Telemanagement              0.02192701%    \$0.00778847

  Capital Telecommunications                  0.02078209%    \$0.00738180

  Broadwing Telecommunications Inc.           0.01993413%    \$0.00708060

  South Carolina Network                      0.01829131%    \$0.00649707

  ACC Long Distance Corp.                     0.01741376%    \$0.00618537

  Cincinnati Bell Long Distance               0.01660766%    \$0.00589904

  Long Distance Savers                        0.01650078%    \$0.00586108

  First Communications                        0.01497019%    \$0.00531741

  TXU Communications                          0.01421800%    \$0.00505023

  Southwestern Bell Telephone                 0.01407712%    \$0.00500019

  TCAST Communications, Inc.                  0.01311337%    \$0.00465787

  Shared Communications Services              0.01300293%    \$0.00461864

  ITC DeltaCom Communications                 0.01299003%    \$0.00461406

  I-Link Communications                       0.01274703%    \$0.00452774

  Birch Telecom                               0.01229039%    \$0.00436555

  Williams Communications                     0.01197243%    \$0.00425261

  CTS Telcom of Florida                       0.01189664%    \$0.00422569

  WinStar                                     0.01143703%    \$0.00406243

  US Xchange                                  0.00998448%    \$0.00354649

  SBC                                         0.00983683%    \$0.00349404

  IDS Long Distance                           0.00948736%    \$0.00336991

  Long Distance Management                    0.00869285%    \$0.00308770

  Long Distance Telephone Savers              0.00839879%    \$0.00298325

  Long Distance Discount                      0.00775520%    \$0.00275465

  Powercom Corp.                              0.00755607%    \$0.00268392

  GST Telecom                                 0.00736841%    \$0.00261726

  Westinghouse Electric Corp.                 0.00725440%    \$0.00257676

  EATELNET                                    0.00683467%    \$0.00242768

  Norlight Telecommunications                 0.00667620%    \$0.00237138

  TeleBeam                                    0.00652307%    \$0.00231700

  Frontier Communications Int\'l, Inc.        0.00630040%    \$0.00223790

  Austin Bestline                             0.00617985%    \$0.00219508

  Electric Lightwave                          0.00601377%    \$0.00213609

  Eastern Telephone Systems                   0.00567334%    \$0.00201517

  XTEL                                        0.00563197%    \$0.00200047

  US Link Long Distance                       0.00526181%    \$0.00186900

  Destia                                      0.00523810%    \$0.00186057

  Williams Local Network                      0.00495901%    \$0.00176144

  Southwestern Bell Comms. Svcs. dba Pacific  0.00484096%    \$0.00171951
  Bell L.D.                                                  

  GCI Globalcom                               0.00478277%    \$0.00169884

  Atlantic Cell. dba Long Distance by         0.00452978%    \$0.00160898
  Cellular One                                               

  XO Communications                           0.00449589%    \$0.00159694

  Arcada Communications                       0.00423173%    \$0.00150311

  C-COM                                       0.00392073%    \$0.00139264

  RSL COM U.S.A.                              0.00379352%    \$0.00134746

  The CommuniGroup                            0.00359706%    \$0.00127768

  Chadwick Telephone                          0.00354778%    \$0.00126017

  General Communication                       0.00352525%    \$0.00125217

  CapRock Telemanagement                      0.00350136%    \$0.00124368

  Iowa Communications Network                 0.00347936%    \$0.00123587

  FOX COMMUNICATIONS CORP.                    0.00305548%    \$0.00108531

  Capsule Communications                      0.00294991%    \$0.00104781

  COMMUNICATIONS OPTIONS                      0.00294503%    \$0.00104608

  Coast to Coast Telecommunications           0.00279191%    \$0.00099169

  Cypress Telecommunications Corp. (Cytel)    0.00252727%    \$0.00089769

  GST ACTION TELECOM                          0.00240553%    \$0.00085444

  Americall Communications                    0.00221222%    \$0.00078578

  KTNT Communications                         0.00194140%    \$0.00068959

  VarTec Telecom                              0.00192173%    \$0.00068260

  Network One                                 0.00183167%    \$0.00065061

  QCC, Inc.                                   0.00173757%    \$0.00061719

  Valuline Long Distance                      0.00171546%    \$0.00060933

  Concord Telephone Long Distance             0.00155247%    \$0.00055144

  INFO-TEL COMMUNICATIONS                     0.00142883%    \$0.00050752

  ProCom, Inc.                                0.00139191%    \$0.00049441

  AT&T EasyLink Services                      0.00139090%    \$0.00049405

  RCC Network                                 0.00136219%    \$0.00048385

  Digital Telecommunications                  0.00111140%    \$0.00039477

  Midco Communications                        0.00111122%    \$0.00039471

  United Communications                       0.00102200%    \$0.00036301

  Off Campus Telecommunications               0.00096565%    \$0.00034300

  WorldCom dba Touch One Long Distance        0.00094597%    \$0.00033601

  BN1 Telecommunications                      0.00092659%    \$0.00032913

  Ionex Telecommunications                    0.00085419%    \$0.00030341

  TresCom U.S.A.                              0.00079612%    \$0.00028278

  American Telco                              0.00079392%    \$0.00028200

  Feist Long Distance                         0.00076758%    \$0.00027265

  Citizens Communications                     0.00075159%    \$0.00026697

  Atlantic Connections                        0.00075011%    \$0.00026644

  MichTel                                     0.00073091%    \$0.00025962

  Sunshine Telephone Inc. dba SUNTEL          0.00068983%    \$0.00024503

  PaeTec Communications                       0.00062587%    \$0.00022231

  Consolidated Comm. Public Services          0.00061838%    \$0.00021965

  Voice Technology Corp                       0.00055514%    \$0.00019718

  OCI                                         0.00054735%    \$0.00019442

  Ameritech                                   0.00054681%    \$0.00019423

  Midcom of Arizona, Inc                      0.00053647%    \$0.00019055

  American Telesource International           0.00049450%    \$0.00017565

  Telescan                                    0.00048125%    \$0.00017094

  Long Distance/USA (Sprint)                  0.00044856%    \$0.00015933

  TCG                                         0.00039761%    \$0.00014123

  Mon-Cre Long Distance                       0.00037193%    \$0.00013211

  Global Crossing Bandwidth                   0.00033686%    \$0.00011965

  Uni-Tel of Farmington                       0.00030690%    \$0.00010901

  EMI Communications Corp.                    0.00030548%    \$0.00010851

  Shoreham Telephone                          0.00030209%    \$0.00010730

  First Financial Management Corp.            0.00028842%    \$0.00010245

  Access Point                                0.00028663%    \$0.00010181

  Questar InfoComm                            0.00025715%    \$0.00009134

  Switch 2000                                 0.00025204%    \$0.00008952

  Union Telephone Co.                         0.00023735%    \$0.00008431

  Florida Digital Network                     0.00022707%    \$0.00008066

  Motorola Inc.                               0.00020811%    \$0.00007392

  Baystar Satellite Paging                    0.00019129%    \$0.00006795

  NTS Communications/GMW Co.                  0.00018778%    \$0.00006670

  VarTec Telecom dba Clear Choice             0.00018481%    \$0.00006564
  Communications                                             

  AT&T Global Network Services (AGNS)         0.00017773%    \$0.00006313

  NTS Communications                          0.00016888%    \$0.00005999

  Time Warner                                 0.00016151%    \$0.00005737

  NACT                                        0.00014742%    \$0.00005236

  Full Service Network                        0.00014670%    \$0.00005211

  Primus (Primus Telecommunications)          0.00014445%    \$0.00005131

  Ameritel                                    0.00014361%    \$0.00005101

  ALLTEL Communications, Inc.                 0.00014237%    \$0.00005057

  AT&T Canada Long Distance Services Co.      0.00013880%    \$0.00004930

  GTE Communications Corp.                    0.00012691%    \$0.00004508

  TELUS Communications (Edmonton)             0.00011496%    \$0.00004083

  Telecom\*USA (MCI)                          0.00011449%    \$0.00004067

  Axces                                       0.00011229%    \$0.00003988

  NATIONAL Telecom of Florida                 0.00010581%    \$0.00003758

  POPP Telcom                                 0.00010373%    \$0.00003684

  BC Tel                                      0.00009243%    \$0.00003283

  U.S. Long Distance                          0.00009231%    \$0.00003279

  Tel Serve                                   0.00008649%    \$0.00003072

  Oncor Communications                        0.00007638%    \$0.00002713

  CEO Telecommunications Star Telecommunica   0.00007145%    \$0.00002538

  Tele-Sys., Inc.                             0.00006901%    \$0.00002451

  IPS Telecom                                 0.00006509%    \$0.00002312

  Teleport Communications Group               0.00006390%    \$0.00002270

  American Express Travel Related Services    0.00005290%    \$0.00001879

  POPP Telecom                                0.00005076%    \$0.00001803

  Coastal Long Distance Services              0.00004720%    \$0.00001676

  Fibernet Telecommunications                 0.00004702%    \$0.00001670

  Yavapai Telephone Exchange                  0.00004345%    \$0.00001543

  Advanced Mkg. Svcs. dba Dial Anywhere       0.00004155%    \$0.00001476

  American Telecommunications Enterprises     0.00004066%    \$0.00001444

  Citizens                                    0.00004012%    \$0.00001425

  Touch America Services                      0.00003864%    \$0.00001372

  Canby Telephone Association                 0.00003787%    \$0.00001345

  EASTERNTEL                                  0.00003323%    \$0.00001180

  STAR TELECOM/ALLSTAR                        0.00003174%    \$0.00001127

  Iowa Network Services                       0.00003032%    \$0.00001077

  Alliance Group Services                     0.00002592%    \$0.00000921

  SBC Long Distance                           0.00002562%    \$0.00000910

  Cleartel Communications                     0.00002550%    \$0.00000906

  Interloop, Inc.                             0.00002503%    \$0.00000889

  Incomnet Communications Corp.               0.00002342%    \$0.00000832

  PSA, Inc.                                   0.00002128%    \$0.00000756

  United Telephone Co.                        0.00002045%    \$0.00000726

  U.S. Net                                    0.00002003%    \$0.00000712

  NetLinx Telecommunications Corp.            0.00001902%    \$0.00000676

  Cherry Communications                       0.00001807%    \$0.00000642

  Systems 1000                                0.00001551%    \$0.00000551

  Sprint Canada, Inc.                         0.00001504%    \$0.00000534

  Valu-Line of Longview                       0.00001391%    \$0.00000494

  Baltimore-Washington Telephone              0.00001379%    \$0.00000490

  Parkway Communications                      0.00001183%    \$0.00000420

  CellToll Corp.                              0.00001022%    \$0.00000363

  MTS Communications                          0.00000963%    \$0.00000342

  Matrix Telecom                              0.00000915%    \$0.00000325

  Eastern Telecom dba InterQuest              0.00000898%    \$0.00000319

  Century Telecommunications                  0.00000886%    \$0.00000315

  Star Tel, Inc.                              0.00000862%    \$0.00000306

  Trinet                                      0.00000814%    \$0.00000289

  Deluxe Data Systems                         0.00000761%    \$0.00000270

  Light Link Inc dba Taylor Comm. Grp.        0.00000737%    \$0.00000262

  West Coast Telecommunications               0.00000713%    \$0.00000253

  Pacific Bell Communications                 0.00000684%    \$0.00000243

  Horry Telephone Long Distance               0.00000642%    \$0.00000228

  Phoenix Network                             0.00000642%    \$0.00000228

  Westcom Long Distance                       0.00000630%    \$0.00000224

  Escondido Telephone Co.                     0.00000618%    \$0.00000220

  WorldCom Technologies                       0.00000565%    \$0.00000201

  Intl.800 Telecom dba Telecall Long Dist.    0.00000565%    \$0.00000201
  (EGLOBE)                                                   

