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 Federal  Communications  Commission  FCC  02-  16 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of 
 Telephone  Number  Portability 
 )  ) 
 )  ) 
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 CC  Docket  No.  95-  116 

 MEMORANDUM  OPINION  AND  ORDER  ON  RECONSIDERATION  AND  ORDER  ON  APPLICATION  FOR  REVIEW 
 Adopted:  January  23,  2002  Released:  February  15,  2002 
 By  the  Commission:  Commissioner  Copps  approving  in  part,  dissenting  in  part,  and  issuing  a  s  t  a  t  e  m  e  n  t 

 Paragraph  No. 
 I.  INTRODUCTION  ...............................................................................................................  1 
 II.  BACKGROUND  .................................................................................................................  5 
 III.  MEMORANDUM  OPINION  AND  ORDER  ON  RECONSIDERATION.........................  9 
 A.  Jurisdiction...............................................................................................................  9  1.  Federal/  State  Jurisdiction.............................................................................  9 

 2.  Determining  the  N-  1  Carrier  on  IntraLATA  and  Extended  Area  Service  Calling  Plans  .................................................................................  14 

 B.  Costs  of  the  Regional  Databases............................................................................  18  1.  Billing  and  Collection  Issues  .....................................................................  18 
 2.  Revenues  to  be  Included  in  the  Allocator..................................................  28  3.  National  and  Multi-  Regional  Carriers  .......................................................  35 

 C.  Recovery  of  Carrier-  Specific  Costs  Directly  Related  to  Providing  Number  Portability...............................................................................................................  41 
 1.  Independent  and  Rural  Incumbent  LECs...................................................  41  2.  Recovery  of  Number  Portability  Costs  from  Other  Carriers  .....................  59 
 3.  Recovery  of  Number  Portability  Costs  from  Feature  Group  A  Access  Lines  ..............................................................................................  66 
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 4.  Recovery  of  Number  Portability  Costs  from  Centrex  and  PBX  Lines...........................................................................................................  74 
 5.  Recovery  through  the  Incumbent  LEC  End-  User  Charge.  ........................  83  6.  Querying  all  Calls  to  an  NXX....................................................................  95 

 IV.  ORDER  ON  APPLICATION  FOR  REVIEW.................................................................  102 
 A.  Operation  Support  Systems  (OSS)  Costs.............................................................  102  1.  Background..............................................................................................  102 

 2.  Discussion................................................................................................  104 
 B.  911  Costs..............................................................................................................  112  1.  Background..............................................................................................  112 

 2.  Discussion................................................................................................  113 
 C.  Joint  Costs............................................................................................................  114  1.  Recovery  of  Advancement  Costs.............................................................  114 

 V.  FINAL  REGULATORY  FLEXIBILITY  CERTIFICATION  ........................................  118 
 VI.  PAPERWORK  REDUCTION  ANALYSIS...................................................................  124 
 VII.  ORDERING  CLAUSES.................................................................................................  125 
 PARTIES  TO  THE  PROCEEDING..............................................................................  Appendix  A 
 FINAL  RULES  ..............................................................................................................  Appendix  B 

 I.  INTRODUCTION 
 1.  On  May  5,  1998,  the  Commission  adopted  the  Third  Report  and  Order  1  in  this  docket,  implementing  section  251(  e)(  2)  of  the  Communications  Act  of  1934,  as  amended  (the  Act),  with 

 regard  to  the  costs  of  providing  local  number  portability.  The  Third  Report  and  Order,  among  other  things,  determined  that  section  251(  e)(  2)  requires  the  Commission  to  ensure  that  carriers 
 bear  the  cost  of  providing  long-  term  number  portability  on  a  competitively  neutral  basis  for  both  interstate  and  intrastate  calls.  The  Third  Report  and  Order  also  determined  that  incumbent  local 
 exchange  carriers  (LECs)  may  recover  carrier-  specific  costs  of  number  portability  through  federally-  tariffed  end-  user  and  query  service  charges.  2 

 2.  Eighteen  parties  filed  petitions  for  reconsideration  and  clarification  in  response  to  the  Third  Report  and  Order.  Thirteen  parties  filed  oppositions  or  comments  on  the  petitions,  and 

 1  Telephone  Number  Portability,  Third  Report  and  Order,  CC  Docket  No.  95-  116,  13  FCC  Rcd  11701  (1998) 
 (Third  Report  and  Order). 
 2  Id.  at  11707,  para.  9. 
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 ten  parties  filed  reply  comments.  3  In  this  Order,  we  resolve  the  following  issues  raised  in  these  filings  regarding  the  rules  adopted  in  the  Third  Report  and  Order.  Specifically,  we  (1)  affirm 
 that  the  Commission  has  exclusive  jurisdiction  over  the  distribution  and  recovery  of  costs  associated  with  intrastate  and  interstate  number  portability;  (2)  clarify  that  the  local  number 
 portability  administrator  may  assess  shared  costs  on  all  eligible  telecommunications  carriers,  not  just  carriers  with  existing  long-  term  number  portability  contracts;  (3)  clarify  that  incumbent 
 LECs  must  allocate  their  shared  costs  between  the  query  service  and  end-  user  charges;  (4)  affirm  the  adoption  of  the  end-  user  revenue  allocator;  (5)  deny  petitioners'  request  that  costs 
 associated  with  a  number  portability  charge  to  carriers  purchasing  unbundled  switching  be  calculated  based  on  total  element  long  run  incremental  cost  (TELRIC);  4  (6)  deny  petitioners' 
 request  that  costs  for  number  portability  be  based  on  avoided  costs;  5  (7)  clarify  that  carriers  may  not  recover  number  portability  costs  from  other  carriers  through  interconnection  charges  or 
 resale  prices;  (8)  clarify  that  as  long  as  an  incumbent  LEC  provides  number  portability  functionality,  it  may  assess  the  number  portability  end-  user  charge  on  resellers  and  purchasers  of 
 switching  ports  as  unbundled  network  elements;  (9)  affirm  that  carriers  not  subject  to  rate-  of-return  regulation  or  price  caps  may  recover  their  carrier-  specific  costs  in  any  lawful  manner 
 consistent  with  their  obligations  under  the  Communications  Act;  (10)  clarify  that  commercial  mobile  radio  service  (CMRS)  providers  are  co-  carriers,  not  end  users,  and,  therefore,  are  not 
 subject  to  an  end-  user  charge;  (11)  clarify  that  carriers  who  offer  Feature  Group  A  access  lines  may  assess  an  end-  user  surcharge  on  such  lines;  (12)  affirm  that  Centrex  lines  may  be  assessed 
 one  end-  user  number  portability  charge  per  line  and  a  Private  Branch  Exchange  (PBX)  trunk  may  be  charged  nine  end-  user  number  portability  charges  per  PBX  trunk;  (13)  affirm  that  Plexar 
 may  be  assessed  one  number  portability  charge  per  line;  (14)  affirm  that  incumbent  LECs  may  impose  an  end-  user  charge  in  service  areas  where  the  switch  is  number-  portability-  capable;  (15) 
 clarify  that  small  and  rural  incumbent  LECs  that  do  not  yet  provide  number  portability  functionality  but  provide  service  under  Extended  Area  Service  (EAS)  arrangements  may  recover 
 their  N  minus  one  (N-  1)  query  and  Number  Portability  Administration  costs  through  end-  user  charges;  (16)  clarify  that  incumbent  LECs  may  not  begin  billing  carriers  for  N-  1  queries  until  a 
 number  has  been  ported  from  an  NXX;  (17)  clarify  that  after  the  five-  year  recovery  period  for  implementation  costs  of  number  portability  through  the  end-  user  charge,  any  remaining  costs 
 will  be  treated  as  normal  network  costs;  (18)  affirm  that  price  cap  LECs  and  rate-  of-  return  LECs  should  treat  the  query  services  charge  as  a  new  service  within  the  meaning  of  section  61.38  of 

 3  A  list  of  petitioners  and  commenting  parties  appears  at  Appendix  A. 
 4  We  note  that  the  Eighth  Circuit  has  ruled  that,  while  TELRIC  is  an  acceptable  method  for  determining  costs, 
 certain  specific  rules  contained  within  the  Commissions  pricing  rules  are  contrary  to  congressional  intent.  Iowa  Utils.  Bd.  v.  FCC,  219  F.  3d  744,  749-  53  (8  th  Cir.  2000),  cert.  granted  sub  nom.,  Verizon  Communications  v.  FCC, 

 531  U.  S.  1124  (2001).  The  Eighth  Circuit  has  stayed  the  issuance  of  its  mandate,  Iowa  Utils  Bd.  v.  FCC,  No.  96-  3321,  et  al.  (8  th  Cir.  Sept.  25,  2000),  pending  appeal  before  the  Supreme  Court,  which  has  granted  certiorari  in  the 
 case.  Verizon  Communications  v.  FCC,  531  U.  S.  1124  (2001).  Accordingly,  the  Commissions  rules  continue  in  effect  at  this  time. 

 5  In  Iowa  Utilities  Bd.  v.  FCC,  see  n.  4,  supra,  the  Eighth  Circuit  concluded  that  section  252(  d)(  3)  of  the 
 Communications  Act  requires  costs  that  are  actually  avoided,  not  those  costs  that  could  be  avoided,  be  excluded  from  wholesale  rates  offered  to  resellers.  Iowa  Utilities  Bd.  v.  FCC,  219  F.  3d  at  755. 
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 our  rules;  and  (19)  affirm  our  rules  adopted  in  the  Third  Report  and  Order  concerning  levelized  charges.  We  take  this  action  toward  the  implementation  of  local  number  portability  at  the 
 direction  of  Congress,  6  and  apply  the  mandate  of  section  251(  e)(  2)  in  the  most  efficient  manner  possible. 

 3.  In  the  Third  Report  and  Order,  the  Commission  delegated  authority  to  the  Common  Carrier  Bureau  (Bureau)  to  determine  appropriate  methods  for  apportioning  joint  costs  among 
 portability  and  non-  portability  services,  and  to  provide  guidance  to  carriers  before  they  filed  their  federal  number  portability  tariffs.  7  On  December  14,  1998,  pursuant  to  delegated  authority, 
 the  Bureau  issued  the  Cost  Classification  Order.  8  The  Cost  Classification  Order,  among  other  things,  provided  guidance  to  incumbent  LECs  concerning:  (1)  the  costs  that  are  eligible  for 
 recovery  through  federal  number  portability  charges  established  in  the  Third  Report  and  Order;  (2)  the  appropriate  methodologies  for  determining  the  amount  of  eligible  number  portability 
 costs;  (3)  advancement  costs;  and  (4)  allocation  of  these  eligible  costs  between  the  end-  user,  pre-arranged  and  default  query  charges.  9 

 4.  In  response  to  the  Cost  Classification  Order,  four  parties  filed  petitions  for  clarification  or  applications  for  review.  Four  parties  filed  oppositions  or  comments  and  four  parties  filed  replies. 
 In  this  Order,  we  address  all  issues  raised  in  these  petitions.  Specifically,  we:  (1)  affirm  that  carriers  may  only  recover  carrier-  specific  costs  directly  relating  to  the  provision  of  number 
 portability;  (2)  affirm  that  carriers  must  distinguish  clearly  costs  incurred  for  narrowly  defined  portability  functions  from  costs  incurred  to  adapt  their  systems  to  implement  number  portability; 
 (3)  affirm  that  costs  carriers  incur  as  an  incidental  consequence  of  number  portability  are  ordinary  costs  of  doing  business  and  represent  general  network  upgrades;  (4)  affirm  the  two-  part 
 cost  recovery  test;  and  (5)  affirm  that  costs  which  do  not  meet  the  two-  part  recovery  test  may  not  be  recovered  through  the  number  portability  cost  recovery  mechanisms. 

 II.  BACKGROUND 
 5.  In  the  Third  Report  and  Order,  we  concluded  that  section  251(  e)(  2)  requires  that  carriers  bear  the  following  costs  on  a  competitively  neutral  basis:  (1)  costs  the  LECs  incur  to  meet  the 

 obligations  imposed  by  section  251(  b)(  2);  and  (2)  costs  other  telecommunications  carriers,  such  as  interexchange  carriers  (IXCs)  and  CMRS  providers,  incur  for  industry-  wide  solutions  to 
 provide  local  number  portability.  10  We  also  held  that  the  costs  of  establishing  number 
 6  Section  251(  e)(  2)  of  the  Act  requires  that  "[  t]  he  cost  of  establishing  telecommunications  numbering 
 administration  arrangements  and  number  portability  shall  be  borne  by  all  telecommunications  carriers  on  a  competitively  neutral  basis  as  determined  by  the  Commission."  47  U.  S.  C.    251(  e)(  2). 

 7  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  75. 
 8  Telephone  Number  Portability  Cost  Classification  Proceeding,  CC  Docket  No.  95-  116,  Memorandum  Opinion 
 and  Order,  13  FCC  Rcd  24495  (CCB  1998)  (Cost  Classification  Order). 
 9  See  Cost  Classification  Order,  13  FCC  Rcd  at  24498,  para.  5. 

 10  Third  Report  and  Order,  13  FCC  Rcd  at  11723-  24,  para.  36.  Section  251(  e)(  2)  requires  that  the  costs  of 
 establishing  number  portability  be  borne  by  all  telecommunications  carriers  on  a  competitively  neutral  basis.  47  (continued.) 
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 portability  include:  (1)  costs  associated  with  the  creation  of  the  regional  databases  to  support  number  portability;  11  (2)  costs  associated  with  the  initial  upgrading  of  the  public  switched 
 network;  and  (3)  ongoing  costs  of  providing  number  portability,  such  as  the  costs  involved  in  transferring  a  telephone  number  to  another  carrier  and  routing  calls  under  the  N-  1  querying 
 protocol.  12  We  concluded  that  section  251(  e)(  2)  applies  to  the  distribution  of  number  portability  costs  among  carriers  as  well  as  the  recovery  of  those  costs  by  carriers.  13  We  found  that  carrier-specific 
 costs  not  directly  related  to  providing  number  portability  are  not  costs  of  number  portability  and,  consequently,  are  not  subject  to  section  251(  e)(  2)  and  its  competitively  neutral 
 mandate.  14 
 6.  In  the  Third  Report  and  Order,  we  applied  the  rules  adopted  in  the  First  Report  and  Order  regarding  competitively  neutral  cost  recovery  to  the  rules  regarding  the  recovery  of  shared 

 and  carrier-  specific  costs.  15  The  rules  regarding  shared  costs  require  that  each 
 (Continued  from  previous  page)  U.  S.  C.    251(  e)(  2).  Section  251(  b)(  2)  requires  all  LECs  "to  provide,  to  the  extent  technically  feasible,  number 

 portability  in  accordance  with  requirements  prescribed  by  the  Commission."  47  U.  S.  C.    251(  b)(  2). 
 11  Number  portability  is  deployed  through  a  system  of  multiple  regional  databases.  The  regional  databases  will 
 facilitate  the  provision  of  number  portability  by  providing  carriers  with  the  number  portability  routing  information  that  is  necessary  to  route  telephone  calls  between  the  carriers'  networks.  Each  database  serves  an  area  that 

 corresponds  to  one  of  the  original  regional  Bell  Operating  Company  service  territories.  See  Telephone  Number  Portability,  CC  Docket  No.  95-  116,  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  11  FCC 
 Rcd  8352,  8399-  8400,  paras.  91-  92  (1996)  (First  Report  and  Order). 
 12  Third  Report  and  Order,  13  FCC  Rcd  at  11725,  para.  38.  Under  the  N-  1  querying  protocol,  the  N-  1  carrier  is 
 the  carrier  responsible  for  the  query  to  the  carrier's  or  a  third  party's  service  control  point.  The  query  is  a  call  made  to  determine  the  address  or  location  routing  number  (LRN)  for  the  call.  "N"  is  the  entity  terminating  the  call 

 to  the  end-  user,  or  a  network  provider  with  whom  the  entity  has  contracted  to  provide  tandem  access.  The  N-  1  carrier  for  a  local  call  will  usually  be  the  calling  customer's  LEC  and  the  N-  1  carrier  for  an  interexchange  call  will 
 usually  be  the  calling  customer's  interexchange  carrier.  Carriers  may  arrange  for  another  carrier  or  third  party  to  perform  query  services  for  them  as  long  as  that  entity  charges  the  N-  1  carrier  in  accordance  with  the  requirements 
 established  in  this  proceeding.  If  a  call  is  not  queried  by  the  N-  1  carrier,  the  call  might  be  routed  by  default  to  the  LEC  that  originally  served  the  telephone  number,  who  will  perform  the  default  query  for  the  N-  1  carrier.  The  N-  1 
 protocol  was  recommended  by  the  North  American  Numbering  Council  (NANC),  the  industry  and  the  state/  regional  workshops  regarding  the  technical  and  operational  standards  for  long  term  number  portability  and 
 was  adopted  by  the  Commission  in  the  Second  Report  and  Order.  See  Telephone  Number  Portability,  CC  Docket  No.  95-  116,  Second  Report  and  Order,  12  FCC  Rcd  12281,  12287,  para.  8,  12323-  24,  paras.  73-  75  (1997) 
 (Second  Report  and  Order). 
 13  Third  Report  and  Order,  13  FCC  Rcd  at  11725-  26,  para.  39. 

 14  Id.  at  11724,  para.  37.  On  December  14,  1998,  the  Common  Carrier  Bureau  issued  an  order  providing  guidance 
 for  carriers  on:  (1)  the  costs  that  are  eligible  for  recovery  through  federal  number  portability  charges;  (2)  the  appropriate  methodologies  for  measuring  costs  eligible  for  LNP  recovery;  and  (3)  the  allocation  of  eligible  costs 

 between  end  user  and  query  services  charges.  Cost  Classification  Order,  13  FCC  Rcd  24495.  The  Third  Report  and  Order  delegated  authority  to  the  Common  Carrier  Bureau  for  this  purpose.  Id.  at  11740,  para.  75. 

 15  Id.  at  11731-  32,  11754-  56,  paras.  52-  53,  105-  107.  Our  competitive  neutrality  rules  require  that  the  cost  of 
 number  portability  borne  by  each  carrier  does  not  affect  significantly  any  carrier's  ability  to  compete  with  other  carriers  for  customers  in  the  marketplace.  Under  our  two-  part  test  to  determine  whether  this  requirement  is  met, 

 the  way  carriers  bear  the  costs  of  number  portability:  (1)  must  not  give  one  service  provider  an  appreciable,  (continued.) 
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 telecommunications  carrier  contribute  to  the  costs  of  each  regional  database  in  proportion  to  each  carriers  intrastate,  interstate,  and  international  end-  user  telecommunications  revenues  for 
 that  region.  We  determined  that  after  each  carrier's  portion  of  the  shared  costs  is  distributed  on  the  basis  of  end-  user  revenues,  the  costs  are  treated  as  carrier-  specific  costs  directly  related  to 
 providing  number  portability.  16  We  concluded  that  it  is  competitively  neutral  for  carriers  to  bear  their  own  carrier-  specific  costs  directly  related  to  providing  number  portability,  17  and  we 
 allowed  the  incumbent  LECs  to  recover  these  costs  through:  (1)  a  monthly  number  portability  end  user  charge;  18  and,  (2)  a  number  portability  query-  service  charge  that  applies  to  carriers  on 
 whose  behalf  the  incumbent  LEC  performs  queries.  19  We  allowed  other  telecommunications  carriers  to  recover  their  carrier-  specific  costs  directly  related  to  providing  local  number 
 portability  in  any  lawful  manner.  20 
 7.  In  the  Cost  Classification  Order,  the  Bureau  adopted  a  two-  part  test  for  incumbent  LECs  to  use  to  identify  carrier-  specific  costs  that  are  directly  related  to  the  implementation  and 

 provision  of  number  portability.  21  In  order  to  determine  that  costs  are  eligible  for  recovery  through  the  federal  cost  recovery  mechanism,  a  carrier  must  show  that  these  costs:  (1)  would  not 
 have  been  incurred  by  the  carrier  "but  for"  the  implementation  of  number  portability;  and  (2)  were  incurred  "for  the  provision  of"  number  portability.  22  The  Bureau  found  that  application  of 
 this  test  would  avoid  over  compensation  of  LECs  for  their  costs,  as  LECs  already  recover  the  cost  of  general  network  upgrades  through  standard  cost  recovery  mechanisms.  The  Bureau, 
 therefore,  concluded  that  the  incumbent  LECs  should  not  be  allowed  to  recover  these  same  costs  through  both  federal  number  portability  charges,  as  well  as  through  price  caps  or  rate-  of-  return 
 recovery  mechanisms.  23 
 8.  The  Bureau  concluded  that  only  new  costs,  but  not  the  costs  incurred  by  incumbent  LECs  prior  to  number  portability  implementation,  could  be  claimed  as  eligible  number  portability 

 costs.  24  The  Bureau  reasoned  that  to  allow  recovery  of  costs  other  than  new  costs  would  lead  to 
 (Continued  from  previous  page)  incremental  cost  advantage  over  another  service  provider  when  competing  for  a  specific  subscriber,  and  (2)  must 

 not  disparately  affect  the  ability  of  competing  service  providers  to  earn  a  normal  return.  See  First  Report  and  Order,  11  FCC  Rcd.  at  8419-  21,  paras.  131-  135. 

 16  Third  Report  and  Order,  13  FCC  Rcd  at  11738-  39,  para.  69. 
 17  Id.  at  11773-  76,  paras.  135-  141. 
 18  Id.  at  11776,  para.  142.  See  47  C.  F.  R.    52.33(  a),  (a)(  1). 
 19  Third  Report  and  Order,  13  FCC  Rcd  at  11778,  para.  147.  See  47  C.  F.  R.    52.33(  a),  (a)(  2). 
 20  Third  Report  and  Order,  13  FCC  Rcd  at  11774,  para.  136. 
 21  Cost  Classification  Order,  13  FCC  Rcd  at  24500,  para.  10. 
 22  Id. 
 23  Id.  at  para.  11. 
 24  Id.  at  24503,  para.  18. 
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 double  recovery  of  costs  already  subject  to  recovery  through  standard  recovery  mechanisms.  25  The  Bureau  directed  the  LECs  to  submit  tariffs  that  distinguish  clearly  costs  incurred  for  the 
 narrowly  defined  portability  functions  from  costs  incurred  to  adapt  other  systems  to  implement  number  portability,  such  as  repair  and  maintenance,  billing,  or  order  processing  systems.  26 

 III.  MEMORANDUM  OPINION  AND  ORDER  ON  RECONSIDERATION 
 A.  Jurisdiction 
 1.  Federal/  State  Jurisdiction 
 a.  Background 
 9.  In  the  Third  Report  and  Order,  we  determined  that  section  251(  e)(  2)  27  requires  the  Commission  to  ensure  that  carriers  bear  the  costs  of  providing  local  number  portability  on  a 

 competitively  neutral  basis  for  both  interstate  and  intrastate  calls.  28  In  this  light,  we  determined  that  an  exclusively  federal  recovery  mechanism  for  long-  term  number  portability  would  enable 
 the  Commission  to  satisfy  most  directly  the  competitive  neutrality  mandate  of  the  1996  Act  and  minimize  the  administrative  and  enforcement  difficulties  that  might  arise  if  jurisdiction  over 
 local  number  portability  was  concurrent,  i.  e.,  split  between  federal  and  state  regulatory  authorities.  29  Several  petitioners  seek  reconsideration  of  the  Commission's  conclusion  that  it  has 
 exclusive  jurisdiction  to  establish  a  federal  cost  recovery  mechanism  for  the  cost  of  providing  intrastate  local  number  portability.  Petitioners  argue  that  section  251(  e)(  2)  provides  no  express 
 authority  for  the  Commission  to  establish  an  end-  user  collection  mechanism  for  intrastate  number  portability  costs  or  to  develop  a  centralized  approach  for  the  recovery  of  the  ongoing 
 intrastate  costs  of  implementing  long-  term  number  portability.  30  Specifically,  petitioners  argue  that  the  language  of  section  251(  e)(  2)  does  not  grant  the  Commission  the  unambiguous, 
 straightforward  authority  required  to  preempt  the  states'  authority  to  determine  an  appropriate  recovery  mechanism  for  the  intrastate  costs  of  number  portability.  31 

 b.  Discussion 
 10.  We  are  unpersuaded  by  petitioners'  arguments.  We  agree  with  commenters  that  petitioners  have  not  raised  any  new  or  compelling  arguments  that  were  not  presented  to,  and 

 25  Id. 
 26  See  id.  at  24501,  para.  12. 
 27  See  47  U.  S.  C.    251(  e)(  2). 
 28  See  Third  Report  and  Order,  13  FCC  Rcd  at  11719-  20,  para.  28. 
 29  See  id.  at  11720,  para.  29;  see  also  First  Report  and  Order,  11  FCC  Rcd  at  8415-  24,  paras.  121-  40. 
 30  See  New  York  DPS  Petition  at  2-  6;  Pennsylvania  Office  of  the  Consumer  Advocate  Petition  at  3. 
 31  See  New  York  DPS  Petition  at  2-  6;  Pennsylvania  Office  of  the  Consumer  Advocate  Petition  at  3. 
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 considered  by,  the  Commission  in  the  Third  Report  and  Order.  32  As  we  determined  in  the  Third  Report  and  Order,  section  251(  e)(  2)  's  express  and  unconditional  grant  of  authority  to  the 
 Commission  requires  us  to  ensure  that  carriers  bear  the  cost  of  providing  number  portability  on  a  competitively  neutral  basis  for  both  interstate  and  intrastate  calls.  33  Section  251(  e)(  2)  states  that 
 carriers  shall  bear  the  costs  of  number  portability  "as  determined  by  the  Commission,"  and  does  not  distinguish  between  costs  incurred  in  connection  with  intrastate  calls  and  costs  incurred  in 
 connection  with  interstate  calls.  Additionally,  the  Supreme  Court  has  stated  that  "[  t]  he  FCC  has  rulemaking  authority  to  carry  out  the  'provisions  of  this  Act,  '  which  include    251  and  252, 
 added  by  the  Telecommunications  Act  of  1996."  34 
 11.  Moreover,  we  are  unpersuaded  by  petitioners'  arguments  that  section  251(  e)(  2)  provides  no  express  authority  allowing  the  Commission  to  exercise  jurisdiction  over  the  carrier-  specific 

 cost  recovery  mechanism  for  the  ongoing  intrastate  costs  of  number  portability.  35  As  we  concluded  in  the  Third  Report  and  Order,  section  251(  e)(  2)  requires  the  Commission  to  ensure 
 that  number  portability  costs  are  distributed  among,  as  well  as  recovered  by,  carriers  on  a  competitively  neutral  basis.  36  Despite  our  tentative  conclusion  in  the  First  Report  and  Order  37 
 that  section  251(  e)(  2)  only  applied  to  the  distribution  of  number  portability  costs,  in  the  Third  Report  and  Order  we  determined  that  section  251(  e)(  2)  applies  to  both  distribution  and  recovery 
 of  number  portability  costs.  38  We  concluded  that  this  interpretation  of  section  251(  e)(  2)  best  achieves  the  congressional  goal  of  ensuring  that  the  costs  of  providing  number  portability  are 
 recovered  in  a  manner  that  does  not  discourage  the  development  of  local  competition  that  number  portability  is  intended  to  encourage.  39  We  reasoned  that  if  we  ensured  the  competitive 
 neutrality  of  only  distribution  of  costs,  carriers  could  effectively  undo  this  competitively  neutral  distribution  by  recovering  some  of  these  costs  from  other  carriers  in  a  manner  that  is  not 
 competitively  neutral.  40  We  continue  to  believe  that  section  251(  e)(  2)  applies  to  both  the  distribution  and  recovery  of  number  portability  costs,  thereby  ensuring  achievement  of  the 
 congressional  goal  of  promoting  local  competition. 
 12.  We  are  not  persuaded  by  petitioners  argument  that  because  the  1996  Act  does  not 

 32  AT&  T  Opposition  at  2;  BellSouth  Comments  at  7-  8;  MCI's  Response  at  13;  SBC  Comments  at  4-  5. 
 33  Third  Report  and  Order,  13  FCC  Rcd  at  11719-  20,  paras.  28-  29. 
 34  AT&  T  Corp.  v.  Iowa  Utilities  Board,  525  U.  S.  366,  378  (1999). 
 35  See  New  York  DPS  Petition  at  7. 
 36  Third  Report  and  Order,  13  FCC  Rcd  at  11725,  para  39. 
 37  First  Report  and  Order,  11  FCC  Rcd  at  8460,  para.  209. 
 38  Third  Report  and  Order,  13  FCC  Rcd  at  11725,  para  39. 
 39  Id. 
 40  Id.  The  Commission  noted,  as  an  example,  that  an  incumbent  LEC  could  redistribute  its  number  portability 
 costs  to  other  carriers  by  seeking  to  recover  them  in  increased  access  charges  to  IXCs. 
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 modify  section  152(  b),  41  which  specifically  preserves  state  jurisdiction  over  intrastate  communications,  the  Commission  lacks  jurisdiction  over  intrastate  number  portability  costs.  42  In 
 AT&  T  Corp.  v  Iowa  Utilities  Board,  43  the  Supreme  Court  rejected  the  argument  that  because  local  competition  provisions  are  not  identified  in  section  152(  b)  's  "except"  clause,  the  1996  Act 
 does  nothing  to  displace  the  presumption  that  the  states  retain  their  traditional  authority  over  local  phone  service.  44  The  Court  determined  that  this  argument  ignores  section  201(  b),  which 
 explicitly  gives  the  Commission  jurisdiction  to  make  rules  governing  matters  to  which  the  1996  Act  applies.  45  The  Supreme  Court  concluded  that  section  201(  b)  "means  what  it  says:  The  FCC 
 has  rulemaking  authority  to  carry  out  the  'provisions  of  this  Act,  '  which  include    251  and  252,  added  by  the  Telecommunications  Act  of  1996."  46  Thus,  we  affirm  our  decision  in  the  Third 
 Report  and  Order  that  we  have  exclusive  jurisdiction  over  the  distribution  and  recovery  of  both  intrastate  and  interstate  costs  of  implementing  long-  term  number  portability. 

