38684 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 54, 61, and 69

[CC Docket Nos. 96–262; 94–1; 99–249; 96–

45; FCC 00–193]

Access Charge Reform, Price Cap

Performance Review for Local

Exchange Carriers, Low-Volume LongDistance Users, and Federal-State

Joint Board on Universal Service

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This document adopts an

integrated interstate access reform and

universal service proposal put forth by

the members of the Coalition for

Affordable Local and Long-distance

Service (CALLS). By adopting this

document, the Commission takes action

to further accelerate the development of

competition in the local and longdistance telecommunications markets,

and to further establish explicit

universal service support that will be

sustainable in an increasingly

competitive marketplace, pursuant to

the mandate of the 1996 Act.

DATES: Effective June 21, 2000.

FOR FURTHER INFORMATION CONTACT: Joi

Roberson Nolen, Common Carrier

Bureau, Competitive Pricing Division,

(202) 418–1520.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Sixth

Report and Order in CC Docket Nos. 96–

262 and 94–1, Report and Order in CC

Docket No. 99–249, Seventh Report and

Order in CC Docket No. 96–45 (‘‘CALLS

Report and Order’’) adopted on May 31,

2000 and released on May 31, 2000. The

full text of this Report and Order, as

well as the complete files for the

relevant dockets, is available for

inspection and copying during the

weekday hours of 9 a.m. to 4:30 p.m. in

the Commission’s Reference Center, 445

12th Street, SW, Room CY–A257,

Washington, DC or copies may be

purchased from the Commission’s

duplicating contractor, ITS Inc., 1231

20th Street., NW, Washington, DC

20036; (202) 857–3088. The complete

text of the Order also may be obtained

through the World Wide Web at

http://www.fcc.gov.

The Federal Communications

Commission (FCC) has received Office

of Management and Budget (OMB)

approval for the following public

information collections pursuant to the

Paperwork Reduction Act of 1995,

Public Law 104–13. An agency may not

conduct or sponsor and a person is not

required to respond to a collection of

information unless it displays a

currently valid control number.

OMB Approval Number: 3060–0942.

Expiration Date: 12/31/2000.

Title: Access Charge Reform—CC

Docket No. 96–262 (Sixth Report and

Order) Price

Cap Performance Review for Local

Exchange Carriers—CC Docket No. 94–

1 (Sixth Report and Order), LowVolume Long-Distance Users—CC

Docket No. 99–249 (Report and Order),

Federal-State Joint Board on Universal

Service—CC Docket No. 96–45

(Eleventh Report and Order).

Form No.: N/A.

Respondents: Business or other for

profit.

(1) Estimates of hour burden of the

collection of information.

(a) Modified tariff filings with the

Commission:

Number of Respondents: 18.

Frequency of Response: On occasion.

1 per year.

Annual Hour Burden: 2.

Total Annual Hour Burden for All

Respondents: 36.

(b) USAC filings. Price Cap LECs—

line counts:

Number of Respondents: 18.

Frequency of Response: Quarterly. 4

per year.

Annual Hour Burden: 20.

Total Annual Hour Burden for All

Respondents: 20 hours per respondent ×

18 respondents = 360.

(c) Price Cap LECs-price and revenue

data:

Number of Respondents: 18.

Frequency of Response: Annual. 1 per

year (2 in the year 2000 only).

Total Annual Hour Burden for All

Respondents: 6081 (12,162 in the year

2000).

(d) Competitive LECs:

Number of Respondents: 9

Frequency of Response: Quarterly. 4

per year.

Annual Hour Burden: 20 hours.

Total Annual Hour Burden for All

Respondents: 20 hours per respondent ×

9 respondents = 180 hours.

(e) Total Annual Hour Burden for

price cap LECs and CLECs: 6621.

(f) Cost support filings with the

Commission:

Number of Respondents: 2

Frequency of Response: 1 per year.

Total Annual Hour Burden for all

Respondents: 20

(g) Total Annual Burden for All

Collections: 36 + 360 + 12,162 + 180 +

20 = 12,758 hours.

(h) Estimated Annual Reporting and

Recordkeeping Cost Burden: $0.

Needs and Uses

The Commission will use the

modified tariff information filed by the

price cap local exchange carriers (LECs)

to ensure compliance with the various

interstate access reforms of the CALLS

proposal. USAC will use the line count

and other information filed by price cap

and competitive LECs to determine, on

a per-line basis, the amount that the

carrier will receive from the interstate

access universal service support

mechanism. The Commission will use

the cost support information filed by the

price cap LECs to ensure that their

interstate access rates are just and

reasonable, as required by section 201(b)

of the Communications Act.

Obligation to respond: Required to

obtain or retain benefits.

Public reporting burden for the

collections of information are as noted

above. Send comments regarding the

burden estimate or any other aspect of

the collections of information, including

suggestions for reducing the burden to

Performance Evaluation and Records

Management, Washington, DC 20554.

Regulatory Flexibility Certification

As required by the Regulatory

Flexibility Act, this Report and Order

contains a Final Regulatory Flexibility

Analysis regarding the Order. A brief

description of the analysis follows.

Pursuant to section 604 of the

Regulatory Flexibility Act, the

Commission performed a

comprehensive analysis of the Order

with regard to small entities. This

analysis includes: (1) A succinct

statement of the need for, and objectives

of, the Commission’s decisions in the

Order; (2) a summary of the significant

issues raised by the public comments in

response to the initial regulatory

flexibility analysis, a summary of the

Commission’s assessment of these

issues, and a statement of any changes

made in the Order as a result of the

comments; (3) a description of and an

estimate of the number of small entities

to which the Order will apply; (4) a

description of the projected reporting,

recordkeeping and other compliance

requirements of the Order, including an

estimate of the classes of small entities

which will be subject to the requirement

and the type of professional skills

necessary for compliance with the

requirement; and (5) a description of the

steps the Commission has taken to

minimize the significant economic

impact on small entities consistent with

the stated objectives of applicable

statutes, including a statement of the

factual, policy, and legal reasons for

selecting the alternative adopted in the

Order and why each one of the other

significant alternatives to each of the

Commission’s decisions which affect

small entities was rejected.

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38685

Synopsis of Order

We note that CALLS submitted both

an original and modified proposal.

Unless otherwise noted, any reference to

the CALLS proposal refers to the

modified proposal. CALLS has

presented us with an integrated and

cohesive proposal that aims to resolve

major outstanding issues concerning

access charges. In addressing these

issues, the CALLS proposal reduces,

and in most instances eliminates,

implicit subsidies among end-user

classes; makes implicit universal service

funding in access charges explicit and

portable; provides significant benefits to

consumers who make few or no longdistance calls; and sets carrier charges at

reasonable levels. Because we find that

the CALLS proposal resolves these

issues in a way that benefits consumers

and is pro-competitive and

economically efficient, we adopt certain

parts of the plan, largely rate structure

components, as mandatory for all price

cap LECs for the full five years of the

plan. As discussed in more detail below,

for certain rate-level components of the

plan, we adopt it as mandatory on an

interim basis. Price cap LECs will be

able to choose between having these

interim rate-level components apply for

the full five years or having their rates

reinitialized based on forward-looking

economic cost.

The proposal that we adopt provides

for the following:

(1) Elimination of the residential

presubscribed interexchange carrier

charge (PICC);

(2) Increases to the primary

residential and single-line business

subscriber line charge (SLC) caps,

beginning at $4.35 on July 1, 2000, and

gradually increasing to $6.50 on July 1,

2003, provided that LECs can justify any

increase beyond $5.00;

(3) A review of the SLC rates prior to

the increase scheduled for July 1, 2002,

including evaluation of forward looking

cost information;

(4) Targeting of an X-factor for

switched access to switching and

switched transport elements;

(5) Creation of a separate X-factor for

special access services;

(6) $2.1 billion in reductions to

switched access usage rates effective

July 1, 2000;

(7) Reduction of the switched access

X-factor to the Gross Domestic

Product—Price Index (GDP–PI) once

specific target rate levels are achieved;

(8) Removal of $650 million in

implicit universal service support from

access charges, and the creation of an

explicit, portable interstate access

universal service support mechanism at

the same level;

(9) Recovery of LEC universal service

contributions directly from end users;

(10) Elimination of minimum usage

charges (MUCs) by participating longdistance carriers;

(11) A commitment by participating

long-distance carriers to flow through

reductions in access rates to residential

and business customers over the life of

the plan; and

(12) Adjustment of the Lifeline

Assistance universal service support

mechanism to shield low-income

customers from increases in the

residential SLC.