  NEXTLINK                                    0.00000499%    \$0.00000177

  Nationwide Communications                   0.00000493%    \$0.00000175

  Coastal Telephone Co.                       0.00000493%    \$0.00000175

  Access Long Distance                        0.00000470%    \$0.00000167

  Tel-Share                                   0.00000464%    \$0.00000165

  Genesis Communications Int\'l               0.00000464%    \$0.00000165

  Gulf Long Distance                          0.00000440%    \$0.00000156

  Hi-Plains NTS Communications                0.00000428%    \$0.00000152

  ARRIVA Communications                       0.00000422%    \$0.00000150

  Network Operator Services                   0.00000404%    \$0.00000144

  American Network Exchange (AMNEX)           0.00000357%    \$0.00000127

  Pilgrim Telephone                           0.00000357%    \$0.00000127

  Southern New England Telephone (SNET)       0.00000351%    \$0.00000125

  Long Distance Wholesale Club (Excel)        0.00000345%    \$0.00000122

  Low Country Carrier dba Hargray L.D. Co.    0.00000309%    \$0.00000110

  People\'s Telephone                         0.00000279%    \$0.00000099

  NOS Communications                          0.00000273%    \$0.00000097

  North State Telephone Long Distance Co.     0.00000262%    \$0.00000093

  Star Tel Transmission Co.                   0.00000256%    \$0.00000091

  Frontier Communications-North Central       0.00000250%    \$0.00000089
  Region                                                     

  Call Savers                                 0.00000250%    \$0.00000089

  Century Long Distance                       0.00000250%    \$0.00000089

  Souris River Telecommunications             0.00000250%    \$0.00000089

  SouthWest United Communication              0.00000250%    \$0.00000089

  Wholesale Telecom Corp.                     0.00000250%    \$0.00000089

  Uni Dial                                    0.00000232%    \$0.00000082

  Texustel                                    0.00000226%    \$0.00000080

  ITC Networks                                0.00000220%    \$0.00000078

  Eclipse Communications                      0.00000208%    \$0.00000074

  ConQuest                                    0.00000190%    \$0.00000068

  EGLOBE INC dba INTL.800 TELECOM dba TELECAL 0.00000178%    \$0.00000063

  Telergy                                     0.00000178%    \$0.00000063

  Long Distance Network                       0.00000172%    \$0.00000061

  Dial Long Distance Billing Svcs.            0.00000166%    \$0.00000059

  Fones West Digital Systems                  0.00000166%    \$0.00000059

  Home Long Distance                          0.00000166%    \$0.00000059

  Call America of Riverside                   0.00000160%    \$0.00000057

  Aliant Systems                              0.00000160%    \$0.00000057

  USN Communications                          0.00000137%    \$0.00000049

  HSS Vending Distributors                    0.00000131%    \$0.00000046

  Chautauqua & Erie Communications            0.00000131%    \$0.00000046

  Star Tel Victoria                           0.00000131%    \$0.00000046

  fONOROLA                                    0.00000119%    \$0.00000042

  The Phone Co.                               0.00000119%    \$0.00000042

  REAMS COMMUNICATIONS dba VALULINE LONG D    0.00000113%    \$0.00000040

  Apple Communications                        0.00000113%    \$0.00000040

  Convergent Communications                   0.00000107%    \$0.00000038

  EqualNet Corp.                              0.00000107%    \$0.00000038

  Central Telephone Co.                       0.00000101%    \$0.00000036

  KRB Telecom                                 0.00000095%    \$0.00000034

  Ben Lomand Communications                   0.00000083%    \$0.00000030

  Valu-Line of Amarillo                       0.00000077%    \$0.00000027

  Econo. Call Long Distance Services          0.00000065%    \$0.00000023

  Public Phone                                0.00000065%    \$0.00000023

  United States Cellular                      0.00000065%    \$0.00000023

  PBC Long Distance                           0.00000065%    \$0.00000023

  Alo-USA Corp.                               0.00000059%    \$0.00000021

  USLink Long Distance                        0.00000053%    \$0.00000019

  Show-Me Long Distance                       0.00000053%    \$0.00000019

  Farmers Long Distance                       0.00000053%    \$0.00000019

  Interlink Telecommunications                0.00000048%    \$0.00000017

  Fiberline Network Communications            0.00000048%    \$0.00000017

  TelVue Corp.                                0.00000048%    \$0.00000017

  Association Communications                  0.00000048%    \$0.00000017

  American Tel Enterprises                    0.00000048%    \$0.00000017

  Integrated Systems Corp.                    0.00000042%    \$0.00000015

  L.D. Services                               0.00000042%    \$0.00000015

  United Telephone Co. dba TELAMERICA L.D.    0.00000042%    \$0.00000015

  Colorado River Communications               0.00000042%    \$0.00000015

  Metro One Telecommunications                0.00000042%    \$0.00000015

  Frontier Communications of the Great Lakes  0.00000036%    \$0.00000013

  Working Assets                              0.00000036%    \$0.00000013

  Brooks Fiber Communications (WorldCom)      0.00000030%    \$0.00000011

  WATS/800                                    0.00000030%    \$0.00000011

  American Tel Group                          0.00000030%    \$0.00000011

  Call America                                0.00000030%    \$0.00000011

  Caribbean Telecommunications Consortium     0.00000030%    \$0.00000011

  International Telephone Corp.               0.00000030%    \$0.00000011

  MCI/1-800-COLLECT                           0.00000030%    \$0.00000011

  Verizon Select Services                     0.00000030%    \$0.00000011

  BizTel Long Distance Telephone Co.          0.00000030%    \$0.00000011

  Cameron Long Distance                       0.00000030%    \$0.00000011

  STARTEC, Inc.                               0.00000030%    \$0.00000011

  Athena International                        0.00000024%    \$0.00000008

  Telephone Assoc. Long Distance Svcs.        0.00000024%    \$0.00000008

  Home Owners L.D. dba HOLD Billing Svcs.     0.00000024%    \$0.00000008

  Extelcom dba Express Tel                    0.00000024%    \$0.00000008

  SBS/MCI                                     0.00000024%    \$0.00000008

  Easton Telecom Services                     0.00000024%    \$0.00000008

  National Brands dba Sharenet Communications 0.00000024%    \$0.00000008

  Heart of Iowa Communications                0.00000024%    \$0.00000008

  Consolidated Network                        0.00000018%    \$0.00000006

  BMG/TELEMANAGEMENT SYSTEMS (BMG)            0.00000018%    \$0.00000006

  Telecom Affiliates                          0.00000018%    \$0.00000006

  Vista Group International                   0.00000018%    \$0.00000006

  OCOM Long Distance                          0.00000018%    \$0.00000006

  Marietta Fibernet                           0.00000018%    \$0.00000006

  NYNEX Long Distance                         0.00000018%    \$0.00000006

  Intercontinental Communications Group (ICG) 0.00000012%    \$0.00000004

  Americatel                                  0.00000012%    \$0.00000004

  U. S. Link                                  0.00000012%    \$0.00000004

  Tele Tech                                   0.00000012%    \$0.00000004

  TCA Long Distance                           0.00000012%    \$0.00000004

  Intel Communications                        0.00000012%    \$0.00000004

  AUC Communications                          0.00000012%    \$0.00000004

  AmeriVision Communications                  0.00000012%    \$0.00000004

  OPTICOM ONE CALL                            0.00000012%    \$0.00000004

  ABCO Communications                         0.00000012%    \$0.00000004

  MID SEA dba MIDCOM COMMUNICATIONS           0.00000012%    \$0.00000004

  PBT Communications                          0.00000012%    \$0.00000004

  USLINK                                      0.00000012%    \$0.00000004

  Hotel America                               0.00000012%    \$0.00000004

  Lexington Telephone Long Distance           0.00000012%    \$0.00000004

  Worldlink Long Distance                     0.00000012%    \$0.00000004

  CTS dba WorldXChange                        0.00000012%    \$0.00000004

  AirTouch Cellular                           0.00000012%    \$0.00000004

  VTA, Inc.                                   0.00000012%    \$0.00000004

  US Long Distance                            0.00000006%    \$0.00000002

  GST Call America                            0.00000006%    \$0.00000002

  Valu-Line of Kansas                         0.00000006%    \$0.00000002

  Action Telcom Co.                           0.00000006%    \$0.00000002

  Amerinet Communications                     0.00000006%    \$0.00000002

  Connect Americom Corp.                      0.00000006%    \$0.00000002

  IntelCom Group                              0.00000006%    \$0.00000002

  DeltaCom Long Distance Services             0.00000006%    \$0.00000002

  ComCentral dba Southnet Services            0.00000006%    \$0.00000002

  Lucky Dog Phone Co.                         0.00000006%    \$0.00000002

  Manitoba Telephone System                   0.00000006%    \$0.00000002

  Telephone Communications Corp.              0.00000006%    \$0.00000002

  Asia International Services Corp.           0.00000006%    \$0.00000002

  Touch 1 Communications                      0.00000006%    \$0.00000002

  MetroLink                                   0.00000006%    \$0.00000002

  LA CONEXION FAMILIAR, INC.                  0.00000006%    \$0.00000002

  TTE OF CHARLESTON                           0.00000006%    \$0.00000002

  Advanced Telecommunications Network         0.00000006%    \$0.00000002

  American Discount Telecommunications        0.00000006%    \$0.00000002

  METRONET Long Distance Communications       0.00000006%    \$0.00000002

  Tel-Optic, Inc. dba Universal Network       0.00000006%    \$0.00000002
  Services                                                   

  American Long Distance Corp.                0.00000006%    \$0.00000002

  RCN Long Distance                           0.00000006%    \$0.00000002

  TMC Long Distance dba Cherry Communications 0.00000006%    \$0.00000002

  KDD America, Inc.                           0.00000006%    \$0.00000002

  Startec Global Operating Co.                0.00000006%    \$0.00000002

  Westel Telecommunications, Ltd.             0.00000006%    \$0.00000002

  ITC Networks of Utah                        0.00000006%    \$0.00000002

  Nextel Communications                       0.00000006%    \$0.00000002

  Telelink                                    0.00000006%    \$0.00000002

  Communication TeleSystems Intl.             0.00000006%    \$0.00000002

  TLD DE PUERTO RICO                          0.00000006%    \$0.00000002

  American Communications Technology          0.00000006%    \$0.00000002

  Hawaiian Telephone Co. (GTE)                0.00000006%    \$0.00000002

  TRT Telecommunications Corp.                0.00000006%    \$0.00000002

  Allcomm Long Distance                       0.00000006%    \$0.00000002

  Beauzile Devereux Communications            0.00000006%    \$0.00000002

  CCT (California Catalog and Technology)     0.00000006%    \$0.00000002

  H.G. Telecom                                0.00000006%    \$0.00000002

  Long Distance Direct                        0.00000006%    \$0.00000002

  O.L.C. Co.                                  0.00000006%    \$0.00000002

  Plant Long Distance Co.                     0.00000006%    \$0.00000002

  Skycomm Technologies                        0.00000006%    \$0.00000002

  Tri-Rural Independent Operations            0.00000006%    \$0.00000002

  Quest Telecommunications                    0.00000006%    \$0.00000002

  American Lightwave Communications           0.00000006%    \$0.00000002

  Diversified Communications                  0.00000006%    \$0.00000002

  Metropolitan Telecommunications             0.00000006%    \$0.00000002

  Monroe Telephone Co. dba Monroe Area Comm   0.00000006%    \$0.00000002

  Plains Cooperative Telephone Association    0.00000006%    \$0.00000002

  VISTA-UNITED TELECOMMUNICATIONS             0.00000006%    \$0.00000002

  World Pass Communications Corp.             0.00000006%    \$0.00000002

  Econ-o-Call, Inc.                           0.00000006%    \$0.00000002

  Fiberlink Communications Corp               0.00000006%    \$0.00000002

  Wisconsin Communications Network            0.00000006%    \$0.00000002

  JAS Networks                                0.00000006%    \$0.00000002

  LAKES STATES COMM                           0.00000006%    \$0.00000002

  NexBell                                     0.00000006%    \$0.00000002

  Opticall Communications Services            0.00000006%    \$0.00000002

  Bell Canada                                 0.00000006%    \$0.00000002

  Enhanced Services Billing                   0.00000006%    \$0.00000002

  Innovative Communications                   0.00000006%    \$0.00000002

  Consolidated Communications Network         0.00000006%    \$0.00000002

  Southwestern Bell Comms. Svcs. dba          0.00000006%    \$0.00000002
  Ameritech                                                  

  Viatel, Inc.                                0.00000006%    \$0.00000002

  Nexus Communications                        0.00000006%    \$0.00000002

  Net Communications Corp.                    0.00000006%    \$0.00000002

  Communication Services of Colorado          0.00000006%    \$0.00000002

  Frontier Local Services                     0.00000006%    \$0.00000002

  Omni Communications                         0.00000006%    \$0.00000002

  Total Media Technologies, Inc.              0.00000006%    \$0.00000002

  Centennial De Puerto Rico                   0.00000006%    \$0.00000002

  Massena Telephone Co.                       0.00000006%    \$0.00000002

  Paradise Communications                     0.00000006%    \$0.00000002

  LDC Telecommunications Co.                  0.00000006%    \$0.00000002
  ------------------------------------------- -------------- ---------------

APPENDIX D

**Non-Carrier Recipients of Payphone Calls**

  -----------------------------------------------------------------------
  AmVox

  Arco Paypoint

  Arthur Anderson & Co.

  Buypass Corp.

  California State Lottery

  Cam-Net

  Card Establishment

  Compuserve

  Contact America

  Dean Witter

  Department of Treasury (IRS)

  Discover & Co.

  EDS

  Envoy Corporation

  ETSC

  First USA

  Full Service Computing

  Harmonic Systems

  HUB Distributing

  Idaho State Government

  JC Penney Business Services

  Landmark Communications

  Legal Aid Society of Orange County

  MAG Card

  MasterCard International

  MCSC Access in Canada

  Merchant Link

  Mobile Oil Credit Corp.

  Mogan Stanley

  National Data Corp.