 13.  Finally,  we  note  that  some  petitioners  request  clarification  that  in  states  where  a  recovery  mechanism  has  not  yet  been  established  for  interim  number  portability,  the  incumbent  LEC  may 
 elect  to  have  the  costs  of  interim  number  portability  incorporated  into  the  long-  term  number  portability  monthly  charge.  47  This  issue  was  decided  in  our  reconsideration  of  the  First  Report 
 and  Order.  48  In  the  Fourth  Reconsideration  Order,  although  we  reaffirmed  our  authority  over  interstate  and  intrastate  number  portability  cost  recovery,  we  denied  requests  that  we  generally 
 preempt  state  number  portability  cost  recovery  decisions  for  interim  number  portability.  49  Instead,  we  affirmed  our  earlier  conclusion  in  the  First  Report  and  Order  that  states  may 
 continue  to  decide  on  cost  recovery  mechanisms  for  interim  number  portability,  as  long  as  they  meet  our  competitively  neutral  guidelines.  50  Thus,  we  will  not  allow  incumbent  LECs  to 
 incorporate  the  costs  of  interim  number  portability  into  their  long-  term  number  portability  monthly  charge. 

 41  See  47  U.  S.  C.    152(  b). 
 42  See  New  York  DPS  Petition  at  2-  6. 
 43  AT&  T  Corp.  v.  Iowa  Utilities  Board,  525  U.  S.  366. 
 44  Id.  at  379-  80.  Title  47  U.  S.  C.    152(  b)  states,  in  relevant  part,  that  "Except  as  provided  in  sections  223  through 
 227,  inclusive,  and  section  332,  and  subject  to  the  provisions  of  section  301  and  title  VI,  nothing  in  this  Act  shall  be  construed  to  apply  or  to  give  the  Commission  jurisdiction  .  .  .  ."  47  U.  S.  C.    152(  b). 

 45  AT&  T  Corp.  v.  Iowa  Utilities  Board,  525  U.  S.  at  380. 
 46  Id.  at  378. 
 47  See  Ameritech  Petition  at  12;  U  S  WEST  Reply  at  4. 
 48  See  Telephone  Number  Portability,  CC  Docket  No.  95-  116,  Fourth  Memorandum  Opinion  and  Order  on 
 Reconsideration,  FCC  99-  151  (rel.  July  16,  1999)  (Fourth  Reconsideration  Order). 
 49  Fourth  Reconsideration  Order  at  para.  29. 

 50  Id. 
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 2.  Determining  the  N-  1  Carrier  on  IntraLATA  and  Extended  Area  Service  Calling  Plans 
 a.  Background 
 14.  In  the  Second  Report  and  Order,  we  adopted  the  North  American  Numbering  Council  s  (NANC's)  recommendation  that  the  carrier  in  the  call  routing  process  immediately  preceding  the 

 terminating  carrier  be  designated  the  "N-  1"  carrier.  51  Petitioners  request  that  the  Commission,  in  instances  of  intraLATA  toll  calling  and  EAS  calling  plans,  relinquish  jurisdiction  over  the 
 distribution  and  recovery  of  intrastate  costs  associated  with  long-  term  number  portability  to  the  states.  52  In  the  alternative,  petitioners  request  that  the  Commission  direct  NANC  to  develop 
 querying  protocol  and  cost  recovery  scenarios  for  intraLATA  and  EAS-  type  services.  53  Petitioners  contend  that  due  to  the  complex  and  varied  arrangements  for  these  services,  it  will  be 
 difficult  for  the  Commission  to  determine  the  N-  1  carrier  assignment  for  intrastate  services  and  appropriate  tariff  rates  for  number  portability  network  interconnection  and  local  number 
 portability  queries  associated  with  various  intraLATA  and  EAS  type  services.  54 
 b.  Discussion 
 15.  We  agree  with  petitioners  that  these  types  of  intrastate  services  may  create  complex  issues  regarding  those  costs  that  may  be  appropriate  for  recovery  by  carriers  in  the 

 implementation  of  long-  term  number  portability.  However,  we  do  not  believe  it  appropriate  to  allow  the  individual  states  to  exercise  jurisdiction  over  the  implementation  and  cost  recovery 
 mechanism  for  local  number  portability  in  the  context  of  intraLATA  and  EAS-  type  services.  As  we  have  stated  above,  we  believe  that  an  exclusively  federal  cost  recovery  mechanism  for  long-term 
 number  portability  enables  the  Commission  to  satisfy  most  directly  the  1996  Acts  competitive  neutrality  mandate  and  minimize  the  administrative  and  enforcement  difficulties  that 
 might  arise  if  jurisdiction  over  local  number  portability  were  divided.  55  Therefore,  we  deny  petitioners  request  that  we  should  relinquish  jurisdiction  over  the  intrastate  costs  of  number 
 portability  associated  with  intraLATA  and  EAS-  type  service  calling  plans. 
 16.  Petitioners  further  request  that  the  Commission  clarify  its  definition  of  N-  1  carrier  assignment  responsibility  for  these  specific  intraLATA  and  EAS-  type  services.  Petitioners  argue 

 that  the  many  and  varied  types  of  call  routing  arrangements  for  these  types  of  intrastate  services  will  make  it  difficult  for  the  Commission  to  determine  the  N-  1  carrier  in  all  instances.  56 

 51  See  Second  Report  and  Order,  12  FCC  Rcd  at  12323,  para.  73. 
 52  ORTC  and  TSTCI  Joint  Petition  at  8-  9. 
 53  Id.  at  11. 
 54  Id.  at  8-  9. 
 55  Third  Report  and  Order,  13  FCC  Rcd  at  11720,  para.  29;  see  also  First  Report  and  Order,  11  FCC  Rcd  at 
 8415-  24,  paras.  121-  40. 
 56  ORTC  and  TSTCI  Joint  Petition  at  8-  9. 
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 Petitioners  argue  that  NANC's  Architecture  &  Administrative  Plan  for  Local  Number  Portability  57  failed  to  provide  N-  1  querying  protocol  scenarios  for  IntraLATA  toll  calls  or  EAS-type 
 service.  58  Petitioners  request  that  the  Commission  direct  NANC  to  develop  comprehensive  intraLATA  and  EAS-  type  service  querying  protocol  scenarios  for  the  various  arrangements  for 
 these  services  throughout  the  country.  59 
 17.  We  deny  the  request  to  develop  the  specific  protocol  scenarios  requested  by  petitioners  because  at  this  time  the  procedures  established  under  the  Second  Report  and  Order  appear 

 sufficient.  60  We  do  believe  that,  in  most  instances,  carriers  have  not  had  any  significant  difficulty  determining  which  carrier  is  the  N-  1  carrier.  Under  the  N-  1  querying  protocol,  the  N-  1 
 carrier  is  responsible  for  the  query  where  "N"  is  the  entity  terminating  the  call  to  the  end-  user,  or  a  network  provider  contracted  by  the  entity  to  provided  tandem  access.  61  Thus,  the  N-  1  carrier 
 (i.  e.,  the  last  carrier  before  the  terminating  carrier)  for  a  local  call  will  usually  be  the  calling  customer's  local  service  provider;  the  N-  1  carrier  for  an  interexchange  call  will  usually  be  the 
 calling  customer's  interexchange  carrier.  62  We  believe  that  until  a  specific  problem  arises  in  determining  the  N-  1  carrier,  it  is  premature  to  ask  NANC  to  spend  the  time  and  resources  it 
 would  take  to  develop  scenarios  for  the  many  different  types  of  intraLATA  and  EAS-  type  services  throughout  the  country.  We  encourage  the  carriers  to  bring  such  specific  issues  to 
 NANC,  pursuant  to  NANCs  oversight  of  number  portability  administration,  for  a  recommended  resolution  to  be  submitted  by  NANC  to  the  Common  Carrier  Bureau  as  and  when  such  issues 
 arise  in  the  context  of  the  provision  of  number  portability.  63 
 B.  Costs  of  the  Regional  Databases 
 1.  Billing  and  Collection  Issues 
 a.  Background 
 18.  In  the  Third  Report  and  Order,  we  stated  that,  as  part  of  its  management  duties  under 
 57  See  North  American  Numbering  Council,  Local  Number  Portability  Administration  Selection  Working  Group 
 Report  App.  D  (Architecture  &  Administrative  Plan  for  Local  Number  Portability)  (Apr.  25,  1997)  (NANC  Recommendation),  adopted,  Second  Report  and  Order,  12  FCC  Rcd  at  12323,  para.  73. 

 58  ORTC  and  TSTCI  Joint  Petition  at  9. 
 59  Id.  at  11. 
 60  Second  Report  and  Order,  12  FCC  Rcd  at  12323,  para.  73. 
 61  Third  Report  and  Order,  13  FCC  Rcd  at  11711,  para.  15;  see  also  NANC  Recommendation  at  8. 
 62  Third  Report  and  Order,  13  FCC  Rcd  at  11711,  para.  15. 
 63  In  the  Second  Report  and  Order,  the  Commission  adopted  the  NANC's  recommendation  that  it  provide  general 
 oversight  of  number  portability  administration  on  an  ongoing  basis.  Specifically,  the  Commission  established  a  procedure  whereby  parties  may  bring  matters  regarding  number  portability  administration  to  the  NANC  so  that  it 

 may  recommend  a  resolution  of  those  matters  to  the  Commission.  Second  Report  and  Order,  12  FCC  Rcd  at  12351,  para.  128. 
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 section  52.26  of  the  Commission's  rules,  64  the  local  number  portability  administrator  (LNPA)  of  each  regional  database  must  collect  sufficient  revenues  to  fund  the  operation  and  management  of 
 that  database.  65  We  required  the  LNPA  to  allocate  the  costs  of  each  regional  database  among  carriers  in  proportion  to  each  carrier's  intrastate,  interstate,  and  international  end-  user 
 telecommunications  revenues  attributable  to  that  region.  66  We  also  noted  that  some  carriers  have  already  begun  paying  their  regional  database  administrators  based  on  temporary  agreements 
 negotiated  between  the  regional  limited  liability  corporations  (LLCs)  and  the  region's  LNPA,  despite  the  fact  that  all  eligible  carriers  had  not  yet  signed  such  agreements.  67  We  permitted,  but 
 did  not  require,  each  regional  administrator  to  adjust  prospectively  through  a  reasonable  true-  up  mechanism  the  future  bills  of  those  carriers  that  participated  in  such  agreements.  68  Such  true-  ups 
 account  for  the  period  prior  to  the  effective  date  of  our  rules  and  recognize  that  agreements  might  have  included  reasonable  cost  recovery  mechanisms  to  recover  regional  database  costs  on 
 a  temporary  basis  pending  the  adoption  of  the  Third  Report  and  Order.  69  NeuStar  has  been  selected  the  LNPA  of  each  region.  70 

 19.  A  number  of  petitioners  raised  issues  relating  to  billing  and  collection  of  LNPA  costs.  Specifically,  petitioners  seek  reconsideration  or  clarification  of:  (1)  the  universe  of  carriers  used 
 to  calculate  cost  recovery;  (2)  potential  double  recovery  of  shared  database  charges;  (3)  audits  of  the  LNPA's  costs;  and  (4)  the  scope  of  work  that  may  be  included  in  the  administrators'  shared 
 costs.  71  In  response  to  these  concerns,  NeuStar  asserts  that  these  billing  and  collection  issues  are  premature  and  should  not  be  addressed  at  this  time.  72  NeuStar  asserts  that  the  "consultative 
 process"  occurring  between  it  and  the  LLCs  will  provide  an  effective  forum  for  establishing  alternate  billing  and  collection  implementation  approaches  to  address  industry  concerns,  such  as 
 those  raised  by  the  commenters.  73 

 64  47  C.  F.  R.    52.26. 
 65  Third  Report  and  Order,  13  FCC  Rcd  at  11761,  para.  116. 
 66  Id. 
 67  Id.  at  para.  117. 
 68  Id. 
 69  Id. 
 70  See  id.  at  11709-  10,  para.  13.  We  note  that  on  November  17,  1999  the  Commission  approved  the  transfer  of 
 Lockheed  Martin  IMSs  NANPA  functions  to  NeuStar.  See  Request  of  Lockheed  Martin  Corporation  and  Warburg,  Pincus  &  Co.  for  Review  of  the  Transfer  of  Lockheed  Martin  Communications  Industry  Services 

 Business,  CC  Docket  No.  92-  237,  Order,  14  FCC  Rcd  19792  (1999). 
 71  See,  e.  g.,  WorldCom  Petition  at  7;  see  also  AT&  T  Corp.  Opposition  at  15-  16.  We  note  that  WorldCom  and 
 MCI  merged  after  the  filing  of  the  pleadings  in  this  proceeding. 
 72  Lockheed  Martin  IMS  Comments  at  2. 

 73  Id.  at  3. 
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 b.  Discussion 
 20.  WorldCom  requests  that  the  Commission  clarify  that  when  NeuStar  implements  its  true-up,  it  does  so  using  all  carriers  as  a  basis  of  its  cost  recovery  plan,  not  just  those  carriers  that 

 have  already  signed  user  agreements  with  the  LNPA.  74  WorldCom  believes  that  it  would  not  be  competitively  neutral  to  allow  NeuStar  to  bill  the  total  costs  of  the  regional  database  to  only  the 
 small  group  of  carriers  that  have  signed  user  agreements,  with  the  intention  of  somehow  crediting  those  carriers  if  and  when  other  carriers  pay  their  proportionate  share.  75  We  agree  with 
 WorldCom  and  hereby  clarify  that  LNPAs  shall  assess  shared  costs  on  all  eligible  carriers,  not  just  carriers  with  existing  long-  term  number  portability  contracts  with  an  LLC.  As  we  stated  in 
 the  Third  Report  and  Order,  we  require  all  telecommunications  carriers  to  bear  LNPA  shared  costs,  and  we  recognize  that  some  carriers  have  already  begun  paying  their  regional  database 
 administrators  based  on  temporary  agreements  negotiated  by  the  regional  LLC.  76  We  did  not  envision  that  such  true-  up  would  exempt  carriers  that  have  not  yet  signed  long-  term  number 
 portability  contracts  with  the  LLC,  but  rather  would  include  such  carriers  in  the  cost  allocation.  We  agree  with  WorldCom  that  although  carriers  without  LLC  contracts  did  not  pay  shared 
 number  portability  costs  from  the  start,  they  are  not  exempt  from  their  responsibility  to  bear  costs  in  a  competitively  neutral  manner.  77  We  also  agree  with  AT&  T  that  we  did  not  intend  to 
 penalize  carriers  currently  under  contract  with  the  LNPA.  78 
 21.  However,  we  decline  to  adopt  WorldCom's  recommendation  that  we  specify  the  manner  in  which  NeuStar  should  implement  true-  ups,  such  as  prohibiting  NeuStar  from  requiring  a  few 

 carriers  to  pay  100  percent  of  the  costs,  and  crediting  funds  back  as  other  payments  flow  in  after  other  carriers  are  billed  at  a  later  date.  79  We  do  not  believe  that  WorldCom  has  presented 
 sufficient  evidence  to  support  its  claim  that  this  true-  up  method  is  discriminatory.  80  Also,  we  acknowledge  NeuStar's  need  to  create  and  maintain  the  number  portability  database,  despite  the 
 fact  that  all  carriers  have  not  signed  user  agreements  with  NeuStar.  We  reiterate  our  earlier  finding  in  the  Second  Report  and  Order,  in  which  we  held  that  the  LLCs  shall  "provide 
 immediate  oversight  and  management  of  the  local  number  portability  administrators."  81  We  strongly  encouraged  all  parties  to  attempt  to  resolve  issues  regarding  number  portability 

 74  WorldCom  Petition  at  7;  see  also  AT&  T  Corp.  Opposition  at  15-  16. 
 75  WorldCom  Petition  at  7. 
 76  Third  Report  and  Order,  13  FCC  Rcd  at  11759-  61,  paras.  113-  117. 
 77  WorldCom  Petition  at  6. 
 78  AT&  T  Corp.  Opposition  at  15-  16. 
 79  WorldCom  Petition  at  7. 
 80  See  id. 
 81  Second  Report  and  Order,  12  FCC  Rcd  at  12345,  para.  114.  We  note  that  such  oversight  is  to  continue  only 
 until  the  Commission  concludes  further  proceedings  to  examine  the  issue  of  local  number  portability  administrator  oversight  and  management.  Id.  at  12346-  47,  para.  119;  see  also  47  C.  F.  R.    52.26(  b)(  2). 
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 deployment  among  themselves  and,  if  necessary,  under  the  auspices  of  the  NANC.  82 
 22.  Vanguard  asserts  that  WorldCom's  request  that  all  carriers  must  bear  their  proportionate  share  of  the  LNPA's  shared  costs  may  lead  to  double  recovery.  83  Vanguard  asserts  that 

 incumbent  LECs  performing  queries  for  CMRS  carriers  are  recovering  their  portion  of  the  shared  administrator's  charges  through  query  service  charges,  and  any  true-  up  adopted  by  administrators 
 has  to  be  sensitive  to  this  particular  potential  for  double  recovery  of  costs,  which  would  not  be  competitively  neutral.  84  MCI  responds  that  Vanguard's  concern  is  over-  recovery  through  query 
 service  charges,  not  double  recovery,  and  such  concerns  should  be  addressed  in  the  context  of  specific  query  service  tariffs.  85 

 23.  We  agree  with  MCI  that  Vanguard's  concern  about  double  recovery  is  really  an  issue  of  potential  over-  recovery  through  query  service  charges.  86  Vanguard  believes  that  CMRS 
 providers  will  be  double-  paying  their  share  of  number  portability  costs  by  paying  their  regional  LNPAs  for  their  respective  portion  of  the  shared  costs,  as  well  as  paying  incumbent  LECs  for 
 query  service  charges,  through  which  incumbent  LECs  will  pass  on  their  own  shared  LNPA  costs.  First,  we  note  that  all  carriers  who  contract  out  their  querying  services,  not  just  CMRS 
 carriers,  will  be  in  the  identical  position  of  paying  both  the  regional  LNPAs  for  shared  costs,  as  well  as  query  service  charges.  Second,  we  held  in  the  Third  Report  and  Order  that  each  carrier's 
 LNPA  costs,  once  distributed,  are  carrier-  specific  costs  directly  related  to  number  portability,  87  and  that  an  incumbent  LEC's  carrier-  specific  costs  directly  related  to  number  portability  are  to  be 
 recovered  through  tariffed  charges.  88  We  also  held  in  the  Cost  Classification  Order  that  carriers  are  to  allocate  their  carrier-  specific  costs  directly  related  to  number  portability  between  end-  user 
 charges  and  query  service  charges.  89  We  clarify  that  incumbent  LECs  must  allocate  their  shared  administrative  fees  between  the  query  service  charge  and  the  end-  user  charge.  90  If  a  carrier 
 believes  that  an  incumbent  LEC  is  recovering  its  shared  costs  solely  through  query  service  charges  rather  than  allocating  such  charges  between  end-  user  and  query  service  charges,  or 
 recovering  these  costs  through  inflated  query  service  charges,  it  should  so  state  in  the  context  of  a  carrier's  tariff  review  process  91  or  through  the  Commission's  normal  complaint  procedures.  92 

 82  Second  Report  and  Order,  12  FCC  Rcd  at  12352-  53,  para.  130. 
 83  Vanguard  Opposition  at  5-  7. 
 84  Id.  at  6-  7. 
 85  MCI  Reply  at  7-  8. 
 86  Id. 
 87  Third  Report  and  Order,  13  FCC  Rcd  at  11745,  para.  87. 

 88  Id.  at  11773-  74,  para.  135. 
 89  See  Cost  Classification  Order,  13  FCC  Rcd  at  24511,  para.  40. 
 90  See  id. 
 91  47  U.  S.  C.    204. 
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 We  will  investigate  a  specific  carrier's  tariff  and  rates  and  examine  them  for  over-  recovery  via  the  query  service  charge  at  that  time. 
 24.  WorldCom  asks  the  Commission  to  clarify  that  shared  LNPA  costs  include  shared  database  costs,  future  statement  of  work  modifications,  and  porting  charges.  93  We  agree  with 
 WorldCom  that  the  LNPAs  may  include  database  costs  and  modifications.  We  have  previously  concluded  that  number  portability  costs  include  initial  costs  as  well  as  costs  due  to  subsequent 
 changes  in  the  number  portability  database.  94  Like  all  other  shared  costs,  these  costs  should  be  distributed  among  all  carriers.  95  However,  the  meaning  of  WorldComs  statement  that  the  LNPA 
 should  be  allowed  to  assess  "porting  charges"  is  unclear.  We  note  that  in  the  Third  Report  and  Order,  we  stated  that  acceptable  LNPA  shared  costs  that  could  be  distributed  to 
 telecommunications  carriers  include  "nonrecurring,  recurring,  upload,  and  download  costs."  96  If  WorldCom  is  referring  to  such  uploading  and  downloading  costs,  and  such  costs  meet  the  "but 
 for"  test  for  number  portability  cost  recovery,  97  then  we  agree  that  such  charges  should  be  included  in  the  LNPAs  shared  costs. 

 25.  WorldCom  also  asks  the  Commission  to  clarify  that  if  number  portability  implementation  causes  public  safety  concerns  that  must  be  addressed  on  a  technical  or 
 operational  level,  any  LNPA  charges  related  to  resolving  those  public  safety  concerns  also  should  be  billed  as  shared  costs.  98  We  held  in  the  First  Report  and  Order  that,  as  a  general 
 matter,  any  long-  term  number  portability  must  not  "result  in  unreasonable  degradation  in  service  quality  or  network  reliability  when  implemented,"  99  and  recognized  that  consumers  "rely  on  the 
 public  switched  telephone  network  for  their  livelihood,  health  and  safety."  100  In  the  Third  Report  and  Order,  we  adopted  the  tentative  definition  of  shared  costs  as  "costs  incurred  by  the 
 industry  as  a  whole,  such  as  those  incurred  by  third-  party  administrator  to  build,  operate,  and  maintain  the  databases  needed  to  provide  number  portability."  101  As  we  have  already  established 
 a  definition  of  "shared  costs"  that  commenters  to  the  Third  Report  and  Order  found  to  be 

 (Continued  from  previous  page)  92  Id.  at    208. 
 93  WorldCom  Petition  at  10. 
 94  Third  Report  and  Order,  13  FCC  Rcd  at  11725,  para.  38. 
 95  Id.  at  11759-  61,  paras.  113-  117. 
 96  Id.  at  11745,  para.  87. 
 97  Cost  Classification  Order,  13  FCC  Rcd  at  24500,  para.  10. 
 98  WorldCom  Petition  at  10. 
 99  First  Report  and  Order,  11  FCC  Rcd  at  8378,  para.  48. 
 100  Id.  at  8382,  para.  55. 
 101  Third  Report  and  Order,  13  FCC  Rcd  at  11738-  11739,  para.  69. 
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 workable,  we  decline  to  expand  on  that  definition  in  the  abstract.  102 
 26.  In  the  Third  Report  and  Order,  we  reserved  the  right  to  audit  each  LNPA's  costs.  103  PCIA  asserts  that  the  Commission  should  clarify  which  of  the  regional  database  administrator's 

 costs  are  recoverable  and  should  implement  a  procedural  mechanism  for  affected  entities  to  review  and  comment  on  the  administrator's  annual  budget.  104  In  opposition,  AT&  T  comments 
 that  such  procedure  would  add  a  new  layer  of  administrative  complexity  for  the  Commission,  introduce  a  new  source  of  delays,  and  increase  the  costs  of  both  the  LNPAs  and  the  carriers.  105 
 NeuStar  asserts  that  it  was  awarded  the  number  portability  regional  contracts  through  a  vigorously  competitive  selection  process  designed  to  ensure  the  lowest  possible  prices  in  the 
 industry,  which  renders  additional  Commission  oversight  of  its  budget  unnecessary.  106  NeuStar  also  believes  that  public  disclosure  of  its  budget  would  unfairly  harm  it  in  competitive  bidding 
 for  any  future  third  party  contracts.  107  NeuStar  states  that  it  has  committed  to  make  its  fees  available  for  audits  pursuant  to  existing  number  portability  administration  contracts.  108  AT&  T 
 also  notes  that  the  Second  Report  and  Order  instructed  carriers  that  they  could  pursue  complaints  to  NANC  or  the  Commission  if  the  LNPAs  are  not  meeting  Commission  requirements.  109 

 27.  We  agree  with  AT&  T  that  adding  an  additional  audit  requirement  would  add  administrative  complexity  and  cost  without  a  commensurate  benefit.  As  AT&  T  noted,  the 
 Commission  stated  in  the  Second  Report  and  Order  that  the  LLCs  "provide  immediate  oversight  and  management  of  the  local  number  portability  administrators."  110  The  record  does  not  support 
 PCIA's  contention  that  additional  provisions  for  public  comment  on  NeuStar's  annual  budget  are  necessary,  especially  because  the  specifics  of  NeuStar's  budget  have  been  agreed  upon  in  the 
 context  of  contractual  negotiations,  and  because  carriers  may  request  an  audit  of  NeuStar's  budget  pursuant  to  LNPA  contracts.  We  therefore  deny  PCIA's  request  to  implement  a 
 procedural  mechanism  to  review  and  comment  on  the  administrators  annual  budget. 