As an initial point, the CALLS

proposal reduces, and in many cases

eliminates, implicit subsidies among

customer classes through two means.

First, by permitting a greater proportion

of the local loop costs of primary

residential and single-line business

customers to be recovered through the

SLC, rather than through the CCL charge

and the multi-line business PICC, the

CALLS proposal reduces, and in most

instances removes, the subsidies

associated with both of the latter

charges. Second, by permitting

participating LECs to deaverage their

SLCs once the CCL charge and multiline business PICCs are eliminated, the

CALLS proposal reduces the subsidy

that subscribers in low-cost areas

provide those in higher cost areas.

The CALLS proposal reduces these

subsidies, and keeps rates affordable in

high-cost areas, by replacing the

subsidies with explicit interstate access

universal service support. In section

254(e), Congress stated that federal

universal service support should be

made explicit. The CALLS proposal

identifies and removes $650 million of

implicit universal service support in

interstate access charges, creates an

explicit interstate access universal

service support mechanism in this

amount to replace the implicit support,

and makes interstate access universal

service support fully portable among

eligible telecommunications carriers.

The CALLS proposal conforms with our

tentative conclusion in the Universal

Service Seventh Report and Order, 64

FR 30440, that price cap LECs should

reduce their interstate access rates to

reflect any increase in explicit high-cost

support. In addition, we conclude that

this interstate access universal service

support mechanism is specific,

predictable and sufficient. Moreover, by

making universal service support

explicit and portable, the interstate

access universal service support

mechanism should also encourage

competitive entry into high-cost areas.

We note that even as the CALLS

proposal phases out these subsidies, it

maintains several safeguards that ensure

that the rates consumers pay for the SLC

remain well within a zone of

reasonableness. The CALLS proposal

maintains an overall cap on the SLC

assessed on primary residential and

single-line business lines at $6.50, and

could set the cap even lower if price cap

LECs cannot justify higher increases.

Thus, as explained below, CALLS

ensures that basic telephone service

does not become too expensive. The

CALLS proposal also asks the

Commission to examine the

appropriateness of setting the SLC caps

for primary residential and single-line

business lines above $5.00 before doing

so. In addition, the CALLS proposal

provides for additional Lifeline support

so that low-income subscribers will not

be hurt by increases to the primary

residential SLC cap. The CALLS

proposal also provides that Lifeline

customers will not be assessed universal

service charges by price cap LECs.

Low-volume long-distance users also

benefit from the CALLS proposal. First,

AT&T and Sprint both commit to having

no monthly minimum charge on their

Basic Schedule for at least three years.

Second, both carriers agree to eliminate

their PICC pass-through charges for

residential and single-line business

subscribers in light of the elimination of

the PICCs for those customers. Third, in

a move that benefits all subscribers,

both carriers have agreed to flow

through to residential and business

customers the savings they realize from

the CALLS-related reductions in access

charges. We find that these

commitments are in the public interest

and adopt them as requirements of this

Order.

We adopt the CALLS proposal

because it accomplishes many

objectives that the Commission to date

has been unable to achieve in the

absence of an industry consensus plan,

while providing significant consumer

benefits that we would not otherwise be

able to ensure on such a wide-scale

basis and in such a timely manner. We

therefore find the CALLS proposal to be

in the public interest. Certainly there is

no guarantee that, at the end of the

CALLS proposal’s five-year term,

competition will exist to such a degree

that deregulation of access charges for

price cap LECs is the next logical step.

Nevertheless, the CALLS proposal

provides stability during its term and

addresses several issues that have

served as major obstacles to access

charge reform and universal service. We

also find the CALLS proposal to be

consistent with our market-based

approach to regulation.

38686 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

We approve and adopt the CALLS

proposal because it resolves in a manner

consistent with the public interest a

number of complex, contentious and

interrelated issues that stand as a

roadblock to a competitive marketplace.

The CALLS proposal is a reasonable

approach for moving toward the

Commission’s goals of using

competition to bring about cost-based

rates, and removing implicit subsidies

without jeopardizing universal service.

The CALLS proposal is not designed as

a permanent solution to all of the issues

it addresses; instead, it is a transitional

plan that moves the marketplace closer

to economically rational competition,

and it will enable us, once such

competition develops, to adjust our

rules in light of relevant market

developments. Consequently, as the

term of the CALLS proposal nears its

end, we envision that the Commission

will conduct a proceeding to determine

whether and to what degree it can

deregulate price cap LECs to reflect the

existence of competition. At that time,

the Commission can also examine

whether the interstate access universal

service support mechanism remains

sufficient.

The level of access rates, the amount

of universal service support in access

rates, and the appropriate X-factor have

all been subject to contentious

proceedings that heretofore have not

been resolved despite years devoted to

their resolution. For many years, IXCs

and consumer groups have argued that

access rates are significantly above cost

and contain monopoly profits, the

amount of which was itself subject to

serious debate. Incumbent LECs, on the

other hand, have contended that

reducing access charges threatened

universal service support. This dispute

cannot be resolved with exactitude, as

setting access charges is at best an

imprecise process whose success can be

measured only by using a zone of

reasonableness. With adoption of the

CALLS proposal, we believe that we

have achieved a reasonable and

appropriate up-front reduction to access

rates that addresses the positions of both

sides.

The 1996 Act stated that the

Commission should create explicit

universal service mechanisms that

would be secure in a competitive

environment. The interstate access

universal service support mechanism

we create today to replace the implicit

universal service support removed from

access charges has been subject to

heated debate as to the appropriateness

of its size and distribution methodology.

During the course of the proceeding,

some parties have argued that the

amount of implicit universal service

support in access charges is as high as

$3.9 billion, while others have argued

that the figure is only $250 million.

Determining the amount of implicit

universal service support is an

imprecise exercise at best.

Consequently, it is only today, more

than four years after the passage of the

1996 Act, that we issue a decision on

this matter.

Similarly, the size of the X-factor has

been subject to debate ever since the

first time it was set with the creation of

price caps. More recently, the current Xfactor of 6.5 percent, which was set in

1997, is currently on remand with the

Commission. By adopting the

reasonable approach set forth in the

CALLS proposal, which treats the Xfactor not as a productivity estimate but

as a method to reduce rates to certain

levels, we expect to end the debate over

the appropriate size of the X-factor now

and for the next five years for

participating price cap LECs.

The rates proposed by CALLS are

reasonable. We have compared LEC

revenues over the five-year period under

the modified CALLS proposal with what

their revenues would be under the

status quo, and conclude that they are

roughly the same. Overall LEC revenues

are roughly $700 million lower than

they would have been for the first year

of the plan, but gradually increase in the

later years so that projected revenue is

higher than the status quo at the end of

the plan. We note, however, that these

estimates make no adjustment to

account for voluntary reductions

participating LECs might make in

response to the development of

competition in the marketplace,

something that is much more likely to

occur in the later years of the plan, in

part due to the reduction of implicit

subsidies by the CALLS proposal.

We find that the CALLS proposal

provides a number of consumer benefits

that are in the public interest. By

eliminating the residential PICC, the

CALLS proposal provides immediate

reductions to consumers’ overall rates,

even after taking the increase to the

primary residential SLC into account.

By having IXCs provide calling plans

with no monthly minimum charges,

CALLS also provides additional benefits

to low-volume long-distance customers.

In addition, by recovering a greater

proportion of loop costs directly from

the end user and by creating an explicit

and portable interstate access universal

service mechanism, the CALLS proposal

also promotes the development of

greater facilities-based residential

competition.

By adopting the CALLS proposal, we

require price cap LECs to make a larger

rate reduction than they otherwise

would have on July 1, 2000. For carriers

that elect CALLS, however, we defer the

rate prescription scheduled to take place

next year that the Commission

established as a ‘‘backstop’’ to the

market-based approach in the event

competition was slow to develop. We

thereby allow four additional years for

competition to develop sufficiently to

begin to control access rates.

With one exception that we discuss

below, we decline to make any

significant modifications to the CALLS

proposal as some parties advocate, and

instead agree with the CALLS

signatories that we should assess the

proposal as a whole. In so doing, we

note that the original proposal, made by

a group of price cap LECs and IXCs but

without comment from consumer

groups, did not address the interests of

consumers as adequately as the

modified proposal. In response to the

various critiques of the original

proposal, CALLS made several proconsumer changes that resulted in a

substantially more equitable proposal.