  Nexus Communications

  Paradise Communications

  PaymentTech

  Professional Fusion Enterprises

  PSA, Inc.

  Public Service Company of New Mexico and Gas Company of New Mexico

  Resource Technology

  Southeast Switch

  State of California

  Stone & Co.

  Telemoney Services

  Transaction Network Services

  United Refining

  Vacation Villages of America

  Visa USA

  Vital Processing Services

  VoiceCom Systems

  VTA, Inc.

  Weeks Communications
  -----------------------------------------------------------------------

**Appendix E**

**Petitions for Reconsideration and Clarification**

1\. The American Public Communications Council

2\. ITC\^DeltaCom Communications, Inc.

3\. RBOC Payphone Coalition

4\. Sprint Corporation

5\. WorldCom, Inc.

**Comments on Petitions for Reconsideration and Clarification**

1\. AT&T Corp.

2\. Sprint Corporation

3\. WorldCom, Inc.

4\. National Payphone Clearinghouse

5\. RBOC Payphone Coalition

6\. Association of Communications Enterprises

**Replies to Comments on Petitions for Reconsideration and
Clarification**

1\. The American Public Communications Council

2\. ITC\^DeltaCom Communications, Inc.

3\. RBOC Payphone Coalition

4\. Sprint Corporation

5\. WorldCom, Inc.

6\. Association of Communications Enterprises

**Appendix F**

The Federal Communications Commission amends 47 C.F.R. Part 64 as
follows:

1\. The authority citation for Part 64 continues to read as follows:

AUTHORITY: 47 U.S.C. 154, 47 U.S.C. 225, 47 U.S.C. 251(e) (1), 47 U.S.C.
276. 151, 154, 201, 202, 205, 218-220, 254, 276, 302, 303, and 337
unless otherwise noted. Interpret or apply sections 201, 218, 225, 226,
227, 229, 332, 48 Stat. 1070, as amended. 47 U.S.C. 201-204, 208, 225,
226, 227, 229, 332, 501 and 503 unless otherwise noted.

2\. Revise § 64.1301 to read as follows:

§ 64.1301 Per-payphone compensation.

\(a\) [Interim access code and subscriber 800 calls]{.underline}. In the
absence of a negotiated agreement to pay a different amount, each entity
listed in Appendix A of the *Fifth Order on Reconsideration and Order on
Remand* in CC Docket No. 96-128, FCC 02-XX, must pay default
compensation to payphone service providers for payphone access code
calls and payphone subscriber 800 calls for the period beginning
November 7, 1996 and ending October 6, 1997 in the amount listed in
Appendix A per payphone per month.

\(b\) [Interim payphone compensation for inmate calls]{.underline}. In
the absence of a negotiated agreement to pay a different amount, if a
payphone service provider providing inmate service was not compensated
for calls originating at an inmate telephone during the period starting
on November 7, 1996 and ending on October 6, 1997, an interexchange
carrier to which the inmate telephone was presubscribed during this same
time period must compensate the payphone service provider providing
inmate service at the default rate of \$0.238 per inmate call
originating during the same time period, except that a payphone service
provider that is affiliated with a local exchange carrier is not
eligible to receive payphone compensation prior to April 16, 1997 or, in
the alternative, the first day following both the termination of
subsidies and payphone reclassification and transfer, whichever date is
latest.

\(c\) [Interim compensation for 0+ payphone calls]{.underline}. In the
absence of a negotiated agreement to pay a different amount, if a
payphone service provider was not compensated for 0+ calls originating
during the period starting on November 7, 1996 and ending on October 6,
1997, an interexchange carrier to which the payphone was presubscribed
during this same time period must compensate the payphone service
provider in the default amount of \$4.2747 per payphone per month during
the same time period, except that a payphone service provider that is
affiliated with a local exchange carrier is not eligible to receive
payphone compensation prior to April 16, 1997 or, in the alternative,
the first day following both the termination of subsidies and payphone
reclassification and transfer, whichever date is latest.

\(d\) [Intermediate access code and subscriber 800 calls]{.underline}.
In the absence of a negotiated agreement to pay a different amount, each
entity listed in Appendix B of the *Fifth Order on Reconsideration and
Order on Remand* in CC Docket No. 96-128, FCC 02-XX, must pay default
compensation to payphone service providers for access code calls and
payphone subscriber 800 calls for the period beginning October 7, 1997
and ending April 20, 1999 in the amount listed in Appendix B for any
payphone for any month during which per-call compensation for that
payphone for that month was not paid by the listed entity.

\(e\) [Post-intermediate access code and subscriber 800
calls]{.underline}. In the absence of a negotiated agreement to pay a
different amount, each entity listed in Appendix C of the *Fifth Order
on Reconsideration and Order on Remand* in CC Docket No. 96-128, FCC
02-XX, must pay default compensation to payphone service providers for
access code calls and payphone subscriber 800 calls for the period
beginning April 21, 1999 in the amount listed in Appendix C for any
payphone for any month during which per-call compensation for that
payphone for that month was or is not paid by the listed entity.

**APPENDIX G**

**Supplemental Final Regulatory Flexibility Act Analysis**

1\. As required by the Regulatory Flexibility Act (RFA),[^201] an
Initial Regulatory Flexibility Analysis (IRFA) was provided in the
*Payphone NPRM*.[^202] The Commission sought written public comment on
the proposals in the *Payphone* NPRM, including comment on the IRFA. A
Final Regulatory Flexibility Analysis (FRFA) was provided in the *First
Report and Order*,[^203] the *First Reconsideration Order*,[^204] the
*Second Report and Order*,[^205] the *Third Report and Order,*[^206] and
the *Fourth Order on Reconsideration.*[^207] This present FRFA conforms
to the RFA, as amended.[^208] To the extent that any statement in this
FRFA is perceived as creating ambiguity with respect to our rules or
statements made in the preceding sections of this order, the rules and
statements set forth in those preceding sections are controlling.

**Need for, and Objectives of, the Rules**

2\. In adopting Section 276 in 1996, Congress mandated *inter alia* that
the Commission \"establish a per-call compensation plan to ensure that
all payphone service providers are fairly compensated for each and every
completed intrastate and interstate call using their payphone

. . .\"[^209] In this order, the Commission redetermines certain aspects
of the per-payphone compensation to be paid to payphone service
providers (PSPs) by interexchange carriers (IXCs) and local exchange
carriers (LECs) for the Interim period pursuant to the remand by the
U.S. Court of Appeals for the District of Columbia Circuit in the
*Illinois* decision.[^210] To implement the remand, the Commission has
calculated a per-call allocation for each carrier and clarifies the
manner in which the true up and offset procedures are to be applied to
determine refunds and overpayments.

**Summary of Significant Issues Raised by the Public Comments in
Response to the IRFA**

3\. We received no comments in direct response to the FRFA in the
*Fourth Order on Reconsideration*. We believe that our rules as adopted
in this order minimize the burdens of the per payphone compensation
procedure to the benefit of all parties, including small entities.[^211]

**Description and Estimate of the Number of Small Entities to which
Rules Will Apply**

4\. The RFA directs agencies to provide a description of, and an
estimate of the number of small entities that may be affected by the
rules adopted herein, where feasible.[^212] The RFA generally defines
\"small entity\" as having the same meaning as the term \"small
business,\" \"small organization,\" and \"small governmental
jurisdiction.\"[^213] In addition, the term \"small business\" has the
same meaning as the term \"small business concern\" under the Small
Business Act, unless the Commission has developed one or more
definitions that are appropriate to its activities.[^214] Under the
Small Business Act, a \"small business concern\" is one that: (1) is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) meets any additional criteria established by the
SBA.[^215]

5\. We have included small incumbent LECs in this RFA analysis. As noted
above, a \"small business\" under the RFA is one that, *inter alia*,
meets the pertinent small business size standard (*e.g.*, a telephone
communications business having 1,500 or fewer employees), and \"is not
dominant in its field of operation.\"[^216] The SBA\'s Office of
Advocacy contends that, for RFA purposes, small incumbent LECs are not
dominant in their field of operation because any such dominance is not
\"national\" in scope.[^217] We have therefore included small incumbent
LECs in this RFA analysis, although we emphasize that this RFA action
has no effect on the Commission\'s analyses and determinations in other,
non-RFA contexts.

6\. *Incumbent Local Exchange Carriers*. Neither the Commission nor the
SBA has developed a specific definition of small providers of incumbent
local exchange services. The closest applicable definition under the SBA
rules is for Wired Telecommunications Carriers. Under that SBA
definition, such a business is small if it has 1,500 or fewer employees.
[^218] According to the most recent *Telephone Trends Report* data,
1,335 incumbent local exchange carriers reported that they were engaged
in the provision of local exchange services.[^219] Of these 1,335
carriers, 1,037 reported that they have 1,500 or fewer employees and 298
reported that, alone or in combination with affiliates, they have more
than 1,500 employees.[^220] We do not have data specifying the number of
these carriers that are either dominant in their field of operations or
are not independently owned and operated, and thus are unable at this
time to estimate with greater precision the number of incumbent local
exchange carriers that would qualify as small business concerns under
the SBA\'s definition. Consequently, we estimate that 1,037 or fewer
providers of local exchange service are small entitles that may be
affected by the rules and policies adopted herein.

7\. *Competitive Local Exchange Carriers.* Neither the Commission nor
the SBA has developed a specific definition for small providers of
competitive local exchange services. The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under that
SBA definition, such a business is small if it has 1,500 or fewer
employees. [^221] According to the Commission\'s *Telephone Trends
Report* data, 349 companies reported that they were engaged in the
provision of either competitive access provider services or competitive
local exchange carrier services.[^222] Of these 349 companies, 297
reported that they have 1,500 or fewer employees and 52 reported that,
alone or in combination with affiliates, they have more than 1,500
employees.[^223] The Commission does not have data specifying the number
of these carriers that are either dominant in their field of operations
or are not independently owned and operated, and thus is unable at this
time to estimate with greater precision the number of competitive local
exchange carriers that would qualify as small business concerns under
the SBA\'s definition. Consequently, the Commission estimates that fewer
than 297 providers of competitive local exchange service are small
entities that may be affected by the rules.

8\. *Competitive Access Providers*. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
competitive access providers (CAPS). The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under that
SBA definition, such a business is small if it has 1,500 or fewer
employees. [^224] According to the Commission\'s most recent *Telephone
Trends Report* data, 349 CAPs or competitive local exchange carriers and
60 other local exchange carriers reported that they were engaged in the
provision of either competitive access provider services or competitive
local exchange carrier services.[^225] Of these 349 competitive access
providers and competitive local exchange carriers, 297 reported that
they have 1,500 or fewer employees and 52 reported that, alone or in
combination with affiliates, they have more than 1,500 employees.[^226]
Of the 60 other local exchange carriers, 56 reported that they have
1,500 or fewer employees and 4 reported that, alone or in combination
with affiliates, they have more than 1,500 employees.[^227] The
Commission does not have data specifying the number of these carriers
that are not independently owned and operated, and thus is unable at
this time to estimate with greater precision the number of CAPS or other
local exchange carriers that would qualify as small business concerns
under the SBA\'s definition. Consequently, the Commission estimates that
there are 297 or fewer small entity CAPS and 56 or fewer other local
exchange carriers that may be affected by the rules.

9\. *Local Resellers*. The SBA has developed a definition for small
businesses within the category of Telecommunications Resellers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees.[^228] According to the Commission\'s most recent *Telephone
Trends Report* data, 87 companies reported that they were engaged in the
provision of local resale services.[^229] Of these 87 companies, 86
reported that they have 1,500 or fewer employees and one reported that,
alone or in combination with affiliates, it had more than 1,500
employees.[^230] The Commission does not have data specifying the number
of these local resellers that are not independently owned and operated,
and thus is unable at this time to estimate with greater precision the
number of local resellers that would qualify as small business concerns
under the SBA\'s definition. Consequently, the Commission estimates that
there are 86 or fewer local resellers that may be affected by the rules.

10\. *Toll Resellers*. The SBA has developed a definition for small
businesses within the category of Telecommunications Resellers. Under
that SBA definition, such a business is small if it has 1,500 or fewer
employees.[^231] According to the Commission\'s most recent *Telephone
Trends Report* data, 454 companies reported that they were engaged in
the provision of toll resale services.[^232] Of these 454 companies, 423
reported that they have 1,500 or fewer employees and 31 reported that,
alone or in combination with affiliates, they have more than 1,500
employees**.**[^233] The Commission does not have data specifying the
number of these toll resellers that are not independently owned and
operated, and thus is unable at this time to estimate with greater
precision the number of toll resellers that would qualify as small
business concerns under the SBA\'s definition. Consequently, the
Commission estimates that there are 423 or fewer toll resellers that may
be affected by the rules.

