Before the

Federal Communications Commission

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | WCB/Pricing No. 02-27        |
|                                  | * |                              |
| Verizon Telephone Companies      | ) |                              |
|                                  | * |                              |
| Tariff F.C.C. Nos. 1, 11, 14,    | * |                              |
| and 16                           |   |                              |
|                                  | * |                              |
| Transmittal No. 243              | * |                              |
|                                  | ) |                              |
| Southwestern Bell Telephone      | * |                              |
| Company                          | * |                              |
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| Tariff F.C.C. No. 73             | * |                              |
|                                  | * |                              |
| Transmittal No. 2913             | ) |                              |
|                                  | * |                              |
| Ameritech Operating Companies    | * |                              |
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| Tariff F.C.C. No. 2              | * |                              |
|                                  | * |                              |
| Transmittal No. 1318             | ) |                              |
|                                  | * |                              |
| Southern New England Telephone   | * |                              |
| Company                          |   |                              |
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| Tariff F.C.C. No. 39             | * |                              |
|                                  | ) |                              |
| Transmittal No. 774              | * |                              |
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| Pacific Bell Telephone Company   |   |                              |
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| Tariff F.C.C. No. 1              | * |                              |
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| Transmittal No. 82               | * |                              |
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| Nevada Bell Telephone Company    |   |                              |
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| Tariff F.C.C. No. 1              | * |                              |
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| Transmittal No. 22               | * |                              |
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+----------------------------------+---+------------------------------+

**Order**

**Adopted: September 30, 2002 Released: September 30, 2002**

By the Chief, Pricing Policy Division:

# Introduction

1.  In this order we suspend for five months and set for investigation
    Verizon Telephone Companies (Verizon) Tariff F.C.C. Nos. 1, 11, 14,
    and 16, Transmittal No. 243 and certain rates for Ameritech
    Operating Companies (Ameritech) Tariff F.C.C. No. 2, Transmittal
    No. 1318. We also suspend for one day, impose an accounting order,
    and set for investigation Southwestern Bell Telephone Company
    (Southwestern) Tariff F.C.C. No. 73, Transmittal No. 2913, Nevada
    Bell Telephone Company (Nevada) Tariff F.C.C. No., 1, Transmittal
    No. 22, Pacific Bell Telephone Company (Pacific) Tariff F.C.C. No.
    1, Transmittal No. 82, Southern New England Telephone Company (SNET)
    Tariff F.C.C. No. 39, Transmittal No. 774, and certain rates for
    Ameritech Operating Companies Tariff F.C.C. No. 2, Transmittal
    No. 1318. These transmittals seek to establish rates for Universal
    Service Fund charges billed to residential and business customers to
    reflect the companies' fourth quarter 2002 contribution obligations.
    No parties filed petitions against these transmittals.

# Background

2.  On September 10, 2002, the Wireline Competition Bureau (Bureau)
    announced its proposed universal service contribution factor for the
    fourth quarter of 2002.[^1] Pursuant to section 54.709 of the
    Commission's rules,[^2] the quarterly contribution factor is based
    on the ratio of total projected quarterly costs of the universal
    service support mechanisms to total end-user interstate and
    international telecommunications revenues, net of prior period
    actual contributions. Under section 54.507, however, funds collected
    in the schools and libraries support mechanism that are unused shall
    be applied to stabilize universal service contributions in
    accordance with the public interest and consistent with section
    54.709(b) for no more than three quarters, beginning with the third
    quarter 2002.[^3] Accordingly, the Bureau's *Public Notice*
    announced that the third quarter 2002 contribution factor of
    0.072805 shall remain unchanged for the fourth quarter of 2002.[^4]
    The captioned transmittals were filed on September 16, 2002 with the
    effective date of October 1, 2002.

# DISCUSSION

3.  Each of the captioned transmittals include an adjustment for
    uncollectible amounts based on residential and business customer net
    bad debt experienced in the first eight months of 2002. [^5] The
    Communications Act and the Commission's Rules require that all
    charges in connection with communication services be just and
    reasonable and all tariff filings of dominant carriers be
    accompanied by an explanation and data supporting rate changes.[^6]
    We find that these tariff filings provide little explanation and
    little or no data supporting the changed rates.

4.  After reviewing the transmittals, we conclude that all of the
    captioned transmittals raise substantial questions of lawfulness
    warranting suspension and investigation. The companies have not
    provided sufficient explanation and cost justification or other
    support to permit a full assessment of the reasonableness of the
    proposed charges, particularly with respect to the inclusion and
    calculation of amounts related to uncollectible debt.