These changes include lowering the

primary residential and single-line

business SLC caps from the original

proposal, both at the start of the plan

and throughout its term; proposing a

cost review to examine the

appropriateness of raising the SLC caps

above $5.00; eliminating minimum

usage charges for basic long-distance

service by CALLS long-distance

signatories; and removing a significant

amount of revenues from access charges

altogether, rather than shifting those

permitted revenues to the common line

basket.

Although we find the CALLS proposal

is reasonable for CALLS signatories and

is likely to be reasonable for nonsignatory price cap LECs, we recognize

that it was developed with the idea that

it would be voluntary for price cap

LECs. At the same time, however, the

benefits of the CALLS proposal could

not be fully realized if all price cap

LECs did not participate. Because the

CALLS proposal is a cohesive proposal,

failure to implement it fully would

frustrate the consumer benefits we find

appropriate for its adoption. Moreover,

failure to implement CALLS completely

will impede advancement toward the

1996 Act’s competition and universal

service goals.

We recognize that not all price cap

LECs could agree on all aspects of the

CALLS proposal. CALLS members

worked among themselves to develop

the mechanisms under which price cap

LECs contribute toward reducing

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38687

switched access usage charges by $2.1

billion, as well as the rules that

determine the size and distribution of

the $650 million interstate access

universal service support mechanism.

These decisions necessarily pit each

price cap LEC’s interest against the

interests of all other price cap LECs.

Consequently, price cap LECs that did

not agree to the CALLS proposal might

not receive the same benefits or carry

the same burdens as the CALLS LEC

signatories.

Accordingly, out of an abundance of

caution, we provide an opportunity for

price cap LECs to choose between two

options for certain rate-level, as opposed

to rate structure, components of the

CALLS proposal. Specifically, price cap

LECs may elect CALLS for the full fiveyear period. Alternatively, price cap

LECs may elect to submit a cost study

based on forward-looking economic cost

that will be the basis for reinitializing

rates to the appropriate level. Because a

cost study proceeding necessarily

requires data specific to the price cap

LEC to be submitted and analyzed, we

find it necessary to mandate the CALLS

rate-level components on an interim

basis, subject to true-up, in order to

provide sufficient time to complete a

cost study. A price cap LEC that elects

the second option will be subject to the

following rate-level components of the

CALLS proposal until we have

completed the forward-looking

economic cost review: the size of the

up-front reduction; the size of the

carrier’s interstate access universal

service support; the X-factor; and the

switching target levels. Adopting these

components on an interim basis will

permit realization of the full consumer

benefits of the CALLS proposal and

preserve the $2.1 billion reduction in

switched access usage charges for the

first year.

At the same time, we adopt the rate

structure components of the CALLS

proposal as mandatory for all price cap

LECs, for the five-year period

envisioned by the CALLS proposal. The

rate structure components are the new

SLC caps, elimination of the residential

PICC, the multi-line business PICC caps,

the creation of a separate basket for

special access, elimination of the

marketing basket and the recovery of the

revenues it recovered as part of CMT

revenues, recovery of universal service

contributions directly from end users,

SLC deaveraging, portability of the

interstate access universal service

mechanism, and increased Lifeline

support to cover the new SLC caps. For

the reasons discussed elsewhere in this

Order, the changes made in these

components are reasonable and in the

public interest and consistent with our

policy of requiring, to the extent

possible, that non-traffic sensitive costs

be recovered through fixed rates or flat

charges. In addition, these changes do

not affect carriers’ overall recovery of

their costs and thus do not raise the

same issues as the rate-level

components.

For the rate-level components, each

price cap LEC will, at the holdingcompany level, choose between two

options. The first alternative is to

subscribe to the CALLS proposal for its

full five-year term. The second

alternative is to submit a cost study

based on forward-looking economic

costs, resulting in the LEC’s rates being

reinitialized to the appropriate level

indicated by the study and then made

subject to a price cap plan and X-factor

that we would determine.

This cost study proceeding is

consistent with what we outlined in the

Access Charge Reform Order. See 62 FR

31868. In the Access Charge Reform

Order, the Commission stated that its

goal was for interstate access charges to

reflect the forward-looking economic

costs of providing interstate access

services. The Commission adopted a

two-phased approach to reach that goal.

It adopted a market-based approach that

relied on competitive pressures to bring

prices toward forward-looking economic

cost, with incumbent LECs receiving

additional pricing flexibility where

competition has developed. The second

phase provided, however, that the

Commission would require forwardlooking cost studies by no later than

February 8, 2001 for access services that

were not subject to competition and

‘‘eventually prescribe rates for those

services at forward-looking economic

cost levels.’’ For those carriers that

accept the CALLS proposal, we are

extending for five years the period

during which we will allow the marketbased approach to bring interstate

access prices toward forward-looking

economic cost. Those carriers that reject

the CALLS proposal will operate under

the framework the Commission set forth

in the Access Charge Reform Order to

address services that are not subject to

substantial competition.

Each price cap LEC will have 60 days

from the release of this Order to make

its election between the two options.

This election will be binding for the

five-year term of CALLS. Price cap LECs

that elect to proceed with a cost study

will be subject to the rules we adopt

today until the completion of our cost

study proceeding. We make this election

binding because we believe the CALLS

proposal, coupled with a true-up

mechanism discussed below, will

ensure reasonable rate levels for all

price cap LECs, while ensuring that the

Commission does not waste its limited

resources in cost proceedings performed

solely for the purpose of having LECs

determine under which approach they

would be better off.

For a price cap LEC electing the cost

study option, we also adopt a true-up

mechanism to be applied to such price

cap LEC’s rates. This will enable the

LEC and its customers to be treated as

it would have been, had we completed

the cost study in time to avoid the need

for imposing the CALLS proposal for an

interim period. Should any price cap

LEC elect to participate in the cost study

proceeding, the Commission will

consider the sufficiency of the interstate

access universal service support

mechanism, including both the size and

distribution of support, concurrently

with the industry-wide review of the

increase to the primary residential SLC

cap after July 2001, to avoid duplication

of effort.

Final Regulatory Flexibility Analysis

As required by the Regulatory

Flexibility Act (RFA), an Initial

Regulatory Flexibility Analysis (IRFA)

was incorporated in the CALLS NPRM,

and revised in the Public Notice

requesting comment on the modified

CALLS proposal. The Commission

sought written public comment on the

proposals in the CALLS NPRM and the

CALLS proposal, including comments

on the IRFAs. This present Final

Regulatory Flexibility Analysis (FRFA)

conforms to the RFA, as amended. To

the extent that any statement in this

FRFA is perceived as creating ambiguity

with respect to our rules or statements

made in preceding sections of this

Order, the rules and statements set forth

in those preceding sections shall be

controlling.

Need for and Objectives of This Order

The CALLS members offer the

proposal as a comprehensive solution to

the members’ access charge, universal

service, and price cap concerns. The

CALLS plan would revise the current

system of common line charges by

combining existing carrier and

subscriber charges into one flat-rated

subscriber line charge (SLC), and would

provide for limited deaveraging of those

charges under specific conditions. The

CALLS plan also would establish an

interstate access universal service

support mechanism that provides

explicit support to replace support

currently implicit in interstate access

charges. In addition, the CALLS plan

calls for annual reductions in traffic

38688 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

sensitive switching access rates until

they reach a specified level.

We believe that the CALLS proposal

is in the public interest, and so adopt it

to the extent discussed in this Order.

This Order agrees with the CALLS

members that the CALLS proposal is the

result of certain segments of the

telecommunications industry

developing a comprehensive approach

to resolve outstanding issues concerning

access charges and universal service. By

adopting the CALLS proposal, this

Order will result in lower rates for both

low-volume and high-volume longdistance consumers, more competition,

greater flexibility for price cap LECs to

meet competition, and an explicit,

portable interstate access universal

service support mechanism. It is the

CALLS proposal’s comprehensive

solution of historically contentious

issues that allows the Commission to

take these actions while ensuring that

consumers in high-cost areas will

continue to have affordable service.

Summary of Significant Issues Raised by

the Public Comments in Response to the

IRFA

The Commission received no

comments addressing the IRFA. We did,

however, receive some general smallbusiness-related comments. Some

commenters request that the CALLS

proposal require a proportionate share

of the agreed upon local switching rate

reductions to come from tandemswitched rates. Other commenters argue

that the CALLS proposal should have a

separate X-factor for mid-size price cap

LECs. These comments are addressed in

detail in this Order.