11\. *Payphone Service Providers*. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
payphone service providers (PSPs). The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under that
SBA definition, such a business is small if it has 1,500 or fewer
employees. [^234] According to the Commission\'s most recent *Trends in
Telephone Service* data, 758 PSPs reported that they were engaged in the
provision of payphone services.[^235] Of these 758 payphone service
providers, 755 reported that they have 1,500 or fewer employees and 3
reported that, alone or in combination with affiliates, they have more
than 1,500 employees.[^236] The Commission does not have data specifying
the number of these payphone service providers that are not
independently owned and operated, and thus is unable at this time to
estimate with greater precision the number of PSPs that would qualify as
small business concerns under the SBA\'s definition. Consequently, the
Commission estimates that there are 755 or fewer PSPs that may be
affected by the rules.

12\. *Interexchange Carriers*. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services. The closest applicable definition
under the SBA rules is for Wired Telecommunications Carriers. Under that
SBA definition, such a business is small if it has 1,500 or fewer
employees. [^237] According to the most recent *Telephone Trends Report*
data, 204 carriers reported that their primary telecommunications
service activity was the provision of interexchange services.[^238] Of
these 204 carriers, 163 reported that they have 1,500 or fewer employees
and 41 reported that, alone or in combination with affiliates, they have
more than 1,500 employees.[^239] We do not have data specifying the
number of these carriers that are not independently owned and operated,
and thus are unable at this time to estimate with greater precision the
number of IXCs that would qualify as small business concerns under the
SBA\'s definition. Consequently, we estimate that there are 163 or fewer
small entity IXCs that may be affected by the rules.

13\. *Operator Service Providers*. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
operator service providers. The closest applicable definition under the
SBA rules is for Wired Telecommunications Carriers. Under that SBA
definition, such a business is small if it has 1,500 or fewer employees.
[^240] According to the Commission\'s most recent *Telephone Trends
Report* data, 21 companies reported that they were engaged in the
provision of operator services.[^241] Of these 21 companies, 20 reported
that they have 1,500 or fewer employees and one reported that, alone or
in combination with affiliates, it had more than 1,500 employees.[^242]
The Commission does not have data specifying the number of these
operator service providers that are not independently owned and
operated, and thus is unable at this time to estimate with greater
precision the number of operator service providers that would qualify as
small business concerns under the SBA\'s definition. Consequently, the
Commission estimates that there are 20 or fewer local resellers that may
be affected by the rules.

14\. *Prepaid Calling Card Providers*. The SBA has developed a
definition for small businesses within the category of
Telecommunications Resellers. Under that SBA definition, such a business
is small if it has 1,500 or fewer employees.[^243] According to the
Commission\'s most recent *Telephone Trends Report* data, 21 companies
reported that they were engaged in the provision of prepaid calling
cards.[^244] Of these 21 companies, 20 reported that they have 1,500 or
fewer employees and one reported that, alone or in combination with
affiliates, it had more than 1,500 employees.[^245] The Commission does
not have data specifying the number of these local resellers that are
not independently owned and operated, and thus is unable at this time to
estimate with greater precision the number of prepaid calling card
providers that would qualify as small business concerns under the SBA\'s
definition. Consequently, the Commission estimates that there are 20 or
fewer local resellers that may be affected by the rules.

15\. *Satellite Service Carriers*. The SBA has developed a definition
for small businesses within the category of Satellite
Telecommunications. Under that SBA definition, such a business is small
if it has 1,500 or fewer employees.[^246] According to the Commission\'s
most recent *Telephone Trends Report* data, 21 carriers reported that
they were engaged in the provision of satellite services.[^247] Of these
21 carriers, 16 reported that they have 1,500 or fewer employees and
five reported that, alone or in combination with affiliates, they have
more than 1,500 employees.[^248] The Commission does not have data
specifying the number of these carriers that are not independently owned
and operated, and thus is unable at this time to estimate with greater
precision the number of satellite service carriers that would qualify as
small business concerns under the SBA\'s definition. Consequently, the
Commission estimates that there are 21 or fewer satellite service
carriers that may be affected by the rules.

16\. *Other Toll Carriers*. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
\"Other Toll Carriers.\" This category includes toll carriers that do
not fall within the categories of interexchange carriers, operator
service providers, prepaid calling card providers, satellite service
carriers, or toll resellers. The closest applicable definition under the
SBA rules is for Wired Telecommunications Carriers. Under that SBA
definition, such a business is small if it has 1,500 or fewer employees.
[^249] According to the Commission\'s most recent *Telephone Trends
Report* data, 17 carriers reported that they were engaged in the
provision of \"Other Toll Services.\"[^250] Of these 17 carriers, 15
reported that they have 1,500 or fewer employees and two reported that,
alone or in combination with affiliates, they have more than 1,500
employees.[^251] The Commission does not have data specifying the number
of these other toll carriers that are not independently owned and
operated, and thus is unable at this time to estimate with greater
precision the number of \"Other Toll Carriers\" that would qualify as
small business concerns under the SBA\'s definition. Consequently, the
Commission estimates that there are 15 or fewer Other Toll Carriers\"
that may be affected by the rules.

17\. *Wireless Service Providers*. The SBA has developed a definition
for small businesses within the two separate categories of Cellular and
Other Wireless Telecommunications or Paging. Under that SBA definition,
such a business is small if it has 1,500 or fewer employees.[^252]
According to the Commission\'s most recent *Telephone Trends Report*
data, 1,495 companies reported that they were engaged in the provision
of wireless service.[^253] Of these 1,495 companies, 989 reported that
they have 1,500 or fewer employees and 506 reported that, alone or in
combination with affiliates, they have more than 1,500 employees. We do
not have data specifying the number of these carriers that are not
independently owned and operated, and thus are unable at this time to
estimate with greater precision the number of wireless service providers
that would qualify as small business concerns under the SBA\'s
definition. Consequently, we estimate that there are 989 or fewer small
wireless service providers that may be affected by the rules.

18\. *Broadband Personal Communications Service*. The broadband personal
communications service (PCS) spectrum is divided into six frequency
blocks designated A through F, and the Commission has held auctions for
each block. The Commission defined \"small entity\" for Blocks C and F
as an entity that has average gross revenues of less than \$40 million
in the three previous calendar years.[^254] For Block F, an additional
classification for \"very small business\" was added and is defined as
an entity that, together with their affiliates, has average gross
revenues of not more than \$15 million for the preceding three calendar
years.[^255] These regulations defining \"small entity\" in the context
of broadband PCS auctions have been approved by the SBA.[^256] No small
businesses within the SBA-approved definition bid successfully for
licenses in Blocks A and B. There were 90 winning bidders that qualified
as small entities in the Block C auctions. A total of 93 small and very
small business bidders won approximately 40 percent of the 1,479
licenses for Blocks D, E, and F.[^257] Based on this information, we
conclude that the number of small broadband PCS licensees will include
the 90 winning C Block bidders and the 93 qualifying bidders in the D,
E, and F Block auctions, for a total of 183 small entity PCS providers
as defined by the SBA and the Commission\'s auction rules.

19\. *800 MHz and 900 MHz Specialized Mobile Radio Licensees*. The
Commission awards bidding credits in auctions for geographic area 800
MHz and 900 MHz Specialized Mobile Radio (SMR) licenses to firms that
had revenues of no more than \$15 million in each of the three previous
calendar years.[^258] In the context of both the 800 MHz and 900 MHz
SMR, a definition of \"small entity\" has been approved by the SBA.
These bidding credits apply to SMR providers in the 800 MHz and 900 MHz
bands that either hold geographic area licenses or have obtained
extended implementation authorizations. We do not know how many firms
provide 800 MHz or 900 MHz geographic area SMR service pursuant to
extended implementation authorizations, nor how many of these providers
have annual revenues of no more than \$15 million.

20\. *Rural Radiotelephone Service*. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service.[^259] A significant subset of the Rural Radiotelephone Service
is the Basic Exchange Telephone Radio Systems (BETRS).[^260] We will use
the SBA\'s definition applicable to wireless companies, *i.e.*, an
entity employing no more than 1,500 persons.[^261] There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
we estimate that almost all of them qualify as small entities under the
SBA\'s definition.

21\. *Fixed Microwave Services*. Microwave services include common
carrier,[^262] private-operational fixed,[^263] and broadcast auxiliary
radio services.[^264] At present, there are approximately 22,015 common
carrier fixed licensees and 61,670 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services. The
Commission has not defined a small business specifically with respect to
microwave services. For purposes of this Supplemental FRFA, we utilize
the SBA\'s definition applicable to wireless companies\--*i.e*., an
entity with no more than 1,500 persons.[^265] We do not have data
specifying the number of these licensees that have more than 1,500
employees, and thus are unable at this time to estimate with greater
precision the number of fixed microwave service licensees that would
qualify as small business concerns under the SBA\'s definition.
Consequently, we estimate that there are 22,015 or fewer small common
carrier fixed microwave licensees and 61,670 or fewer small private
operational-fixed microwave licensees and small broadcast auxiliary
radio licensees in the microwave services that may be affected by the
rules. We note, however, that the common carrier microwave fixed
licensee category includes some large entities.

22\. *39 GHz Licensees*. The Commission defined "small entity" for 39
GHz licenses as an entity that has average gross revenues of less than
\$40 million in the three previous calendar years.[^266] An additional
classification for "very small business" was added and is defined as an
entity that, together with their affiliates, has average gross revenues
of not more than \$15 million for the preceding three calendar
years.[^267] The SBA approved these regulations defining "small entity"
in the context of 39 GHz auctions.[^268] The auction of the 2,173 39 GHz
licenses began on April 12, 2000 and closed on May 8, 2000. The 18
bidders who claimed small business status won 849 licenses.

**Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements**

23\. As mandated by the court in the *Illinois* decision, we established
a compensation procedure for resolving monthly payments and refunds
between PSPs and carriers for the Interim Period, starting on November
7, 1996 through October 6, 1997, where payphone service providers (PSPs)
and IXCs may have been overpaid or underpaid for services. In addition,
we are applying our Interim Procedures to cover the subsequent
Intermediate Period which commenced October 7, 1997 and ended April 20,
1999.

24\. With this exception, this order imposes no new reporting,
recordkeeping or other compliance requirements not previously adopted in
this or related payphone proceedings.

**Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered**

25\. Although we reject, because of the degree of regulatory
intervention it would require, a proposal to establish a
carrier-to-carrier payment mechanism for resolving payments and refunds,
we specify instead carrier-specific per-call costs that can be used by
carriers and PSPs to calculate total over or underpayments. The order
also affirms the conclusions reached in the *Fourth Order on
Reconsideration* that alternative payment arrangements can be made
between or among carriers provided they are agreed to by affected PSPs.
Adoption of this payment scheme will minimize the economic impact and
administrative burden for both payors and recipients of payphone
compensation, including small entities.

26\. This Order also recognizes that small entities such as PSPs would
be disadvantaged by the true up and offset mechanisms used in the
per-call compensation process. The Order recognizes that such a process
would allow carriers to use a self-help remedy of withholding future
payments from PSPs, and that carriers would have no incentive to resolve
such disputes in a timely manner. The Order, therefore, affirms the
conclusion reached in the *Third Report and Order* that carriers may
deduct the remaining overpayments from future payments to PSPs, but
clarifies that it may only be done as follows: (1) carriers may only
withhold *undisputed* amounts from future payments; (2) carriers may not
withhold any amounts from future payments until PSPs and carriers have
had an opportunity to apply the refund against Interim and Intermediate
Period compensation claimed by the PSP; and (3) carriers must allow PSPs
to make payments of refunds over multiple future payments subject to
ongoing accrual interest, if reasonably requested by the PSP.

We are satisfied that these procedural safeguards will restore the
necessary measures of fairness to the process for small entities.

**Report to Congress**

27\. The Commission will send a copy of this Order, including this
Supplemental FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act.[^269] In addition, the Commission will send a
copy of this Order, including this Supplemental FRFA, to the Chief
Counsel for Advocacy of the Small Business Administration. A copy of
this Order and Supplemental FRFA (or summaries thereof) will also be
published in the Federal Register.[^270]

[^1]: *Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-128, *Fourth Order on Reconsideration and Order on
    Remand*, 17 FCC Rcd 2020 (2002) (*Fourth Reconsideration Order*).

[^2]: *Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-128, *Report and Order*, 11 FCC Rcd 20541 (1996)
    (*First Report and Order*); *Order on Reconsideration*, 11 FCC Rcd
    21233 (1996) ( *First Reconsideration Order*), *aff\'d in part and
    remanded in part sub nom. Illinois Pub. Telecomm. Ass\'n v. FCC*,
    117 F.3d 555 (D.C. Cir. 1997) ( *Illinois)*, *clarified on reh'g,*
    123 F.3d 693 (D.C. Cir. 1997), *cert. denied sub nom. Virginia State
    Corp. Comm'n v. FCC*, 523 U.S. 1046 (1998); *see also Second Report
    and Order*, 13 FCC Rcd 1778 (1997)(Second Report and Order), *aff\'d
    in part and remanded in part sub nom. MCI v. FCC*, 143 F.3d 606
    (D.C. Cir. 1998) (*MCI*).