5.  We therefore suspend for five months and set for investigation the
    proposed rate increases proposed in Verizon Transmittal No. 243 and
    Ameritech Transmittal No. 1318 with respect to Michigan and
    Wisconsin. We suspend for one day, impose an accounting order, and
    set for investigation proposed rates that would remain constant or
    decrease in Nevada Transmittal No. 22, Pacific Transmittal No. 82,
    SNET Transmittal No. 774, Southwestern Transmittal No. 2913, and
    Ameritech Transmittal No. 1318 with respect to Indiana and Ohio. The
    specific issues that will be the subject of the investigation will
    be identified in an upcoming designation order and may include, but
    may not be limited to, the issues identified in this order.

# *EX PARTE* REQUIREMENTS

6.  This investigation is a permit-but-disclose proceeding and subject
    to the requirements of section 1.1206(b) of the rules, 47 C.F.R. §
    1.1206(b), as revised. Persons making oral *ex parte* presentations
    are reminded that memoranda summarizing the presentations must
    contain a summary of the substance of the presentation and not
    merely a listing of the subjects discussed. More than a one- or
    two-sentence description of the views and arguments presented is
    generally required.[^7] Other rules pertaining to oral and written
    presentations are set forth in section 1.1206(b).

    **V. ORDERING CLAUSES**

7.  ACCORDINGLY, IT IS ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    through the authority delegated pursuant to sections 0.91 and 0.291
    of the Commission's Rules, 47 C.F.R. §§ 0.91 and 0.291, the
    revisions filed by Verizon Telephone Companies, Tariff F.C.C. Nos.
    1, 11, 14, and 16, under Transmittal No. 243, and certain rates for
    Ameritech Operating Companies Tariff F.C.C. No. 2, Transmittal No.
    1318, as identified at paragraph 5, *supra*, ARE SUSPENDED for five
    months and an investigation IS INSTITUTED.

8.  IT IS FURTHER ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    through the authority delegated pursuant to sections 0.91 and 0.291
    of the Commission's Rules, 47 C.F.R. §§ 0.91 and 0.291, the
    revisions filed by Nevada Bell Telephone Company Tariff F.C.C. No.,
    1, Transmittal No. 22, Pacific Bell Telephone Company Tariff F.C.C.
    No. 1, Transmittal No. 82, Southern New England Telephone Company
    Tariff F.C.C. No. 39, Transmittal No. 774, Southwestern Bell
    Telephone Company Tariff F.C.C. No.73, Transmittal No. 2913, and
    certain rates for Ameritech Operating Companies Tariff F.C.C. No. 2,
    Transmittal No. 1318, as identified at paragraph 5, *supra*, ARE
    SUSPENDED for one day and an investigation IS INSTITUTED.

9.  IT IS FURTHER ORDERED that, pursuant to sections 4(i) and 204(a) of
    the Communications Act of 1934, as amended, 47 U.S.C. § 154(i),
    205(a), Nevada Bell Telephone Company, Pacific Bell Telephone
    Company, Southern New England Telephone Company, Southwestern Bell
    Telephone Company and Ameritech Operating Companies SHALL KEEP
    accurate account of all amounts received by the reason of the rates
    that are suspended for one-day and subject of this investigation.

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

> FEDERAL COMMUNICATIONS COMMISSION
>
> Tamara L. Preiss
>
> Chief, Pricing Policy Division
>
> Wireline Competition Bureau

[^1]: *Proposed Fourth Quarter 2002 Universal Service Contribution
    Factor*, CC Docket No. 96-45, Public Notice, DA 02-2221 (released
    Sept. 10, 2002, WCB)(*Public Notice*).

[^2]: *See* 47 C.F.R. § 54.709(a)(2).

[^3]: *See* 47 C.F.R. § 54.507(a).

[^4]: *See* *Public Notice*.

[^5]: *See* Verizon Telephone Companies Tariff F.C.C. Nos. 1, 11, 14,
    and 16, Transmittal No. 243*, Description and Justification*, filed
    September 16, 2002, at 2 *ff.*; Southwestern Bell Telephone Company,
    Tariff F.C.C. No. 73, Transmittal No. 2913, *Description and
    Justification*, filed September 16, 2002, at 2 *ff.*; Ameritech
    Operating Companies, Tariff F.C.C. No. 2, Transmittal No. 1318,
    *Description and Justification*, filed September 16, 2002, at 2
    *ff.*; Southern New England Telephone Company, Tariff F.C.C. No. 39,
    Transmittal No. 774, *Description and Justification*, filed
    September 16, 2002, at 2 *ff.*; Pacific Bell Telephone Company,
    Tariff F.C.C. No. 1, Transmittal No. 82, *Description and
    Justification*, filed September 16, 2002, at 2 *ff.*; Nevada Bell
    Telephone Company, Tariff F.C.C. No. 1, Transmittal No. 22,
    *Description and Justification,* filed September 16, 2002, at 2
    *ff.*

[^6]: 47 U.S.C. § 201(b), 47 C.F.R. § 61.38(b).

[^7]: *See* 47 C.F.R. § 1.1206(b)(2), as revised.