Description and Estimate of the Number

of Small Entities to Which the Rules

Will Apply

The RFA directs agencies to provide

a description of, and, where feasible, an

estimate of the number of small entities

that may be affected by the proposed

rules, if adopted. The Regulatory

Flexibility Act defines the term ‘‘small

entity’’ as having the same meaning as

the terms ‘‘small business,’’ ‘‘small

organization,’’ and ‘‘small business

concern’’ under section 3 of the Small

Business Act. 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 SBA.

The SBA has defined a small business

for Standard Industrial Classification

(SIC) category 4813 (Telephone

Communications, Except

Radiotelephone) to be a small entity that

has no more than 1500 employees.

Total Number of Telephone Companies

Affected

Price Cap Local Exchange Carriers.

The Commission does not have data

specifying the number of these carriers

that are either dominant in their field of

operations, are not independently

owned and operated, or have more than

1,500 employees, and thus is unable at

this time to estimate with greater

precision the number of price cap LECs

that would qualify as small business

concerns under the SBA’s definition.

However, there are currently only 13

price cap LECs, four of which share

common ownership. Consequently,

significantly fewer than 13 providers of

local exchange service are estimated to

be small entities or small price cap LECs

that may be affected by these proposals.

We have included small price cap LECs

in this present RFA analysis. As noted

above, a ‘‘small business’’ under the

RFA is one that, inter alia, meets the

pertinent small business size standard

(e.g., a telephone communications

business having 1,500 or fewer

employees), and ‘‘is not dominant in its

field of operation.’’ The SBA’s Office of

Advocacy contends that, for RFA

purposes, small price cap LECs are not

dominant in their field of operation

because any such dominance is not

‘‘national’’ in scope. We have therefore

included small price cap LECs in this

RFA analysis, although we emphasize

that this RFA action has no effect on

FCC analyses and determinations in

other, non-RFA contexts.

Competitive Local Exchange Carriers.

Neither the Commission nor the SBA

has developed a definition of small

providers of local exchange service. The

closest applicable definition under SBA

rules is for telephone

telecommunications companies other

than radiotelephone (wireless)

companies. The most reliable source of

information regarding the number of

competitive LECs nationwide of which

the Commission is aware appears to be

the data that the Commission collects

annually in connection with the

Telecommunications Relay Service

(TRS). According to the Commission’s

most recent data, 129 companies

reported that they were engaged in the

provision of either competitive access

provider services or competitive local

exchange carrier services. The

Commission does not have data

specifying the number of these carriers

that are either dominant in their field of

operations, are not independently

owned and operated, or have more than

1,500 employees, and thus is unable at

this time to estimate with greater

precision the number of competitive

LECs that would qualify as small

business concerns under the SBA’s

definition. Consequently, the

Commission estimates that fewer than

129 providers of local exchange service

are small entities or small competitive

LECs that may be affected by these

proposals.

Description of the Projected Reporting,

Recordkeeping, and Other Compliance

Requirements

It is not clear whether, on balance, the

CALLS proposal will increase or

decrease price cap incumbent local

exchange carriers’ administrative

burdens. Some of the rate structure

reforms in the CALLS proposal will

require additional filings. In particular,

the CALLS proposal requires price cap

LECs to file with USAC additional

information pertaining to line counts by

zone and customer class, revenue data,

and information regarding zone

boundaries. Competitive LECs would

also have to file with USAC line counts

by zone and customer class. The filings

are on a quarterly basis. On the other

hand, other reforms in the CALLS

proposal, such as the elimination of the

PICC, should reduce administrative

burdens for price cap LECs. Finally,

some of the reforms in the CALLS

proposal may have a neutral affect on

administrative burdens. For example,

under the CALLS proposal, implicit

subsidies now collected by price cap

LECs from IXCs through access charges

will be collected as explicit subsidies

from USAC. This reform should neither

increase nor decrease the administrative

burden for price cap LECs.

Steps Taken To Minimize Significant

Economic Impact on Small Entities, and

Significant Alternatives Considered

The proposals made by CALLS could

have varying positive or negative

impacts on price cap LECs, including

any such small carriers. The alternative

to consideration of adopting the CALLS

proposal at this time would be to

continue in effect the existing access

charge and universal service fund rules.

Neither this alternative, nor any other

identified by the Commission, would

lessen the significant economic impact

on small entities while remaining

consistent with this Order’s objectives.

Several commenters, while not

directly responding to our IRFA, did

raise general small-business-related

concerns. Commenters concerned about

protecting smaller IXCs in competition

with large IXCs request that the CALLS

proposal require a proportionate share

of the agreed upon local switching rate

reductions to come from tandemswitched rates. This Order explains,

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38689

however, that (1) competition in the

long-distance market eliminates the

need for rules protecting smaller IXCs,

and (2) even if price cap LECs target

their access rate reductions only to

direct-trunked transport, these

reductions should make direct-trunked

transport an affordable alternative for

smaller IXCs. Other commenters argue

that the CALLS proposal should have a

separate X-factor for mid-size price cap

incumbent LECs because these carriers

are not able to achieve the same levels

of productivity growth as larger LECs.

As this Order explains, however, the Xfactor adopted under the CALLS

proposal is not a productivity offset, but

is merely a method to reduce traffic

sensitive charges to the Proposal’s target

level.

This Order makes two allowances for

smaller price cap LECs. First, the Order

allows a higher target access rate for

smaller and very low-density price cap

LECs. Whereas the target for the BOCs

and GTE is set at 0.55 cents, the target

is 0.95 cents for small very-low density

price cap LECs and 0.65 cents for the

other smaller price cap LECs. Second,

the Order allows mid-size price cap

carriers with at least 20 percent of total

holding company lines serving

statutorily rural areas to pool their

access charge reductions and to

temporarily recover them from sources

other than residential end users and perminute charges.

Report to Congress

The Commission will send a copy of

this Order, including this FRFA, in a

report to be sent to Congress pursuant

to the Small Business Regulatory

Enforcement Fairness Act of 1996. In

addition, the Commission will send a

copy of this Order, including this FRFA,

to the Chief Counsel for Advocacy of the

Small Business Administration. A copy

of this Order and FRFA (or summaries

thereof) will also be published in the

Federal Register.

Paperwork Reduction Act

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

recordkeeping requirements or burdens

on the public. Implementation of these

new or modified reporting and

recordkeeping requirements have been

approval by OMB as prescribed by the

Act, and will go into effect upon

publication in the Federal Register.

Pursuant to sections 1, 4(i) and (j),

201–209, 218–222, 254, and 403 of the

Communications Act, as amended, 47

U.S.C. 151, 154 (i), 154(j), 201–209,

218–222, 254, and 403 that this Order Is

Hereby Adopted.

We, therefore, Order that the Inquiry

initiated in CC Docket 99–249 is hereby

Terminated. This action is taken

pursuant to authority contained in

sections 4(i) and 303 of the

Communications Act of 1934, as

amended, 47 U.S.C. 4(i), 303.

The Commission’s Consumer

Information Bureau, Reference

Information Center, Shall Send a copy

of this Order, including the Final

Regulatory Flexibility Analysis, to the

Chief Counsel for Advocacy of the Small

Business Administration.

Pursuant to 5 U.S.C. 553(d)(3), we

find good cause exists to have the rules

take effect immediately upon

publication in the Federal Register.

Local exchange carriers subject to price

cap regulation must file access reform

tariffs no later than June 16, 2000 in

order for them to be effective by July 1,

2000, as required by 47 CFR 69.3. In

addition, to ensure that the local

exchange carriers subject to price cap

regulation have actual notice of these

rules immediately following their

release, we are serving those entities by

overnight mail.

List of Subjects

47 CFR Part 54

Reporting and recordkeeping

requirements, Telecommunications,

Telephone.

47 CFR Part 61

Access charges, Communications

common carriers, Telephone.

47 CFR Part 69

Communications common carriers,

Telephone.

Federal Communications Commission.

William F. Caton,

Deputy Secretary.

Regulatory Text

For the reasons set forth in the

preamble, the Federal Communications

Commission amends 47 CFR parts 54,

61, and 69 as follows:

PART 54—UNIVERSAL SERVICE

1. The authority citation for part 54

continues to read as follows:

Authority: Secs. 1, 4(i), 201, 205, 214, and

254 unless otherwise noted.

2. Amend § 54.403 by removing

paragraph (d) and revising paragraphs

(a) and (b) to read as follows:

§ 54.403 Lifeline support amount.