[^3]: Most of the entities that owe payphone compensation are IXCs.
    Indeed, in the *First Report and Order*, the Commission defined the
    term "IXC" to include LECs to the extent that LECs carried
    compensable payphone calls. *First Report and Order,* 11 FCC Rcd at
    20584 n. 293. We will generally refer to entities owing compensation
    as "carriers" in this Order, to avoid any inference that, except as
    otherwise provided herein, we intend to exclude types of providers
    other than IXCs.

[^4]: *Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-128, *Third Report and Order and Order on
    Reconsideration of the Second Report and Order*, 14 FCC Rcd 2545
    (1999)(*Third Report and Order*), reconsideration petitions pending,
    *aff\'d sub nom. American Pub. Communications Council v. FCC*, 215
    F.3d 51 (D.C. Cir. 2000) (*American*).

[^5]: Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified at 47 U.S.C. §
    276). The complete text of Section 276 is provided as Appendix A of
    the *First Report and Order*, 11 FCC Rcd at 20713-14.

[^6]: *First Report and Order,* 11 FCC Rcd at 20632-34, ¶¶ 180-87.

[^7]: Also referred to in previous orders as "subscriber 800" calls.
    *See id.* at 20549 & n. 35. As dialing prefixes other than "800" are
    increasingly used for toll-free calls, we will refer to these calls
    as "toll-free" or "subscriber toll-free" calls in this Order.

[^8]: *First Report and Order,* 11 FCC Rcd at 20585, ¶85.

[^9]: *Id.*; *Second Report and Order*, 13 FCC Rcd at 1844, § 162;
    *Third Report and Order*, 14 FCC Rcd at 2565, ¶ 42 and 2597,
    ¶¶114-16 (". . . we find that the statutory language and legislative
    history indicate Congress's disapproval of a caller-pays
    methodology"); *see also* S. Rep. No. 101-439 at 20 (1990).

[^10]: *First Report and Order,* 11 FCC Rcd at 20584, ¶ 83, 20586, ¶ 86.

[^11]: *Id.* at 20567, ¶ 49.

[^12]: *See SBC Request to Extend Limited Waiver of Coding Digit
    Requirements*, CC Docket 96-128, Order (Dec. 9, 1998);  *Third
    Report and Order*, 14 FCC Rcd at 2553; *see also* *Implementation of
    the Pay Telephone Reclassification and Compensation Provisions of
    the Telecommunications Act of 1996*, CC Docket No. 96-128, Order, 14
    FCC Rcd 836 (Network Serv. Div. 1998) (waiver denials).

[^13]: *See* *Illinois*, 117 F.3d at 564; *MCI,* 143 F.3d at 609;
    *American*, 215 F.3d at 58.

[^14]: *Illinois*, 117 F.3d at 565.

[^15]: *Second Report and Order,* 13 FCC Rcd at 1830, ¶ 121, 1845, ¶
    165.

[^16]: *MCI*, 143 F.3d at 606, 609.

[^17]: *American*, 215 F.3d at 58.

[^18]: *Third Report and Order*, 14 FCC Rcd at 2635.

[^19]: The Colorado Payphone Association Petition for Partial
    Reconsideration (*CPA* Petition) at 19-25 (Apr. 21, 1999); American
    Public Communications Council (APCC) Comments at 2-13 (Oct. 20,
    2000); Letter from Robert F. Aldrich, Counsel for APCC, to Marlene
    H. Dortch, Secretary, FCC at 2-3 (May 23, 2002).

[^20]: *Fourth Reconsideration Order*, 17 FCC Rcd at 2022-26, ¶¶ 5-14.

[^21]: *Id.* at 2035 ¶ 39.

[^22]: *First Report and Order*, 11 FCC Rcd at 20546, ¶ 9.

[^23]: We note that APCC, Sprint Corporation, MCI and Frontier
    Corporation filed petitions for reconsideration and review of a
    Bureau-level decision and a Division-level decision, each related to
    per-phone compensation for the Intermediate Period. *See*
    *Implementation of the Pay Telephone Reclassification and
    Compensation Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-128, Memorandum Opinion & Order, 13 FCC Rcd 10893
    (Com. Car. Bur. 1998); Order, 13 FCC Rcd 7303 (Enf. Div. 1998).
    These petitions attack various aspects of the waiver process by
    which per-phone compensation was paid during the Intermediate
    Period, variously arguing that the formula used to calculate call
    volumes systematically undercompensated independent PSPs and also
    that the Bureau could not, consistent with *Illinois*, limit such
    compensation to only a few IXCs. To the extent that the *Fourth
    Reconsideration Order* and this Order now establish the appropriate
    methodology for calculating and apportioning per-phone compensation
    for the Interim and Intermediate Periods, and allocate the
    responsibility for per-phone compensation to as large a group of
    carriers as possible, given available data, the questions raised in
    these petitions are mooted and we dismiss them accordingly.

[^24]: *Fourth Reconsideration Order*, 17 FCC Rcd at 2024-25, ¶¶ 11-13.

[^25]: WorldCom Inc. Petition for Reconsideration at 2-3; Sprint
    Corporation Petition for Reconsideration at 9-11 (April 3, 2002). If
    the Commission used the lower estimate of 131 calls, together with
    the 23.8 cent rate adopted in this Order, the per-phone per-month
    compensation rate would be reduced from the \$35.224 (23.8 cents X
    148 calls per-month) adopted in this Order to \$31.178 (23.8 cents X
    131 calls per-month).

[^26]: WorldCom Petition for Reconsideration at 3.

[^27]: RBOC Payphone Coalition Comments on Petition for Reconsideration
    (*RBOC Coalition* Comments) at 13 (May 1, 2002).

[^28]: As reported in the *First Report and Order*, estimates of 129,
    130, 124, 140 and 132 were added, and then divided by 5, to derive a
    simple average of 131. *First Report and Order*, 11 FCC Rcd at
    20603-04.

[^29]: *See* WorldCom Inc. Petition for Reconsideration at 2; Sprint
    Corporation Petition for Reconsideration at 3.

[^30]: *Illinois*, 117 F.3d at 564-65.

[^31]: *See* RBOC Coalition Comments at 13; Letter from Robert F.
    Aldrich, Counsel for APCC, to Magalie Roman Salas, Secretary, FCC,
    at 1 ( Mar. 26 1998).

[^32]: *See infra* Section III.B.1.a.

[^33]: We also note separately that additional data provided recently by
    the RBOCs further supports our use of an estimate of 148 calls. Data
    provided by the RBOCs for 1997 in response to the Commission's
    request, *see infra* Section III.B.1.a, shows that RBOC payphones
    could have averaged over 188 calls per-month, if we assume (as did
    the RBOCs for the purposes of the submission) that completed calls
    equaled calls with hold times of 40 seconds or more. This amount of
    188 calls per-month is derived by taking the total of all calls
    reported for the fourth quarter of 1997 by the RBOCs, 782 million,
    and dividing by the number of RBOC payphones in service at the end
    of 1997, 1.4 million. *See* RBOC Coalition Comments, Andersen Report
    at 10 (filed July 13, 1998). (These numbers exclude call data
    submitted for GTE, as this data was based on call attempts
    regardless of call length.) From this calculation, each RBOC
    payphone would have had 565 calls over the fourth quarter of 1997,
    or 188 calls per-month. Obviously, this estimate, if used in our
    methodology or the weighted average advocated by Sprint, would
    increase the estimated number of calls per-month. We do not rely on
    this calculation here, as we have not endorsed the use of the 40
    second hold time as a proxy for completed calls, the data is over a
    shorter period of time than the estimates used in our methodology,
    and we otherwise decline to reconsider our reasonable methodology
    for determining a monthly per-call estimate. We do, however, draw
    additional comfort from this analysis that our use of the 148 call
    volume estimate is reasonable and should not be disturbed in favor
    of the questionable estimate of 142.6 calls proposed by Sprint.

[^34]: RBOC Coalition Reply at 14-15.

[^35]: WorldCom, Inc. Petition for Reconsideration at 2; WorldCom, Inc.
    Comments on Petition for Clarification and Reconsideration at 1-2
    (May 15, 2002).

[^36]: RBOC Coalition Comments at 7. "\[A\] 1+ call is an interLATA toll
    call originating at a payphone and carried by an \[IXC\], where the
    IXC's operator or its automated rating system directs that calling
    party to deposit coins for the call." *Illinois Bell v. One Call
    Communications,* 16 FCC Rcd 16697 (Enf. Bur. 2001) (*Illinois
    Bell*).

[^37]: *Illinois Bell*, 16 FCC Rcd at 16701, § 9.

[^38]: *Id.* (quoting *Implementation of the Pay Telephone
    Reclassification and Compensation Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-128, Notice of
    Proposed Rulemaking, 11 FCC Rcd 6716, 6725, ¶ 15 (1996) (*Payphone
    NPRM*)).

[^39]: *Id.*

[^40]: CPA Petition at 3.

[^41]: *See Second Report and Order,* 13 FCC Rcd at 1790, ¶ 26.

[^42]: *See, e.g.,* CPA Petition at 4-5.

[^43]: Even the RBOC Coalition and GTE, who support CPA's petition, note
    that CPA has made arguments that are substantially the same as
    arguments already made by the RBOC Coalition. RBOC Coalition
    Comments at 5; *see also* Cable & Wireless Reply at 3.

[^44]: CPA Petition at 13-15.

[^45]: *Id.* at 5-6.

[^46]: *See Second Report and Order*, 13 FCC Rcd at 1806, ¶ 60; APCC
    Reply Comments (Sept. 10, 1997) at 15 ("rates of 15%-18% are more
    realistic"); *see also* Sprint Corporation Opposition to Petition
    for Reconsideration at 3-4.

[^47]: *Second Report and Order*, 13 FCC Rcd at 1806, ¶ 60.

[^48]: *Third Report and Order*, 14 FCC Rcd at 2625-26, ¶¶ 175-77.

[^49]: CPA Petition at 15-16.

[^50]: *Id.* at 7.

[^51]: *Second Report and Order*, 13 FCC Rcd at 1815, ¶ 83.

[^52]: AT&T Opposition to Petition for Reconsideration (July 7, 1999) at
    4; Sprint Opposition to Petition for Reconsideration (July 7, 1999)
    at 5. Moreover, AT&T and Sprint also argue that even though we
    reduced maintenance costs to remove coin collection, they should
    have been reduced even further as coin payphones are generally more
    expensive to maintain than coinless payphones. AT&T Opposition at 5;
    Sprint Opposition at 5-6.

[^53]: For example, a carrier is usually billed in April for payphone
    calls originating during January, February and March (the first
    quarter of the year), and the carrier issues a check to the PSP by
    July 1 (the first day of the third quarter).

[^54]: This deduction impacts the resulting per-phone per-month
    compensation rate as follows. If the interest rate component is
    deducted, the resulting per-phone per-month compensation rate is
    \$33.892, as we held in the *Fourth Reconsideration Order* (22.9
    cents X 148 calls per-month). If the interest rate component is not
    deducted, the resulting per-phone per-month compensation rate is
    \$35.224, as we calculate below (23.8 cents X 148 calls per-month).

[^55]: *Third Report and Order*, 14 FCC Rcd at 2636 n. 427.

[^56]: *See infra* at III.D.2.

[^57]: *First Report and Order*, 11 FCC Rcd at 20598-99.

[^58]: Granting APCC's Petition for Reconsideration on this issue
    effectively moots Sprint's petition that we clarify that the 22.9
    cent rate applied to all true-ups for the Intermediate Period,
    whether a carrier paid on a per-phone or per-call basis. *See*
    Sprint Corporation Petition for Reconsideration at 16. It also moots
    WorldCom Inc.'s Petition that we clarify that the rate of 22.9 cents
    per compensable call applies to payments for payphones that do not
    transmit payphone-specific coding digits, even if the carrier has
    compensated on a per-call, rather than per-payphone basis for those
    payphones. *See* WorldCom Inc. Petition for Reconsideration at 5-6.
    As set forth in this Order, the same 23.8 cent rate that applied to
    per-call compensation during the Intermediate Period applies to
    determine per-phone compensation, and as set forth *supra* Section
    III.D.2, interest will accrue from the point at which payments
    normally would have been considered late.

[^59]: *See Third Report and Order*, 14 FCC Rcd at 2023, ¶¶ 7-8.

[^60]: *First Report and Order*, 11 FCC Rcd at 20601-04, ¶¶ 119-26.

[^61]: As noted above, the per-phone per-month compensation rate was
    \$45.85, but under this Order has been changed to \$35.224.

[^62]: *Illinois*, 117 F.3d at 564-65.

[^63]: *See Payphone NPRM*, 11 FCC Rcd 6716 (1996).

[^64]: *Pleading Cycle Established for Comment on Remand Issues in the
    Payphone Proceeding*, CC Docket No. 96-128, *Public Notice*, 13 FCC
    Rcd 4801 (1997) ( *Remand Public Notice*); *RBOC/GTE Payphone
    Coalition Files Proposal*, CC Docket No. 96-128, *Public Notice*, 15
    FCC Rcd 18122 (2000) (*2000 Public Notice*).