 102  See  WorldCom  Petition  at  10. 
 103  Third  Report  and  Order,  13  FCC  Rcd  at  11763-  64,  para.  121. 
 104  PCIA  Petition  at  3-  5;  see  also  UTC  Comments  at  5. 
 105  AT&  T  Opposition  at  14-  15. 
 106  Lockheed  Martin  IMS  Comments  at  4. 
 107  Id. 
 108  Id. 
 109  AT&  T  Opposition  at  14-  15. 
 110  Second  Report  and  Order,  12  FCC  Rcd  at  12345,  para.  114. 
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 2.  Revenues  to  be  Included  in  the  Allocator 
 a.  Background 
 28.  In  the  Third  Report  and  Order,  we  decided  that  the  number  portability  regional  database  administrator  would  allocate  the  costs  of  each  number  portability  regional  database  among  all 

 telecommunications  carriers  in  proportion  to  each  carrier's  intrastate,  interstate,  and  international  end-  user  telecommunications  revenues  attributable  to  that  region.  111  Our  decision  to  use  the  end-user 
 revenue  allocator  was  based  on  our  conclusion  that  it  meets  the  two-  prong  competitive  neutrality  test  in  that:  (1)  the  allocator  will  not  give  one  service  provider  an  appreciable, 
 incremental  cost  advantage  when  competing  for  a  subscriber;  and  (2)  allocating  shared  costs  in  proportion  to  end-  user  revenues  will  prevent  the  shared  costs  from  disparately  affecting  the 
 ability  of  carriers  to  earn  a  normal  return.  112 
 29.  MCI  challenges  the  end-  user  revenue  allocator  adopted  by  the  Commission.  MCI  asserts  that  the  end-  user  revenue  allocator  is  over-  inclusive  because  it  captures  services  that  are 

 completely  unrelated  to  number  portability,  that  neither  use  numbering  resources  nor  impose  any  costs  on  the  Number  Portability  Administration  Center  (NPAC)  system,  and  receive  no  benefits 
 from  local  competition  or  local  number  portability.  113  MCI  requests  that  we  exclude  from  the  regional  database  cost  allocator  revenues  from  services  such  as  private  lines,  virtual  private 
 networks,  toll  free,  and  outbound  international  services.  114 
 b.  Discussion 
 30.  We  affirm  our  decision  in  the  Third  Report  and  Order  that  the  number  portability  regional  database  administrator  will  allocate  the  costs  of  each  number  portability  regional 

 database  among  all  telecommunications  carriers  in  proportion  to  each  carrier's  intrastate,  interstate,  and  international  end-  user  telecommunications  revenues  attributable  to  that  region. 
 We  disagree  with  MCI  that  the  end-  user  revenue  allocator  is  over-  inclusive.  Section  251(  e)(  2)  requires  that  number  portability  costs  "be  borne  by  all  telecommunications  carriers  on  a 
 competitively  neutral  basis  as  determined  by  the  Commission."  115  The  statutory  language  mandates  that  the  costs  of  number  portability  be  shared  by  all  telecommunications  carriers  in  a 
 competitively  neutral  manner,  and  does  not  limit  the  application  of  the  shared  costs  to  telecommunications  services  that  use  numbering  resources.  The  Commission  determined  that 
 the  end-  user  revenues  allocator  is  competitively  neutral  in  part  because  it  spreads  the  costs  of  number  portability  among  all  telecommunications  carriers  rather  than  imposing  the  costs 

 111  Third  Report  and  Order,  13  FCC  Rcd  at  11754-  55  and  11759,  paras.  105  and  113. 
 112  Id.  at  11755-  56,  paras.  106-  07. 
 113  MCI  Petition  at  3. 
 114  Id.  at  1-  6. 
 115  47  U.  S.  C.    251(  e)(  2). 
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 disproportionately  on  any  particular  class  or  classes  of  carriers.  116 
 31.  In  this  light,  the  Commission  determined  that  the  end-  user  revenue  allocator  would  not  give  one  service  provider  any  appreciable,  incremental  cost  advantage  when  competing  for  a 

 subscriber.  117  The  Commission  reasoned  that  because  the  allocator  would  distribute  the  shared  costs  of  the  regional  databases  to  each  carrier  in  proportion  to  that  carrier's  end-  user  revenues, 
 carriers  would  incur  approximately  the  same  increase  in  shared  costs  to  win  a  specific  customer.  118 

 32.  Moreover,  the  Commission  concluded  that  allocating  shared  costs  in  proportion  to  end-user  revenues  would  prevent  the  shared  costs  from  disparately  affecting  the  ability  of  carriers  to 
 earn  a  normal  return.  119  The  Commission  reasoned  that  because  allocations  of  the  shared  costs  would  vary  directly  with  end-  user  revenues,  a  carriers  share  of  the  regional  database  costs 
 would  increase  in  proportion  to  its  customer  base.  120  Thus,  no  carrier's  portion  of  the  shared  costs  would  be  excessive  in  relation  to  its  expected  revenues,  and  its  allocated  share  would  only 
 increase  as  it  increases  its  revenue  stream.  121 
 33.  MCI  argues  that  administrative  efficiency  is  not  a  valid  reason  for  adopting  an  allocator  that  imposes  cost  recovery  obligations  on  carriers  where  there  is  no  relationship  between  the 

 service  --  number  portability  --  and  the  services  from  which  the  carrier  realizes  revenues.  122  We  disagree.  As  discussed  above,  Congress  mandated  that  the  Commission  establish  a 
 competitively  neutral  mechanism  for  the  recovery  of  number  portability  costs.  123  In  seeking  to  establish  a  revenue  allocator,  the  Commission  not  only  sought  one  that  satisfied  this 

 116  Third  Report  and  Order,  13  FCC  Rcd  at  11755-  56,  paras.  106-  107. 
 117  Id.  at  11755,  para.  106. 
 118  The  Commission  provided  the  following  example  as  explanation:  if  one  of  two  LECs  wins  a  third  LEC's 
 subscriber,  whichever  of  the  two  LECs  who  wins  the  subscriber  will  win  the  end-  user  revenue  that  subscriber  generates.  This  will  increase  the  winning  LECs  allocated  portion  of  the  shared  costs.  Because  the  subscriber  is 

 likely  to  use  approximately  the  same  amount  of  local  service  regardless  of  which  of  the  two  competing  LECs  provides  service  to  the  subscriber,  the  incremental  shared  cost  one  of  the  two  LECs  would  experience  if  it  had 
 won  the  subscriber  would  be  about  the  same  as  the  incremental  shared  cost  the  other  would  experience  if  it  won  the  subscriber.  This  increase  would  also  approximately  equal  the  decrease  in  the  shared  costs  the  third  carrier 
 would  experience,  having  lost  the  subscriber.  These  amounts  may  not  be  exactly  the  same  because  each  of  the  three  carriers  may  have  different  rates  and  may  not  collect  exactly  the  same  revenue  from  that  subscriber.  The 
 Commission  reasoned  that  any  difference  would  not  be  significant  enough  to  create  an  appreciable,  incremental  cost  disadvantage.  Id. 

 119  Id.  at  11755-  56,  para.  107. 
 120  Id. 
 121  Id. 
 122  MCI  Petition  at  4. 
 123  47  U.  S.  C.    251(  e)(  2). 
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 Congressional  mandate,  but  one  that  would  be  relatively  simple  for  telecommunications  carriers  to  apply.  In  this  light,  the  Commission  adopted  the  end-  user  telecommunications  revenue 
 allocator  for  three  reasons.  First,  because  it  met  the  Congressional  competitive  neutrality  mandate.  124  Second,  because  it  would  be  administratively  efficient  for  telecommunications 
 carriers  to  apply  because  they  already  track  their  sales  to  end  users  for  billing  purposes.  125  And,  third,  because  telecommunication  carriers  are  familiar  with  the  end-  user  revenues  allocator  from 
 its  use  for  universal  service  support  contributions.  126 
 34.  We  agree  with  Bell  Atlantic  that  if  we  begin  excluding  revenues  from  the  allocation  process,  other  carriers  will  likely  seek  to  exclude  revenues  from  other  services,  resulting  in  little 

 change  in  allocation,  but  a  great  deal  of  extra  bookkeeping.  127  We  also  believe  that  allowing  carriers  to  exclude  revenues  associated  with  particular  services  would  result  in  unnecessary 
 administrative  work  for  not  only  the  telecommunications  carriers,  but  also  for  the  LNPA.  Reducing  the  bookkeeping  and  reporting  burdens  on  the  telecommunications  industry  is  one  of 
 the  goals  of  the  Commission's  recent  Streamlined  Contributor  Reporting  Requirements  Order.  128  We  continue  to  believe  that  the  application  of  the  end-  user  revenues  allocator  fulfills  our 
 congressional  mandate  of  ensuring  that  the  costs  of  number  portability  are  shared  on  a  competitively  neutral  basis  by  all  telecommunications  carriers.  Thus,  we  affirm  our  end-  user 
 revenues  allocator  and  deny  MCI's  request  for  reconsideration. 
 3.  National  and  Multi-  Regional  Carriers 
 a.  Background 
 35.  In  the  Third  Report  and  Order,  we  determined  that  the  costs  of  the  number  portability  regional  databases  should  be  allocated  among  all  telecommunications  carriers  operating  in  each 

 of  the  seven  number  portability  regions  in  proportion  to  each  carrier's  end-  user  revenues  as  determined  by  the  end-  user  revenues  collected  by  all  telecommunications  carriers  in  that 

 124  Third  Report  and  Order,  13  FCC  at  11755,  para.  106. 
 125  Id.  at  11765,  para.  107. 
 126  Id.  Since  that  time,  we  have  modified  our  rules  for  contributions  to  the  Telecommunications  Relay  Services 
 (TRS)  and  North  American  Numbering  Plan  (NANP)  so  that  the  contributions  are  now  based  on  end-  user  telecommunications  revenues.  See  1998  Biennial  Regulatory  Review  --  Streamlined  Contributor  Reporting 

 Requirements  Associated  with  Administration  of  Telecommunications  Relay  Services,  North  American  Numbering  Plan,  Local  Number  Portability,  and  Universal  Service  Support  Mechanisms,  CC  Docket  No.  98-  171,  Report  and 
 Order,  14  FCC  Rcd  16602,  16630-  35,  paras.  59-  70  (1999)  (Streamlined  Contributor  Reporting  Requirements  Order). 

 127  Bell  Atlantic  Response  at  3-  4. 
 128  One  of  the  goals  of  the  Streamlined  Contribution  Reporting  Requirement  Order  is  to  reduce  carriers'  and 
 service  providers'  burdens  by  combining  the  reporting  requirements  of  the  TRS  Fund,  federal  universal  support  mechanisms,  NANP,  and  local  number  portability  administration  into  one  consolidated  form,  the 

 Telecommunications  Reporting  Worksheet.  See  Streamlined  Contributor  Reporting  Requirements  Order,  14  FCC  Rcd  at  16603,  para.  1. 
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 region.  129  To  facilitate  the  cost  allocation  of  the  regional  databases,  the  local  number  portability  administrator  for  each  regional  database  may  collect  end-  user  revenue  information  for  all 
 telecommunications  carriers  once  each  year.  130 
 36.  Commenters  argue  that  compliance  with  section  52.32(  a)(  2)  of  our  rules  will  require  national  and  multi-  regional  carriers  to  change  the  manner  in  which  they  record  revenues.  131 

 WorldCom  requests  that  the  Commission  allow  national  and  multi-  regional  carriers  to  report  total  end-  user  revenues,  and  then  divide  these  figures  among  the  seven  regional  databases.  132 
 MCI  suggests  that  the  Commission  permit  carriers  to  attribute  end-  user  revenues  on  a  pro-  rata  or  other  reasonable  basis,  rather  than  being  required  to  develop  new  revenue  attribution  systems 
 only  for  number  portability.  133  In  response,  NeuStar  notes  that  it  is  engaged  in  discussions  with  the  LLC  for  each  region  on  the  very  issues  raised  by  MCI  and  WorldCom.  134  NeuStar  argues 
 that  it  would  be  premature  for  the  Commission  to  address  these  issues  at  this  time.  135  Moreover,  in  separately  filed  petitions  for  waiver,  Williams  Communications,  Inc.  (Williams)  and  AMSC 
 Subsidiary  Corporation  (AMSC)  request  waiver  of  section  52.32  of  our  rules  on  similar  grounds.  136 

 b.  Discussion 
 37.  We  recognize  the  inherent  difficulties  some  national  and  multi-  regional  carriers  will  experience  in  attempting  to  determine  end-  user  revenue  by  regional  database  area.  We  agree 

 with  WorldCom  that  the  use  of  an  estimate  can  reduce  an  otherwise  onerous  data  collection  paperwork  burden.  137  We  also  agree  with  MCI  that  requiring  national  and  multi-  regional  carriers 

 129  Third  Report  and  Order,  13  FCC  Rcd  at  11761,  para.  116. 
 130  Id.  See  47  C.  F.  R.    52.32(  a)(  2).  We  note  that  NeuStar,  the  database  administrator  for  all  seven  regions, 
 requested  this  information  from  all  telecommunications  carriers  through  FCC  Form  487,  the  LNP  1998  Worksheet.  FCC  Form  499-  A  replaced  FCC  Form  487  in  July  1999  and  is  now  used  to  collect  this  information. 

 See  Streamlined  Contributor  Reporting  Requirements  Order,  14  FCC  Rcd  16602. 
 131  WorldCom  Petition  at  8-  9;  MCI  Petition  at  8-  9;  MCI  Reply  at  2  n.  4. 

 132  WorldCom  Petition  at  8. 
 133  MCI  Petition  at  8-  9;  MCI  Reply  at  2  n.  4. 
 134  Lockheed  Comments  at  2-  3,  5.  NeuStar  also  notes  that  each  local  number  portability  region  has  an  established 
 limited  liability  company  (LLC),  which  has  existing  contracts  with  the  LNPA  to  provide  local  number  portability  database  services.  Id.  at  1  n.  2. 

 135  Id.  at  2-  3. 
 136  See  Williams  Communications  Petition  for  Expedited  Waiver  (filed  Mar.  29,  1999)  (Williams  Petition)  and 
 AMSC  Subsidiary  Corporation  Waiver  Request  (filed  Apr.  13,  1999)  (AMSC  Waiver). 
 137  See  WorldCom  Petition  at  8. 
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 to  develop  region-  specific  attribution  systems  for  all  of  its  end-  user  services  may  be  costly  and  administratively  burdensome.  138  The  use  of  a  proxy  based  on  the  percentage  of  subscribers  a 
 carrier  serves  in  a  particular  region  is  a  reasonable  means  of  reaching  an  estimate  and  of  reducing  the  administrative  burden  on  the  carriers.  Therefore,  we  will  allow  national  and  multi-region 
 carriers  to  use  a  proxy  to  allocate,  on  a  good  faith  basis,  their  end-  user  revenues  to  the  appropriate  regional  LNP  administrator.  Those  carriers  that  submit,  with  their  LNP  Worksheet, 
 an  attestation  certifying  that  they  are  unable  to  precisely  divide  their  traffic  and  resulting  end-user  revenue  among  the  seven  LNPA  regions  identified  in  the  LNP  worksheet  will  be  allowed  to 
 divide  their  end-  user  revenue  among  these  regions  based  on  the  percentage  of  subscribers  served  in  each  region.  Carriers  may  use  their  billing  databases  to  identify  subscriber  location.  139 

 38.  We  acknowledge  that  subscriber  percentages  may  not  be  the  only  satisfactory  proxy  for  end-  user  revenue.  Accordingly,  national  and  multi-  region  carriers  that  cannot  make  a  proxy 
 certification  based  upon  subscriber  percentages  may  request  a  waiver  of  section  52.32  of  our  rules  based  on  other  reasonable  proxy  methods. 

 39.  Neither  AMSC  nor  Williams  propose  to  allocate  their  revenue  based  upon  number  of  subscribers  served  in  the  regions  in  which  they  provide  service.  AMSC  would  divide  its  end-user 
 revenue  equally  between  the  LNP  regions.  140  Williams  proposes  to  report  its  revenue  derived  from  services  rendered  in  or  between  two  or  more  regions,  based  on  a  good-  faith 
 estimate  as  to  which  portions  of  those  revenues  are  derived  from  each  of  the  seven  regions,  but  it  does  not  explain  its  proposed  methodology.  141  Williams  requests  a  waiver  only  until  such  time  as 
 the  Commission  issues  rules,  guidelines  or  policies  which  instruct  carriers  how  to  apportion  revenue  between  regions,  for  long-  term  number  portability  cost  recovery  purposes,  which  we  have 
 now  done.  AMSC  does  not  limit  its  waiver  request  in  this  fashion,  but  rather  seems  to  request  permission  to  permanently  adopt  its  alternative  allocation  system. 

 40.  In  evaluating  these  petitions,  we  recognize  that  both  AMSC  and  Williams,  in  all  likelihood, 
 138  See  MCI  Petition  at  8-  9. 
 139  See  Local  Competition  and  Broadband  Reporting,  CC  Docket  No.  99-  301,  Report  and  Order,  15  FCC  Rcd 
 7717,  7745,  7757,  paras.  52,  85  (2000). 
 140  See  AMSC  Waiver  at  1.  AMSC  requests  waiver  of  section  52.32  on  the  ground  that  it  operates  a  mobile  satellite 
 service  system  that  provides  two-  way  mobile  voice  and  data  through  out  the  United  States  using  five  slightly  overlapping  beams.  AMSC  states  that  when  a  customer  is  using  one  of  its  mobile  terminals,  AMSC  cannot  identify 

 which  of  the  five  beams  the  customer  is  using.  Moreover,  as  beams  cover  thousands  of  square  miles,  AMSC  argues  that  there  is  no  simple  or  precise  way  to  divide  its  traffic  and  end-  user  revenue  between  the  regions  identified  in  the 
 LNP  worksheet.  ANSC  requests  that  the  Commission  allow  it  to  divide  its  end-  user  revenue  on  FCC  Form  499-  A  equally  between  the  LNP  regions. 

 141  See  Williams  Petition  at  2.  Williams  seeks  waiver  of  section  52.32  on  the  grounds  that  it  derives  a  substantial 
 portion  of  its  revenue  from  services  that  are  provided  to  large  business  customers  in  two  or  more  regions,  and  that  it  is  not  able  to  assign  revenue  from  many  of  its  customers  to  a  single  region.  Williams  requests  that  the  Commission 

 allow  it  to  report  its  revenue  derived  from  services  rendered  in  or  between  two  or  more  regions,  based  on  a  good-  faith  estimate  as  to  which  portions  of  those  revenues  are  derived  from  each  of  the  seven  regions. 
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 have  already  begun  paying  their  regional  database  administrators.  Although  we  find  that  the  particular  allocation  proxy  we  permit  above  is  preferable  to  either  of  the  allocation  alternatives  set 
 forth  in  the  AMSC  or  Williams  petitions,  we  are  also  mindful  of  the  potential  administrative  costs  that  may  be  incurred  were  we  to  conclude  that  the  alternatives  proposed  by  petitioners  could  not  be 
 used  for  those  periods  for  which  filings  have  already  been  submitted.  Therefore,  taking  into  account  all  these  circumstances,  we  grant  both  waivers  to  the  limited  extent  that  the  alternative 
 revenue  allocations  have  been  submitted  by  AMSC  or  Williams  on  or  before  the  release  date  of  this  Order.  On  a  going-  forward  basis,  we  further  conclude  that  although  the  proxy  we  adopt  today 
 provides  a  better  allocation  method  than  those  in  the  petitions,  we  would  consider  alternative  allocation  methods  that  these  companies  might  propose  in  waiver  petitions  for  prospective  periods, 
 based  upon  their  particular  circumstances.  With  respect  to  future  worksheets,  therefore,  Williams  and  AMSC  may  either  (1)  file  an  attestation  certifying  that  they  are  unable  to  precisely  divide 
 their  traffic  and  resulting  end-  user  revenue  among  the  seven  LNPA  regions  identified  in  the  worksheet  and  accordingly  will  divide  their  end-  user  revenue  among  these  regions  based  on  the 
 percentage  of  subscribers  served  in  each  region,  consistent  with  this  Order;  or  (2)  request  in  a  timely  manner  a  waiver  to  use  another  appropriate  proxy.  If  petitioners  choose  the  latter 
 alternative,  we  encourage  them  to  file  their  waiver  requests  expeditiously. 
 C.  Recovery  of  Carrier-  Specific  Costs  Directly  Related  to  Providing  Number  Portability 

 1.  Independent  and  Rural  Incumbent  LECs 
 a.  Background 
 41.  In  the  First  Reconsideration  Order,  the  Commission  determined  that  carriers  outside  the  100  largest  Metropolitan  Statistical  Areas  (MSAs)  would  only  be  required  to  provide  local 

 number  portability  within  six  months  of  a  request  from  a  carrier  offering  competitive  local  service.  142  In  the  Third  Report  and  Order,  the  Commission  allowed  but  did  not  require 
 incumbent  LECs  to  recover  their  carrier  specific  costs  directly  related  to  providing  number  portability  through  a  federally  tariffed  end-  user  charge.  143  At  that  time,  the  Commission 
 determined  that  recovery  of  these  costs  from  end  users  would  not  begin  until  the  end  users  were  reasonably  able  to  begin  receiving  the  direct  benefits  of  long-  term  number  portability.  144  The 
 Commission  allowed  an  incumbent  LEC  to  assess  the  monthly  end-  user  charge  only  on  end  users  in  the  100  largest  MSAs,  and  end  users  it  serves  outside  the  100  largest  metropolitan  statistical 
 areas  from  a  number  portability-  capable  switch.  145  Because  carriers  may  make  any  switch  number  portability-  capable,  the  Commission  determined  that  this  approach  would  encourage 

 142  See  Telephone  Number  Portability,  CC  Docket  No.  95-  116,  First  Memorandum  Opinion  and  Order  on 
 Reconsideration,  12  FCC  Rcd  7236,  7266,  7298,  paras.  48,  107  (1997)  (First  Reconsideration  Order). 
 143  Third  Report  and  Order,  13  FCC  Rcd  at  11773-  74,  para.  135. 

 144  Id.  at  11776,  para.  142. 
 145  Id.  at  11776,  para.  143. 
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 carriers  to  install  number  portability  and  ensure  that  end  users  were  assessed  number  portability  charges  only  where  they  were  reasonably  likely  to  benefit  from  number  portability.  146 
 Petitioners  contend  that  carriers  that  are  not  required  to  be  number  portability-  capable  at  this  time,  are,  nevertheless,  incurring  costs  associated  with  number  portability.  147  Petitioners  argue 
 that  the  Third  Report  and  Order  fails  to  provide  a  mechanism  for  carriers,  in  this  situation,  to  recover  their  costs  related  to  number  portability.  148 

 42.  Specifically,  petitioners  request  that  an  alternative  recovery  mechanism  be  established  for  incumbent  LECs  who  are  not  required  to  be  number  portability-  capable  at  this  time.  149 
 Petitioners  note  that  once  shared  costs  are  allocated  to  each  telecommunications  carrier,  that  carrier's  portion  of  the  shared  cost  is  treated  as  a  "carrier-  specific  cost"  directly  related  to 
 providing  number  portability.  Under  the  rules  set  forth  in  the  Third  Report  and  Order,  however,  incumbent  LECs  who  are  not  number  portability-  capable  cannot  recover  these  costs.  Petitioners 
 argue  that  this  places  small  and  independent  incumbent  LECs  at  a  competitive  disadvantage.  150 
 43.  Petitioners  further  argue  that  the  Third  Report  and  Order  fails  to  provide  a  recovery  mechanism  for  the  costs  that  will  be  incurred  for  query  services  by  those  incumbent  LECs  that 

 have  no  number  portability  capability.  151  USTA  argues  that  the  Commission  should  allow  incumbent  LECs  without  long-  term  number  portability  capability  to  book  and  recover  these  costs 
 though  the  regular  accounting  and  separations  process.  152 
 44.  NECA  and  NTCA  both  note  that  because  of  joint  local  calling  agreements  between  small  incumbent  LECs  and  larger  incumbent  LECs  for  the  provision  of  number  portability  database 

 query  services,  the  larger  incumbent  LECs  will  assess  smaller  incumbent  LECs  a  charge  for  performing  query  services.  NECA  and  NTCA  further  point  out  that  because  of  these 
 agreements,  most  of  their  pool  participants,  as  N-  1  carriers,  will  incur  query  service  costs  whenever  any  number  in  an  NXX  their  customers  call,  has  been  ported.  153  NTCA  further  argues 

 146  Id. 
 147  See  NECA  Petition  at  1-  4;  NTCA  Petition  at  3;  ORTC  and  TSTCI  Petition  at  3-  4;  see  also  Petition  for  Expedited 
 Interim  Waiver  (  filed  March  19,  1999)  (NECA  Waiver)  (NECA,  NRTA,  NTCA,  OPATSCO,  and  USTA  are  parties  to  the  interim  waiver  request). 

 148  See  NECA  Petition  at  1-  4;  NTCA  Petition  at  3;  ORTC  and  TSTCI  Petition  at  3-  4;  Third  Report  and  Order,  13 
 FCC  Rcd  at  11776,  para.  143. 
 149  NECA  Petition  at  5;  NTCA  Petition  at  5;  ORTC  and  TSTCI  Joint  Petition  at  4. 

 150  See  NECA  Petition  at  5;  NTCA  Petition  at  5;  ORTC  and  TSTCI  Joint  Petition  at  4. 
 151  USTA  Petition  at  5;  NECA  Petition  at  4-  5;  NTCA  Petition  at  5;  ORTC  and  TSTCI  Joint  Petition  at  4;  NECA 
 Reply  at  3,  5. 
 152  USTA  Petition  at  5-  6. 

 153  NECA  Petition  at  3-  4;  NTCA  Petition  at  5-  6. 
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 that  since  the  benefits  of  number  portability  accrue  to  interexchange  carriers,  the  Commission  should  consider  recovery  through  access  charges  as  long  as  the  mechanism  it  establishes  is 
 competitively  neutral.  154 
 b.  Discussion 
 45.  In  the  Third  Report  and  Order,  we  required  that  all  shared  costs  155  be  allocated  among  all  telecommunications  carriers  based  on  the  requirement  of  section  251(  e)(  2)  of  the  Act  that  the 

 costs  of  establishing  number  portability  "shall  be  borne  by  all  telecommunications  carriers  on  a  competitively  neutral  basis."  156  After  distribution,  each  carrier's  portion  of  shared  costs  is  treated 
 as  a  carrier-  specific  cost  directly  related  to  providing  local  number  portability.  157  To  ensure  that  there  would  be  sufficient  revenues  to  fund  the  operation  and  management  of  the  databases,  we 
 concluded  that  it  was  necessary  to  allocate  the  costs  of  each  regional  database  among  carriers  in  proportion  to  each  carrier's  intrastate,  interstate,  and  international  end-  user  telecommunications 
 revenues  attributable  to  that  region.  158 
 46.  NTCA  argues  that  if  no  alternative  recovery  mechanism  is  made  available  to  incumbent  LECs  outside  the  100  largest  MSAs,  they  will  be  forced  to  either  upgrade  their  systems  and 

 assess  charges  on  their  end  users,  or  contribute  to  the  costs  of  the  regional  databases  with  no  method  of  cost  recovery.  They  contend  that  both  options  create  a  "significant  expense"  for  these 
 carriers  even  though  they  have  not  received  a  request  for  portability.  159 
 47.  Petitioners  further  argue  that  many  of  the  carriers  outside  the  top  100  MSAs  face  no  local  competition  in  the  near  future,  and  do  not  have  immediate  long-  term  portability 

 deployment  obligations.  160  Petitioners  further  contend  that  it  would  be  unfair  to  begin  charging  end  users  when  there  is  no  facilities-  based  local  competition  and  end  users  receive  no  direct 
 benefit  from  number  portability.  161  For  this  reason,  petitioners  suggest  that  non-  portability 
 154  NTCA  Reply  at  3. 

 155  Shared  costs  are  costs  incurred  by  the  industry  as  a  whole,  such  as  those  incurred  by  the  third-  party  administrator 
 to  build,  operate  and  maintain  the  databases  needed  to  provide  number  portability.  See  Third  Report  and  Order,  13  FCC  Rcd  at  11738-  39,  para.  69. 

 156  See  Third  Report  and  Order,  13  FCC  Rcd  at  11759,  para.  113  (quoting  47  U.  S.  C.    251(  e)(  2)). 
 157  Id.  at  11745,  para.  87. 
 158  Id.  at  11754,  para.  105. 
 159  NTCA  Petition  at  4. 
 160  NTCA  points  out  that  "[  u]  nder  the  current  cost-  recovery  rules,  the  small  and  rural  LECs  are  forced  to  either:  (1) 
 upgrade  their  systems  and  assess  charges  on  their  end-  users;  or  (2)  contribute  to  the  costs  of  the  regional  database  with  no  method  of  cost-  recovery"  and  no  provisions  made  for  compensating  affected  carriers.  Id. 