(a) The federal Lifeline support

amount for all eligible

telecommunications carriers shall equal:

(1) Tier One. The tariffed rate in effect

for the primary residential End User

Common Line charge of the incumbent

local exchange carrier serving the area

in which the qualifying low-income

consumer receives service, as

determined in accordance with § 69.104

or §§ 69.152(d)(1) and 69.152(q) of this

chapter, whichever is applicable;

(2) Tier Two. If the state commission

approves an additional reduction of

$1.75 in the amount paid by consumers,

additional federal Lifeline support in

the amount of $1.75 will be made

available to the carrier providing

Lifeline service to that consumer; and

(3) Tier Three. Additional federal

Lifeline support in an amount equal to

one-half the amount of any state Lifeline

support will be made available to the

carrier providing Lifeline service to a

qualifying low-income consumer if the

state commission approves an

additional reduction in the amount paid

by that consumer equal to the state

support multiplied by 1.5.

(b) For the qualifying low-income

consumer, the federal Lifeline support

amount shall not exceed $3.50 plus the

tariffed rate in effect for the primary

residential End User Common Line

charge of the incumbent local exchange

carrier serving the area in which the

qualifying low-income consumer

receives service, as determined in

accordance with § 69.104 or

§§ 69.152(d)(1) and 69.152(q) of this

chapter, whichever is applicable.

Eligible telecommunications carriers

that charge federal End User Common

Line charges or equivalent federal

charges shall apply Tier One federal

Lifeline support to waive Lifeline

consumers’ federal End User Common

Line charges. Such carriers shall apply

any additional federal support amount

to a qualifying low-income consumer’s

intrastate rate, if the state has approved

of such additional support. Other

eligible telecommunications carriers

shall apply Tier One federal Lifeline

support amount, plus any additional

federal support amount, to reduce their

lowest tariffed (or otherwise generally

available) residential rate for the

services enumerated in § 54.101(a)(1)

through (a)(9), and charge Lifeline

consumers the resulting amount.

* * * * *

3. Amend § 54.701 by revising

paragraph (g) to read as follows:

§ 54.701 Administrator of universal service

support mechanism.

* * * * *

(g)(1) The Administrator shall

establish three divisions:

(i) the Schools and Libraries Division,

which shall perform duties and

38690 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

functions in connection with the

schools and libraries support

mechanism under the direction of the

Schools and Libraries Committee of the

Board, as set forth in § 54.705(a);

(ii) The Rural Health Care Division,

which shall perform duties and

functions in connection with the rural

health care support mechanism under

the direction of the Rural Health Care

Committee of the Board, as set forth in

§ 54.705(b); and

(iii) The High Cost and Low Income

Division, which shall perform duties

and functions in connection with the

high cost and low income support

mechanism, and the interstate access

universal service support mechanism

described in subpart J of this part, under

the direction of the High Cost and Low

Income Committee of the Board, as set

forth in § 54.705(c).

(2) As directed by the Committees of

the Board set forth in § 54.705, these

divisions shall perform the duties and

functions unique to their respective

support mechanisms.

* * * * *

4. Amend § 54.702 by revising

paragraphs (a) and (i) to read as follows:

§ 54.702 Administrator’s functions and

responsibilities.

(a) The Administrator, and the

divisions therein, shall be responsible

for administering the schools and

libraries support mechanism, the rural

health care support mechanism, the

high cost support mechanism, the low

income support mechanism, and the

interstate access universal service

support mechanism described in

subpart J of this part.

* * * * *

(i) The Administrator shall report

quarterly to the Commission on the

disbursement of universal service

support program funds. The

Administrator shall keep separate

accounts for the amounts of money

collected and disbursed for eligible

schools and libraries, rural health care

providers, low-income consumers,

interstate access universal service

support, and high cost and insular areas.

* * * * *

5. Amend § 54.705 by revising

paragraph (c)(1) to read as follows:

§ 54.705 Committees of the

Administrator’s Board of Directors.

* * * * *

(c) * * *

(1) Committee functions. The High

Cost and Low Income Committee shall

oversee the administration of the highcost and low-income support

mechanisms and the interstate access

universal service support mechanism

described in subpart J of this Part, by the

High Cost and Low Income Division.

The High Cost and Low Income

Committee shall have the authority to

make decisions concerning:

(i) How the Administrator projects

demand for the high-cost, low-income,

and interstate access universal service

support mechanisms;

(ii) Development of applications and

associated instructions as needed for the

high-cost, low-income, and interstate

access universal service support

mechanisms;

(iii) Administration of the application

process, including activities to ensure

compliance with Federal

Communications Commission rules and

regulations;

(iv) Performance of audits of

beneficiaries under the high-cost, lowincome, and interstate access universal

service support mechanisms and;

(v) Development and implementation

of other functions unique to the highcost, low-income, and interstate access

universal service support mechanisms.

* * * * *

6. Amend § 54.715 by revising

paragraph (c) to read as follows:

§ 54.715 Administrative expenses of the

Administrator.

* * * * *

(c) The Administrator shall submit to

the Commission projected quarterly

budgets at least sixty (60) days prior to

the start of every quarter. The

Commission must approve the projected

quarterly budgets before the

Administrator disburses funds under

the federal universal service support

mechanisms. The administrative

expenses incurred by the Administrator

in connection with the schools and

libraries support mechanism, the rural

health care support mechanism, the

high-cost support mechanism, the lowincome support mechanism, and the

interstate access universal service

support mechanism shall be deducted

from the annual funding of each

respective support mechanism. The

expenses deducted from the annual

funding for each support mechanism

also shall include the Administrator’s

joint and common costs allocated to

each support mechanism pursuant to

the cost allocation manual filed by the

Administrator under § 64.903 of this

chapter.

7. Add subpart J to part 54 to read as

follows:

Subpart J—Interstate Access Universal

Service Support Mechanism

Sec.

54.800 Terms and definitions.

54.801 General.

54.802 Obligations of LECs and the

Administrator.

54.803 Universal service zones.

54.804 Preliminary study area minimum

access universal service support

calculated by the Administrator.

54.805 Zone and study area above

benchmark revenues calculated by the

Administrator.

54.806 Calculation by the Administrator of

interstate access universal service

support for areas served by price cap

LECs.

54.807 Interstate access universal service

support.

54.808 Transition provisions and periodic

calculation.

54.809 Carrier certification.

Subpart J—Interstate Access Universal

Service Support Mechanism

§ 54.800 Terms and definitions.

(a) Average Price Cap CMT Revenue

Per Line Month in a Study Area has the

same meaning as that term is defined in

§ 61.3(d) of this chapter, except that it

includes exogenous changes in effect

prior to the effective date of a

calculation made pursuant to § 54.808

and exogenous changes not yet effective

related to the sale or acquisition of

exchanges, but excludes any other

exogenous changes or other changes

made pursuant to § 61.45(i)(4) of this

chapter that are not yet effective.

(b) Base Period Lines. For purposes of

calculations pursuant to this subpart,

Base Period Lines are the number of

lines for a given study area or zone as

of the end of the quarter ending 6

months prior to the effective date of a

calculation pursuant to § 54.808.

(c) Interstate Access Universal Service

Support Benchmark shall mean, for

residential and single-line business

lines, $7.00, and for multi-line business

lines, $9.20.

(d) Minimum Adjustment Amount

(MAA) is defined in § 54.806(f).

(e) MAA Phase In Percentage is:

50% as of July 1, 2000,

75% as of July 1, 2001,

100% as of July 1, 2002.

(f) Minimum Delta (MD) is defined in

§ 54.806(d).

(g) Minimum Support Requirement

(MSR) is defined in § 54.806(g).

(h) Nationwide Total Above

Benchmark Revenues is defined in

§ 54.806(b).

(i) Price Cap LEC is defined in

§ 54.802(c).

(j) Preliminary Study Area Minimum

Access Universal Service Support is the

amount calculated pursuant to § 54.804.

(k) Preliminary Study Area Universal

Service Support (PSAUSS) is defined in

§ 54.806(c).

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38691

(l) Study Area Above Benchmark

Revenues is the sum of all Zone Above

Benchmark Revenues for all zones in

the study area.

(m) Study Area Access Universal

Service Support (SAAUS) is defined in

§ 54.806 (i) and (j).

(n) Total National Minimum Delta

(TNMD) is the nationwide sum of all

study area Minimum Deltas.