[^65]: *See* Reply Comments of WorldCom, Inc. at 2 (Oct. 30, 2000).

[^66]: *Id*. at 3.

[^67]: *Id.* at 4.

[^68]: *See* Reply Comments of Sprint Corporation at 4 (Oct. 31, 2000).

[^69]: *Id.* at 4-5.

[^70]: MCI Comments at 6-7 (Aug. 26, 1997).

[^71]: *See* Comments of Teleleasing Enterprises at 11 (Aug. 26, 1997)
    (an allocation "based on toll revenues is flawed because the total
    toll revenues do not appear to bear much relationship to the total
    number of \[payphone\] calls being routed to a particular carrier");
    Comments of Cable & Wireless, Inc. at 16 (Aug. 26, 1997)
    ("Allocating compensation based on total toll revenues without any
    concomitant review of the specific business objectives of the
    carrier is simply not rational.\"); Comments of General
    Communication at 3-4 (Aug. 26, 1997) (\"Total toll revenues of a
    carrier does not necessarily correlate to the number of dial around
    calls at payphones.\").

[^72]: Comments of MIDCOM Communications at 10 (Aug. 26, 1997).

[^73]: *See* Letter from Robert F. Aldrich, counsel for APCC, to Marlene
    H. Dortch, Secretary, FCC, CC Docket No. 96-128 (May 23, 2002).

[^74]: *See* *infra* Section III.D.1.a.

[^75]: The RBOC Coalition has made a similar proposal to use actual
    data. *See* RBOC Coalition Comments at 35. We consider and dispose
    of this proposal for the same reasons as discussed with regard to
    the Sprint proposal.

[^76]: Letter of John E. Benedict, Sprint Corporation, to Marlene H.
    Dortch, Secretary, FCC, of June 25, 2002.

[^77]: Sprint Corporation Comments at 13 (Aug. 26, 1997); Sprint
    Corporation Petition for Reconsideration at 3 (April 3, 2002).

[^78]: *See Bureau Coding Digit Waiver Order*, 13 FCC Rcd at 5007.

[^79]: *Bureau Coding Digit Waiver Order*, 13 FCC Rcd at 5010-11.

[^80]: *See, e.g.,* RBOC Coalition Reply Comments at 7 (Jul. 15, 1996)
    ("In those \[RBOC\] regions that use a mix of
    central-office-implemented (*i.e.*, dumb) payphones and smart
    phones, the dumb phones tend to be placed in lower usage areas and
    therefore have much lower levels of toll free calls. Smart payphones
    are placed in high usage areas and have higher levels of 800 calls.
    The former are not a proper surrogate for the latter and would
    understate the number of 800 calls upon which per-call compensation
    must be paid.").

[^81]: *See Second Report and Order*, 13 FCC Rcd at 1501-2, ¶ 53.

[^82]: Sprint Corporation Petition for Reconsideration at 14 (April 3,
    2002).

[^83]: ITC\^DeltaCom Petition for Reconsideration at 8-9; WorldCom Inc.
    Reply Comments at 4 (Oct. 30, 2000).

[^84]: Comments of Telaleasing Enterprise, Inc. at 11.

[^85]: Comments of Cable & Wireless, Inc. at ii (Aug. 26, 1997).

[^86]: This Bureau is now designated the Wireline Competition Bureau.

[^87]: The RBOCs submitted the requested data during the first four
    months of 2002. Both the data and the Bureau's letters requesting
    the data were made a part of the record in this proceeding and
    parties were given an opportunity to comment on them. SBC and Qwest
    requested confidential treatment for their submissions, which was
    granted on March 28, 2002. *Implementation of Pay Telephone
    Reclassification and Compensation Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-128, *Protective
    Order*, 17 FCC Rcd 5870 (Pricing Policy Div. 2002); *Implementation
    of Pay Telephone Reclassification and Compensation Provisions of the
    Telecommunications Act of 1996*, CC Docket No. 96-128, *Protective
    Order*, 17 FCC Rcd 5877 (Pricing Policy Div. 2002). Under the terms
    of the protective orders, other parties could examine the data,
    subject to restrictions.

[^88]: Because the RBOC data account for such a large percentage of
    payphones, we did not seek data from the 1300 non-BOC incumbent
    local exchange carriers. Moreover, the data set has great geographic
    diversity and includes both rural and urban areas.

[^89]: Because such entities had no notice that they could be
    responsible for payphone compensation, we will not hold them liable.
    We will also excuse governmental entities such as, the Internal
    Revenue Service, and various state governments, that were in the
    RBOC data. We may not, however, have identified all of them; thus,
    some entities on the allocation chart may not in fact be carriers.
    Any entity named in our allocation that then receives a request for
    per payphone compensation from a PSP or other entity may, within
    ninety (90) days of receiving such a request, file a waiver request
    with the Wireline Competition Bureau for exclusion from our
    allocation, with a demonstration that the entity provides no
    communications service to others.

[^90]: *Fourth Reconsideration Order*, 17 FCC Rcd at 2028, ¶ 20.

[^91]: Comments of the Competitive Telecommuni­cations Association at 15
    (Aug. 26, 1997).

[^92]: *First Report and Order*, 11 FCC Rcd at 20584 n. 293; *see also*
    *Fourth Reconsideration Order*, 17 FCC Rcd at 2026-2027.

[^93]: The Allocation Table reflects compensable calls handled by
    competitive LECs (CLECs) acting in an IXC capacity by identification
    of the CLEC by name and specifying the amount of per payphone
    compensation to be paid by that CLEC.

[^94]: RBOC Coalition Comments at 34-35.

[^95]: Letter from Michael K. Kellogg, Counsel to RBOC/GTE/SNET Payphone
    Coalition, to Rose M. Crellin, FCC (March 27, 1998).

[^96]: *Id.* at 2.

[^97]: *Id.*; *see also* Letter from Michael K. Kellogg, Counsel to
    RBOC/GTE/SNET Payphone Coalition, to Rose M. Crellin, FCC (March 24,
    1998) at 1-2.

[^98]: Each incumbent LEC must make the 2.19% payment to PSPs for each
    payphone located in its service territory, even if the PSP had/has
    its payphones connected to a CLEC. Even if a loop or resold service
    is provided by a CLEC to a PSP, this is irrelevant to a
    determination of responsibility for per-phone compensation: for the
    purposes of dial around compensation, it does not matter who
    provides the local loop; rather, only those carriers that receive
    calls compensable under our rules are required to provide
    compensation. The 2.19% applies to incumbent LECs because it
    accounts for, and only reflects, the fact that an incumbent LEC does
    receive and carry compensable calls originated within its territory.
    For example, to the extent this 2.19% includes calls made to
    subscriber toll-free services provided by the incumbent LEC, the
    incumbent LEC would owe this compensation regardless of whether the
    incumbent LEC or a competitive LEC provided the loop to the PSP. We
    also note that, to the extent many CLECs will be required to pay
    some portion of per-phone compensation as a result of carrying
    interexchange and other traffic, as detailed at Appendices A and B,
    CLECs are not escaping from their obligation to pay a fair
    allocation of dial around compensation.

[^99]: One exception is KTNT Communications. To facilitate billing and
    clarify payment obligations for these 39 operator service providers,
    we have identified KTNT Communications as the company obligated to
    pay the per-payphone compensation required by this Order. KTNT
    Communications filed a notice with the Public Utility Commission of
    Texas on April 18, 1997 that it was the "management company
    responsibility" for these other operator service providers. Notice
    of Docketing and Suspension, Kathleen S. Hamilton, Administrative
    Law Judge, Public Utility Commission of Texas (Apr. 22, 1997); *see
    also* Letter of Mitchell F. Brecher, Counsel for Digital Network
    Services, Inc. to William A. Caton, Acting Secretary, FCC (Apr. 28,
    1997) with regard to Southwestern Bell Telephone Company Tariff No.
    73, Transmittal No. 2629, Petition of Digital Network Services, Inc.
    to Reject or Suspend. In addition, KTNT Communications and each of
    the 38 other operator service providers submitted "concurring
    carrier" documentation to qualify to use KTNT Communications tariff
    submissions. The 38 other operator service providers with payphone
    call data aggregated with data for KTNT Communications are Bay TNT
    Network, Who Ever, U Speak Long Distance, It Doesn't Matter, Zimmer
    Way, I Don't Care, I Don't Know, Riverbend Communications, Minh Long
    Distance, Viva Tel L.D., Bryant Service, Rea Long Distance,
    Signature Network Service, Brown Service Co., Exco Long Distance,
    Mustang Operators, Far Point, Knox Service Group, Sandell Operator
    Service, Christine LD Service, Vera Long Distance, Old Laredo
    Service, Old Home Operator, Andril Service Group, Any One Is Okay,
    MCV, Brahms Communications, Forest Pine Telcom, Amadeus, Dvorak,
    KBTN, Callum Long Distance, Sunrise Operator, Wisteria LD Service,
    World Window, Hickory Grover Group, Alert Operators, and Friendly
    Voice Network. While KTNT Communications must pay all of the
    per-payphone compensation required in this order for itself and each
    of the 38 entities listed in this footnote, KTNT Communications has
    a right of recovery from the 38 entities if such recovery does not
    lead to double recovery by KTNT Communications.

[^100]: We note, however, that this name identification was provided for
    the convenience of carriers and PSPs alike, and was not intended to
    impose a modification to otherwise appropriate intracorporate
    relationships. If an entity listed on Appendices A or B has provided
    for payment of its payphone compensation allocations through
    separate subsidiaries or otherwise, it may, absent some other
    resolution agreeable to the PSPs to which it owes payment, ask for
    clarification from the Wireline Competition Bureau, which will
    promptly provide the appropriate attribution of allocation amounts
    among subsidiaries or other entities, or otherwise provide
    clarification of the per-payphone compensation obligation required
    by this Order. An entity listed on Appendices A or B may not,
    however, avoid its obligation to pay per-phone compensation by
    requesting such clarification.

[^101]: In addition to the adjustment noted above, we note that because
    RBOCs were not required under any of our rules to collect and retain
    the specific payphone call data solicited, some of the data are
    unusable, and we have excluded unusable data from the final data
    set. For example, the data reflects calls routed to destinations
    that could not be identified. There were 822,723 such calls in 1997,
    16,656,053 in 1998, and 3,798,565 in 2001. Nevertheless, those
    numbers are quite small given the huge amount of usable data, and
    our conclusions remain sound.

[^102]: Sprint Corporation Reply Comments at 5-8.

[^103]: We do recognize that it is possible calls routed to
    facilities-based carriers' CICs may in fact have been ultimately
    routed to resellers. Given the inclusion of a significant number of
    resellers in the allocation methodology, however, the ultimate
    impact on the compensation paid by other carriers will most likely
    not be significant. Moreover, as we noted above when discussing
    Sprint's proposed alternative method for allocating per-phone
    compensation, we have no more reasonable alternative -- Sprint's
    proposal, for example, would effectively exclude *all* resellers
    from compensation and thus cannot be considered "fair" compensation
    to PSPs. Moreover, if a carrier has data that calls allocated to
    them (i.e., routed to its CIC code) were actually carried by
    resellers, nothing in this Order prevents carriers from seeking
    reimbursement of the cost of these calls from resellers, and we
    explicitly hold that they may do so. We hasten to add, however, that
    carriers may in no way delay payment of compensation to PSPs on
    account of seeking such reimbursement.

[^104]: ITC\^Deltacom Petition for Reconsideration at 7-8.

[^105]: 117 F.3d at 565.

[^106]: Although ITC\^Deltacom argues on behalf of IXCs with annual toll
    revenue below \$100 million, its legal arguments apply equally to
    any company not listed in the *First Report and* *Order*. For
    example, if it is impermissible retroactive rulemaking to require a
    small IXC to pay this compensation because the Commission failed to
    list small IXCs from the 1996 list, according to ITC\^Deltacom\'s
    argument, it is also impermissible retroactive rulemaking to require
    a reseller to pay this compensation if the Commission failed to list
    that reseller on the 1996 list. ITC\^Deltacom's arguments fail in
    this respect for the same reason they fail as discussed above.