 161  See,  e.  g.,  NECA  Waiver  at  3-  4;  ORTC  and  TSTCI  Joint  Petition  at  2-  3.  NECA  suggests  that  those  customers 
 may  be  faced  with  substantial  local  rate  increases  as  a  result  of  other,  unrelated  Commission  decisions  in  the  areas  of  access  reform,  separations  reform  and  universal  service.  NECA  Petition  at  4  n.  10. 
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 capable  carriers  should  be  permitted  to  treat  carrier-  specific  local  number  portability  costs  in  the  same  manner  that  other,  similar  network  costs  are  currently  treated  i.  e.,  through  normal 
 accounting  and  separations  processes,  162  or  allowed  to  recover  the  costs  through  access  charges.  163 

 48.  In  opposition,  both  AT&  T  and  MCI  urge  the  Commission  to  reject  proposals  which  allow  incumbent  LECs  to  shift  costs  to  competitors  via  access  charges.  164  AT&  T  recognizes  that 
 petitioners  do  not  explicitly  advocate  including  local  number  portability  costs  in  access  charges,  but  argues  that  incumbent  LECs  should  not  be  allowed  to  recover  such  costs  through  the  regular 
 separations  process,  as  this  approach  would  result  in  increased  access  charges  to  IXCs.  165  MCI  states  that  in  principle  it  has  no  objections  to  the  creation  of  an  alternative  cost  recovery 
 mechanism  for  these  small  and  rural  incumbent  LECs  to  recover  long-  term  number  portability  related  costs.  However,  MCI  urges  the  Commission  not  to  allow  recovery  of  query  costs  from 
 other  carriers  through  access  charges.  166 
 49.  In  the  alternative,  petitioners  suggest  that  small  and  rural  incumbent  LECs  be  allowed  to  pool  their  costs.  167  NECA  specifically  urges  the  Commission  to  allow  these  carriers  to  use  a 

 pooling  method  similar  to  that  allowed  for  data  base  query  charges  associated  with  calls  to  "800"  and  "900"  numbers."  168  NECA  argues  that  this  type  of  pooling  arrangement  would  allow 
 carriers  to  recover  their  local  number  portability  costs  before  being  local  number  portability-capable  because  costs  are  included  in  central  office  expense  accounts  and  are  then  allocated 
 between  jurisdictions  on  the  same  basis  as  central  office  investment.  169 
 50.  We  agree  with  AT&  T  that  the  Third  Report  and  Order  does  not  allow  recovery  of  long-term  number  portability  costs  through  the  normal  accounting  and  separations  process.  We  also 

 note  that  MCI  objects  to  the  recovery  of  query  services  costs  from  other  carriers,  but  not  to  the  creation  of  some  viable  alternative  recovery  mechanism. 

 51.  We  believe  that  competitive  neutrality  is  essential  to  sustain  continued  deployment  of  the  long-  term  number  portability  service.  We  have  mandated  that  a  carrier  may  only  recover 
 long-  term  number  portability  shared  costs  through  a  federal  tariff.  Recovery  must,  therefore,  be 
 162  NECA  Petition  at  5,  9;  ORTC  and  TSTCI  Joint  Petition  at  4;  USTA  Petition  at  5-  6. 
 163  NECA  Waiver  at  4. 
 164  AT&  T  Opposition  at  13-  14;  MCI  Response  at  7-  8. 

 165  AT&  T  Opposition  at  13  n.  31. 
 166  MCI  Response  at  7-  8. 
 167  See  NECA  Petition  at  5;  ORTC  and  TSTCI  Joint  Petition  at  4. 
 168  NECA  Petition  at  5. 
 169  Id.  at  n.  11. 
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 sought  through  a  federal  recovery  process.  We  agree,  however,  with  the  petitioners  that  certain  small  carriers  who  do  not  currently  have  long-  term  number  portability-  capable  switches,  but  are 
 incurring  long-  term  number  portability  shared  costs  and  additional  query  costs  as  a  result  of  their  participation  in  an  EAS  calling  plan  would  be  financially  disadvantaged  if  they  were  not  allowed 
 recovery  of  these  costs.  For  this  reason,  we  reconsider  the  issue  of  whether  non-  LNP  capable  carriers  serving  areas  outside  the  100  largest  MSAs  may  recover  their  eligible  number  portability 
 costs  through  the  federal  mechanisms  that  are  available  to  other  carriers. 
 52.  The  information  provided  in  support  of  the  expedited  petition  for  interim  waiver  shows  that  a  significant  number  of  end  users  are  located  in  areas  adjacent  to  the  100  largest  MSAs  and 

 areas  where  number  portability  is  available.  These  end  users  also  participate  in  EAS  calling  plans  through  their  local  service  providers  and  make  calls  to  numbers  in  extended  calling  areas 
 that  are  served  by  number  portability-  capable  switches.  The  terminating  carriers  query  these  calls  in  order  to  determine  whether  the  called  party  has  ported  a  number.  The  cost  of  these 
 queries  is  passed  on  to  the  non-  LNP  capable  LECs  as  query  charges.  In  this  instance,  the  queries  are  a  direct  result  of  the  implementation  of  number  portability  in  the  neighboring  area  located 
 within  the  EAS  area.  We  find  that  the  costs  the  non-  LNP  capable  LECs  incur  for  queries  to  areas  within  EAS  calling  plan  areas  are  costs  incurred  as  a  result  of  the  implementation  of 
 number  portability  and  are  also  the  costs  of  doing  business  within  the  EAS  area. 
 53.  We  also  find  that  the  non-  number  portability  capable  LECs  customers,  in  this  situation,  receive  direct  benefits  from  the  implementation  of  number  portability  in  EAS  calling  plan  areas. 

 These  customers  EAS  calls  are  completed  by  a  number  portability-  capable  switch  located  within  the  EAS  area;  even  though  the  non-  number  portability-  capable  LECs  do  not  own  the 
 number  portability-  capable  switches,  the  switches  are  a  part  of  the  EAS  networks  that  complete  calls  from  the  non-  number  portability-  capable  LECs  customers.  The  query  charges  paid  by  the 
 non-  number  portability-  capable  LECs  recover  the  cost  of  performing  the  query  and  a  portion  of  the  number  portability-  capable  LECs  implementation  costs.  170  Moreover,  these  customers 
 would  have  difficulty  completing  their  calls  within  the  EAS  calling  plan  area  without  access  to  the  number  portability-  capable  switch.  The  benefits  of  number  portability,  therefore,  extend  to 
 customers  other  than  those  of  the  number  portability-  capable  LEC.  We  conclude,  therefore,  that  a  non-  LNP  capable  LEC  that  participates  in  an  EAS  calling  plan  with  any  one  of  the  100  largest 
 MSAs  or  with  an  adjacent  number  portability-  capable  LEC,  may  recover  its  costs  for  payment  of  query  charges  as  eligible  number  portability  costs  through  an  end-  user  charge  as  set  out  in  the 
 Third  Report  and  Order  and  explained  in  the  Cost  Classification  Order.  171  We  will  not  create  a  special  category  of  cost  recovery  for  small  and  rural  carriers,  and  remain  consistent  with  our 
 decision  in  this  regard  as  stated  in  the  Third  Report  and  Order. 
 54.  We  also  allow  these  non-  number  portability-  capable  LECs  to  recover  their  LNPA  charges  through  an  end-  user  charge.  Their  customers  also  benefit  from  the  creation  and 

 170  Cost  Classification  Order,  13  FCC  Rcd  at  24511,  paras.  40,  41  (Allocation  of  joint  costs  should  be  based  on 
 the  capacity  set  aside  to  handle  default,  prearranged,  and  database  queries). 
 171  Third  Report  and  Order,  13  FCC  Rcd  at  11773,  para.  135;  Cost  Classification  Order,  13  FCC  Rcd  at  24498- 
 99,  para.  6. 
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 maintenance  of  the  number  portability  administration  database.  Accurate  location  routing  number  (LRN)  information  promotes  call  completion  for  the  customers  of  the  non-  number 
 portability-  capable  LECs  in  EAS  calling  plan  areas.  These  carriers  are  also  distinct  from  competing  local  exchange  carriers  (CLECs)  and  the  other  unregulated  telecommunications 
 companies  that  pay  LNPA  charges  because  they  lack  an  alternative  method  of  recovering  these  costs  and  cannot  include  the  cost  in  the  price  of  another  service.  Although  we  are  clarifying  the 
 language  of  the  Third  Report  and  Order,  we  are  compelled,  however,  to  affirm  our  prior  decision  that  number  portability  costs  should  not  be  recovered  through  access  charges.  172  We  decline  to 
 allow  the  non-  number  portability-  capable  LECs  to  recover  their  eligible  number  portability  costs  in  access  charges  as  requested  by  the  NECA  because  recovery  through  access  charges  would  not 
 be  competitively  neutral  as  stated  in  the  Third  Report  and  Order.  173 
 55.  Our  decision  on  this  issue  emphasizes  the  statement  in  the  Third  Report  and  Order  that  incumbent  LECs  are  to  recover  carrier-  specific  number  portability  costs  through  end-  user 

 charges  only  when  and  where  the  end  users  are  reasonably  able  to  begin  receiving  the  direct  benefits  of  number  portability.  Those  receiving  direct  benefits  of  number  portability  include  the 
 customers  of  small  and  rural  incumbent  LECs  located  within  EAS  calling  plan  areas  that  encompass  portions  of  one  of  the  100  largest  MSAs  and/  or  other  areas  served  by  number 
 portability-  capable  switches.  174  We  also  elaborate  on  the  statement  in  the  Third  Report  and  Order  that  incumbent  LECs  may  also  assess  a  monthly  charge  only  on  end  users  it  serves  in  the 
 100  largest  MSAs,  and  end  users  it  serves  outside  the  100  largest  MSAs  from  a  number  portability-  capable  switch,  by  adding  that  the  small  and  rural  incumbent  LECs  that  provide 
 service  through  EAS  calling  plan  agreements  and  are  located  adjacent  to  number  portability-capable  areas  may  assess  a  monthly  charge  on  their  end  users.  As  parties  to  the  EAS  calling 
 plan  agreements,  these  carriers  provide  service  to  customers  within  their  study  areas  in  a  number  portability  environment  and  calls  from  these  customers  are  completed  by  number  portability-capable 
 switches  located  in  the  neighboring  LECs  service  area  of  the  EAS  calling  plan  area.  The  customers  in  the  small  and  rural  LECs  study  areas,  therefore,  are  connected  to  the  number 
 portability  network  through  the  EAS  calling  plans,  and  receive  the  direct  benefit  of  completing  their  calls  using  the  number  portability-  capable  switches.  The  small  and  rural  incumbent  LECs 
 are,  thus,  authorized  to  recover  their  query  and  LNPA  costs  that  were  incurred  after  our  decision  mandating  LNP  for  a  period  of  five-  years  using  the  same  method  that  other  incumbent  LECs  use 
 to  recover  their  costs. 
 56.  Our  decision  also  complies  with  the  congressional  mandate  that  number  portability  cost  recovery  mechanisms  must  be  competitively  neutral.  Allowing  the  small  and  rural  carriers 

 located  within  EAS  calling  plan  areas  to  recover  their  number  portability  costs  prior  to  becoming  number  portability-  capable  does  not  give  these  carriers  an  incremental  cost  advantage  over  other 

 172  Third  Report  and  Order,  13  FCC  Rcd  at  11773,  para.  135. 
 173  Id.  at  11725-  26,  11773,  paras.  39,  135.  Cf.  NECA  Ex  Parte  Letter  from  Regina  McNeil,  NECA  Senior 
 Attorney,  to  Magalie  Roman  Salas,  Secretary,  FCC  (filed  Mar.  24,  2000)  at  4;  NECA  Waiver  at  4. 
 174  Third  Report  and  Order  at  11776,  paras.  142-  143. 
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 carriers  when  competing  for  customers.  175  Once  the  carriers  add  number  portability  to  their  networks,  they  can  recover  the  costs  of  establishing  number  portability,  for  a  five-  year  period, 
 through  the  same  end-  user  charge  through  which  they  recover  the  query  and  LNPA  costs.  The  small  and  rural  carriers  costs  will  vary  directly  in  proportion  to  the  number  of  customers  each 
 carrier  serves  and  the  number  of  EAS  calls  their  customers  make  to  number  portability-  capable  exchanges  of  adjoining  LECs.  In  addition,  our  decision  does  not  in  any  way  affect  competing 
 service  providers  and,  therefore,  does  not  disparately  affect  the  ability  of  the  competing  service  providers  to  earn  a  normal  return.  176 

 57.  NECA  also  suggests  that  a  Fifth  Amendment  "takings"  issue  is  presented  by  the  Third  Report  and  Order.  177  NECA  notes  that  the  Third  Report  and  Order  requires  carriers  "to 
 contribute  to  the  support  of  number  portability  in  adjacent  regions  while  at  the  same  time  specifically  forbids  carriers  from  recovering  those  costs  in  their  rates."  178  We  disagree  with 
 NECA;  this  issue  was  addressed,  and  rejected,  in  the  Third  Report  and  Order.  179 
 58.  We  consider  the  issue  of  whether  the  small  and  rural  LECs  should  be  allowed  to  recover  costs  that  may  be  incurred  to  implement  number  portability  functionality  through  a  second  end-user 

 charge  after  or  while  these  LECs  recover  the  query  and  LNPA  costs  through  an  initial  end-user  charge.  In  order  to  comply  with  Congress  competitive  neutrality  requirement,  we  conclude 
 that  these  carriers  must  be  allowed  an  opportunity  to  recover  all  eligible  LNP  costs  through  the  five-  year  federal  cost  recovery  mechanism  established  in  the  Third  Report  and  Order.  We 
 considered  the  costs  associated  with  equipping  a  network  with  number  portability  functionality  in  the  context  of  the  tariff  investigations  and  recognized  in  the  Third  Report  and  Order  that  the 
 most  significant  portion  of  a  carriers  cost  will  be  incurred  for  this  purpose.  180  To  limit  these  companies  to  recovering  only  their  query  and  LNPA  costs  may  give  other  carriers  an  appreciable 
 cost  advantage  over  them  or  significantly  impact  their  ability  to  earn  a  normal  return.  Incumbent  LECs  may  recover  query  and  LNPA  costs  through  an  end-  user  charge  collected  over 
 one  five-  year  period  and  may  recover  the  costs  of  equipping  their  networks  with  number  portability  functions  through  an  end-  user  charge  collected  over  a  different  five-  year  period.  181 
 These  five-  year  periods  may  run  either  consecutively  or  concurrently,  in  whole  or  in  part,  as  may  be  determined  by  the  Commission. 

 175  Id.  at  11731-  32,  para.  53. 
 176  Id.  at  11731-  32,  11774,  paras.  53,  136. 
 177  NECA  Petition  at  4  n.  8. 

 178  Id. 
 179  Third  Report  and  Order,  13  FCC  Rcd  at  11779,  para.  149. 
 180  See  id.,  13  FCC  Rcd  at  11774,  para.  137. 
 181  This  depends  on  when  a  carrier  that  participates  in  an  EAS  calling  arrangement  begins  to  equip  its  network 
 with  number  portability  functionality. 
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 2.  Recovery  of  Number  Portability  Costs  from  Other  Carriers 
 a.  Background 
 59.  In  the  Third  Report  and  Order  the  Commission  determined  that  incumbent  LECs  may  assess  a  monthly  number  portability  end-  user  charge  on  resellers  of  the  incumbent  LEC's  local 

 service,  as  well  as  on  purchasers  of  switching  ports  as  unbundled  network  elements  under  section  251  of  the  Communications  Act.  182  We  reasoned  that  allowing  the  incumbent  LECs  to 
 assess  this  charge  was  competitively  neutral  "because  the  reseller  and  the  purchaser  of  the  switch  port  will  incur  the  [end-  user]  charge  in  lieu  of  costs  they  would  otherwise  incur  in  obtaining 
 long-  term  number  portability  functionality  elsewhere."  183  We  noted  that  the  unregulated  reseller  and  purchaser  of  the  switch  port  may  recover  in  any  lawful  manner  the  charges  the  incumbent 
 LEC  assesses  on  them.  184 
 60.  A  number  of  petitioners  seek  clarification  or  reconsideration  of  issues  relating  to  the  manner  in  which  incumbent  LECs  recover  their  number  portability  costs  from  other  carriers. 

 MCI  seeks  clarification  that  any  costs  associated  with  a  number  portability  charge  to  carriers  purchasing  unbundled  switching  be  calculated  based  on  Total  Element  Long  Run  Incremental 
 Cost  (TELRIC),  and  that  costs  for  number  portability  charged  to  resellers  be  based  on  avoided  costs.  185  MCI  claims  that,  to  comport  with  the  costing  requirements  of  the  1996  Act,  charges 
 assessed  on  carriers  purchasing  unbundled  switching  or  resale  must  be  cost-  based,  citing  section  251(  c)(  3)  and  (4).  186  Comcast  seeks  clarification  that  incumbent  LECs  may  not  recover  their 
 number  portability  costs  through  interconnection  charges  or  add-  ons  to  interconnection  charges  to  their  carrier  "customers,"  and  that  incumbent  LECs  may  not  seek  to  recover  carrier-  specific 
 costs  through  interconnection  charges  to  other  carriers  where  no  number  portability  functionality  is  provided.  187  PCIA  requests  that  the  Commission  affirm  that  paging  providers  are  co-  carriers 
 for  purposes  of  cost  recovery,  not  end-  users,  and,  for  this  reason,  should  not  be  assessed  end-  user  fees.  188  PCIA  asserts  that  the  Commission  has  held  in  past  orders  that  all  CMRS  providers, 
 including  paging  providers,  are  to  be  treated  by  LECs  as  co-  carriers.  189 

 182  Third  Report  and  Order,  13  FCC  Rcd  at  11778,  para.  146. 
 183  Id. 
 184  Id. 
 185  MCI  Petition  at  6-  7. 
 186  Id.  at  6. 
 187  Comcast  Petition  at  2-  6. 
 188  PCIA  Petition  at  5-  7. 
 189  PCIA  Petition  at  6-  7. 
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 b.  Discussion 
 61.  In  our  view,  MCIs  request  for  clarification  addresses  prices  for  unbundled  network  elements  and  resale,  and  not  the  mechanism  established  by  the  Commission  in  the  Third  Report 

 and  Order  by  which  incumbent  LECs  may  recover  their  costs  of  implementing  long-  term  number  portability.  190  The  statutory  language  relating  to  number  portability  costs  differs  from 
 the  sections  governing  the  pricing  of  unbundled  network  elements  and  resale  rates.  Section  251(  e)(  2),  which  the  Commission  applied  in  the  Third  Report  and  Order  to  create  the  LNP  end 
 user  charge,  provides  that  [  t]  he  cost  of  establishing  telecommunications  numbering  administration  arrangements  and  number  portability  shall  be  borne  by  all  telecommunications 
 carriers  on  a  competitively  neutral  basis  as  determined  by  the  Commission.  By  contrast,  the  Commission  has  found  that  section  251(  c)(  3)  requires  incumbent  LECs  to  price  unbundled 
 network  elements  under  the  TELRIC  pricing  methodology,  191  and  that  section  251(  c)(  4)  requires  that  resale  rates  be  set  at  the  retail  rate  minus  any  avoided  costs.  192  Although  the 
 Commission  decided  in  the  Third  Report  and  Order  to  permit  carriers  to  impose  end  user  surcharges  on  purchasers  of  unbundled  switching  ports  and  resellers,  it  did  not  find  that  these 
 surcharges  thereby  became  an  element  of  the  UNE  or  resale  rates.  193  Our  decision  to  permit  the  imposition  of  end  user  surcharges  on  purchasers  of  unbundled  switching  ports  and  resellers  was, 
 instead,  based  upon  the  conclusion  that,  although  incumbent  LECs  will  provide  the  underlying  number  portability  functionality  in  such  situations,  they  will  no  longer  have  a  direct  relationship 
 with  the  end  users.  194  Instead,  the  purchaser  of  the  unbundled  switch  port  and  the  reseller  receive  all  their  number  portability  functionality  from  the  incumbent  through  these  arrangements.  195 

 190  See  generally  Third  Report  and  Order,  13  FCC  Rcd  at  11731-  32,  11738-  41,  11773-  79,  paras.  53,  68-  77,  135- 
 47. 
 191  See  47  C.  F.  R.    51.501-  09.  Although  the  U.  S.  Court  of  Appeals  for  the  Eighth  Circuit  stayed  the 
 Commissions  pricing  rules  in  1996,  Iowa  Utils  Bd.  v.  FCC,  120  F.  3d  753,  800,  804,  805-  06  (8  th  Cir.  1997),  the  Supreme  Court  restored  the  Commissions  pricing  authority  and  remanded  to  the  Eighth  Circuit  for  consideration 

 of  the  challenged  rules.  AT&  T  v.  Iowa  Utils.  Bd.,  525  U.  S.  366,  385  (1999).  On  remand  from  the  Supreme  Court,  the  Eighth  Circuit  concluded  that  while  TELRIC  is  an  acceptable  method  for  determining  costs,  certain 
 specific  rules  contained  within  the  Commissions  pricing  rules  were  contrary  to  congressional  intent.  Iowa  Utils.  Bd.  v.  FCC,  219  F.  3d  744  (8  th  Cir.  2000),  cert.  granted  sub  nom.,  Verizon  Communications  v.  FCC,  531  U.  S.  1124 
 (2001).  The  Eighth  Circuit  has  stayed  the  issuance  of  its  mandate,  Iowa  Utils  Bd.  v.  FCC,  No.  96-  3321,  et  al.  (8  th  Cir.  Sept.  25,  2000),  pending  appeal  before  the  Supreme  Court,  which  has  granted  certiorari  in  the  case.  Verizon 
 Communications  v.  FCC,  531  U.  S.  1124  (2001).  Accordingly,  the  Commissions  rules  continue  in  effect  at  this  time. 

 192  In  Iowa  Utilities  Bd.  v.  FCC,  see  n.  191,  supra,  the  Eighth  Circuit  concluded  that  section  252(  d)(  3)  of  the 
 Communications  Act  requires  costs  that  are  actually  avoided,  not  those  costs  that  could  be  avoided,  be  excluded  from  wholesale  rates  offered  to  resellers.  Iowa  Utilities  Bd.  v.  FCC,  219  F.  3d  at  755. 

 193  Id.,  13  FCC  Rcd  at  11778,  para.  146. 
 194  Id.  at  11778,  para.  146. 
 195  Id.  The  unregulated  reseller  and  purchaser  of  the  unbundled  switch  port  can,  in  turn,  recover  in  any  lawful 
 manner  the  charges  the  incumbent  assesses  on  them. 
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 Moreover,  we  believe  that  application  of  the  TELRIC  standard  would  be  inappropriate  because  the  LNP  end-  user  charge  is  intended  to  recover  the  short-  term  costs  of  number  portability,  196 
 whereas  TELRIC  is  designed  to  recover  long-  run  costs.  Accordingly,  we  conclude  that  the  LNP  end-  user  charges  for  number  portability  associated  with  unbundled  switching  ports  and  resellers 
 are  not  part  of  the  rate  elements  for  these  services.  We  therefore  deny  MCIs  request  that  the  LNP  costs  associated  with  unbundled  switch  ports  and  resale  be  based  on  the  statutory  standards 
 set  forth  in  sections  251(  c)(  3)  and  251(  c)(  4),  respectively,  and  reaffirm  that  they  are  governed  by  the  competitively  neutral  standard  set  forth  in  section  251(  e)(  2). 

 62.  We  agree  with  Comcast  that  incumbent  LECs  may  not  recover  any  number  portability  costs  through  interconnection  charges  or  add-  ons  to  interconnection  charges  to  their  carrier 
 "customers,"  nor  may  they  recover  carrier-  specific  costs  through  interconnection  charges  to  other  carriers  where  no  number  portability  functionality  is  provided.  197  To  the  extent  necessary,  we 
 clarify  our  decision  accordingly.  The  Third  Report  and  Order  allows  incumbent  LECs  to  assess  number  portability  charges  in  limited  circumstances  and  only  where  the  incumbent  LEC 
 provides  number  portability  functionality:  (1)  on  resellers  of  the  incumbent  LEC's  local  service;  (2)  on  purchasers  of  switching  ports  as  unbundled  network  elements  under  section  251;  and,  (3) 
 on  other  carriers  for  whom  the  LEC  provides  query  services.  198  Allowing  the  incumbent  LECs  to  assess  an  end-  user  charge  on  resellers  and  on  purchasers  of  switching  ports  as  unbundled 
 network  elements  is  competitively  neutral  because  the  reseller  and  the  purchaser  of  the  switch  port  will  incur  the  charge  in  lieu  of  costs  they  would  otherwise  incur  in  obtaining  long-  term 
 number  portability  functionality  elsewhere.  199 
 63.  In  considering  the  issue  of  recovery  of  costs  through  charges  on  other  carriers,  Comcast  asks  that  we  recognize  that  we  have  not  fully  addressed  how  wireless  providers  and  other  non-incumbent 

 LECs  will  recover  their  carrier-  specific  costs.  200  Comcast  argues  that,  for  technical  reasons,  wireless  providers  cannot  perform  queries  for  themselves  or  for  other  carriers  and, 
 accordingly,  must  recover  their  carrier-  specific  costs  through  end-  user  charges.  Comcast  further  asserts  that  the  inability  of  wireless  providers  to  recover  any  of  their  costs  from  other 
 telecommunications  providers  means  that  the  current  cost  recovery  scheme  creates  a  cost  advantage  for  incumbent  LECs,  who  can  recover  their  costs  both  through  query  charges  and  end- 

 196  See  Third  Report  and  Order,  13  FCC  Rcd  at  11777,  para.  144.  This  cost  recovery  method  limits  the  ability  of 
 carriers  to  impose  costs  on  other  carriers.  Indeed,  a  cost  structure  for  LNP  may  not  be  competitively  neutral  if  it  permits  a  carrier  to  shift  a  disproportionate  share  of  costs  onto  another  carrier.  See  para.  11,  supra. 

 197  Comcast  Petition  at  3. 
 198  Third  Report  and  Order,  13  FCC  Rcd  at  11778-  79,  paras.  146-  147;  see  also  Bell  Atlantic  Response  at  3  (pointing 
 out  that  the  Third  Report  and  Order  allows  incumbent  LECs  to  1)  pass  the  end  user  charge  to  resellers  and  unbundled  network  element  purchasers,  and  2)  charge  other  carriers  for  number  portability  query  service). 

 199  Third  Report  and  Order,  13  FCC  Rcd  at  11778,  para.  146. 
 200  Comcast  Reply  at  3. 
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 user  charges.  201 
 64.  We  disagree.  First,  we  note  that  the  Commission  has  fully  addressed  the  issue  of  how  other  carriers,  including  non-  incumbent  LECs  and  wireless  carriers,  may  recover  their  costs  of 

 number  portability.  Specifically,  we  held  that  carriers  not  subject  to  rate  regulation  --  such  as  competitive  LECs,  CMRS  providers  and  non-  dominant  IXCs  --  may  recover  their  carrier-specific 
 costs  directly  related  to  providing  number  portability  in  any  lawful  manner  consistent  with  their  obligations  under  the  Communications  Act.  202  Second,  we  disagree  that  CMRS 
 carriers  are  at  a  competitive  disadvantage  because  they  cannot  perform,  and  charge  other  carriers  for,  query  services.  In  filing  number  portability  tariffs,  incumbent  LECs  must  allocate  their 
 carrier-  specific  costs  incurred  only  to  provide  portability  functions  for  end-  users  to  that  service  and  costs  incurred  specifically  to  provide  only  one  particular  type  of  query  service  to  that 
 service.  203  Remaining  eligible  costs  should  be  allocated  on  the  basis  of  the  capacity  requirements  for  each  type  of  service.  204  Requiring  carriers  to  allocate  their  costs  in  this  manner 
 ensures  that  incumbent  LECs  will  not  use  their  query  service  charges  to  other  carriers  for  the  recovery  of  the  costs  of  providing  number  portability  service  to  end-  users,  thereby  achieving  a 
 lower  end-  user  charge.  205  Moreover,  although  we  recognized  in  the  Third  Report  and  Order  that  some  small  LECs  and  CMRS  providers  may  find  that  their  smaller  customer  bases  might  make 
 adding  number  portability  capability  in  their  own  networks  uneconomical,  we  also  recognized  that  such  carriers  have  other  options  for  achieving  economies  of  scale  similar  to  those  of  the 
 larger  incumbent  LECs.  For  example,  such  carriers  could  arrange  for  another  carrier  to  perform  queries  for  them,  enter  into  cooperative  agreements  with  other  small  carriers,  or  install  number 
 portability  in  their  own  networks  and  use  excess  number  portability  capacity  to  provide  query  services  to  other  carriers.  206  Thus,  we  affirm  our  conclusion  that  our  competitive  neutrality 

 201  Id.  at  3-  4. 
 202  Third  Report  and  Order,  13  FCC  Rcd  at  11774,  para.  136. 
 203  Id.,  13  FCC  Rcd  at  11778-  79,  para.  147;  Cost  Classification  Order,  13  FCC  Rcd  at  24511,  para.  40. 
 204  Cost  Classification  Order,  13  FCC  Rcd  at  24511,  para.  41. 
 205  We  distinguish,  however,  the  situation  where  an  incumbent  LEC  incurs  costs  for  query  services  that  other 
 carriers  or  third  parties  provide.  As  with  other  carrier-  specific  costs  directly  related  to  providing  number  portability  to  end  users,  incumbent  LECs  may  recover  such  costs  with  a  five-  year  monthly  charge  on  the  end-  users 

 it  serves  from  a  number  portability  capable  switch.  See  Third  Report  and  Order,  13  FCC  Rcd  at  11776-  77,  para.  143.  If  an  incumbent  LEC  in  such  a  situation  does  not  have  a  number  portability-  capable  switch,  it  should  keep 
 track  of  the  query  costs  it  incurs  from  other  carriers  or  third  parties.  The  incumbent  LEC  may  begin  recovering  those  costs  from  its  end  users  when  it  begins  to  serve  them  from  a  number  portability-  capable  switch.  In  the  case 
 of  incumbent  LECs  serving  carriers  in  EAS,  these  carriers  may  recover  their  query  costs  and  LNP  administration  charges  through  an  end-  user  charge  as  discussed  in  Section  III.  C.  1  of  this  of  this  order  for  a  limited  period  of  five 
 years  from  the  date  of  the  first  end-  user  charge.  Any  costs  the  incumbent  LEC  incurs  subsequently  for  implementation  of  a  number  portability  network  may  also  be  recovered  for  a  limited  five-  year  period  in 
 accordance  with  section.  These  five-  year  periods  may  run  consecutively  or  concurrently.  Incumbent  LECs  may  recover  for  each  type  of  LNP  cost  during  only  one  five-  year  period. 