(o) Total National Minimum Support

Requirement (TNMSR) is the sum of the

MSR for all price cap LEC study areas.

(p) Zone Above Benchmark Revenues

is defined in § 54.805(a)(2).

(q) Zone Average Revenue per Line.

The amount calculated as follows:

Zone Average Revenue Per Line =

(25% * (Loop + Port)) + U (Uniform

revenue per line adjustment)

Loop = Price for the loop in a particular

zone.

Port = Price for the port in a particular

zone.

U = [(Average Price Cap CMT Revenue

Per Line Month in a study area *

LEC Base Period Lines) ¥ (25% *

Σ (LEC Base Period Lines in a UNE

Zone × ((Loop + Port ) for all

zones)))] ÷ LEC Base Period Lines in

a study area.

§ 54.801 General.

(a) The total amount of universal

service support under this subpart,

excluding administrative expenses, for

areas served by price cap LECs as of

June 30, 2000, is targeted to be $650

million per year, if no exchanges, other

than those offered for sale prior to

January 1, 2000, are sold to non-pricecap LECs or purchased from non-price

cap LECs by price cap LECs.

(b) In the event that all or a portion

of a study area served by a price cap

LEC is sold to an entity other than a

price cap LEC, and the study area or

portion thereof was not offered for sale

prior to January 1, 2000, then the

support that would otherwise be

provided under this subpart, had such

study area or portion thereof not been

sold, will not be distributed or

collected. Subsequent calculations will

use the last reported data for the study

area or portion thereof that was sold to

determine the amount that will not be

distributed or collected.

(c) In the event that a price cap LEC

acquires additional exchanges, from an

entity other than a price cap LEC, that

acquisition should be reported to the

Administrator pursuant to § 54.802 and

included in the determination of study

area support pursuant to § 54.806 for the

areas served by the acquiring price cap

LEC, beginning with the next support

recalculation pursuant to § 54.808.

(d) In the event that a price cap LEC

acquires additional exchanges from an

entity that is also a price cap LEC, the

acquiring price cap LEC will receive

support under this subpart at the same

level as the selling price cap LEC

formerly received, and both carriers will

adjust their line counts accordingly

beginning with the next quarterly report

to the Administrator. At the subsequent

report to the Administrator for purposes

of recalculating support as required by

§ 54.808, the acquiring and selling price

cap LECs will reflect the acquired and

sold lines, and will adjust the average

CMT Revenue per Line per Month for

the affected study areas accordingly.

(e) The Administrator for the fund

created by this subpart shall be the

Universal Service Administrative

Company.

§ 54.802 Obligations of LECs and the

Administrator.

(a) Each Eligible Telecommunications

Carrier that is providing service within

an area served by a price cap LEC shall

submit to the Administrator, on a

quarterly basis on the last business day

of March, June, September, and

December of each year line count data

showing the number of lines it serves

for the period ending three months prior

to the reporting date, within each price

cap LEC study area disaggregated by

UNE Zone if UNE Zones have been

established within that study area,

showing residential/single-line business

and multi-line business line counts

separately. For purposes of this report,

and for purposes of computing support

under this subpart, the aggregated

residential/single-line business class

lines reported include single and nonprimary residence lines, single-line

business lines, ISDN BRI and other

related residence class lines. Similarly,

the multi-line business class lines

reported include multi-line business,

centrex, ISDN PRI and other related

business class lines assessed the End

User Common Line charge pursuant to

§ 69.152 of this chapter. For purposes of

this report and for purposes of

computing support under this subpart,

lines served using resale of the price cap

LEC’s service pursuant to section

251(c)(4) of the Communications Act of

1934, as amended, shall be considered

lines served by the price cap LEC only

and must be reported accordingly.

(b) In addition to the information

submitted pursuant to paragraph (a) of

this section, each price cap LEC must

submit to the Administrator, on June 30,

2000, October 15, 2000, and April 16,

2001 and annually thereafter or as

determined by the Administrator

according to § 54.808:

(1)(i) Average Price Cap CMT Revenue

Per Line Month in a study area for each

of its study areas;

(ii) The rates established for UNE

Loops and UNE Line Ports, by zone in

those study areas where UNE Zones

have been established as of the date of

filing; and

(iii) Make available information

sufficient to determine the boundaries

of each UNE Zone within each of its

study areas where such zones have been

established;

(2) Provided, however, that after the

June 30, 2000 filing, if there have been

no changes since its previous filing a

company may submit a statement that

there have been no changes in lieu of

such information, and further provided

that, for study areas in which UNE

Zones have been newly established

since the last filing pursuant to this

paragraph, the price cap LEC shall also

report the information required by

paragraphs (b)(1)(ii) and (b)(1)(iii) of this

section to the Administrator on July 15,

2000, or January 15, 2001, as required.

(c) An eligible telecommunications

carrier shall be eligible for support

pursuant to this subpart only after it has

filed all of the information required by

paragraphs (a) through (c) of this

section, where applicable. An eligible

telecommunications carrier shall receive

payment of support pursuant to this

subpart only for such months the carrier

is actually providing service to the end

user. The Administrator shall ensure

that there is periodic reconciliation of

support payments.

(d) Upon receiving the information

required to be filed in paragraphs (a)

and (b) of this section, the

Administrator shall:

(1) Perform the calculations described

in §§ 54.804 through 54.807 of this

subpart;

(2) Publish the results of these

calculations showing Interstate Access

Universal Service Support Per Line

available in each price cap LEC study

area, by UNE Zone and customer class;

(3) Collect the funds necessary to

provide support pursuant to this subpart

in accordance with subpart H; and

(4) Distribute support calculated

pursuant to the rules contained in this

subpart; and;

(5) Report quarterly to the

Commission on the collection and

distribution of funds under this subpart

as described in § 54.701(g). Fund

distribution reporting will be by state

and by eligible telecommunications

carrier within the state.

§ 54.803 Universal service zones.

(a) The zones used for determining

interstate access universal service

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support shall be the same zones that

would be used for End User Common

Line (EUCL) charge deaveraging as

described in § 69.152(q)(2) of this

chapter.

(b) In a price cap study area where the

price cap LEC has not established stateapproved prices for UNE loops by zone,

the Administrator shall develop an

estimate of the LEC’s Zone Above

Benchmark Revenues for transitional

purposes, in order to reserve a portion

of the fund for that study area. This

estimate will be included by the

Administrator in the Nationwide Study

Area Above Benchmark Revenues

calculated pursuant to § 54.806.

(1) For the purpose of developing this

transitional estimate, the loop and port

costs estimated by the FCC cost model,

or other substitute method if no model

is available, shall be used.

(2) For the purpose of developing this

transitional estimate, the administrator

shall construct three zones. Wire centers

within the study area will be grouped

into these zones in such a way that each

zone is assigned approximately one

third of LEC base period lines in the

study area, with the lowest cost wire

centers assigned to Zone 1, the highest

cost wire centers assigned to Zone 3,

and the remainder to Zone 2.

§ 54.804 Preliminary study area minimum

access universal service support calculated

by the Administrator.

(a) If Average Price Cap CMT Revenue

Per Line Month is greater than $9.20

then: Preliminary Minimum Access

Universal Service Support (for a study

area) = Price Cap CMT Revenue Per Line

Month in a study area × LEC Base

Period Lines × 12)¥(($7.00 × LEC Base

Period Residential and Single-Line

Business Lines × 12) + ($9.20 × LEC

Base Period Multi-line Business Lines ×

12)).

(b) If Price Cap CMT Revenue Per

Line Month in a study area is greater

than $7.00 but less than $9.20 then:

Preliminary Minimum Access Universal

Service Support (for a study area) =

(Price Cap CMT Revenue Per Line

Month in a study area¥$7.00) × (LEC

Base Period Residential and Single-Line

Business Lines × 12).

(c) If Price Cap CMT Revenue Per Line

Month in a study area is less than $7.00

then the Preliminary Minimum Access

Universal Service Support (for a study

area) is zero.

§ 54.805 Zone and study area above

benchmark revenues calculated by the

Administrator.

(a) The following steps shall be

performed by the Administrator to

determine Zone Above Benchmark

Revenues for each price cap LEC.

(1) Calculate Zone Average Revenue

Per Line.