[^107]: This holding is entirely consistent with recent precedent
    applicable to rulings of this Commission. In *Verizon v. FCC*, 269
    F.3d 1098, 1110-11 (D.C. Cir. 2001), the D.C. Circuit approved the
    Commission's ruling that LECs had improperly applied EUCL charges to
    independent PSPs, even though a Commission order allowed them to do
    so. The court stated that there was no retroactivity problem because
    "

    > the agency orders on which the LECs claim to have relied not only
    > have never been judicially confirmed, but were under unceasing
    > challenge before progressively higher legal authorities. Our cases
    > indicate that under such circumstances reliance is typically not
    > reasonable, a conclusion that significantly decreases concerns
    > about retroactive application of the rule eventually announced.
    > *See Clark-Cowlitz Joint Operating Agency v. FERC*, 826 F.2d 1074,
    > 1083 n. 7 (D.C. Cir. 1987) (en banc) ("\[A\] holding of
    > retroactivity . . . cannot be premised on a single, recent agency
    > decision . . . that is still in the throes of litigation when it
    > is overruled."). . . . \[Moreover,\] the agency pronouncements on
    > which the LECs relied were subsequently held by this court to be
    > mistaken as a matter of law. As such, the FCC's Liability Order
    > was largely an exercise in error correction. We have previously
    > held that administrative agencies have greater discretion to
    > impose their rulings retroactively when they do so in response to
    > judicial review, that is, when the purpose of retroactive
    > application is to rectify legal mistakes identified by a federal
    > court. *See Exxon Co., USA v. FERC*, 182 F.3d 30, 49-50 (D.C. Cir.
    > 1999). . . . \[T\]he LEC's argument that the FCC may not reach the
    > same conclusion now reduces to the assertion that the agency may
    > not retroactively correct its own legal mistakes, even when those
    > missteps have been highlighted by the federal judiciary. But this
    > is not the law."

[^108]: ITC\^Deltacom Petition for Reconsideration at 8-9.

[^109]: ITC\^Deltacom Petition for Reconsideration at 8-9.

[^110]: 47 U.S.C. §226; *Policies and Rules Concerning Operator Service
    Access and Pay Telephone Compensation*, CC Docket No. 91-35, *Report
    and Order and Further Notice of Proposed Rulemaking*, 6 FCC Rcd 4736
    (1991), *Second Report and Order*, 7 FCC Rcd 3251 (1992).

[^111]: *Florida Pub. Telecomms. Ass'n, Inc. v. FCC*, 54 F.3d 857 (D.C.
    Cir. 1995)("*Florida*").

[^112]: Letter of Albert H. Kramer, Counsel for APCC, to William F.
    Caton, Secretary, FCC (Apr. 15, 2002); Letter of Teresa Marrero,
    AT&T, to Marlene Dortch, Secretary, FCC (July 2, 2002).

[^113]: *Policies and Rules Concerning Operator Service Access and Pay
    Telephone Compensation,* Memorandum Opinion and Order on Further
    Reconsideration and Second Further Notice of Proposed Rulemaking, 10
    FCC Rcd 11547 (1995).

[^114]: *Implementation of the Pay Telephone Reclassification and
    Compensation provisions of the Telecommunications Act of 1996,* CC
    Docket No. 96-128, Notice of Proposed Rulemaking, 11 FCC Rcd 6716
    (1996) ("*Notice*").

[^115]: *First Report and Order*, 11 FCC Rcd at 20601, ¶ 119.

[^116]: *Id.* at 20546 n. 16 and 20711, ¶ 374 ("IT IS FURTHER ORDERED
    that the proceedings . . . in CC Docket 91-35 . . .ARE
    TERMINATED.").

[^117]: *See id.* at 20601-602, ¶¶ 119-121.

[^118]: *Id*. at 20604, ¶ 126 & n. 430.

[^119]: *First Report and Order*, 11 FCC Rcd at 20577, ¶ 70.

[^120]: *Illinois*, 117 F.3d at 563-64.

[^121]: *MCI,* 143 F.3d at 608-09.

[^122]: *American*, 215 F.3d at 58.

[^123]: In a footnote in its Petition for Reconsideration, Sprint
    Corporation states that it did not believe the obligation set forth
    in the *Fourth Reconsideration Order* regarding per-phone
    compensation for the Intermediate Period, "is intended to force
    carriers that heretofore paid on a per-call basis to now conduct
    true ups on a per-payphone basis for the Intermediate Period."
    Sprint Petition for Reconsideration at 18 n.28. Sprint is correct on
    this point. If carriers have already paid per-call compensation on
    payphones for which they received coding digits in the Interim,
    Intermediate or any other period, nothing in the *Fourth
    Reconsideration Order* or this Order requires carriers to now go
    back and apply per-phone compensation to these payphones.

[^124]: CPA Petition at 21, 25 (Apr. 21, 1999).

[^125]: *See, e.g.,* Letters from Albert H. Kramer et al., Counsel for
    APCC, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, CC Docket No. 96-128 (filed Sept. 23, 2002) (APCC Sept.
    23 Ex Parte Letter) at 10-12 (discussing Sprint's end user
    surcharges).

[^126]: *Third Report and Order*, 14 FCC Rcd at 2637, § 199; *see*
    Letter from Albert H. Kramer et al., Counsel for APCC, to Marlene H.
    Dortch, Secretary, Federal Communications Commission, CC Docket No.
    96-128 (filed Oct. 4, 2002) (APCC Oct. 4 Overrecovery Ex Parte
    Letter), Attachment at 1-2.

[^127]: APCC Sept. 23 Ex Parte Letter at 2-7, 10-12.

[^128]: Letter from Albert H. Kramer, et. Al., Counsel for APCC, to
    Marlene H. Dortch, Secretary, Federal Communications Commission, CC
    Docket No. 96-128 (filed Mar. 26, 2001 and Apr. 23, 2001). In the
    *Third Report and Order*, we found the 23.8 cent rate to be a
    cost-based rate because it would enable PSPs to recover the fixed
    costs of "marginal" payphones, i.e., payphones deployed at
    "break-even" locations where a PSP's call revenues just barely
    recover the costs of maintaining the payphone. *Third Report and
    Order,* ¶¶ 139-41. We estimated that a "marginal payphone" would
    average 439 calls per-month, including 142 dial-around calls. *Id.*
    at n.302. At the 23.8 cent rate, we determined, the fixed cost of a
    marginal payphone would be recovered. *Id.* at ¶ 191. The 23.8 cent
    rate, we found, would thereby meet the objective of ensuring
    "widespread deployment of payphone services." 47 U.S.C. §276(b).

[^129]: *Id.*

[^130]: *Id.*

[^131]: Letters from Albert H. Kramer, et. al., Counsel for APCC, to
    Marlene H. Dortch, Secretary, Federal Communications Commission, CC
    Docket No. 96-128 (filed Sept. 11, 2002) (APCC Sept. 11 Ex Parte
    Letter) at 2-6; Letter from Albert H. Kramer et al., Counsel for
    APCC, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, CC Docket No. 96-128 (filed Oct. 4, 2002) (APCC Oct. 4
    Bankruptcy Ex Parte Letter), Attachment at 1-2.

[^132]: APCC Sept. 11 Ex Parte Letter at 7-9 (citing *West Ohio Gas Co.
    v. Pub. Util. Comm'n of Ohio*, 294 U.S. 79 (1935); *Moss v. Civil
    Aeronautics Bd.*, 521 F.2d 298 (D.C. Cir. 1975); *Summerfield v.
    Civil Aeronautics Bd.*, 207 F.2d 200 (D.C. Cir. 1953); APCC Oct. 4
    Bankruptcy Ex Parte Letter at 1-3.

[^133]: Opposition of Cable & Wireless at 5 (July 7, 1999); AT&T
    Opposition at 6-7 (July 7, 1999); Letter from Teresa Marrero et al.,
    on behalf of AT&T, WorldCom and Sprint, to Marlene H. Dortch,
    Secretary, Federal Communications Commission, CC Docket No. 96-128
    (filed Oct. 1, 2002) (Joint Oct. 1 Ex Parte Letter) at 2-3.

[^134]: Joint Oct. 1 Ex Parte Letter at 5-7.

[^135]: Letter from Michael DelCasino, AT&T, to Marlene H. Dortch,
    Secretary, Federal Communications Commission, CC Docket No. 96-128
    (filed June 14, 2002).

[^136]: Opposition of MCI WorldCom Inc. at 6 (July 7, 1999); Opposition
    of Sprint Corporation to Petition of Colorado Payphone Association
    Petition for Partial Reconsideration (*MCI Opposition)* at 7-9 (July
    7, 1999).

[^137]: Joint Oct. 1 Ex Parte Letter at 7-9; Letter from John E.
    Benedict, Sprint, to Marlene H. Dortch, Secretary, Federal
    Communications Commission, CC Docket No. 96-128 (filed Sept. 27,
    2002) at 1-2; Letter from Larry Fenster, WorldCom, to Marlene H.
    Dortch, Secretary, Federal Communications Commission, CC Docket No.
    96-128 (filed Oct. 1, 2002) at 2; Letter from Larry Fenster,
    WorldCom, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, CC Docket No. 96-128 (filed Oct. 2, 2002) at 2; Letter
    from Teresa Marrero, AT&T, to Marlene H. Dortch, Secretary, Federal
    Communications Commission, CC Docket No. 96-128 (filed Oct. 3, 2002)
    at 2-3. In addition to these arguments, WorldCom also argues that
    their underrecovery is further exacerbated because the *Fourth
    Reconsideration Order* would prevent WorldCom and other carriers
    from recovering Interim period compensation from their resellers.
    Letter from Larry Fenster, WorldCom, to Marlene H. Dortch,
    Secretary, Federal Communications Commission, CC Docket No. 96-128
    (filed Oct. 1, 2002) at 2-3. As we noted above, we have effectively
    granted Sprint's petition for reconsideration on this point, and as
    such limited the impact of this alleged underrecovery.

[^138]: MCI Opposition at 6 (July 7, 1999).

[^139]: Joint Oct. 1 Ex Parte Letter at 9-11; Letter from Larry Fenster,
    WorldCom, to Marlene H. Dortch, Secretary, Federal Communications
    Commission, CC Docket No. 96-128 (filed Sept. 18, 2002) at 1-2.

[^140]: Joint Oct. 1 Ex Parte Letter at 11.

[^141]: *MCI*, 143 F.3d at 609.

[^142]: *MCI*, 143 F.3d at 609 (citations omitted, emphasis added).

[^143]: *Third Report and Order*, 14 FCC Rcd at 2545, ¶¶ 195-196.

[^144]: *Exxon Co. USA v. FERC*, 182 F.3d at 50 (D.C. Cir. 1999)
    (quoting *Public Utilities Comm'n of the State of California v.
    FERC*, 988 F.2d 154, 168 (D.C. Cir. 1993)).

[^145]: *Verizon*, 269 F.3d at 1111.

[^146]: *See, e.g., Towns of Concord, Norwood and Wellesley,
    Massachusetts v. FERC*, 955 F.2d 67, 76 (D.C. Cir. 1992) ("absent
    some conflict with the explicit requirements or core purposes of a
    statute, we have refused to constrain agency discretion by imposing
    a presumption in favor of refunds").

[^147]: APCC has made industry-wide estimates, and even attempted to
    break this down among the very largest carriers. *See* Letter from
    Robert F. Aldrich, Counsel for APCC, to Marlene Dortch, Secretary,
    FCC, CC Docket No. 96-128. (May 23, 2002). We note, however, that
    these estimates were calculated at a very high level and, even if
    assumed to be reliable, do not provide us with the level of
    specificity we would need to overcome known and specific refunds
    owed to IXCs.

[^148]: As APCC points out and as we noted above, the *Third Report and
    Order* stated that IXCs had recovered the cost of compensating PSPs
    at a rate of 28.4 cents per call. We believe the record in this
    proceeding creates significant questions as to whether the blanket
    statement in the *Third Report and* Order was correct for all
    carriers that might have paid Intermediate Period per call
    compensation -- the Commission did not cite to any support for this
    assertion and, regardless of what the Commission said regarding cost
    recovery, nevertheless ordered a refund.

[^149]: The same reasoning deprives of equitable bearing changes in the
    types of calls made from payphones from less profitable ones (for
    the IXCs) to more profitable ones.

[^150]: Which we reaffirm below, *infra* Section III.D.1.a.

[^151]: *See* *APCC Servs., Inc., v. AT&T Corp.*, No. 99-CV-696
    (D.D.C.); *APCC Servs., Inc., v. WorldCom, Inc.*, No. 01-CV-638
    (D.D.C.); *APCC Servs., Inc., v. Qwest Communs. Corp.*, No.
    01-CV-641 (D.D.C.); *APCC Servs., Inc., v. Sprint Communs., Inc.*,
    No. 01-CV-642 (D.D.C.); *APCC Servs., Inc., v. Cable & Wireless,
    Inc.,* No. 02-CV-158 (D.D.C.).

[^152]: See APCC Petition for Reconsideration at 10-16, 16-19 (APCC
    Petition).

[^153]: *Third Report and Order* at 2636-37, ¶ 198.

[^154]: APCC Reply to Comments on Petition for Reconsideration (APCC
    Reply) at 7 (May 13, 2002).

[^155]: APCC Petition at 16.

[^156]: AT&T Comments to Petition for Reconsideration (AT&T Comments) at
    4 (May 1, 2002); Sprint Corporation on Petition for Reconsideration
    and Clarification (Sprint Comments) at 9-10 (May 1, 2002).

[^157]: APCC Petition at 17-18.

[^158]: *Id.* at 18.

[^159]: AT&T Comments at 4 (May 1, 2002); WorldCom Inc. Comments on
    Petition for Clarification and Reconsideration (WorldCom, Inc.
    Comments) at 8 (May 1, 2002); Sprint Comments at 8-10 (May 1, 2002).