 206  Id.  at  11775,  para.  138. 
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 standard  is  met  if  we  leave  unregulated  those  carriers  not  subject  to  rate  regulation.  207  We,  therefore,  decline  to  establish  a  federal  recovery  mechanism  for  these  carriers. 
 65.  Moreover,  we  clarify  that  CMRS  providers  and  paging  providers  are  co-  carriers  with  incumbent  LECs  for  the  purpose  of  number  portability  cost  recovery,  and  should  not  be  assessed 
 end-  user  charges.  208  In  the  recent  investigation  of  the  number  portability  tariff  filings  of  Ameritech,  GTE,  and  SBC,  the  Commission  found  unlawful  Ameritech's  imposition  of  number 
 portability  surcharges  on  CMRS  providers'  Type  1  DID/  DOD  Trunks.  209  In  making  that  decision,  the  Commission  reasoned  that,  as  in  the  context  of  access  charges,  CMRS  providers 
 and  paging  providers  are  carriers,  not  end  users,  for  purposes  of  number  portability.  210  Our  number  portability  rules  specify  that  monthly  number  portability  surcharges  may  be  assessed 
 only  on  end  users,  not  carriers.  211  We  also  agree  with  Arch's  assertion  that  incumbent  LECs  may  not  impose  a  monthly  end-  user  charge  on  all  Type  1  interconnections  by  analogizing  such 
 connections  to  a  PBX-  type  service,  on  which  LECs  may  impose  monthly  surcharges.  212  As  we  stated  in  Bell  Atlantic  Cellular,  "it  is  clear  that  PBX  service  is  quite  different  than  that  of  [radio 
 common  carrier]  interconnections."  213  The  most  notable  difference  is  that  a  PBX  trunk  connects  an  end-  user  premise  and  a  LEC  switch,  while  a  Type  1  connection  links  the  LEC  to  the  Mobile 
 Telephone  Switching  Office  (MTSO),  which  is  not  an  end-  user  premise.  214  We  thus  agree  with  PCIA  and  Arch  that,  because  CMRS  providers  and  paging  companies  are  co-  carriers  and  not 
 end-  users,  they  should  not  be  assessed  an  end-  user  charge  by  LECs.  Moreover,  we  conclude  that  an  interpretation  that  our  orders  and  rules  governing  local  number  portability  permit  incumbent 
 LECs  to  impose  an  end-  user  charge  on  all  Type  1  interconnections  is  unreasonable.  We  find  that 
 207  Id.  at  11774,  para.  136. 

 208  Pursuant  to  our  rules,  incumbent  LECs  may  "assess  each  end  user  it  serves  .  .  .  one  monthly  number-  portability 
 charge  per  line  .  .  .  ."  47  C.  F.  R.    52.33(  a)(  1)(  i). 
 209  See  Long-  Term  Number  Portability  Tariff  Filings  of  Ameritech,  et  al.,  CC  Docket  No.  99-  35,  Memorandum 
 Opinion  and  Order,  14  FCC  Rcd  11883,  11933,  para.  109  (1999)  (LNP  Investigation  Order).  In  addition  to  discussing  this  issue  in  their  Comments  in  that  proceeding,  Arch  and  PCIA  filed  a  Petition  for  Reconsideration  of  the 

 LNP  Designation  Order  requesting  clarification  that  CMRS  carriers  are  co-  carriers,  not  end  users,  and  may  not  be  assessed  monthly  surcharges.  Arch  asserted  that  its  local  exchange  provider,  Ameritech,  was  billing  Arch  a  "Service 
 Provider  Number  Portability  Monthly  Charge"  on  all  of  Arch's  Type  I  Wireless  Interconnection  trunks.  See  Petition  for  Partial  Reconsideration  of  Order  Designating  Issues  for  Investigation  (filed  Mar.  26,  1999)  (Arch  Petition);  Long-Term 
 Telephone  Number  Portability  Tariff  Filings  of  Ameritech,  et  al.,  CC  Docket  No.  99-  35,  Order  Designating  Issues  for  Investigation  (LNP  Designation  Order),  14  FCC  Rcd  3367  (1999). 

 210  LNP  Investigation  Order,  14  FCC  Rcd  at  11934,  paras.  110-  111. 
 211  47  C.  F.  R.    52.33(  a)(  1)(  i). 
 212  Arch  Petition  at  11. 
 213  Bell  Atlantic  Telephone  Companies,  Transmittal  No.  418,  Order,  6  FCC  Rcd  4794,  4795,  para.  10  (1991)  (Bell 
 Atlantic  Cellular). 
 214  Id. 
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 our  orders  clearly  prohibit  carriers  from  imposing  their  end-  user  query  costs  on  other  carriers,  except  in  very  limited  circumstances  where  the  incumbent  LEC  also  provides  the  number 
 portability  functionality. 
 3.  Recovery  of  Number  Portability  Costs  from  Feature  Group  A  Access  Lines 

 a.  Background 
 66.  Feature  Group  A  is  a  local  exchange  service  that  is  used  to  provide  interstate  access  service  to  IXCs  and  end  users.  215  Feature  Group  A  access  provides  IXCs  with  dedicated 

 transmission  facilities  from  the  IXC's  Point  of  Presence  (POP)  to  a  LEC  central  office.  216  Within  Local  Access  and  Transport  Areas  (LATAs)  in  which  an  IXC  takes  Feature  Group  A  service,  a 
 caller  reaches  the  IXC's  POP  by  dialing  a  Feature  Group  A  ten-  digit  number,  plus  an  authorization  code  and  the  ten  digit  number  the  customer  wishes  to  reach.  217  The  caller  must  pay 
 any  local  toll  charges  incurred  to  reach  the  IXC's  POP,  in  addition  to  the  IXC's  toll  charges;  when  the  LEC  terminates  a  call  through  a  Feature  Group  A  arrangement,  however,  the  LEC 
 generally  will  carry  the  call  anywhere  within  the  receiving  service  area  without  assessing  additional  toll  charges.  218  Feature  Group  A  service  is  also  used  by  non-  carrier  entities  as  part  of 
 an  interstate  Foreign  Exchange  (FX)  or  Off  Network  Access  Line  (ONAL)  arrangement.  219  In  this  type  of  arrangement,  the  Feature  Group  A  customer  obtains  from  a  LEC  a  combination  of 
 local  exchange  service  and  dedicated  interoffice  transport  facilities  linking  the  LEC  dial  tone  office  to  an  IXC  POP.  220  The  IXC  POP  is  linked  to  the  out-  of-  state  Feature  Group  A  customer 
 by  an  interstate  private  line,  which  enables  end  users  in  the  dial  tone  office  area  to  reach  out-  of-state  Feature  Group  A  customers  without  incurring  interstate  toll  charges.  221  The  dial  tone  office 
 processes  the  call  originating  in  its  service  area  as  a  local  call  and  delivers  it  to  the  dedicated  trunked  transport  and,  ultimately,  to  the  IXC's  interstate  private  line  for  transmission  to  the 
 Feature  Group  A  customer.  222 
 67.  Several  petitioners  request  that  the  Commission  revise  or  clarify  the  Commission's  new 

 215  See  AT&  T  Communications  Tariff  F.  C.  C.  Nos.  9  and  11,  CC  Docket  No.  94-  120,  Memorandum  Opinion  and 
 Order,  10  FCC  Rcd  4288,  4289-  91,  paras.  2-  6  (1995). 
 216  Id.  at  4289-  90,  paras.  2-  3. 

 217  See  id.  at  4290,  para.  4. 
 218  Id. 
 219  Id.  at  para.  5. 
 220  Id. 
 221  Id. 
 222  Id. 
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 rule,  found  at  section  52.33(  a)(  1)(  ii),  to  allow  incumbent  LECs  to  assess  a  surcharge  on  Feature  Group  A  lines.  223  The  petitioners  assert  that  because  Feature  Group  A  lines  are  used  as  a  form  of 
 access  lines  and  the  telephone  numbers  associated  with  them  are  portable,  the  Commission  should  clarify  or  find  upon  reconsideration  that  carriers  may  charge  Feature  Group  A  end  users 
 and  carriers  an  LNP  monthly  end-  user  surcharge.  224  The  petitioners  assert  that  such  surcharge  should  be  allowed,  notwithstanding  that  the  service  is  obtained  through  an  access  tariff  and  the 
 Commission  specifically  prohibits  the  recovery  of  number  portability  costs  through  access  charges.  225  In  opposition,  parties  assert  that  a  surcharge  should  not  be  assessed  purchasers  of 
 Feature  Group  A  access,  because  number  portability  costs  can  be  recovered  from  other  carriers  only  through  query  charges,  not  through  surcharges.  226  Parties  opposed  to  the  request  assert  that 
 the  request  is  an  attempt  to  circumvent  the  Commission's  decision  that  carriers  should  not  be  required  to  pay  other  carriers'  LNP  costs.  227  Additionally,  some  commenters  assert  that  carriers 
 are  already  paying  access  fees  for  Feature  Group  A  service  and  should  not  also  be  charged  an  end-  user  surcharge.  228 

 b.  Discussion 
 68.  In  the  Third  Report  and  Order,  we  determined  that  incumbent  LECs  may  assess  end-  user  surcharges  on  resellers  as  well  as  purchasers  of  switching  ports  as  unbundled  network 

 elements,  229  based  on  our  conclusion  that  incumbent  LECs  will  provide  the  underlying  number  portability  functionality  in  such  situations,  although  they  will  no  longer  have  a  direct  relationship 
 with  the  end-  users.  230  We  did  not  allow  incumbent  LECs  to  assess  surcharges  on  carriers  that  purchase  only  their  local  loops  as  unbundled  network  elements,  however,  because  the  unbundled 
 local  loop  does  not  contain  the  number  portability  functionality.  231  Accordingly,  the  purchaser  of  the  unbundled  loop  still  will  be  responsible  for  providing  such  functionality  and,  thus, 
 incurring  elsewhere  the  corresponding  cost.  232 

 223  Ameritech  Petition  at  13;  Bell  Atlantic  Petition  at  1;  SBC  Reply  at  1-  2. 
 224  See  Ameritech  Petition  at  13. 
 225  Id. 
 226  See  AT&  T  Opposition  at  12-  13;  Ameritech  Reply  at  2. 
 227  MCI  Response  at  8;  Vanguard  Opposition  at  4-  5. 
 228  See  MCI  Response  at  8. 
 229  Third  Report  and  Order,  13  FCC  Rcd  at  11778,  para.  146. 
 230  Id. 
 231  Id. 
 232  Id. 
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 69.  We  clarify,  however,  that  carriers  who  offer  Feature  Group  A  access  lines  may  assess  a  monthly  surcharge  on  such  lines.  We  conclude  that  this  clarification  is  consistent  with  our 
 decision  in  the  Third  Report  and  Order  that  incumbent  LECs  may  impose  a  monthly  surcharge  on  resellers  as  well  as  on  purchasers  of  switching  ports  as  unbundled  network  elements.  We  will 
 amend  section  52.33(  a)(  1)(  ii)  of  our  rules  to  reflect  this  clarification.  We  agree  with  the  parties'  assertion  that  the  LEC  providing  the  Feature  Group  A  line  also  provides  the  underlying  number 
 portability  functionality,  and  should  be  allowed  to  recover  its  number  portability  costs  through  a  surcharge  on  the  Feature  Group  A  line.  233  Our  conclusion  is  based  on  the  determination  that  the 
 Feature  Group  A  line,  whether  providing  access  to  the  end-  user's  private  network  or  a  connection  between  an  end  office  and  the  IXC's  POP,  connects  to  the  end  office  switch  and  uses  that  switch 
 in  the  same  manner  that  an  end-  user  line  does.  234  Because  a  Feature  Group  A  line  connects  to  the  end  office  switch,  uses  the  switch  in  the  same  manner  as  an  ordinary  end-  user  line,  and  uses  a 
 ten-  digit  telephone  number  that  is  portable,  235  the  incumbent  LEC  is  responsible  for  providing  the  underlying  number  portability  functionality  and  may  thus  recover  its  permissible  incremental 
 costs  through  a  monthly  surcharge  on  the  Feature  Group  A  line. 
 70.  We  disagree  with  AT&  T's  assertion  that  when  Feature  Group  A  lines  are  used  to  connect  a  LEC  end  office  and  an  IXC's  POP,  allowing  a  LEC  to  assess  a  number  portability  surcharge  on 

 the  IXC  would  result  in  double  billing.  236  Incumbent  LECs  may  only  assess  one  end-  user  charge  per  line.  237  Additionally,  as  discussed  below,  incumbent  LECs  may  not  recover  their  number 
 portability  costs  through  increased  access  charges.  Therefore,  allowing  incumbent  LECs  to  assess  one  end-  user  surcharge  on  Feature  Group  A  lines  does  not  result  in  double  billing. 

 71.  We  disagree  with  Vanguard's  assertion  that  we  are  "reclassifying"  carriers  who  purchase  Feature  Group  A  lines  as  end  users  in  order  to  allow  incumbent  LECs  to  assess  end-  user 
 surcharges.  238  We  merely  find  that  such  carriers  are  in  a  situation  similar  to  end  users  and  incumbent  LECs  may  recover  their  number  portability  costs  in  such  a  situation.  As  discussed 
 above,  we  allow  such  cost  recovery  because  in  this  situation,  the  carrier  purchasing  Feature  Group  A  service  is  in  the  same  position  as  an  end  user.  Additionally,  in  response  to  AT&  T's 
 request  that  only  Feature  Group  A  line  end-  users,  but  not  carriers  who  use  Feature  Group  A  lines,  be  assessed  a  surcharge,  we  note  that  SBC  asserts  that  incumbent  LECs  are  incapable  of 
 identifying  the  nature  of  the  customer  purchasing  the  Feature  Group  A  service  and  cannot  differentiate  between  such  customers  for  purposes  of  a  number  portability-  related  charge.  239  We 

 233  Bell  Atlantic  Reply  at  1-  2;  SBC  Reply  at  2  n.  4. 
 234  Bell  Atlantic  Petition  at  1;  Ameritech  Reply  at  2. 
 235  See  Bell  Atlantic  Petition  at  1;  Ameritech  Reply  at  2. 
 236  See  AT&  T  Opposition  at  13. 
 237  See  Third  Report  and  Order,  13  FCC  Rcd  at  11777-  78,  para.  145. 

 238  Vanguard  Opposition  at  4-  5. 
 239  SBC  Reply  at  3. 
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 also  agree  with  Bell  Atlantic  that  the  label  that  is  on  the  service  should  not  determine  whether  the  number  portability  surcharge  applies  to  that  service,  but  rather  whether  the  telephone  number 
 associated  with  the  line  is  capable  of  being  ported  to  another  carrier.  Feature  Group  A  lines  satisfy  this  test.  240 

 72.  We  disagree  with  Vanguard's  assertion  that  allowing  LECs  to  assess  this  surcharge  would  require  carriers  purchasing  Feature  Group  A  to  purchase  portability  functionality, 
 regardless  of  whether  that  functionality  has  any  utility  for  the  purchasing  carrier.  241  We  noted  in  the  Third  Report  and  Order  that  it  is  competitively  neutral  to  allow  an  incumbent  LEC  to  assess 
 an  end-  user  surcharge  because  the  reseller  and  unbundled  switch  port  purchaser  will  receive  all  their  number  portability  functionality  through  these  arrangements  and  will  incur  such  costs  in 
 lieu  of  costs  they  would  otherwise  incur  in  obtaining  number  portability  functionality  elsewhere.  242  We  agree  with  the  numerous  commenters  who  assert  that  Feature  Group  A  lines 
 have  their  own  ten-  digit  numbers  which  are  portable,  and  thus  incumbent  LECs  may  recover  their  number  portability  costs  through  an  end-  user  surcharge. 

 73.  We  also  disagree  with  Vanguard's  assertion  that  allowing  carriers  to  assess  end-  user  charges  on  other  carriers  would  permit  the  incumbent  LECs  to  recover  number  portability  costs 
 through  interstate  access  charges,  albeit  indirectly.  243  Such  incumbent  LECs  are  providing  the  number  portability  functionality  to  the  carriers  and  may  recover  such  costs  through  the  end-  user 
 surcharge.  Although  the  Feature  Group  A  service  is  obtained  through  an  access  tariff,  incumbent  LECs  assign  Feature  Group  A  lines  a  ten-  digit  number  that  is  portable,  and  a  LEC  providing 
 such  underlying  number  portability  functionality  may  recover  its  costs  through  a  monthly  end-user  surcharge.  244 

 4.  Recovery  of  Number  Portability  Costs  from  Centrex  and  PBX  Lines 
 a.  Background 
 74.  Business  customers  with  a  large  number  of  telephone  lines  may  choose  to  connect  their  users  with  each  other  and  with  other  telephone  lines  in  one  of  two  ways:  Centrex  or  a  PBX.  245 

 Centrex  customers  receive  service  from  a  LEC's  central  office  switch  via  line  side  connections,  while  in  a  PBX  arrangement,  customers  are  connected  to  the  central  office  switch  via  trunk  side 

 240  Bell  Atlantic  Reply  at  2  (citing  Third  Report  and  Order,  13  FCC  Rcd  at  11776,  11778,  paras.  142,  146). 
 241  Vanguard  Opposition  at  5. 
 242  Third  Report  and  Order,  13  FCC  Rcd  at  11778,  para.  146. 
 243  Vanguard  Opposition  at  5. 
 244  See  SBC  Petition  at  2. 
 245  Access  Charge  Reform,  CC  Docket  No.  96-  262,  Second  Order  on  Reconsideration  and  Memorandum  Opinion 
 and  Order,  12  FCC  Rcd  16606,  16615-  19,  paras.  31-  42  (1997)  (Access  Charge  Reform  Order). 
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 connections.  246  In  the  Third  Report  and  Order,  we  held  that  incumbent  LECs  may  assess  end-users  one  monthly  number  portability  charge  per  line,  but  applied  a  line-  to-  trunk  equivalency 
 ratio  in  the  case  of  PBX  trunks.  247  We  observed,  as  we  had  in  the  Access  Charge  Reform  Order,  that  one  PBX  trunk  provides,  on  average,  the  equivalent  service  capacity  of  nine  Centrex 
 lines.  248  For  this  reason,  we  allowed  LECs  to  assess  one  monthly  end-  user  charge  per  Centrex  line,  and  nine  monthly  number-  portability  end-  user  charges  per  PBX  trunk.  249  Our  decision  was 
 based  on  our  determination  that  in  the  absence  of  this  line-  to-  trunk  equivalency  ratio,  large  customers  would  be  encouraged  to  choose  one  of  these  arrangements  over  the  other  because  of 
 the  number  portability  charge,  an  outcome  that  we  concluded  would  violate  the  competitively  neutral  requirement  of  section  251(  e)(  2).  250 

 75.  A  number  of  incumbent  LECs  request  reconsideration  of  this  equivalency  determination.  251  According  to  the  incumbent  LECs,  while  the  Commission  sought  to  create  a 
 similar  type  of  "equivalency"  between  Centrex  and  PBX  trunk  subscribers,  we  erred  in  establishing  the  9:  1  equivalency  ratio.  252  The  petitioners  argue  that  rather  than  treating  the  PBX 
 trunk  as  a  single  unit,  the  Commission  incorrectly  treated  the  Centrex  subscriber  as  the  unit  of  reference  and  allowed  PBX  customers  to  be  charged  9  times  the  amount  charged  the  Centrex 
 customer.  253  Petitioners  argue  that  we  should  have  used  the  exact  equivalency  ratio  used  in  the  access  charge  context,  that  is,  assessing  one  line  charge  for  PBX  and  one-  ninth  of  a  line  charge 
 for  Centrex.  For  number  portability,  we  allowed  carriers  to  assess  nine  charges  for  PBX  and  one  charge  for  Centrex. 

 b.  Discussion 
 76.  We  agree  with  those  carriers  who  assert  that  a  trunk  equivalency  ratio  is  needed  to  account  for  the  service  capacity  differences  between  a  PBX  trunk  and  a  Centrex  line.  We  also 

 agree  that  the  PBX  trunk  provides,  on  average,  the  equivalent  service  capacity  of  nine  Centrex  lines.  254  We  disagree,  however,  that  we  have  deviated  from  the  trunk  equivalency  ratio  adopted 

 246  Id.  at  16616,  para.  32. 
 247  Third  Report  and  Order,  13  FCC  Rcd  at  11777-  78,  para.  145. 
 248  Id. 
 249  Id. 
 250  Id. 
 251  See,  e.  g.,  Bell  Atlantic  Petition  at  2;  BellSouth  Petition  at  2-  5;  U  S  WEST  Petition  at  3-  7. 
 252  See  U  S  WEST  Petition  at  4. 
 253  Id. 
 254  Third  Report  and  Order,  13  FCC  Rcd  at  11777-  78,  para.  145. 
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 in  the  Access  Charge  Reform  Order  255  and  affirm  our  earlier  finding  that  Centrex  lines  may  be  assessed  one  number  portability  charge  and  PBX  trunks  may  be  charged  nine  number  portability 
 charges. 
 77.  Consistent  with  our  decision  in  the  Access  Charge  Reform  Order,  we  find  that  a  9:  1  ratio  is  "reasonable  and  administratively  simple."  256  The  one-  ninth  charge  urged  by  the  petitioners,  on 

 the  other  hand,  is  unreasonable  and  would  be  administratively  difficult  to  use  in  computing  tariffs.  Were  we  to  adopt  the  petitioners'  suggestion  and  reduce  the  Centrex  line  number 
 portability  charge,  incumbent  LECs  would  be  required  to  assess  one-  ninth  of  a  charge  on  all  other  end-  user  lines,  to  avoid  a  discriminatory  rate  and  one  that  impermissibly  imposes  the 
 burden  of  number  portability  on  residential  end-  users.  We  note  that  the  petitioners  have  failed  to  address  the  impact  of  the  proposed  change  in  the  equivalency  ratio  on  residential  customers. 

 78.  Ameritech  257  and  UTC  assert  that  the  9:  1  trunk  equivalency  ratio  is  a  major  policy  change  from  our  earlier  access  charge  reform  ratio  that  was  made  without  a  public  policy  or  cost 
 justification.  258  These  carriers  state  that  the  Commission  did  not  make  any  finding  that  PBX  customers  should  make  a  disproportionate  contribution  to  the  costs  of  number  portability,  nor  did 
 it  find  any  cost  justification  for  forcing  PBX  customers  to  pay  multiple  number  portability  monthly  charges.  259  Bell  Atlantic  makes  the  same  argument.  260  We  disagree.  The  equivalency 
 ratio  remains  the  same  --  9:  1  --  based  on  our  finding  that  a  PBX  trunk  provides  approximately  the  same  functionality  as  nine  Centrex  lines.  261  We  also  disagree  that  we  are  imposing  a 
 disproportionate  contribution  to  the  costs  of  number  portability  on  PBX  customers.  To  the  contrary,  the  trunk  equivalency  ratio  compensates  for  the  fact  that  one  PBX  trunk  provides  the 
 functionality  of  approximately  nine  Centrex  lines  and  is  intended  to  place  PBX  and  Centrex  services  on  an  equal  footing  with  respect  to  number  portability  charges  so  that  customers  do  not 
 choose  one  service  over  the  other  because  of  the  number  portability  charge. 
 79.  We  also  are  not  persuaded  that  the  equivalency  ratio  established  in  the  Third  Report  and  Order  should  be  changed.  262  The  1:  1/  9  ratio  will  materially  impact  billing  systems  that  are 

 already  configured  for  access  charges  assessed  on  PBX  and  Centrex  at  a  nine  to  one  ratio.  We  recognize,  as  we  did  in  the  Third  Report  and  Order,  that  number  portability  is  a  new  service  that 

 255  Bell  Atlantic  Petition  at  2;  BellSouth  Petition  at  4-  5 
 256  Access  Charge  Reform  Order,  12  FCC  Rcd  at  16617-  18,  para.  38. 
 257  We  note  that  SBC  acquired  Ameritech  after  the  filing  of  the  pleadings  in  this  proceeding. 
 258  Ameritech  Petition  for  at  9;  UTC  Comments  at  3-  4;  see  also  U  S  WEST  Petition  at  4-  5. 