(2) Calculate Zone Above Benchmark

Revenues. Zone Above Benchmark

Revenues is the sum of Zone Above

Benchmark Revenues for Residential

and Single-Line Business Lines and

Zone Above Benchmark Revenues for

Multi-line Business Lines Zone Above

Benchmark Revenues for Residential

and Single-Line Business Lines is,

within each zone, (Zone Average

Revenue Per Line minus $7.00)

multiplied by all eligible

telecommunications carrier Base Period

Residential and Single-Line Business

Lines times 12. If negative, the Zone

Above Benchmark Revenues for

Residential and Single-Line Business

Lines for the zone is zero. Zone Above

Benchmark Revenues for Multi-line

Business Lines is, within each zone,

(Zone Average Revenue Per Line minus

$9.20) multiplied by all eligible

telecommunications carrier zone Base

Period Multi-line Business Lines times

12. If negative, the Zone Above

Benchmark Revenues for Multi-line

Business Lines for the zone is zero.

(b) Study Area Above Benchmark

Revenues is the sum of Zone Above

Benchmark Revenues for all zones in

the study area.

§ 54.806 Calculation by the Administrator

of interstate access universal service

support for areas served by price cap LECs.

(a) The Administrator, based on the

calculations performed in §§ 54.804 and

54.805, shall calculate the Interstate

Access Universal Service Support for

areas served by price cap LECs

according to the following methodology:

(b) Calculate Nationwide Total Above

Benchmark Revenues. Nationwide Total

Above Benchmark Revenues is the sum

of all Study Area Above Benchmark

Revenues for all study areas served by

LECs,

(c) Calculate Preliminary Study Area

Universal Service Support (PSAUSS).

(1) If the Nationwide Total Above

Benchmark Revenues is greater than

$650 million, then the Preliminary

Study Area Universal Service Support

(PSAUSS) equals the Study Area Above

Benchmark Revenues multiplied by the

ratio of $650 million to Nationwide

Total Above Benchmark Revenues (i.e.,

Preliminary Study Area Universal

Service Support = Study Area Above

Benchmark Revenues × ($650 Million/

Nationwide Total Above Benchmark

Revenues).

(2) If the Nationwide Total Above

Benchmark Revenues is not greater than

$650 million, PSAUSS equals the Study

Area Above Benchmark Revenues.

(d) Calculate the Minimum Delta

(MD) by study area. Within each study

area the Minimum Delta will be equal

to the Preliminary Minimum Access

Universal Service Support less the

PSAUSS, if the difference is greater than

zero. If the difference is less than or

equal to zero, the MD is equal to zero.

(e) Calculate the Total National

Minimum Delta (TNMD) by summing

all study are Minimum Deltas

nationwide.

(f) Calculate the Minimum

Adjustment Amount. (1) If the TNMD is

greater than $75 million, then the

Minimum Adjustment Amount product

of the (MAA) equals the MAA Phase In

Percentage times the MD by study area

times the ratio of $75 million to TNMD

Or:

Minimum Adjustment Amount =

(MAA Phase in Percentage) × (Minimum

Delta) × ($75 million / Total National

Minimum Delta).

(2) If the TNMD is less than $75

million, then the MAA equals the

product of the MAA Phase In Percentage

and the MD by study area.

(g) Calculate the Minimum Support

Requirement (MSR). The Minimum

Support Requirement for a study area

equals the PSAUSS plus the MAA.

(h) Calculate the Total National

Minimum Support Requirement

(TNMSR), which equals the sum of the

MSR for all study areas in which the

Preliminary Minimum Access Universal

Service Support is greater than or equal

to the PSAUSS.

(i) Calculate Study Area Access

Universal Service Support (SAAUS) for

a study area in which the price cap LEC

has geographically deaveraged stateapproved rates for UNE loops:

(1) For study areas in which the

Preliminary Minimum Access Universal

Service Support is greater than

PSAUSS, and within which the price

cap LEC has established geographically

deaveraged state-approved rates for UNE

loops, the SAAUS for that study area is

the MSR.

(2) For study areas in which the

Preliminary Minimum Access Universal

Service Support is less than PSAUSS,

and within which the price cap LEC has

established geographically deaveraged

state-approved rates for UNE loops, the

SAAUS for that study area is equal to:

Preliminary Study Area Universal

Service Support × ($650 million ¥

TNMSR) ÷ (the sum of PSAUSS of study

areas where the Preliminary Minimum

Access Universal Service Support is less

than PSAUSS).

(j) Calculate Study Area Access

Universal Service Support (SAAUS) for

a price cap LEC that has not established

geographically deaveraged stateVerDate 11<MAY>2000 18:04 Jun 20, 2000 Jkt 190000 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\21JNR2.SGM pfrm08 PsN: 21JNR2
Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38693

approved rates for UNE loops. In such

study areas, the SAAUS shall be the

lesser of the Preliminary Minimum

Access Universal Service Support or:

(1) For study areas in which the

Preliminary Minimum Access Universal

Service Support is greater than

PSAUSS, and for which an estimate has

been made for deaveraged UNE loop

costs, the SAAUS for that study area is

the MSR.

(2) For study areas in which the

Preliminary Minimum Access Universal

Service Support is less than PSAUSS,

and for which an estimate has been

made for deaveraged UNE loop costs,

the SAAUS for that study area is equal

to:

Preliminary Study Area Universal

Service Support × ($650 million ¥

TNMSR) ÷ (the sum of PSAUSS of study

areas where the Preliminary Minimum

Access Universal Service Support is less

than PSAUSS).

§ 54.807 Interstate access universal

service support.

(a) Each Eligible Telecommunication

Carrier (ETC) that provides supported

service within the study area of a price

cap LEC shall receive Interstate Access

Universal Service Support for each line

that it serves within that study area.

(b) In any study area within which the

LEC has not established state approved

geographically deaveraged rates for UNE

loops, the Administrator shall calculate

the Interstate Access Universal Service

Support Per Line by dividing Study

Area Access Universal Service Support

by twelve times all eligible

telecommunications carriers’ base

period lines in that study area adjusted

for growth during the relevant support

period based on the average nationwide

annual growth in eligible lines during

the three previous years. For the

purpose of calculating growth, the

Administrator shall use a simple

average of annual growth rates for total

switched access lines for the three most

recent years as reported in the Common

Carrier Bureau Report, Statistics of

Communications Common Carriers,

Table 6.10—Selected Operating

Statistics. Interested parties may obtain

this report from the U.S. Government

Printing Office or by downloading it

from the Federal Communication

Commission’s website http://

www.fcc.gov.

(c) In any study area within which the

LEC has established state approved

geographically deaveraged rates for UNE

loops, the Administrator shall calculate

the Interstate Access Universal Service

Support Per Line for each customer

class and zone using all eligible

telecommunications carriers’ base

period lines by customer class and zone

adjusted for growth during the relevant

support period based on the average

nationwide annual growth in eligible

lines during the three previous years.

For the purpose of calculating growth,

the Administrator shall use a simple

average of annual growth rates for total

switched access lines for the three most

recent years as reported in the Common

Carrier Bureau Report, Statistics of

Communications Common Carriers,

Table 6.10—Selected Operating

Statistics. Support shall be allocated to

lines in the highest cost UNE zone first,

and will ‘‘cascade’’ to lines in lower cost

UNE zones to the extent that sufficient

funding is available. Beginning with the

zone with the highest Zone Average

Revenue Per Line, support will be

applied in the following order of

priority:

(1) To all lines in the highest zone, to

eliminate the amount per line by which

Zone Average Revenue Per Line exceeds

the higher of $9.20 or the Average

Revenue Per Line in the next highest

zone;

(2) If the Zone Average Revenue Per

Line in the next highest zone is greater

than $9.20, then to all lines in both

zones to eliminate the amount per line

by which Zone Average Revenue per

Line exceeds $9.20 or the Zone Average

Revenue Per Line in the third highest

zone. This application of support will

continue to additional zones in the same

fashion until the amount per line by

which Zone Average Revenue Per Line

exceeds $9.20 has been eliminated in all

zones, or until the available support has

been exhausted;

(3) To all residential and single-line

business lines in the highest zone, to

eliminate the remaining amount per line

that Zone Average Revenue Per Line for

these lines exceeds the higher of $7.00

or Zone Average Revenue Per Line in

the next highest zone;

(4) If the Zone Average Revenue per

Line in the next highest zone is greater

than $7.00, then to all residential and

single-line business lines in both zones

to eliminate the remaining amount per

line by which Zone Average Revenue

Per Line exceeds $7.00. This application

of support will continue to additional

zones in the same fashion until the

difference between Zone Average

Revenue Per Line and $7.00 has been

eliminated in all zones, or until the

available support has been exhausted.