[^160]: APCC Petition at 13-14.

[^161]: *See* APCC Petition at 17.

[^162]: *Id*. At 18.*.*

[^163]: National Payphone Clearinghouse Comments on Petition for
    Reconsideration at 3 (May 5, 2002).

[^164]: *See, e.g.,* AT&T Comments at 4.

[^165]: For these reasons, we specifically decline to require payment on
    compensation to be made within thirty days after release of this
    order, as the RBOC Coalition has requested. RBOC Coalition Petition
    for Reconsideration at 2 (April 3, 2002). It would be unrealistic to
    impose such a short maximum period for payment when it is possible
    that not all PSPs, or clearinghouses that handle payments, would be
    able to calculate and render payment in such a short period of time.

[^166]: *Third Report and Order*, 14 FCC Rcd at 2636, ¶ 198.

[^167]: *Id.* at 2636-37, ¶ 198.

[^168]: RBOC Payphone Coalition's Reply to Comments on Petitions for
    Reconsideration of the Fourth Order on Reconsideration and Order on
    Remand (RBOC Reply) at 4-5 (May 13, 2002).

[^169]: AT&T Comments at 3; Sprint Corporation Comments at 2; WorldCom
    Comments at 10.

[^170]: Adopting the RBOC Coalition's petition could lead to calculation
    of a rate for each carrier, depending on the cost of capital of the
    party paying the interest and the cost of capital of the party
    receiving the interest. In this situation, there are a number of
    PSPs who will pay interest for overpayments received for the Interim
    Period which have a cost of capital higher than 11.25 percent and
    there may be IXCs who will pay interest for underpayments for the
    Interim Period which have a cost of capital lower than 11.25
    percent.

[^171]: *See* *supra* at III.A.4.

[^172]: *Second Report and Order,* 13 FCC Rcd at 1805-06, ¶ 60; *Third
    Report and Order,* 14 FCC Rcd at 2630-31, ¶¶ 188-89; *Fourth
    Reconsideration Order*, 17 FCC Rcd at 2032, ¶ 31.

[^173]: *Fourth Reconsideration Order* at 2031, ¶¶ 27-29.

[^174]: WorldCom Petition for Reconsideration at 4-5.

[^175]: *First Report and Order*, 11 FCC Rcd at 20598, ¶ 113.

[^176]: WorldCom Petition for Reconsideration at 4-5.

[^177]: Section 276(a)(1) provides that "any Bell operating company that
    provides payphone service shall not subsidize its payphone service
    directly or indirectly from its payphone service directly or
    indirectly from its telephone exchange service operations or its
    exchange access operations." 47 U.S.C. § 276 (a) (1). Subsection (b)
    of § 276 requires the Commission to issue "regulations
    that...discontinue...all intrastate and interstate payphone
    subsidies from basic exchange and exchange access revenues." Id.
    U.S.C. § 276 ((b)(1)(B).

[^178]: *See First Report and Order*, 11 FCC Rcd at 20611-14, ¶¶
    142-145.

[^179]: 47 C.F.R. § 32.27(b).

[^180]: *First Report and Order*, 11 FCC Rcd at 20623-20628, ¶ 163.

[^181]: *Id*., at 20624, ¶ 164.

[^182]: *First Report and Order*, 11 FCC Rcd at 20625, ¶ 165.

[^183]: 485 F.2d 786, 806 (D.C. Cir. 1973), *cert. denied*, 415 U.S. 935
    (1974).

[^184]: *Illinois*, 117 F.3d at 570.

[^185]: *Id.*

[^186]: RBOC/GTE/SNET Payphone Coalition Comments at 40 (Aug. 26, 1997).

[^187]: *Id*.

[^188]: Competitive Telecommunications Association Comments at 9 (August
    26, 1997).

[^189]: *Id*.

[^190]: We note that, at this point, this holding may have little
    practical effect. Historically, payphone assets comprised less than
    1 per cent of a LEC's physical plant. Today, that percentage has
    continued to shrink due in large part to the dramatic growth of
    wireless alternatives. SBC Communications, parent of several large
    phone companies and Qwest Communications, parent of US West, have
    over the past few years tried to sell their payphone divisions. When
    no buyers emerged, the companies resorted to hiking the cost a local
    call to as much as 50 cents, and both are rapidly removing
    unprofitable phones. Not too long after Bell South Corp. transferred
    its payphone assets to a separate affiliate, the RBOC announced it
    was getting out of the payphone business no later than 2003.

[^191]: To the extent a transfer of payphone assets does not meet these
    requirements, the Commission's affiliate transaction rules would
    apply. In this event, we take this opportunity to remind carriers
    that they should include in fair market valuations of payphone
    assets the going concern value associated with location contracts
    supporting the payphone assets. *See* *First Report and Order*, 11
    FCC Rcd at 20624-25, ¶ 164; *First Reconsideration Order,* 11 FCC
    Rcd at 21315-317, ¶¶ 181-87.

[^192]: *Third Report and Order*, 14 FCC Rcd at 2572 n. 103.

[^193]: CPA Petition at 17-19.

[^194]: CPA Petition at 16-19.

[^195]: CPA Petition at 7-8.

[^196]: Sprint Comments at 6-7; AT&T Comments at 6.

[^197]: RBOC Reply at 6 (requesting that the Commission "revise the
    effective date of the order" to include compensation "as soon as
    possible"); Sprint Comments at 5; WorldCom Comments at ii.

[^198]: Sprint Comments at 5.

[^199]: APCC Reply at 10.

[^200]: *See* *supra* at III.D.1.b.

[^201]: *See* 5 U.S.C. § 603. The RFA, 5 U.S.C. § 601 *et seq.*, has
    been amended by the Contract with America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAA). Title II of the
    CWAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^202]: *Payphone NPRM*, 11 FCC Rcd at 6762-63.

[^203]: *First Report and Order*, 11 FCC Rcd at 20691-20709.

[^204]: *First Reconsideration Order*, 11 FCC Rcd at 21345-48.

[^205]: *Second Report and Order*, 12 FCC Rcd at 1835-45.

[^206]: *Third Report and Order*, 14 FCC Rcd at 2637-47.

[^207]: *Implementation of the Pay Telephone and Reclassification and
    Compensation Provisions of the Telecommunications Act of 1966,* CC
    Docket No. 96-128*, Fourth Order on Reconsideration and Order on
    Remand*, 17 FCC Rcd 2020 (2002) (*Fourth Reconsideration Order.)*

[^208]: *See* 5 U.S.C. § 604.

[^209]: Pub. L. No. 104-104, 110 Stat. 56 (1996) (codified at 47 U.S.C.
    § 276).

[^210]: *Illinois*, 117 F.3d. at 555.

[^211]: *See* \"Steps Taken to Minimize Significant Economic Impact on
    Small Entities, and Significant Alternatives Considered,\" §§ 25-26
    *infra*.

[^212]: 5 U.S.C. § 604(a) (3).

[^213]: 5 U.S.C. § 601(6).

[^214]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    \"small business concern\" in 5 U.S.C. § 632). Pursuant to 5 U.S.C.
    § 601(3), the statutory definition of a small business applies
    \"unless an agency after consultation with the Office of Advocacy of
    the Small Business Administration and after opportunity for public
    comment, establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition in the Federal Register.\"

[^215]: 5 U.S.C. § 632.

[^216]: 5 U.S.C. § 601(3).

[^217]: *See* Letter from Jere W. Glover, Chief Counsel for Advocacy,
    SBA, to Chairman William E. Kennard, FCC (May 27, 1999). The Small
    Business Act contains a definition of \"small business concern,\"
    which the RFA incorporates into its own definition of \"small
    business.\" *See* 5 U.S.C. § 632(a) (Small Business Act); 5 U.S.C.
    601(3) (RFA). SBA regulations interpret \"small business concern\"
    to include the concept of dominance on a national basis. 13 C.F.R. §
    121.102(b).

[^218]: 13 C.F.R. § 121.201, NAICS code 513310.

[^219]: *Telephone Trends Report*, Table 5.3.

[^220]: *Id*.

[^221]: 13 C.F.R. § 121.201, NAICS code 513310.

[^222]: *Telephone Trends Report*, Table 5.3.

[^223]: *Id*.

[^224]: 13 C.F.R. § 121.201, NAICS code 513310.

[^225]: *Telephone Trends Report*, Table 5.3.

[^226]: *Id*.

[^227]: *Id*.

[^228]: 13 C.F.R. § 121.201, NAICS code 513330.

[^229]: *Telephone Trends Report*, Table 5.3.

[^230]: *Id*.

[^231]: 13 C.F.R. § 121.201, NAICS code 513330.

[^232]: *Telephone Trends Report*, Table 5.3.

[^233]: *Id*.

[^234]: 13 C.F.R. § 121.201, NAICS code 513310.

[^235]: *Telephone Trends Report*, Table 5.3.

[^236]: *Id*.

[^237]: 13 C.F.R. § 121.201, NAICS code 513310.

[^238]: *Telephone Trends Report*, Table 5.3.

[^239]: *Id*.

[^240]: 13 C.F.R. § 121.201, NAICS code 513310.

[^241]: *Telephone Trends Report*, Table 5.3.

[^242]: *Id*.

[^243]: 13 C.F.R. § 121.201, NAICS code 513330.

[^244]: *Telephone Trends Report*, Table 5.3.

[^245]: *Id*.

[^246]: 13 C.F.R. § 121.201, NAICS code 513340.

[^247]: *Telephone Trends Report*, Table 5.3.

[^248]: *Id*.

[^249]: 13 C.F.R. § 121.201, NAICS code 513310.

[^250]: *Telephone Trends Report*, Table 5.3.

[^251]: *Id*.

[^252]: 13 C.F.R. § 121.201, NAICS code 513322.

[^253]: *Telephone Trends Report*, Table 5.3.

[^254]: *See Amendment of Parts 20 and 24 of the Commission\'s Rules -
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap*, WT Docket No. 96-59, *Report and Order*, 11
    FCC Rcd 7824, ¶¶ 57-60 (1996), 61 Fed. Reg. 33859 (July 1, 1996);
    *see also* 47 C.F.R. § 24.720(b).

[^255]: *See Amendment of Parts 20 and 24 of the Commission\'s Rules -
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap*, WT Docket No. 96-59, *Report and Order*, 11
    FCC Rcd 7824, ¶¶ 57-60 (1996), 61 Fed. Reg. 33859 (July 1, 1996).

[^256]: *See, e.g., Implementation of Section 309(j) of the
    Communications Act \-- Competitive Bidding*, PP Docket No. 93-253,
    *Fifth Report and Order*, 9 FCC Rcd 5532, 5581-84, ¶¶ 115-17 (1994).

[^257]: FCC News, Broadband PCS, D, E and F Block Auction Closes, No.
    71744 (rel. Jan. 14, 1997).

[^258]: 47 C.F.R. § 90.814(b) (1).

[^259]: The service is defined in § 22.99 of the Commission\'s Rules. 47
    C.F.R. § 22.99.

[^260]: BETRS is defined in §§ 22.757 and 22.759 of the Commission\'s
    Rules. 47 C.F.R. §§ 22.757, 22.759.

[^261]: 13 C.F.R. § 121.201, NAICS codes 513321, 513322, and 51333.

[^262]: 47 C.F.R. §§ 101, *et seq*. (formerly Part 21 of the
    Commission\'s Rules).

[^263]: Persons eligible under Parts 80 and 90 of the Commission\'s
    rules can use Private Operational‑Fixed Microwave services. *See* 47
    C.F.R. Parts 80, 90. Stations in this service are called
    operational‑fixed to distinguish them from common carrier and public
    fixed stations. Only the licensee may use the operational‑fixed
    station, and only for communications related to the licensee\'s
    commercial, industrial, or safety operations.

[^264]: Auxiliary Microwave Service is governed by Part 74 of the
    Commission\'s rules. *See* 47 C.F.R. Part 74. The Auxiliary
    Microwave Service is available to licensees of broadcast stations
    and to broadcast and cable network entities, broadcast auxiliary
    microwave stations and are used for relaying broadcast television
    signals from the studio to the transmitter, or between two points
    such as a main studio and an auxiliary studio. The service also
    includes mobile TV pickups, which relay signals from a remote
    location back to the studio.

[^265]: 13 C.F.R. § 121.201, NAICS codes 513321, 513322, and 51333.

[^266]: *See* *Amendment of the Commission's Rules Regarding the
    37.0-38.6 GHz and 38.6-40.0 GHz Bands*, ET Docket No. 95-183,
    *Report and Order*, 12 FCC Rcd 18600 (1997).

[^267]: *Id.*

[^268]: *See* Letter to Kathleen O\'Brien Ham, Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau, FCC,
    from Aida Alvarez, Administrator, SBA (Feb. 4, 1998).

[^269]: *See* 5 U.S.C. § 801(a) (1) (A).

[^270]: *See* 5 U.S.C. § 604(b).