 259  Ameritech  Petition  at  9;  UTC  Comments  at  4. 
 260  Bell  Atlantic  Petition  at  2. 
 261  Third  Report  and  Order,  13  FCC  Rcd  at  11777,  para.  145. 
 262  Ameritech  Petition  at  10;  US  WEST  Reply  at  7. 
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 will  require  carriers  to  incur  costs  to  modify  their  networks  to  provide  number  portability.  263  We  do  not  find  that  changes  in  billing  systems,  if  any,  resulting  from  the  9:  1  ratio,  would  support  the 
 requested  change  to  a  1:  1/  9  ratio.  Moreover,  we  note  that  in  the  Cost  Classification  Order,  we  stated  that  carriers  may  not  recover  the  costs  of  "billing  or  order  processing  systems"  unless  they 
 can  clearly  distinguish  costs  incurred  for  narrowly  defined  portability  functions  from  costs  incurred  to  adapt  other  systems  to  implement  number  portability.  264 

 80.  SBC  asserts  that  Plexar  systems  are  unique  PBX-  like  arrangements  that  ascribe  separate  7-  and  10-  digit  telephone  numbers  to  each  station  in  the  system,  with  a  single  local  exchange 
 provider  providing  all  the  stations  in  the  Plexar  system.  265  Accordingly,  SBC  requests  that  Plexar  systems  be  assessed  one  number  portability  charge,  not  nine.  266  SBC  asserts  that  a  9:  1 
 ratio  relating  to  the  number  of  Plexar  stations  to  an  equivalent  number  of  individual  voice  paths  is  an  effective  means  for  levying  per-  line  charges  under  the  access  charge  reform  rulemaking.  267 
 SBC  further  asserts  that  a  similar  ratio  was  used  for  Centrex,  and  thus  Plexar  and  PBX  trunks  should  be  assessed  one  portability  charge,  rather  than  one-  ninth  of  the  charge  per  Centrex  line.  268 
 AT&  T  disagrees,  and  asserts  that  because  Plexar  is  like  Centrex  in  that  every  Plexar  telephone  line  has  its  own  dedicated  connection  to  switching  equipment  it  should  be  assessed  one  number 
 portability  charge,  not  nine.  269  In  a  prior  rulemaking,  we  examined  the  relationship  between  Plexar  and  Centrex,  and  determined  that  Plexar  offers  a  nearly  identical  functionality  to 
 Centrex.  270  We  agree  with  AT&  T  that  because  each  station  in  the  Plexar  system  has  its  own  dedicated  connection  to  a  switch,  it  is  similar  to  Centrex  and  should  be  assessed  the  same 
 number  portability  charge,  that  is,  one  number  portability  charge  per  line.  271 
 81.  Finally,  we  disagree  with  those  commenters  who  assert  that  a  9:  1  line-  to-  trunk  ratio  is  not  competitively  neutral.  Indeed,  the  ratio  is  specifically  aimed  at  ensuring  that,  by  treating 

 263  Third  Report  and  Order,  13  FCC  Rcd  at  11728,  para.  46. 
 264  Cost  Classification  Order,  13  FCC  Rcd  at  24501,  para.  12. 
 265  SBC  Petition  at  3. 
 266  Id.  at  3-  4. 
 267  See  id.  at  4. 
 268  Id. 
 269  AT&  T  Opposition  at  11-  12. 
 270  See  Public  Utility  Commission  of  Texas,  Docket  No.  CCB  Pol  96-  13,  Memorandum  Opinion  and  Order,  13  FCC 
 Rcd  3460,  3559  n.  492  (1997)  ("[  a]  lthough  SWBT  Centrex  and  Plexar  services  were  different  in  several  respects,  they  provided  virtually  the  same  functionality");  see  also  Rules  and  Policies  Regarding  Calling  Number  Identification 

 Service  -  Caller  ID,  CC  Docket  No.  91-  281,  Third  Report  and  Order,  Memorandum  Opinion  and  Order  on  Further  Reconsideration,  and  Memorandum  Opinion  and  Order  on  Reconsideration,  12  FCC  Rcd  3867,  3880  n.  76  (1997) 
 ("  Plexar  is  a  SWBT  Centrex  service"). 
 271  AT&  T  Opposition  at  11-  12. 
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 end-  users  in  a  nondiscriminatory  manner,  the  local  number  portability  cost  recovery  mechanism  fulfills  section  251(  e)(  2)  's  competitively  neutral  mandate.  We,  therefore,  affirm  our  conclusion 
 that  in  the  absence  of  establishing  a  9:  1  equivalency  between  a  PBX  trunk  and  Centrex  subscribers,  large  customers  would  be  encouraged  to  choose  one  of  these  arrangements  over  the 
 other  because  of  the  number  portability  charge,  an  outcome  that  would  violate  the  competitive  neutrality  requirements  of  section  251(  e)(  2).  272 

 82.  We  also  disagree  with  those  carriers  who  assert  that  allowing  one  charge  for  Centrex  lines  and  nine  charges  for  PBX  trunks  is  not  competitively  neutral,  because  competitive  LECs 
 are  not  required  to  assess  number  portability  monthly  charges  on  these  services.  273  These  carriers  assert  that  competitive  LECs  are  free  to  recover  their  costs  as  they  see  fit  and  are  thus 
 not  required  to  "overcharge"  their  PBX  customers  in  order  to  recover  their  number  portability  costs.  274  In  response,  we  note  that  incumbent  LECs  are  not  required  to  "overcharge"  their  PBX 
 customers,  but  rather  may,  if  they  wish,  assess  up  to  nine  portability  charges  due  to  the  PBX  trunk's  higher  capacity.  275  We  also  determined  in  the  Third  Report  and  Order  that  carriers  not 
 subject  to  rate  regulation,  such  as  competitive  LECs,  may  recover  their  carrier-  specific  costs  directly  related  to  number  portability  in  any  lawful  manner  consistent  with  their  obligations 
 under  the  Communications  Act.  276  We  stated  that  allowing  incumbent  LECs  to  recover  their  carrier-  specific  number  portability  costs  from  their  customers  gives  the  incumbent  LECs  the 
 option  to  forego  some  or  all  of  the  charges  to  compete  in  the  local  service  market.  277  We  also  noted  in  the  Third  Report  and  Order  that  regulating  the  recovery  of  number  portability  costs  by 
 incumbent  LECs  but  not  competitive  LECs  will  not  place  any  carrier  at  a  competitive  disadvantage  because  competitive  LECs  also  have  portability  costs,  and  incumbent  LECs  are 
 unlikely  to  have  a  "material  disadvantage"  in  competing  for  subscribers  under  our  rules.  278  Here,  the  petitioners  allege  that  they  must  "overcharge"  their  customers,  and  that  such  charges  will 
 cause  them  to  lose  customers.  The  incumbent  LECs  allegations  alone  are  insufficient  to  persuade  us  that  the  optional  end-  user  charge  does  not  provide  competitive  parity  with  CLECs, 
 which  also  incur  similar  costs.  At  this  stage,  these  carriers  can  only  speculate  that  CLECs  will  not  assess  end-  user  charges  for  PBX  lines  and  that  incumbent  LECs  must  always  assess  the  end-user 
 charges  where  they  are  faced  with  competition  in  a  specific  market.  We  see  no  reason,  therefore,  to  abandon  the  requirements  established  in  the  Third  Report  and  Order  regarding  the 
 charges  that  apply  to  Centrex  and  PBX  lines. 

 272  Third  Report  and  Order,  13  FCC  Rcd  at  11777-  78,  para.  145. 
 273  Ameritech  Petition  at  9;  see  SBC  Petition  at  4. 
 274  See,  e.  g.,  Ameritech  Petition  at  9. 
 275  Third  Report  and  Order,  13  FCC  Rcd  at  11777-  78,  para.  145. 
 276  Id.  at  11774,  para.  136. 
 277  Id.  at  11775,  para.  139. 
 278  Id. 
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 5.  Recovery  through  the  Incumbent  LEC  End-  User  Charge 
 a.  Initiation  of  the  end-  user  charge 
 (i)  Background 
 83.  In  the  Third  Report  and  Order,  we  allowed  incumbent  LECs  to  assess  a  number 
 portability  monthly  charge,  for  a  five-  year  period,  only  on  end  users  they  serve  in  the  100  largest  MSAs  and  on  end  users  they  serve  outside  the  100  largest  MSAs  when  the  switch  serving  that 

 MSA  is  number-  portability  capable.  279  We  determined  that  such  an  approach  will  encourage  carriers  to  install  number  portability  and  help  ensure  that  end-  users  are  assessed  number 
 portability  charges  only  where  they  are  reasonably  likely  to  benefit  from  number  portability.  280  We  chose  the  five-  year  period  for  the  end-  user  charge  because  it  enables  incumbent  LECs  to 
 recover  their  portability  costs  in  a  timely  fashion,  and  also  helps  produce  reasonable  charges  for  customers  and  avoids  imposing  those  charges  for  an  unduly  long  period.  281  Florida  asserts  that 
 this  rule  should  be  amended  to  provide  that  incumbent  LECs  may  impose  an  end  user  charge  no  sooner  than  the  end  users  are  reasonably  able  to  begin  receiving  number  portability."  282  Bell 
 Atlantic  states  that  Floridas  request  would  be  administratively  difficult  to  impose  and  enforce.  283 
 (ii)  Discussion 
 84.  We  agree  with  Bell  Atlantic  and  therefore  decline  to  change  our  rules.  We  based  our  determination  of  when  carriers  may  begin  collecting  end-  user  charges  on  our  need  to  balance 

 carriers'  need  to  recover  their  costs  with  our  concerns  about  consumer  charges  being  levied  before  number  portability  is  available  in  an  area.  Here,  we  agree  with  Bell  Atlantic  that  allowing 
 the  imposition  of  number  portability  charges  when  individual  end  users  are  able  to  receive  direct  benefits  would  greatly  increase  the  burden  on  carriers,  due  to  carriers'  need  to  determine  when 
 each  residential  and  business  line  is  number  portability-  capable,  and  then  to  begin  billing  consumers  within  that  region  only.  We  also  agree  with  Bell  Atlantic  that  changing  the  time  a 
 carrier  may  begin  billing  based  on  the  individual  availability  of  number  portability  would  involve  the  Commission  in  numerous  disputes  over  when  that  exact  time  had  arrived.  On  the 
 other  hand,  it  is  relatively  simple  for  carriers  and  the  Commission  to  make  such  determination  within  each  MSA.  It  is  also  unclear  how  Florida's  proposal  would  benefit  individual  consumers 
 above  and  beyond  our  current  provisions.  We  authorized  carriers  to  begin  assessing  end-  user  charges  no  sooner  than  February  1,  1999  based  on  the  implementation  schedule  and  in 
 anticipation  that  number  portability  would  be  available  to  a  large  number  of  customers  by  the  end  of  1998.  Because  number  portability  has  been  implemented  in  the  top  100  MSAs  since  the 

 279  Id.  at  11776-  77,  paras.  142-  144. 
 280  Id. 
 281  Id. 
 282  Florida  PSC  Petition  at  3-  4. 
 283  Bell  Atlantic  Response  at  2-  3. 
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 end  of  1998,  as  required  by  the  First  Report  and  Order,  as  modified,  284  Floridas  request  is  moot.  We  therefore  deny  Florida's  request  and  uphold  our  earlier  determination. 
 b.  Recovery  Period  of  the  End-  User  Charge 
 (i)  Background 
 85.  In  the  Third  Report  and  Order,  we  decided  that  incumbent  LECs  may  recover  their  number  portability  costs  with  a  federally-  tariffed  monthly  end-  user  charge.  285  We  determined 

 that  the  end-  user  charge  may  begin  "no  earlier  than  February  1,  1999,  on  a  date  the  incumbent  local  exchange  carrier  selects,  and    last  no  longer  than  five  years."  286  We  decided  further  that 
 after  the  five-  year  recovery  of  the  implementation  costs  of  number  portability  with  the  end-  user  charge,  "[  c]  arriers  can  recover  any  remaining  costs  through  existing  mechanisms  available  for 
 recovery  of  general  costs  of  providing  service."  287 
 86.  NECA  and  SBC  request  clarification  regarding  how  incumbent  LECs  will  recover  number  portability  costs  beyond  the  five-  year  cost  recovery  period.  288  SBC  asks  us  to  address 

 this  issue  before  we  implement  our  directive  on  separations.  289  Furthermore,  SBC  asks  for  clarification  that,  until  the  issue  of  the  distribution  of  joint  costs  is  decided,  290  incumbent  LECs 

 284  See  Third  Report  and  Order,  13  FCC  Rcd  at  11712,  para.  17. 
 285  Id.  at  11773-  74,  11776,  paras.  135,  142. 

 286  Id.  at  11776,  para.  142;  see  also  47  C.  F.  R.    52.33(  a)(  1). 
 287  Third  Report  and  Order,  13  FCC  Rcd  at  11777,  para.  144. 
 288  NECA  Petition  at  8;  SBC  Petition  at  8. 
 289  SBC  Petition  at  7-  8  (citing  Third  Report  and  Order,  13  FCC  Rcd  at  11720,  para.  29  (incumbent  LECs  number 
 portability  costs  will  not  be  subject  to  separations)).  Jurisdictional  separations  is  the  process  of  apportioning  regulated  costs  between  the  intrastate  and  interstate  jurisdictions,  pursuant  to  Part  36  of  the  Commission's  rules.  47 

 C.  F.  R.    36  et  seq.  We  note  that  at  the  time  SBCs  Petition  was  filed,  the  Commission  was  reviewing  its  jurisdictional  separations  procedures  to  ensure  that  they  meet  the  objectives  of  the  1996  Act,  and  to  consider 
 changes  [that  may  be  needed]  in  light  of  changes  in  the  law,  technology,  and  market  structure  of  the  telecommunications  industry.  See  Jurisdictional  Separations  Reform  and  Referral  to  the  Federal-  State  Joint 
 Board,  CC  Docket  No.  80-  286,  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  22120,  22122,  para.  2  (1997).  On  May  22,  2001,  the  Commission  issued  a  Report  and  Order  establishing  a  five-  year  interim  freeze  of  the  Part  36 
 separations  rules,  pending  comprehensive  reform  of  the  separations  process.  This  freeze  will  be  in  effect  from  July  1,  2001  to  June  30,  2006,  or  until  comprehensive  reform  is  completed,  whichever  comes  first.  See  Jurisdictional 
 Separations  Reform  and  Referral  to  the  Federal-  State  Joint  Board,  CC  Docket  No.  80-  286,  Report  and  Order,  FCC  01-  162  (rel.  May  22,  2001). 

 290  In  the  Third  Report  and  Order,  the  Commission  delegated  authority  to  the  Chief  of  the  Common  Carrier  Bureau 
 to  issue  an  order  to  provide  guidance  for  carriers  in  determining  their  carrier-  specific  costs  directly  related  to  number  portability.  The  intent  was  for  carriers  to  have  this  guidance  before  they  filed  their  number  portability  end-  user 

 charge  tariffs,  which  were  to  take  effect  no  earlier  than  February  1,  1999.  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  75.  The  result  was  the  Cost  Classification  Order,  13  FCC  Rcd  24495. 
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 are  under  no  obligation  to  attempt  to  exclude  what  they  would  define  as  number  portability  costs  from  the  separations  process.  291  USTA  urges  us  to  clarify  that  section  52.33(  a)(  1)  of  the  Third 
 Report  and  Order  specifically  provides  for  a  full  five-  year  cost  recovery  period.  292  USTA  asserts  that  the  Third  Report  and  Order  is  not  clear  as  to  whether  incumbent  LECs  serving  the 
 top  100  MSAs  may  recover  their  implementation  costs  from  end  users  over  five  years  from  the  date  the  incumbent  LECs  begin  the  charge,  or  whether  they  must  recover  those  costs  from  end 
 users  within  five  years  of  February  1,  1999.  293 
 (ii)  Discussion 
 87.  We  clarify  that  after  incumbent  LECs  have  recovered  their  initial  implementation  costs  of  number  portability  through  the  end-  user  charge,  any  remaining  number  portability  costs  will 

 be  normal  network  costs  recoverable  under  general  rate-  of-  return  and  price-  cap  regulations.  294  We  designed  the  end-  user  charge  to  ensure  that  incumbent  LECs  would  have  a  reasonable 
 opportunity  to  recover  their  initial  costs  of  implementing  number  portability,  295  which  make  up  the  majority  of  their  number  portability  costs.  296  Thus,  we  noted  in  the  Third  Report  and  Order 
 that  "once  incumbent  LECs  have  recovered  their  initial  implementation  costs,  number  portability  will  be  a  normal  network  feature,  and  a  special  end-  user  charge  will  no  longer  be  necessary  to 
 ensure  that  incumbent  LECs  recover  their  number  portability  costs  on  a  competitively  neutral  basis."  297 

 88.  In  addition,  we  note  that  carriers'  charges  for  providing  query  services  to  other  carriers  will  continue  beyond  the  five-  year  period  of  the  number  portability  end-  user  charge.  298  Because 
 of  this  fact,  the  Common  Carrier  Bureau,  in  its  Cost  Classification  Order,  required  price  cap  LECs  to  treat  the  query  service  charge  as  a  new  service  within  the  meaning  of  section  61.49(  g) 
 of  our  rules.  299  This  action  was  consistent  with  the  treatment  of  such  charges  in  previously  filed  tariffs.  300  We  affirm  this  requirement.  Furthermore,  we  require  rate-  of-  return  LECs  that  provide 

 291  SBC  Petition  at  7-  8. 
 292  USTA  Petition  at  3. 
 293  Id. 
 294  See  47  C.  F.  R.    61.38-  61.39,  61.41-  61.49. 
 295  Third  Report  and  Order,  13  FCC  Rcd  at  11775,  11777,  paras.  139,  144. 
 296  Id.  at  11724-  25,  para.  38. 
 297  Id.  at  11777,  para.  144. 
 298  Id.  at  11778-  79,  para.  147. 
 299  Cost  Classification  Order,  13  FCC  Rcd  at  24513,  para.  47. 
 300  Id. 
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 number  portability  query  service  to  treat  the  query  service  as  a  new  service  within  the  meaning  of  section  61.49(  g)  of  our  rules.  We  note  SBC's  request  that  incumbent  LECs  be  able  to  utilize 
 the  separations  process  for  their  number  portability  costs  before  the  issue  of  the  distribution  of  joint  costs  is  decided.  301  Although  SBCs  request  was  rendered  moot  by  the  December  1998 
 release  of  the  Cost  Classification  Order,  we  established  an  exclusively  federal  cost  recovery  mechanism  for  number  portability  costs  in  the  Third  Report  and  Order,  which  precludes 
 assignment  and  recovery  of  number  portability  costs  for  intrastate  ratemaking  purposes,  through  the  jurisdictional  separations  process.  302 

 89.  Finally,  we  clarify  that  incumbent  LECs  will  have  five  years  to  recover  their  implementation  costs  of  number  portability  through  an  end-  user  charge,  regardless  of  when  they 
 initiate  the  charge.  Thus,  for  example,  if  an  incumbent  LEC  began  its  recovery  through  an  end-user  charge  on  June  1,  1999,  it  would  have  60  months  from  that  date  to  recover  its 
 implementation  costs  of  number  portability.  We  will  amend  section  52.33(  a)(  1)  of  our  rules  to  read:  "The  monthly  number-  portability  charge  may  take  effect  no  earlier  than  February  1,  1999, 
 on  a  date  the  incumbent  local  exchange  carrier  selects,  and  may  end  no  later  than  five  years  after  the  incumbent  local  exchange  carriers  monthly  number-  portability  charge  takes  effect.  303 

 c.  Administration  of  the  End-  User  Charge 
 (i)  Background 
 90.  UTC  and  Florida  assert  that  the  Commission  should  require  that  LECs  imposing  the  end-user  charge  apply  a  standardized  label,  such  as  "Federal  Number  Portability  Charge,"  because 

 the  myriad  of  new  charges  appearing  on  telecommunications  bills  has  confused  consumers.  304  UTC  states  that  while  it  has  taken  steps  to  educate  its  members  on  the  new  charges,  this  task  is 
 difficult  in  the  absence  of  standard  labels,  and  those  UTC  members  that  are  customers  of  multiple  LECs  are  faced  with  even  greater  complexity,  as  each  LEC  bill  may  contain  a  different 
 description  of  the  same  type  of  charge.  305  Florida  requests  the  Commission  implement  public  service  announcements  and  require  carriers  to  include  bill  inserts  and  explanations  of  new 
 charges  or  services  before  they  are  introduced.  306  Florida  also  asserts  that  the  Commission  should  establish  sufficient  staffing  to  educate  consumers  about  the  number  portability  end-  user 
 charge.  307 

 301  SBC  Petition  at  7-  8.  See  supra  note  289  and  accompanying  text. 
 302  Third  Report  and  Order,  13  FCC  Rcd  at  11720,  para.  29. 
 303  See  Appendix  B    52.33(  a)(  1)  (emphasis  added). 
 304  Florida  PSC  Petition  at  2;  UTC  Comments  at  5-  6. 

 305  UTC  Comments  at  5-  6. 
 306  See  Florida  PSC  Petition  at  1-  2,  4-  5. 
 307  Id.  at  1-  2. 
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 (ii)  Discussion 
 91.  It  appears  that  the  issues  raised  by  UTC  and  Florida  regarding  formats  for  telephone  bills  are  identical  to  those  raised  in  the  Truth-  in-  Billing  NPRM  and  decided  on  April  15,  1999  in  the 

 Truth-  in-  Billing  Order.  308  In  the  Truth-  in-  Billing  Order,  we  adopted  broad  principles  and  guidelines  to  promote  truth-  in-  billing  rather  than  rigid,  detailed  rules  that  govern  carrier  billing 
 practices.  We  determined  that  services  included  on  the  telephone  bill  must  be  accompanied  by  a  brief,  clear  description  of  the  services  rendered.  309  This  description  must  convey  enough 
 information  to  enable  a  customer  reasonably  to  identify  and  to  understand  the  service  for  which  the  customer  is  being  charged.  310  We  observed  that  the  industry  and  consumer  focus  groups  may 
 be  best  equipped  to  develop  standard  service  descriptions  that  are  compatible  with  the  character  limitations  for  text  messages  and  other  operational  restrictions  found  in  the  systems  currently 
 used  for  billing.  311  In  the  Truth-  in-  Billing  Order,  we  also  noted  that  the  failure  of  carriers  to  consistently  label  and  accurately  describe  certain  line  item  charges  associated  with  federal 
 regulatory  action,  such  as  the  number  portability  end-  user  charge,  has  increased  customer  confusion  about  the  nature  of  the  charges.  312  To  address  this  problem,  we  adopted  a  guideline 
 requiring  carriers  to  use  clear  standardized  labels  on  telephone  bills  to  refer  to  line  item  charges  related  to  federal  regulatory  action.  313  In  addition,  we  sought  comment  on  whether  to  mandate 
 specific  standard  labels  for  such  charges.  314  Although  we  declined  to  formulate  standardized  descriptions  for  services,  such  as  the  "Federal  Number  Portability  Charge"  suggested  by  UTC 
 and  Florida,  we  encouraged  carriers  and  consumer  groups  to  come  together  to  develop  uniform  terminology  and  jointly  submit  proposals  to  the  Commission.  315  Because  we  are  already 
 considering  whether  to  require  specific  standard  labels  for  number  portability  service  and  other  line  items  in  another  proceeding,  we  will  not  resolve  that  question  here.  Instead,  we  will  again 
 encourage  the  industry  and  consumer  groups  to  develop  uniform  terminology  to  describe  the  number  portability  end-  user  charge  on  customer  bills. 

 308  Truth-  in-  Billing  and  Billing  Format,  CC  Docket  No.  98-  170,  First  Report  and  Order  and  Further  Notice  of 
 Proposed  Rulemaking,  14  FCC  Rcd  7492  (1999)  (Truth-  in-  Billing  Order). 
 309  Id.  at  7516,  para.  38. 

 310  Id.  at  7517-  18,  para.  40. 
 311  Id.  at  7519  and  7525-  26,  paras.  43,  54. 
 312  Id.  at  7524-  25,  paras.  52-  53. 
 313  Id.  at  7525-  26,  para.  54. 
 314  Id.  at  7526-  27,  7537,  paras.  55,  71. 
 315  Id.  at  7519,  para.  43. 
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 d.  Levelization  of  the  End-  User  Charge 
 (i)  Background 
 92.  We  held  in  the  Third  Report  and  Order  that  incumbent  LECs  must  levelize  their  monthly  number  portability  charge  over  five  years.  316  A  levelized  rate  is  one  that  is  calculated  to  remain 

 constant  over  a  recovery  period  and  is  set  at  the  level  at  which  the  discounted  present  value  of  the  stream  of  payments  is  equal  to  the  discounted  present  value  of  the  stream  of  costs  over  the 
 period.  317  We  require  levelization  of  the  monthly  charge  to  protect  consumers  from  varying  rates.  318  Incumbent  LECs  may  collect  less  than  the  maximum  allowable  charge,  or  decline  to 
 collect  the  charge,  from  some  or  all  of  their  customers  as  long  as  they  do  so  in  a  reasonable  and  nondiscriminatory  manner.  319  We  will  not,  however,  allow  incumbent  LECs  to  offset  lower 
 charges  for  some  customers  by  collecting  higher  charges  in  areas  where  no  competitive  carriers  are  present.  We  also  stated  that  after  a  carrier  establishes  its  levelized  end-  user  charge  in  the 
 tariff  review  process,  we  do  not  anticipate  that  it  may  raise  the  charge  during  the  five-  year  period  unless  it  can  show  that  the  end-  user  charge  was  not  reasonable  based  on  the  information 
 available  at  the  time  it  was  initially  set.  320 
 93.  USTA  asserts  that  incumbent  LECs  in  the  top  100  MSAs  must  be  able  to  adjust  their  monthly  number  portability  charge  up  or  down  to  fully  recover  costs  during  the  five-  year 

 recovery  period  without  making  the  showing  required  by  the  Commission.  321  USTA  asserts  that  demand  for  number  portability  can  change,  and  customers  can  be  lost,  which  makes  it  unlikely 
 that  an  incumbent  LEC's  estimate  of  costs  at  the  beginning  of  the  five  year  recovery  period  will  be  the  same  as  its  actual  costs  throughout  that  period.  322 

 (ii)  Discussion 
 94.  We  decline  at  this  time  to  change  the  rule  adopted  in  the  Third  Report  and  Order  concerning  levelized  charges.  323  USTA  has  presented  no  compelling  reason  to  do  so.  We 

 continue  to  recognize  consumers'  sensitivity  to  end-  user  charges,  as  well  as  our  stated  goal  of 

 316  Third  Report  and  Order,  13  FCC  Rcd  at  11776-  77,  para.  143. 
 317  Id.  at  n.  478. 
 318  Id.,  13  FCC  Rcd  at  11776-  77,  para.  143. 
 319  Id. 
 320  Id.  at  11777,  para.  144. 
 321  USTA  Petition  at  3-  4. 
 322  Id.  at  4. 
 323  Third  Report  and  Order,  13  FCC  Rcd  at  11776-  77,  paras.  142-  46. 
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 protecting  consumers  from  varying  rates.  324  We  note  that  we  did  not  state  in  the  Third  Report  and  Order  that  carriers  may  never  change  their  monthly  end-  user  rates.  Carriers  may  reduce 
 their  rates,  provided  they  do  so  in  a  reasonable  and  nondiscriminatory  manner.  325  Also,  we  did  not  foreclose  carriers  from  increasing  their  rates,  but  held  that  to  do  so,  carriers  must  show  that 
 their  end-  user  charges  were  not  reasonable  based  on  the  information  available  at  the  time  they  were  initially  set.  We  continue  to  believe  that  requiring  such  a  showing  will  best  protect 
 consumers  from  rate  variances.  Based  on  our  goal  of  protecting  consumers  from  rate  shifts,  we  decline  to  grant  USTA's  request. 

 6.  Querying  all  Calls  to  an  NXX 
 a.  Background 
 95.  In  the  First  Report  and  Order,  we  concluded  that  "there  is  no  direct  correlation  between  the  number  of  queries  made  and  the  number  of  telephone  numbers  that  have  been  forwarded 

 because  queries  will  be  performed  on  all  calls  to  a  particular  switch  once  any  single  number  has  been  transferred  or  ported  from  that  switch.  326  In  the  Third  Report  and  Order,  we  concluded 
 that  "long-  term  number  portability  requires  N-  1  carriers  to  incur  query  costs  for  all  interswitch  calls  to  an  NXX  once  number  portability  is  available  for  that  NXX,  whether  or  not  the 
 terminating  customer  has  ported  a  number."  327  We  also  stated  that  a  carrier  must  query  all  interswitch  calls  to  an  NXX  once  number  portability  is  "available"  to  determine  whether  the 
 terminating  customer  has  ported  the  telephone  number.  328 
 96.  In  the  Cost  Classification  Order,  the  Bureau  directed  the  incumbent  LECs,  when  filing  their  long-  term  number  portability  tariffs,  to  demonstrate  whether  their  demand  assumptions 

 included  performing  queries  for  all  calls  in  NXXs  where  no  number  had  been  ported  and  to  explain  why  it  is  necessary  to  query  calls  in  this  situation.  329 

 97.  USTA  seeks  clarification  of  the  Third  Report  and  Order,  requesting  that  the  Commission  establish  a  specific  procedure  for  opening  an  NXX  code  for  portability.  330  USTA 
 asserts  that  the  procedures  followed  by  carriers  in  opening  NXX  codes  for  portability  varies  among  carriers.  The  carriers  may  either  begin  charging  for  queries  on  the  Bellcore  (now 

 324  Id.  at  11707,  11776-  77,  paras.  10,  143-  44. 
 325  Id.  at  11776-  77,  paras.  142-  44. 
 326  First  Report  and  Order,  11  FCC  Rcd  at  8463,  para.  219  (emphasis  added). 
 327  Third  Report  and  Order,  13  FCC  Rcd  at  11729,  para.  46. 
 328  Id. 
 329  Cost  Classification  Order,  13  FCC  Rcd  at  24513,  para.  48.  We  note  that  the  issue  of  performing  queries  for  calls 
 to  NXXs  where  no  number  has  been  ported  also  was  raised  in  other  related  number  portability  proceedings. 
 330  USTA  Petition  at  2,  7;  USTA  Comments  at  2. 
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 Telcordia)  Local  Exchange  Routing  Guide  (LERG)  effective  date  (which  is  in  advance  of  an  initial  port),  or  begin  charging  for  queries  upon  notice  of  the  first  service  port.  331  USTA  requests 
 that  the  Commission  establish  a  cost  recovery  mechanism  for  querying  functions  that  provides  no  financial  impact  prior  to  implementation  of  "true  number  portability"  and  allows  incumbent 
 LECs  with  non-  number  portability  capable  switches  to  recover  query  costs  only  when  legitimate  queries  are  required.  332  USTA  further  requests  that  the  Commission  clarify  that  an  incumbent 
 LEC  will  not  be  required  to  perform  query  functions  unnecessarily  and  prematurely.  333 
 98.  In  addition  to  USTAs  petition,  Time  Warner  seeks  reconsideration  of  the  Bureau's  order  reconsidering  the  suspension  334  of  Sprint  Local  Telephone  Companies'  (Sprint)  long-  term 

 number  portability  tariffs  on  the  ground  that  Sprint's  tariffs  indicate  that  Sprint  intends  to  charge  for  long-  term  number  portability  default  queries  on  calls  to  NXXs  where  no  number  has  been 
 ported.  335 
 b.  Discussion 
 99.  We  note  that  the  issue  of  queries  for  calls  to  NXXs  where  no  number  has  been  ported  has  been  raised  in  the  context  of  other  number  portability  proceedings.  Comcast  Cellular 

 Communications,  Inc.,  in  its  petition  for  reconsideration  of  the  Commission's  Query  Services  Order,  336  urged  the  Commission  to  address  the  issue  of  whether  assessing  default  query  charges 
 on  calls  to  non-  ported  NXXs  is  reasonable  in  regard  to  Bell  Atlantic's  interim  query  services  tariff.  337  In  the  course  of  the  long-  term  number  portability  tariff  investigations,  the  Bureau 
 sought  information  from  the  carriers  to  enable  the  Bureau  to  resolve  this  issue.  338  AT&  T 
 331  USTA  Petition  at  7. 
 332  Id.  at  7-  8. 
 333  Id. 
 334  See  Long-  Term  Telephone  Number  Portability  Tariff  Filings  of  Sprint  Local  Telephone  Companies,  CC  Docket 
 No.  99-  35,  Reconsideration  of  Decision  To  Suspend  and  Investigate  Tariff  Filings  of  Sprint  Local  Telephone  Companies,  14  FCC  Rcd  3828  (1999)  (Sprint  LNP  Tariff  Reconsideration  Order). 

 335  Time  Warner  Petition  for  Reconsideration  of  Sprint  LNP  Tariff  Reconsideration  Order  (filed  Apr.  7,  1999). 
 336  Number  Portability  Query  Services  Order,  CC  Docket  No.  98-  14,  Order,  13  FCC  Rcd  16117  (1998). 
 337  Comcast  Cellular  Communications  Petition  for  Reconsideration  (filed  Sept.  18,  1998).  The  Commission  denied 
 Comcast's  petition  in  an  order  released  December  17,  1998.  Comcast  Cellular  Communications,  Inc.  Petition  for  Reconsideration  of  Number  Portability  Query  Services  Order,  CC  Docket  No.  98-  14,  Memorandum  Opinion  and 

 Order,  14  FCC  Rcd  1664  (1998).  The  Commission  concluded  that  the  issue  would  be  most  appropriately  handled  after  the  filing  of  the  incumbent  LECs'  number  portability  tariffs,  when  both  end-  user  and  query  costs  would  be 
 before  the  Commission  for  review. 
 338  In  the  Cost  Classification  Order,  the  Bureau  requested  that  carriers  state  whether  their  demand  assumptions 
 include  performing  queries  for  all  calls  even  in  NXXs  where  no  telephone  number  has  been  ported  and  to  explain  why  it  is  necessary  to  query  all  calls  in  this  situation.  See  Cost  Classification  Order,  13  FCC  Rcd  at  24513,  para.  48. 
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 Communications  and  Time  Warner  filed  comments  regarding  the  tariffs  filed  by  the  incumbent  LECs  in  response  to  the  Bureau's  Cost  Classification  Order,  urging  the  Bureau  to  reject  the 
 tariffs  of  companies  that  impose  default  query  charges  on  calls  to  NXXs  with  no  ported  numbers.  339  In  response,  SBC  argued  that  the  issue  of  whether  an  incumbent  LEC  may  query  all 
 calls  to  NXXs  where  a  number  has  not  been  ported  was  resolved  in  the  Commission's  Third  Report  and  Order,  which  requires  carriers  to  query  all  interswitch  calls  to  an  NXX  once  number 
 portability  is  available  for  that  NXX  in  order  to  determine  whether  the  terminating  customer  has  ported  a  number.  340 

 100.  In  the  LNP  Investigation  Order,  we  affirmed  the  Bureau's  conclusion  that  querying  all  calls  and  charging  carriers  prior  to  the  date  that  a  number  is  ported  in  an  NXX  is  premature  and 
 inconsistent  with  the  Third  Report  and  Order  and  Cost  Classification  Order  requirement  that  customers  may  not  be  charged  for  number  portability  until  they  are  able  to  receive  the  benefits  of 
 that  service.  341  This  conclusion  is  based  on  the  language  in  the  First  Report  and  Order  wherein  we  stated  that  queries  will  be  performed  on  all  calls  once  any  single  number  has  been  transferred 
 or  ported  from  that  switch.  342  This  language  contemplates  that  carriers  will  not  perform  queries  until  a  number  has  been  ported  from  an  NXX.  We  further  concluded  that  querying  all  calls  and 
 charging  carriers  prior  to  the  date  upon  which  a  number  is  ported  in  an  NXX  is  premature,  unnecessary  to  prevent  potential  service  disruption,  and  without  value  or  purpose.  343 

 101.  We  find  that  Sprint  is  not  authorized  to  charge  for  long-  term  number  portability  default  queries  on  calls  made  to  NXXs  where  no  number  has  been  ported.  In  response  to  the 
 Commissions  decision  in  the  LNP  Investigation  Order,  however,  Sprint  amended  its  number  portability  tariff  to  discontinue  the  practice  of  charging  N-  1  carriers  for  long-  term  number 
 portability  default  queries  for  calls  to  numbers  in  an  NXX  before  a  number  has  been  ported  from  that  NXX.  Time  Warners  petition  for  reconsideration  is,  therefore,  moot  and  is  denied. 

 339  AT&  T  Petition  to  Reject  or  Suspend  Tariffs  at  8  (filed  Jan.  22,  1999);  Time  Warner  Petition  to  Suspend  for  One 
 Day  and  Set  for  Investigation  at  1-  2  (filed  Jan.  21,  1999);  see  also  LNP  Designation  Order,  14  FCC  Rcd  3367. 
 340  SBC  Reply  at  4-  5  (filed  Jan.  27,  1999). 

 341  LNP  Investigation  Order,  14  FCC  Rcd  at  11949,  para.  140;  see  also  Number  Portability  Designation  Order,  14 
 FCC  Rcd  at  3383,  para.  46;  Third  Report  and  Order,  13  FCC  Rcd  at  11729,  para.  46;  First  Report  and  Order,  11  FCC  Rcd  at  8463,  para.  219. 

 342  LNP  Investigation  Order,  14  FCC  Rcd  at  11947,  para.  136  (citing  First  Report  and  Order,  11  FCC  Rcd  at  8463, 
 para.  219).  We  also  noted  that  the  references  in  the  Third  Report  and  Order  regarding  queries  to  calls  where  number  portability  is  "available"  refer  to  paragraph  219  of  the  First  Report  and  Order.  See  Third  Report  and  Order,  13  FCC 

 Rcd  at  11711,  para.  15  &  n.  58. 
 343  LNP  Investigation  Order,  14  FCC  Rcd  at  11948-  49,  para.  139. 
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 IV.  ORDER  ON  APPLICATION  FOR  REVIEW 
 A.  Operation  Support  Systems  (OSS)  Costs 
 1.  Background 
 102.  In  the  Third  Report  and  Order,  the  Commission  delegated  authority  to  the  Bureau  to  determine  appropriate  methods  for  apportioning  joint  costs  among  portability  and  non-  portability 

 services  and  to  issue  an  order  to  provide  guidance  to  carriers  before  they  file  their  federal  tariffs.  344  Consistent  with  the  Third  Report  and  Order,  the  Bureaus  Cost  Classification  Order 
 specifically  addressed  issues  related  to  the  determination  of  costs  eligible  for  cost  recovery,  the  apportionment  of  costs  between  portability  and  non-  portability  services,  and  the  apportionment 
 between  end-  user  charges  and  query  service  charges.  345  In  it,  the  Bureau  reiterated  the  earlier  conclusions  of  the  Third  Report  and  Order  and,  consistent  with  its  mandates,  adopted  a  two-  part 
 test  for  identification  of  carrier-  specific  costs  directly  related  to  number  portability.  346  Pursuant  to  the  Cost  Classification  Order,  a  carrier  must  demonstrate  that  the  costs  that  are  eligible  for 
 cost  recovery  through  the  federal  recovery  mechanism:  (1)  would  not  have  been  incurred  by  the  carriers  "but  for"  the  implementation  of  number  portability;  and  (2)  were  incurred  "for  the 
 provision  of"  number  portability.  347  The  Bureau  stated  that  this  two-  part  test  avoids  overcompensation  of  LECs  for  their  costs  because  LECs  are  already  deemed  to  be  recovering 
 costs  of  general  network  upgrades  through  "standard  recovery  mechanisms."  348  Consistent  with  the  Third  Report  and  Order,  the  Bureau  further  held  that  LECs  should  not  be  allowed  to  recover 
 such  costs  through  both  federal  number  portability  charges  and  under  price  caps  or  rate-  of-  return  regulation.  349  The  Bureau  stated  that  it  required  LECs  to  distinguish  clearly  costs  incurred  for 
 narrowly  defined  portability  functions  from  costs  incurred  to  adapt  their  systems  to  implement  number  portability,  such  as  repair  and  maintenance,  billing,  or  order  processing  systems.  350 

 103.  Several  carriers  filed  applications  for  review  or  clarification  of  the  Cost  Classification  Order.  351  Petitioners  argue  that  the  Cost  Classification  Order  is  too  restrictive  and  prevents 
 carriers  from  recovering  all  costs  associated  with  the  implementation  of  number  portability.  352 
 344  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  75. 

 345  See  Cost  Classification  Order,  13  FCC  Rcd  at  24495,  para.  1. 
 346  Id.  at  24500,  para.  10. 
 347  Id. 
 348  Id.  at  24500,  para.  11. 
 349  Id. 
 350  Id.  at  24501,  para.  12. 
 351  A  list  of  petitioners  and  commenting  parties  appears  at  Appendix  A. 
 352  See  Bell  Atlantic  Application  at  2-  3;  Cincinnati  Bell  Application  at  4-  7;  U  S  WEST  Application  at  7-  13. 
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 Specifically,  petitioners  argue  that  the  two-  part  test  set  out  in  the  Cost  Classification  Order  exceeds  the  Bureau's  delegated  authority  by  excluding  costs  associated  with  OSS  modifications 
 that  are  the  direct  result  of  number  portability  by  incorrectly  classifying  them  as  general  network  upgrades.  353  Petitioners  also  assert  that  the  Cost  Classification  Order  requires  incumbent  LECs 
 to  recover  number  portability  costs  through  access  charges  and  other  cost  recovery  mechanisms  prohibited  by  the  Third  Report  and  Order.  354  Petitioners  challenge  the  Bureau's  determination 
 that  the  two-  part  test  excludes  recovery  of  some  OSS  costs  associated  with  the  implementation  of  long-  term  number  portability.  355 

 2.  Discussion 
 104.  We  disagree  with  those  commenters  who  assert  that  the  Cost  Classification  Order  is  overly  restrictive  and  prevents  carriers  from  recovering  costs  associated  with  the  implementation 

 of  number  portability.  356  We  agree  with  Ameritech  that  the  Bureau  set  forth  a  reasonable  methodology  for  the  allocation  of  joint  costs,  and  that  this  method  is  consistent  with  section 
 251(  e)(  2)  of  the  Act  and  with  the  Third  Report  and  Order.  357  Additionally,  we  have  previously  approved  the  two-  part  cost  classification  test,  as  stated  in  the  LNP  Investigation  Order  358  and  the 
 U  S  WEST  LNP  Investigation  Order.  359  We  also  disagree  with  the  assertion  that  carriers  are  not  allowed  to  recover  the  costs  of  OSS  modifications.  As  we  stated  in  the  LNP  Investigation  Order, 
 "[  t]  he  Cost  Classification  Order  does  not  exclude  all  costs  for  modifications  to  OSS,  but  instead  excludes  those  costs  incurred  as  'an  incidental  consequence  of  number  portability.  '"  360  As  we 
 stated  in  the  Third  Report  and  Order,  the  costs  carriers  incur  as  an  incidental  consequence  of  number  portability  are  not  costs  directly  related  to  providing  number  portability  and  are,  thus, 
 ordinary  costs  of  doing  business  in  this  new  environment.  361  These  costs  may  not  be  recovered  through  number  portability  charges.  However,  they  may  be  recovered  through  price  caps  and 

 353  Id. 
 354  See  Cincinnati  Bell  Application  at  7;  U  S  WEST  Application  at  13-  17. 
 355  See  Cincinnati  Bell  Application  at  5-  6;  U  S  WEST  Application  at  12. 
 356  See  Bell  Atlantic  Application  at  2-  3;  Cincinnati  Bell  Application  at  4-  7;  U  S  WEST  Application  at  7-  13. 
 357  Ameritech  Petition  for  Clarification  or  Review  at  2-  3. 
 358  LNP  Investigation  Order,  14  FCC  Rcd  at  11901-  02,  paras.  40-  44. 
 359  See  Long-  Term  Number  Portability  Tariff  Filings  of  U  S  WEST  Communications,  Inc.,  CC  Docket  No.  99-  35, 
 Memorandum  Opinion  and  Order,  14  FCC  Rcd  11983,  11994,  paras.  21-  22  (1999)  (U  S  WEST  LNP  Investigation  Order). 

 360  LNP  Investigation  Order,  14  FCC  Rcd  at  11902,  para.  43. 
 361  See  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  72. 
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 rate-  of-  return  recovery  mechanisms.  362 
 105.  We  disagree  with  U  S  WEST's  assertion  that  the  Bureau  requires  incumbent  LECs  to  recover  network  costs,  including  any  network  upgrade  or  OSS  cost,  through  cost  recovery 

 mechanisms  that  the  Commission  has  expressly  forbidden,  namely  through  access  charges  and  through  state  recovery  mechanisms.  363  In  the  LNP  Investigation  Order,  we  held  that  general 
 network  upgrades  are  not  eligible  number  portability  costs  because  they  are  assumed  to  be  recovered  through  ordinary  price  cap  and  rate-  of-  return  mechanisms.  364  We  stated  in  the  Third 
 Report  and  Order  that  carrier-  specific  costs  directly  related  to  number  portability  may  not  be  recovered  through  access  charges.  365  In  the  Cost  Classification  Order,  the  Bureau  correctly 
 interpreted  the  Third  Report  and  Order  when  it  stated  that  carriers  may  recover  some  general  network  upgrades  through  price  caps  and  rate-  of-  return  regulation,  but  could  not  also  recover 
 these  costs  through  the  number  portability  cost  recovery  mechanism,  because  this  could  lead  to  double  recovery.  366  Thus,  the  Bureau  has  not  required  incumbent  LECs  to  recover  carrier-specific 
 costs  directly  related  to  number  portability  through  forbidden  cost  recovery  mechanisms,  but  has  merely  stated  that  general  upgrade  costs  that  are  incidental  to  number  portability  that  are 
 not  recovered  through  the  number  portability  federal  charges  may  be  recovered  elsewhere,  through  access  charges  and  state  cost  recovery  mechanisms. 

 106.  We  also  disagree  with  those  commenters  who  assert  that  the  two-  part  cost  allocation  method  constitutes  an  unconstitutional  taking  because  carriers'  costs  will  not  be  recovered.  367  U 
 S  WEST  asserts  that  due  to  the  Bureau's  order,  it  must  absorb  approximately  $85  million  in  number  portability  costs,  reflecting  expenses  for  OSS  changes,  switch  hardware  and  software 
 upgrades,  and  signaling  system  expansion.  368  We  held  in  the  Third  Report  and  Order  that  incumbent  LECs  may  recover  their  carrier-  specific  costs  directly  related  to  providing  number 
 portability  through  two  federally  tariffed  charges,  369  including  that  portion  of  a  carrier's  joint  costs  that  is  demonstrably  an  incremental  cost  incurred  in  the  provision  of  number  portability.  370 
 We  held  that  costs  the  carriers  incur  as  an  incidental  consequence  of  number  portability  are  not 

 362  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 
 363  U  S  WEST  Application  at  13-  17. 
 364  LNP  Investigation  Order,  14  FCC  Rcd  at  11901-  02,  para.  42. 
 365  Third  Report  and  Order,  13  FCC  Rcd  at  11773,  para.  135. 
 366  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  para.  11. 
 367  U  S  WEST  Application  at  17-  19. 
 368  Id.  at  7. 
 369  Third  Report  and  Order,  13  FCC  Rcd  at  11773,  11778-  79,  paras.  135,  147. 
 370  Id.  at  11740,  para.  73. 
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 costs  directly  related  to  number  portability.  371  The  Bureau  correctly  interpreted  the  Third  Report  and  Order  that  the  costs  of  general  network  upgrades  are  recoverable  through  "standard  recovery 
 mechanisms"  under  price  caps  or  rate-  of-  return  regulation.  372  We  also  held  in  the  Third  Report  and  Order  that  carriers  not  subject  to  rate  regulation  may  recover  their  carrier-  specific  costs 
 directly  related  to  providing  number  portability  in  any  lawful  manner  consistent  with  their  obligations  under  the  Act.  373  Because  carriers  will  be  allowed  to  recover  their  costs  through 
 federally  tariffed  charges,  through  standard  recovery  mechanisms,  or  in  any  lawful  manner,  we  do  not  agree  that  carriers  are  required  to  incur  costs  for  which  no  cost  recovery  is  allowed. 

 107.  Moreover,  we  disagree  with  those  commenters  who  assert  that  the  Bureau  did  not  give  full  consideration  to  arguments  that  certain  OSS  modifications  were  necessary  to  ensure  that 
 there  will  be  no  impairment  of  "quality,  reliability,  or  convenience."  374  We  have  previously  considered  and  rejected  this  argument.  In  the  U  S  WEST  LNP  Investigation  Order,  the 
 Commission  noted  that  it  previously  considered  and  rejected  the  argument  that  all  costs  allegedly  incurred  to  prevent  any  degradation  of  service,  however  insignificant,  are  eligible  number 
 portability  costs.  375  Although  the  industry,  the  NANC,  and  the  Commission  all  considered  degradation  of  the  quality  of  service  when  selecting  the  method  used  to  implement  number 
 portability,  376  in  the  First  Report  and  Order  we  expressly  stated  that  the  implementation  of  any  long-  term  cost  recovery  method  should  not  unreasonably  degrade  existing  service  quality  or 
 network  reliability.  377  We  affirm  our  earlier  finding  that  this  performance  criterion  is  not  authority  for  the  proposition  that  all  costs  incidental  to  achieving  that  performance  level  are  costs 
 incurred  for  the  provision  of  number  portability.  378  Thus,  OSS  modification  costs  are  eligible  for  cost  recovery  only  to  the  extent  that  they  are  directly  related  to  providing  number  portability.  379 

 108.  We  disagree  with  Cincinnati  Bell's  assertion  that  the  Bureau's  cost  allocation  policy  contradicts  the  Commission's  previous  statements  that  all  number  portability  costs  should  be 
 recoverable  except  to  the  degree  the  upgrade  enhances  other  services.  380  We  affirm  our  earlier 
 371  Id.  at  para.  72. 

 372  Cost  Classification  Order,  13  FCC  Rcd  at  24500,  paras.  10-  11. 
 373  See  Third  Report  and  Order,  13  FCC  Rcd  at  11774,  para.  136. 
 374  Bell  Atlantic  Application  at  2-  3;  Cincinnati  Bell  Application  at  3-  4. 
 375  U  S  WEST  LNP  Investigation  Order,  14  FCC  Rcd  at  12000-  01,  para.  36. 
 376  Cost  Classification  Order,  13  FCC  Rcd  at  24501-  02,  para.  13. 
 377  First  Report  and  Order,  11  FCC  Rcd  at  8378,  para.  48. 
 378  U  S  WEST  LNP  Investigation  Order,  14  FCC  Rcd  at  12000-  01,  para.  36;  see  also  Cost  Classification  Order,  13 
 FCC  Rcd  at  24501-  02,  para.  13. 
 379  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 

 380  Cincinnati  Bell  Application  at  4. 
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 determination  in  the  LNP  Investigation  Order  and  the  U  S  WEST  LNP  Investigation  Order  that  costs  carriers  incur  as  an  incidental  consequence  of  number  portability  are  ordinary  costs  of 
 doing  business  in  this  new  environment  and  represent  general  network  upgrades.  381  Doing  otherwise  could  overcompensate  LECs  who  are  already  recovering  costs  of  general  network 
 upgrades  through  "standard  recovery  mechanisms."  382  Such  overcompensation  would  violate  the  provisions  of  the  Third  Report  and  Order  that  only  those  costs  directly  related  to  providing 
 number  portability  are  recoverable  through  federal  number  portability  recovery  mechanisms.  383  We  also  affirm  the  Bureau's  requirement  that  LECs  must  distinguish  the  costs  of  providing 
 number  portability  itself,  which  are  recoverable  through  the  federal  charges  provided  in  the  Third  Report  and  Order,  from  general  network  upgrade  costs  recoverable  through  price  caps  and 
 rate-  of-  return  mechanisms  in  order  to  avoid  possible  double-  recovery.  384 
 109.  We  are  not  persuaded  by  Ameritech's  assertion  that  because  we  have  imposed  access  to  OSS  as  a  condition  of  BOC  long-  distance  entry  under  section  271,  OSS  is  clearly  necessary  to 

 number  portability  and  all  OSS  costs  must  be  recoverable.  385  In  the  LNP  Investigation  Order,  we  clarified  that  number  portability  cost  recovery  issues  were  not  considered  in  the  context  of 
 Ameritech's  application  to  provide  interLATA  services  in  Michigan.  386  We  further  held  that  statements  we  made  in  that  context  do  not  establish  a  standard  for  the  recovery  of  OSS  costs,  nor 
 should  they  be  relied  upon  by  the  incumbent  LECs  as  guidance  in  determining  the  eligible  portion  of  OSS  costs  to  be  allocated  to  number  portability  tariffs.  387  In  the  Third  Report  and 
 Order,  we  noted  that  section  251(  e)(  2)  "expressly  and  unconditionally  grants  the  Commission  authority  to  ensure  that  carriers  bear  the  costs  of  providing  number  portability  on  a  competitively 
 neutral  basis."  388  We  concluded  that  an  exclusively  federal  recovery  mechanism  would  enable  us  to  satisfy  most  directly  our  competitive  neutrality  mandate,  and  allowed  incumbent  LECs  to 
 recover  their  costs  pursuant  to  the  requirements  we  set  forth.  389  We  fail  to  see  how  the  fourteen-point  checklist  for  BOC  long-  distance  entry  under  section  271  negates  our  authority  under 
 sections  251  or  271,  or  how  it  changes  our  determination  that  not  all  costs  of  network  upgrades 
 381  LNP  Investigation  Order,  14  FCC  Rcd  at  11916-  17,  para.  73;  U  S  WEST  LNP  Investigation  Order,  14  FCC  Rcd 
 at  12000-  01,  paras.  35-  37. 
 382  See  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 

 383  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  72;  see  also  Cost  Classification  Order,  13  FCC  Rcd  at 
 24500,  para.  10. 
 384  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 

 385  Ameritech  Petition  for  Clarification  or  Review  at  7-  8. 
 386  LNP  Investigation  Order,  14  FCC  Rcd  at  11902,  para.  44. 
 387  Id. 
 388  Third  Report  and  Order,  13  FCC  Rcd  at  11719,  para.  28. 
 389  Id.  at  11719-  20,  paras.  28-  29. 
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 could  be  recovered  through  federal  number  portability  tariffs.  We  therefore  disagree  with  Ameritech's  assertion  and  deny  its  request  to  recover  all  OSS  upgrade  costs  necessary  for 
 number  portability  through  federal  number  portability  end-  user  or  query  charges. 
 110.  We  also  disagree  with  U  S  WESTs  statement  that  we  should  have  used  an  alternative  method  for  calculating  eligible  OSS  costs,  rather  than  the  two-  part  "but  for"  test  adopted  by  the 

 Bureau.  390  U  S  WEST  asserts  that  the  economically  proper  way  to  calculate  the  direct  costs  of  number  portability  would  have  been  to  take  the  costs  of  network  upgrades  that  would  not  have 
 been  deployed  absent  the  number  portability  mandate,  add  the  extra  costs  of  accelerating  the  deployment  of  otherwise-  planned  upgrades  solely  to  meet  the  Commission's  timetable,  and 
 subtract  the  value  of  the  incidental  non-  portability  network  benefits  these  upgrades  cost.  391  We  believe  that  such  a  formula  would  be  administratively  difficult  and  does  not  conform  to  our 
 previously-  adopted  formula.  Specifically,  we  have  not  allowed  LECs  to  add  the  extra  costs  of  accelerating  the  deployment  of  otherwise-  planned  upgrades,  because,  as  we  stated  in  the  Third 
 Report  and  Order,  upgrades  that  will  enhance  LECs'  services  generally  are  not  costs  eligible  for  recovery  through  federal  number  portability  tariffs.  392  We  also  stated  in  the  LNP  Investigation 
 Order  that  the  two-  part  cost  eligibility  test  avoids  overcompensation  of  LECs  for  their  costs  because  LECs  are  already  deemed  to  be  recovering  costs  of  general  network  upgrades  through 
 standard  recovery  mechanisms.  393  U  S  WEST  has  presented  no  compelling  arguments  to  overturn  the  two-  part  formula  adopted  in  the  Cost  Classification  Order,  394  and  we  therefore  deny 
 its  request. 
 111.  We  further  disagree  with  Cincinnati  Bell's  assertion  that  the  Bureau's  statement  that  number  portability  costs  not  directly  related  to  the  provision  of  number  portability  are  to  be 

 treated  as  general  network  upgrades  means  that  LECs  will  be  competitively  disadvantaged,  and  the  cost  recovery  will  not  be  competitively  neutral.  395  We  stated  in  the  Third  Report  and  Order 
 that  costs  not  directly  related  to  providing  number  portability  are  not  costs  of  providing  number  portability  that  must  be  borne  by  all  telecommunications  carriers  on  a  competitively  neutral 
 basis,  as  mandated  by  statute.  396  Thus,  costs  that  do  not  meet  our  two-  part  cost  recovery  formula  are  not  subject  to  the  competitive  neutrality  mandate.  Additionally,  as  noted  above,  carriers 
 cannot  claim  they  are  competitively  disadvantaged  because  they  are  not  allowed  to  recover  their  number  portability  costs,  because  they  are  allowed  to  recover  such  costs  either  through  the 

 390  U  S  West  Application  at  12-  13. 
 391  Id.  at  13. 

 392  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  73. 
 393  LNP  Investigation  Order,  14  FCC  Rcd  at  11901-  02,  para.  42. 
 394  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 
 395  Cincinnati  Bell  Application  at  7. 
 396  See  Third  Report  and  Order,  13  FCC  Rcd  at  11724,  para.  37. 
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 number  portability  federal  mechanism  or  through  "normal"  cost  recovery  mechanisms. 
 B.  911  Costs 
 1.  Background 
 112.  Several  carriers  request  that  we  clarify  that  incremental  costs  incurred  to  adapt  and  upgrade  911  equipment,  facilities,  databases  and  software  are  required  for  the  provision  of 

 number  portability,  and  thus  all  upgrade  costs  should  be  recoverable.  397  Bell  Atlantic  asserts  that  its  system  that  supports  911  service  was  modified  to  permit  a  carrier  to  update  the  911  database 
 for  telephone  numbers  in  NXXs  assigned  to  another  carrier  and  to  enable  911  personnel  to  direct  database  problems  to  the  correct  service  provider.  398  Bell  Atlantic  asserts  that  this  work  does  not 
 fit  within  the  Bureau's  narrow  reading  of  the  Commission's  rules,  but  few  customers  would  find  porting  satisfactory  if  they  could  not  use  911  or  if  that  service  were  not  reliable.  399 

 2.  Discussion 
 113.  We  recognize  the  significant  public  safety  concerns  involved  with  911  services.  We,  therefore,  clarify  that  carriers  will  be  allowed  to  treat  and  recover  as  number  portability  costs 

 those  costs  to  modify  their  911  and  E911  services  and  databases  only  to  the  extent  that  such  OSS  modifications  to  the  911  and  E911  database  provide  updates  of  customer  information  or  line  and 
 number  information  for  ported  numbers.  In  the  LNP  Investigation  Order,  we  determined  that  the  incumbent  LECs  may  recover  the  costs  of  modifying  E911  systems  because  of  public  interest 
 considerations.  400  Because  of  the  public  safety  concerns  involved  with  911  and  E911  service,  we  made  an  exception  to  the  cost  recovery  standards  set  out  in  the  Cost  Classification  Order  to 
 allow  certain  types  of  OSS  modifications  to  these  systems.  401  Thus,  we  allow  these  carriers  to  treat  and  recover  as  number  portability  costs  those  costs  necessary  to  modify  their  911  services 
 and  databases  only  to  the  extent  that  such  costs  were  incurred  to  provide  number  portability.  402  We  stated,  however,  that  modifications  to  OSS  systems  that  relate  to  the  LECs'  provision  of  911 
 or  E911  service  as  part  of  the  local  service  or  plain  old  telephone  service  the  LECs  provide  their  own  customers  are  not  eligible  number  portability  costs  and  may  not  be  recovered  through  end-user 
 and  query  service  charges.  Other  costs  associated  with  911  or  E911  modifications  to  the  incumbent  LECs  local  service  to  its  customers  are  general  network  upgrade  costs  recoverable 

 397  See  Ameritech  Petition  for  Clarification  or  Review  at  10-  11;  Bell  Atlantic  Application  at  3-  4;  Cincinnati  Bell 
 Application  at  4-  6. 
 398  Bell  Atlantic  Application  at  4. 

 399  Id. 
 400  LNP  Investigation  Order,  14  FCC  Rcd  at  11905-  06,  para.  52. 
 401  Id. 
 402  Cost  Classification  Order,  13  FCC  Rcd  at  24500-  01,  paras.  10-  11. 
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 through  price  caps  and  rate-  of-  return  mechanisms.  403 
 C.  Joint  Costs 
 1.  Recovery  of  Advancement  Costs 
 a.  Background 
 114.  In  the  Third  Report  and  Order,  we  determined  that  carriers  could  not  recover  the  entire  cost  of  an  upgrade  as  a  carrier-  specific  cost  directly  related  to  providing  number  portability  just 

 because  some  aspect  of  the  upgrade  relates  to  the  provision  of  number  portability.  404  We  determined  that  only  the  portion  of  a  carrier's  joint  costs  that  is  a  demonstrably  incremental  cost 
 incurred  in  the  provision  of  long-  term  number  portability  is  a  carrier-  specific  cost  directly  related  to  the  provision  of  long-  term  number  portability.  405  We  allowed  LECs  to  recover  only  the 
 incremental  costs  of  upgrades  through  the  federal  number  portability  recovery  mechanism. 
 115.  Advancement  costs  are  primarily  those  costs  arising  from  the  cost  of  money  or  the  time  value  of  money  that  have  been  incurred  for  the  deployment  of  upgrades  or  modifications  to  the 

 network  at  an  accelerated  pace  or  earlier  date  than  provided  for  in  the  LECs  original  plans.  406  Consistent  with  the  Third  Report  and  Order,  the  Bureaus  Cost  Classification  Order  stated  that 
 LECs  may  claim  only  the  incremental  portion  of  advancement  costs  directly  related  to  the  provision  of  number  portability.  407  Bell  Atlantic  seeks  review  of  the  Cost  Classification  Order 
 on  the  grounds  that  all  advancement  costs  associated  with  the  costs  of  advancing  purchase  should  be  recovered  through  the  federal  number  portability  cost  recovery  mechanism.  408  Bell 
 Atlantic  posits  that  the  entire  cost  of  advancing  purchases  is  a  direct  cost  of  number  portability,  because  the  advanced  cost  was  incurred  specifically  to  provide  number  portability  and  would  not 
 have  been  incurred  otherwise.  409 
 b.  Discussion 
 116.  We  disagree  with  Bell  Atlantic's  contention  that  the  entire  cost  of  advancing  purchases  is  a  direct  cost  of  number  portability.  We  affirm  the  Bureau's  interpretation  that  only  the 

 incremental  portion  of  advancement  costs  that  are  directly  related  to  the  provision  of  number 

 403  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  paras.  72-  73. 
 404  Id.  at  11740,  para.  73. 
 405  Id. 
 406  Cost  Classification  Order,  13  FCC  Rcd  at  24507  n.  70. 
 407  Id.  at  24507-  08,  para.  30. 
 408  Bell  Atlantic  Application  at  4-  5. 
 409  Id.  at  5. 
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 portability  are  eligible  number  portability  costs.  410  In  the  Third  Report  and  Order,  we  specifically  rejected  requests  that  we  classify  the  entire  costs  of  an  upgrade  as  a  carrier-  specific 
 cost  directly  related  to  providing  number  portability  just  because  some  aspect  of  the  upgrade  related  to  the  provision  of  number  portability.  411  In  recognizing  that  carriers  incur  costs  for 
 software  generics,  switch  hardware,  and  OSS,  Signaling  System  7  (SS7)  or  Advanced  Intelligent  Network  (AIN)  upgrades  which  provide  a  wide  range  of  services  and  features,  we  stated  that 
 only  a  portion  of  these  joint  costs  are  carrier-  specific  costs  directly  related  to  providing  number  portability.  412  We  determined  that  all  of  a  carrier's  dedicated  number  portability  costs,  such  as 
 for  number  portability  software  and  for  service  control  points  (SCPs)  and  signal  transfer  points  (STPs)  reserved  exclusively  for  number  portability  would  be  subject  to  the  competitive  neutrality 
 mandate  of  section  251(  e)(  2).  413  We  reasoned  that  apportioning  costs  in  this  way  would  further  the  goal  of  section  251(  e)(  2)  by  recognizing  that  providing  number  portability  will  cause  some 
 carriers,  including  small  and  rural  LECs,  to  incur  costs  that  they  would  not  ordinarily  have  incurred  in  providing  telecommunications  services.  414  At  the  same  time,  this  approach 
 recognizes  that  some  upgrades  will  enhance  carriers'  services  generally  and  presumably  provide  additional  revenues  to  offset  those  upgrade  costs,  and  that  at  least  some  portion  of  such  upgrade 
 costs  are  not  directly  related  to  providing  number  portability. 
 117.  We  agree  with  the  Bureau  that  these  same  principles  apply  to  advancement  costs.  415  Even  though  the  costs  of  planned  upgrades  may  have  been  advanced  by  number  portability 

 requirements  and  LECs  may  not  have  deployed  these  upgrades  early  "but  for"  our  portability  implementation  schedule,  the  associated  upgrades  provide  general  enhancements  to  the  LECs 
 networks.  We  believe  that  allowing  the  recovery  of  advancement  costs  associated  with  general  enhancements  to  the  LECs  networks  would  violate  the  competitive  neutrality  mandate  of 
 section  251(  e)(  2)  and  may  lead  to  double  recovery  of  these  costs.  Moreover,  we  believe  that  advancement  costs  associated  with  upgrades  that  enhance  a  carrier's  services  generally  and 
 presumably  produce  additional  revenues  are  costs  incurred  as  an  incidental  consequence  of  number  portability  and  are  not  costs  directly  related  to  providing  number  portability.  416 
 Therefore,  we  affirm  the  Bureau's  conclusion  that  only  the  advancement  costs  equaling  the  difference  between  the  costs  of  the  upgrade  with  the  number  portability  function  and  its  costs 

 410  Cost  Classification  Order,  13  FCC  Rcd  at  24507-  08,  para.  30. 
 411  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  para.  73. 
 412  Id.  at  11740,  paras.  72,  73.  (Carrier-  specific  costs  directly  related  to  providing  number  portability  are  limited 
 to  costs  carriers  incur  specifically  in  the  provision  of  number  portability  services,  such  as  for  the  querying  of  calls  and  the  porting  of  telephone  numbers  from  one  carrier  to  another). 

 413  Id.  at  11740,  para.  73. 
 414  Id. 
 415  See  Cost  Classification  Order,  13  FCC  Rcd  at  24507-  08,  para.  30. 
 416  Third  Report  and  Order,  13  FCC  Rcd  at  11740,  paras.  72-  73. 
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 without  that  function  may  be  claimed  as  eligible  number  portability  costs.  417 
 V.  FINAL  REGULATORY  FLEXIBILTY  CERTIFICATION 
 118.  The  Regulatory  Flexibility  Act  of  1980,  as  amended  (RFA),  418  requires  that  a  regulatory  flexibility  analysis  be  prepared  for  notice-  and-  comment  rulemaking  proceedings, 

 unless  the  agency  certifies  that  the  rule  will  not,  if  promulgated,  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities.  419  The  RFA  generally  defines  the  term  small 
 entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  420  In  addition,  the  term  small  business  has  the  same 
 meaning  as  the  term  small  business  concern  under  the  Small  Business  Act.  421  A  small  business  concern  is  one  which:  (1)  is  independently  owned  and  operated;  (2)  is  not  dominant  in 
 its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  Small  Business  Administration  (SBA).  422 

 119.  Section  251(  b)(  2)  of  the  Act  seeks  to  remove  one  barrier  to  competition  by  requiring  all  local  exchange  carriers  (LECs)  to  provide,  to  the  extent  technically  feasible,  number  portability 
 in  accordance  with  requirements  prescribed  by  the  Commission.  On  May  5,  1998,  the  Commission  adopted  the  Third  Report  and  Order  in  this  docket,  implementing  section  251(  e)(  2) 
 of  the  Act  with  regard  to  the  costs  of  providing  local  number  portability.  In  the  Third  Report  and  Order,  the  Commission  concluded  that  incumbent  LECs  may  recover  their  carrier-  specific 
 costs  directly  related  to  providing  long-  term  number  portability  on  a  competitively  neutral  basis,  through  two  federal  charges:  (1)  a  monthly  number-  portability  charge  applicable  to  end  users; 
 and  (2)  a  number  portability  query-  service  charge,  applicable  to  carriers  on  whose  behalf  the  LEC  performs  queries.  On  December  14,  1998,  pursuant  to  authority  delegated  to  it  in  the  Third 
 Report  and  Order,  the  Bureau  issued  the  Cost  Classification  Order,  which  specifically  addressed  issues  related  to  the  determination  of  costs  eligible  for  cost  recovery,  the  apportionment  of  costs 
 between  portability  and  non-  portability  services,  and  apportionment  between  end-  user  charges  and  query  service  charges. 

 417  Cost  Classification  Order,  13  FCC  Rcd  at  24507-  08,  para.  30. 
 418  The  RFA,  see  5  U.  S.  C.    601    612,  has  been  amended  by  the  Small  Business  Regulatory  Enforcement 
 Fairness  Act  of  1996  (SBREFA),  Pub.  L.  No.  104-  121,  Title  II,  110  Stat.  857  (1996). 
 419  5  U.  S.  C.    605(  b). 

 420  5  U.  S.  C.    601(  6). 
 421  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  small-  business  concern  in  the  Small  Business 
 Act,  15  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(  s)  in  the  Federal  Register. 

 422  15  U.  S.  C.    632. 
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 120.  This  Order  responds  to  three  types  of  issues  raised  in  petitions  for  reconsideration  and  clarification  and  applications  for  review.  First,  it  clarifies  numerous  points  made  in  the  Third 
 Report  and  Order.  423  Second,  it  affirms  several  issues  decided  in  the  Third  Report  and  Order  and  the  Cost  Classification  Order.  424  And  third,  it  denies  certain  requests  concerning  cost 
 recovery.  425  No  party  filed  comments  or  applications  for  reconsideration  on  the  regulatory  flexibility  analysis  contained  in  the  Third  Report  and  Order.  In  this  Order,  we  have  considered 
 and  addressed  the  comments  of  parties  concerning  recovery  by  non-  LNP  capable  small  and  rural  incumbent  LECs  of  the  costs  of  number  portability  query  service  and  Local  Number  Portability 
 Administration. 
 121.  All  clarifications  contained  in  this  item  are  of  a  minor,  procedural  nature  except  one  clarification  that  will  result  in  a  positive  net  impact  on  small  entities.  Small  and  rural  incumbent 

 LECs  that  do  not  yet  provide  number  portability  functionality  but  do  provide  service  under  Extended  Area  Service  arrangements  may  recover  their  N  minus  one  query  and  Local  Number 
 Portability  Administration  costs  through  end-  user  charges.  Because  this  will  allow  small  and  rural  incumbent  LECs  to  recover  their  costs,  it  will  have  a  de  minimus  impact  on  the  affected 

 423  Specifically,  it  clarifies  that:  (1)  the  local  number  portability  administrator  may  assess  shared  costs  on  all 
 eligible  telecommunications  carriers,  not  just  carriers  with  existing  long-  term  number  portability  contracts;  (2)  incumbent  LECs  must  allocate  their  shared  costs  between  the  query  service  and  end-  user  charges;  (3)  carriers  may 

 not  recover  number  portability  costs  from  other  carriers  through  interconnection  charges  or  resale  prices;  (4)  an  incumbent  LEC  may  assess  the  number  portability  end-  user  charge  on  resellers  and  purchasers  of  switching  ports  as 
 unbundled  network  elements  as  long  as  it  provides  number  portability  functionality;  (5)  CMRS  providers  are  co-carriers,  not  end  users,  and,  therefore,  are  not  subject  to  an  end-  user  charge;  (6)  carriers  who  offer  Feature  Group  A 
 access  lines  may  assess  an  end-  user  surcharge  on  such  lines;  (7)  small  and  rural  incumbent  LECs  that  do  not  yet  provide  number  portability  functionality  but  provide  EAS  service  may  recover  their  N-  1  query  and  Number 
 Portability  Administration  costs  through  end-  user  charges;  (8)  incumbent  LECs  may  not  begin  billing  carriers  for  N-1  queries  until  a  number  has  been  ported  from  an  NXX;  and,  (9)  after  the  five-  year  recovery  period  for 
 implementation  costs  of  number  portability  through  the  end-  user  charge,  any  remaining  costs  will  be  treated  as  normal  network  costs. 

 424  Specifically,  it  affirms  that:  (1)  the  Commission  has  exclusive  jurisdiction  over  the  distribution  and  recovery  of 
 costs  associated  with  intrastate  and  interstate  number  portability;  (2)  carriers  not  subject  to  rate-  of-  return  regulation  or  price  caps  may  recover  their  carrier-  specific  costs  in  any  lawful  manner  consistent  with  their  obligations  under 

 the  Communications  Act;  (3)  Centrex  lines  may  be  assessed  one  end-  user  number  portability  charge  per  line  and  a  PBX  trunk  may  be  charged  nine  end-  user  number  portability  charges  per  PBX  trunk;  (4)  Plexar  may  be  assessed 
 one  number  portability  charge  per  line;  (5)  incumbent  LECs  may  impose  an  end-  user  charge  in  service  areas  where  the  switch  is  number-  portability-  capable;  (6)  price  cap  LECs  and  rate-  of-  return  LECs  should  treat  the  query  services 
 charge  as  a  new  service  within  the  meaning  of  section  61.38  of  our  rules;  (7)  carriers  may  only  recover  carrier-specific  costs  directly  related  to  the  provision  of  number  portability;  (8)  carriers  must  distinguish  clearly  costs 
 incurred  for  narrowly  defined  portability  functions  from  costs  incurred  to  adapt  their  systems  to  implement  number  portability;  (9)  costs  carriers  incur  as  an  incidental  consequence  of  number  portability  are  ordinary  costs  of  doing 
 business  and  represent  general  network  upgrades;  and  (10)  costs  that  do  not  meet  the  two-  part  cost  recovery  test  may  not  be  recovered  through  number  portability  cost  recovery  mechanisms.  It  also  affirms  (11)  the  adoption  of  the 
 end-  user  revenue  allocator;  (12)  the  rules  adopted  in  the  Third  Report  and  Order  concerning  levelized  charges;  and  (13)  the  two-  part  cost  recovery  test. 

 425  Specifically,  it  denies  requests  that  certain  costs  associated  with  number  portability  be  calculated  based  on 
 avoided  costs  and  TELRIC. 
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 small  entities. 
 122.  Therefore,  we  certify  that  the  requirements  of  the  Order  will  not  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities. 

 123.  The  Commission  will  send  a  copy  of  the  Order,  including  a  copy  of  this  Final  Regulatory  Flexibility  Certification,  in  a  report  to  Congress  pursuant  to  the  Congressional 
 Review  Act.  426  In  addition,  the  Order  and  this  final  certification  will  be  sent  to  the  Chief  Counsel  for  Advocacy  of  the  SBA,  and  will  be  published  in  the  Federal  Register.  427 

 VI.  PAPERWORK  REDUCTION  ANALYSIS 
 124.  The  action  contained  herein  has  been  analyzed  with  respect  to  the  Paperwork  Reduction  Act  of  1995  and  found  to  impose  new  or  modified  reporting  and/  or  recordkeeping 

 requirements  or  burdens  on  the  public.  Implementation  of  these  new  or  modified  reporting  and/  or  recordkeeping  requirements  will  be  subject  to  approval  by  the  Office  of  Management  and 
 Budget  (OMB)  as  prescribed  by  the  Act,  and  will  go  into  effect  upon  announcement  of  OMB  approval  in  the  Federal  Register. 

 VII.  ORDERING  CLAUSES 
 125.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  sections  1,  2,  4(  i),  201-  205,  215,  251(  b)(  2),  251(  e)(  2),  and  332  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.   

 151,  152,  154(  i),  201-  205,  215,  251(  b)(  2),  251(  e)(  2),  and  332,  this  Memorandum  Opinion  and  Order  on  Reconsideration  and  Order  on  Application  for  Review  (  Order)  and  the  revisions  to 
 Part  52  of  the  Commissions  rules,  47  C.  F.  R.  Part  52,  are  hereby  ADOPTED.  The  requirements  in  this  Order  shall  become  effective  30  days  after  a  publication  of  this  Order  or  summary  thereof 
 in  the  Federal  Register. 
 126.  IT  IS  FURTHER  ORDERED  that,  pursuant  to  sections  1,  2,  4(  i),  201-  205,  215,  251(  b)(  2),  251(  e)(  2),  and  332  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.   

 151,  152,  154(  i),  201-  205,  215,  251(  b)(  2),  251(  e)(  2),  and  332,  the  Petitions  for  Reconsideration  and/  or  Clarification  and  the  Applications  for  Review  ARE  GRANTED  to  the  extent  indicated 
 herein  and  otherwise  ARE  DENIED. 
 127.  IT  IS  FURTHER  ORDERED  that  Williams  Petition  for  Expedited  Waiver  and  AMSCs  Waiver  Request  are  GRANTED,  as  discussed  herein. 

 128.  IT  IS  FURTHER  ORDERED  that  NECAs  Expedited  Petition  for  Waiver  is  DENIED  as  discussed  herein. 
 129.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  Information  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Order,  including  the  Final 
 426  See  5  U.  S.  C.    801(  a)(  1)(  A). 
 427  See  5  U.  S.  C.    605(  b). 
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 Regulatory  Flexibility  Certification,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 
 130.  IT  IS  FURTHER  ORDERED  that  the  collection  of  information  contained  within  this  Order  is  contingent  upon  approval  by  the  OMB.  The  Commission  will  publish  a  document  at  a 
 later  date  announcing  OMB  approval. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 William  F.  Caton  Acting  Secretary 
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 APPENDIX  A:  PARTIES  TO  THE  PROCEEDING 
 Petitions  for  Reconsideration  and  Clarification 
 Ameritech  Bell  Atlantic 

 BellSouth  Corporation  Comcast  Cellular  Communications,  Inc. 
 Florida  Public  Service  Commission  MCI  Telecommunications  Corporation 
 National  Exchange  Carrier  Association,  Inc.  National  Telephone  Cooperative  Association 
 New  York  Department  of  Public  Service  Oklahoma  Rural  Telephone  Coalition 
 Pennsylvania  Office  of  the  Consumer  Advocate  Personal  Communications  Industry  Association 
 SBC  Communications  Inc.  Sprint  Local  Telephone  Companies 
 Texas  Statewide  Telephone  Cooperative,  Inc.  U  S  WEST,  Inc. 
 United  States  Telephone  Association  WorldCom,  Inc. 

 Responses  to  and  Comments  on  Petitions  for  Reconsideration  and  Clarification 
 AT&  T  Corp.  Bell  Atlantic 

 BellSouth  Corporation  Cincinnati  Bell  Telephone  Company 
 Lockheed  Martin  IMS  Maine  Public  Utilities  Commission 
 MCI  Telecommunications  Corporation  Organization  for  the  Promotion  and  Advancement  of  Small  Telecommunications  Companies 
 SBC  Communications  Inc.  Telephone  Resellers  Association 
 United  States  Telephone  Association  UTC,  the  Telecommunications  Association 
 Vanguard  Cellular  Systems,  Inc. 
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 Reply  Comments 
 Ameritech  Bell  Atlantic 

 BellSouth  Corporation  Comcast  Cellular  Communications,  Inc. 
 MCI  Telecommunications  Corporation  National  Exchange  Carrier  Association,  Inc. 
 National  Telephone  Cooperative  Association  SBC  Communications  Inc. 
 Sprint  Local  Telephone  Companies  US  WEST  Communications,  Inc. 

 Applications  for  Review  and  Petition  for  Clarification  or  Review  of  Joint  Cost  Order 
 Ameritech  Bell  Atlantic 
 Cincinnati  Bell  Telephone  Company  U  S  WEST  Communications,  Inc. 

 Oppositions  to  Comments  on  Applications  for  Review  and  Petition  for  Clarification  or  Review  of  Joint  Cost  Order 
 AT&  T  Corp.  BellSouth  Corporation 
 Independent  Telephone  &  Telecommunications  Alliance  United  States  Telephone  Association 

 Replies  and  Responses 
 Bell  Atlantic  Cincinnati  Bell  Telephone  Company 
 SBC  Communications  Inc.  U  S  WEST  Communications,  Inc. 
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 APPENDIX  B  FINAL  RULES 
 PART  52  -  NUMBERING 
 1.  The  authority  for  Part  52  continues  to  read  as  follows: 
 AUTHORITY:  Secs  1,  2,  4,  5,  48  Stat.  1066,  as  amended;  47  U.  S.  C.    151,  152,  154,  155  unless  otherwise  noted.  Interpret  or  apply  secs.  3,  4,  201-  05,  207-  09,  218,  225-  7,  251-  2,  271  and  332, 
 48  Stat.  1070,  as  amended,  1077;  47  U.  S.  C.  153,  154,  201-  05,  207-  09,  218,  225-  7,  251-  2,  271  and  332  unless  otherwise  noted. 

 2.  Part  52,  subpart  C,  section  52.33(  a)  of  Title  47  of  the  Code  of  Federal  Regulations  is  amended  to  read  as  follows: 
   52.33  Recovery  of  carrier-  specific  costs  directly  related  to  providing  long-  term  number  portability 
 (a)  Incumbent  local  exchange  carriers  may  recover  their  carrier-  specific  costs  directly  related  to  providing  long-  term  number  portability  by  establishing  in  tariffs  filed  with  the  Federal 
 Communications  Commission  a  monthly  number-  portability  charge,  as  specified  in  paragraph  (a)(  1),  a  number  portability  query-  service  charge,  as  specified  in  paragraph  (a)(  2),  and  a  monthly 
 number-  portability  query/  administration  charge,  as  specified  in  paragraph  (a)(  3). 
 (  1)  The  monthly  number-  portability  charge  may  take  effect  no  earlier  than  February  1,  1999,  on  a  date  the  incumbent  local  exchange  carrier  selects,  and  may  end  no  later  than  five  years  after  the 
 incumbent  local  exchange  carriers  monthly  number-  portability  charge  takes  effect. 
 (i)  *  *  * 
 (ii)  An  incumbent  local  exchange  carrier  may  assess  on  carriers  that  purchase  the  incumbent  local  exchange  carriers  switching  ports  as  unbundled  network  elements  under  section  251  of  the 
 Communications  Act,  and/  or  Feature  Group  A  access  lines,  and  resellers  of  the  incumbent  local  exchange  carriers  local  service,  the  same  charges  as  described  in  paragraph  (a)(  1)(  i)  of  this 
 section,  as  if  the  incumbent  local  exchange  carrier  were  serving  those  carriers  end  users. 
 (iii)  *  *  * 
 (iv)  *  *  * 
 (2)  *  *  * 
 (3)  An  incumbent  local  exchange  carrier  serving  an  area  outside  the  100  largest  metropolitan  statistical  areas  that  is  not  number-  portability  capable  but  that  participates  in  an  extended  area 
 service  calling  plan  with  any  one  of  the  100  largest  metropolitan  statistical  areas  or  with  an  adjacent  number  portability-  capable  local  exchange  carrier  may  assess  each  end  user  it  serves 
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 one  monthly  number-  portability  query/  administration  charge  per  line  to  recover  the  costs  of  queries,  as  specified  in  paragraph  (a)(  2),  and  carrier-  specific  costs  directly  related  to  the  carriers 
 allocated  share  of  the  regional  local  number  portability  administrators  costs,  except  that  per-  line  monthly  number-  portability  query/  administration  charges  shall  be  assigned  as  specified  in 
 paragraph  (a)(  1)  with  respect  to  monthly  number-  portability  charges. 
 (i)  Such  incumbent  local  exchange  carriers  may  assess  a  separate  monthly  number-  portability  charge  as  specified  in  paragraph  (a)(  1)  but  such  charge  may  recover  only  the  costs  incurred  to 
 implement  number  portability  functionality  and  shall  not  include  costs  recovered  through  the  monthly  number-  portability  query/  administration  charge. 

 (ii)  The  monthly  number-  portability  query/  administration  charge  may  end  no  later  than  five  years  after  the  incumbent  local  exchange  carriers  monthly  number-  portability 
 query/  administration  charge  takes  effect.  The  monthly  number-  portability  query/  administration  charge  may  be  collected  over  a  different  five-  year  period  than  the  monthly  number-  portability 
 charge.  These  five-  year  periods  may  run  either  consecutively  or  concurrently,  in  whole  or  in  part. 

 *  *  *  * 
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 SEPARATE  STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS, 
 APPROVING  IN  PART,  DISSENTING  IN  PART 
 Re:  Telephone  Number  Portability  (CC  Docket  No.  95-  116) 
 I  dissent  from  the  part  of  this  Order  that  authorizes  a  new  monthly  number  portability  charge  on  certain  customers  bills  for  a  service  those  customers  are  not  even  able  to  obtain.  In 
 the  Telecommunications  Act  of  1996,  Congress  recognized  that  the  inability  of  customers  to  retain  their  telephone  number  when  they  switch  service  providers  would  impede  the 
 development  of  competition.  Congress  therefore  imposed  a  number  portability  obligation  on  local  exchange  carriers. 

 To  implement  this  directive  of  the  1996  Act,  the  Commission  in  previous  orders  required  carriers  that  received  a  request  from  another  carrier  to  upgrade  their  networks  to  provide  number 
 portability.  For  those  carriers  that  receive  such  a  request,  the  Commission  allowed,  but  did  not  require,  carriers  to  recover  from  their  customers  the  costs  of  upgrading  their  networks. 
 Importantly,  however,  the  Commission  prohibited  carriers  from  charging  customers  until  local  number  portability  was  actually  available  to  those  customers.  As  a  result,  carriers  could  only 
 assess  a  monthly  charge  on  customers  that  receive  the  direct  benefits  of  number  portability.  Moreover,  the  Commission  determined  that  carriers  could  only  assess  the  charge  for  five  years, 
 and  that  any  ongoing  costs  would  have  to  be  recovered  from  other  existing  mechanisms. 
 In  todays  Order,  the  Commission  foregoes  that  approach,  and  allows  carriers  that  have  not  upgraded  their  networks  to  assess  a  monthly  charge  for  ongoing  costs.  Customers  of  these 
 carriers  may  therefore  have  to  pay  a  monthly  fee,  but  will  not  be  able  to  retain  their  phone  number  if  they  switch  providers.  Even  more  of  a  problem,  this  fee  will  have  a  disproportionate 
 impact  on  consumers  served  by  smaller,  more  rural  carriers,  and  could  result  in  charges  estimated  as  high  as  $1.00  per  month  for  some  customers. 

 Certainly  carriers  are  entitled  to  recover  the  legitimate  costs  of  implementing  number  portability.  But  customers  should  be  receiving  the  real  and  direct  benefits  of  number  portability 
 before  they  are  forced  to  pay  a  monthly  fee.  I  do  not  believe  that  todays  Order  appropriately  balances  these  concerns.  I  would  have  followed  the  previous  Commissions  decision  and  not 
 allowed  carriers  to  impose  a  new  line-  item  until  their  customers  receive  the  benefits  of  the  service.  Indeed,  just  last  month,  this  Commission  determined  that  the  costs  of  implementing 
 number  conservation  measures  should  be  recovered  from  other  existing  mechanisms,  and  not  from  a  new  line-  item  on  customers  bills.  I  see  no  reason  to  adopt  a  different  approach  here. 
 Consumers  should  be  rightly  dissatisfied  when  they  are  asked  to  pay  for  services  that  are  not  available  to  them. 
68