(d) Notwithstanding the provisions of

§ 54.307(a)(2), the per-line support

amount determined within each zone by

applicable customer class under

paragraph (b) or (c) of this section is

portable among all eligible

telecommunications carriers providing

service within that zone.

§ 54.808 Transition provisions and

periodic calculation.

Study Area Access Universal Service

Support amounts for the area served by

each price cap LEC will be calculated as

of July 1, 2000, January 1, 2001, July 1,

2001 and thereafter as determined by

the Administrator, but at least annually.

§ 54.809 Carrier certification.

(a) Certification. Carriers that desire to

receive support pursuant to § 54.807

must file a certification with the

Administrator and the Commission

stating that all interstate access

universal service support provided to

such carrier will be used only for the

provision, maintenance, and upgrading

of facilities and services for which the

support is intended. Support provided

pursuant to § 54.807 shall only be

provided to the extent that the carrier

has filed the requisite certification

pursuant to this section.

(b) Certification format. A

certification pursuant to this section

may be filed in the form of a letter from

an authorized representative for the

carrier, and must be filed with both the

Office of the Secretary of the

Commission clearly referencing CC

Docket No. 96–45, and with the

Administrator of the interstate access

universal service support mechanism,

on or before the filing deadlines set

forth in paragraph (c) of this section. All

of the certifications filed by carriers

pursuant to this section shall become

part of the public record maintained by

the Commission.

(c) Filing deadlines. In order for a

price cap local exchange carrier, and/or

an eligible telecommunications carriers

serving lines in the service area of a

price cap local exchange carrier, to

receive interstate access universal

service support, such carrier must file

an annual certification, as described in

paragraph (b) of this section, on the date

that it first files its line count

information pursuant to § 54.802, and

thereafter on June 30th of each year.

PART 61—TARIFFS

8. The authority citation for part 61

continues to read as follows:

Authority: Secs.1, 4(i), 4(j), 201–205 and

403 of the Communications Act of 1934, as

amended; 47 U.S.C. 151, 151(i), 154(j), 201–

205 and 403, unless otherwise noted.

9. Amend § 61.3 by revising

paragraphs (d) through (pp) and adding

paragraphs (qq) through (zz) to read as

follows:

38694 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

§ 61.3 Definitions.

* * * * *

(d) Average Price Cap CMT Revenue

per Line month. (1) Price Cap CMT

Revenue (as defined in § 61.3(cc)) per

month as of July 1, 2000 (adjusted to

remove Universal Service Contributions

assessed to LECs pursuant to § 54.702 of

this chapter) using 2000 annual filing

base period demand, divided by the

2000 annual filing base period demand.

In filing entities with multiple study

areas, if it becomes necessary to

calculate the Average Price Cap CMT

Revenue Per Line month for a specific

study area, then the Average Price Cap

CMT Revenue Per Line month for that

study area is determined as follows,

using base period demand revenues

(adjusted to remove Universal Service

Contributions assessed to Local

Exchange Carriers pursuant to § 54.702

of this chapter), Base Factor Portion

(BFP) and 2000 annual filing base

period lines:

Average Price Cap CMT Revenue Per

Line Month in a study area = Price Cap

CMT Revenue × (BFP in the study area

÷ (BFP in the Filing Entity) ÷(Lines in the

study area.

(2) Nothing in this definition

precludes a price cap local exchange

carrier from continuing to average rates

across filing entities containing multiple

study areas, where permitted under

existing rules.

(3) Average Price Cap CMT Revenues

Per Line month may be adjusted after

July 1, 2000 to reflect exogenous costs

pursuant to § 61.45(d).

(4) Average Price Cap CMT Revenues

Per Line month may also be adjusted

pursuant to § 61.45 (b)(1)(iii).

(e) Average traffic sensitive charge. (1)

The Average Traffic Sensitive Charge

(‘‘ATS charge’’) is the sum of the

following two components:

(i) The Local Switching (LS)

component. The Local Switching

component will be calculated by

dividing the proposed Local Switching

revenues (End Office Switch, LS trunk

ports, Information Surcharge, and

signalling transfer point (STP) port) by

the base period LS minutes of use

(MOUs); and

(ii) The Transport component. The

Transport component will be calculated

by dividing the proposed Transport

revenues (Switched Direct Trunk

Transport, Signalling for Switched

Direct Trunk Transport, Entrance

Facilities for Switched Access traffic,

Tandem Switched Transport, Signalling

for Tandem Switching and residual per

minute Transport Interconnection

Charge (TIC) pursuant to § 69.155 of this

chapter by LEC only base period MOUs

(including meet-point billing

arrangements for jointly-provided

interstate access by a LEC and any other

LEC).

(2) For the purposes of determining

whether the ATS charge has reached the

Target Rate as set forth in § 61.3(qq), the

calculations should include all the

relevant revenues and minutes for

services provided under generally

available price cap tariffs.

(f) Band. A zone of pricing flexibility

for a service category, which zone is

calculated pursuant to § 61.47.

(g) Base period. For carriers subject to

§§ 61.41 through 61.49, the 12-month

period ending six months prior to the

effective date of annual price cap tariffs.

Base year or base period earnings shall

exclude amounts associated with

exogenous adjustments to the PCI for

the lower formula adjustment

mechanism permitted by

§ 61.45(d)(1)(vii).

(h) Basket. Any class or category of

tariffed service or charge:

(1) Which is established by the

Commission pursuant to price cap

regulation;

(2) The rates of which are reflected in

an Actual Price Index; and

(3) The related revenues of which are

reflected in a Price Cap Index.

(i) Change in rate structure. A

restructuring or other alteration of the

rate components for an existing service.

(j) Charges. The price for service

based on tariffed rates.

(k) Commercial contractor. The

commercial firm to whom the

Commission annually awards a contract

to make copies of Commission records

for sale to the public.

(l) Commission. The Federal

Communications Commission.

(m) Concurring carrier. A carrier

(other than a connecting carrier) subject

to the Act which concurs in and assents

to schedules of rates and regulations

filed on its behalf an issuing carrier or

carriers.

(n) Connecting carrier. A carrier

engaged in interstate or foreign

communication solely through physical

connection with the facilities of another

carrier not directly or indirectly

controlling or controlled by, or under

direct or indirect common control with,

such carrier.

(o) Contract-based tariff. A tariff

based on a service contract entered into

between a non-dominant carrier and a

customer, or between a customer and a

price cap local exchange carrier which

has obtained permission to offer

contract-based tariff services pursuant to

part 69, subpart H, of this chapter.

(p) Corrections. The remedy of errors

in typing, spelling, or punctuation.

(q) Dominant carrier. A carrier found

by the Commission to have market

power (i.e., power to control prices).

(r) GDP Price Index (GDP–PI). The

estimate of the Chain–Type Price Index

for Gross Domestic Product published

by the United States Department of

Commerce, which the Commission

designates by Order.

(s) GNP Price Index (GNP–PI). The

estimate of the ‘‘Fixed-Weighted Price

Index for Gross National Product, 1982

Weights’’ published by the United

States Department of Commerce, which

the Commission designates by Order.

(t) Issuing carrier. A carrier subject to

the Act that publishes and files a tariff

or tariffs with the Commission.

(u) Line month. Line demand per

month multiplied by twelve.

(v) Local exchange carrier. Any

person that is engaged in the provision

of telephone exchange service or

exchange access as defined in section

3(26) of the Act.

(w) Mid-size company. All price cap

LECs other than the Regional Bell

Operating Companies and GTE.

(x) New service offering. A tariff filing

that provides for a class or sub-class of

service not previously offered by the

carrier involved and that enlarges the

range of service options available to

ratepayers.

(y) Non-dominant carrier. A carrier

not found to be dominant.

(z) Other participating carrier. A

carrier subject to the Act that publishes

a tariff containing rates and regulations

applicable to the portion or through

service it furnishes in conjunction with

another subject carrier.

(aa) Price cap LEC. See § 61.41(a) of

this section.

(bb) Local switching pooled Revenue.

For certain qualified companies as set

forth in § 61.48 (m), is the amount of

additional local switching reductions in

the July 2000 Annual filing allowed to

be moved and recovered in the common

line basket.

(cc) Price Cap CMT Revenue. The

maximum total revenue a filing entity

would be permitted to receive from End

User Common Line charges under

§ 69.152 of this chapter, Presubscribed

Interexchange Carrier charges (PICCs)

under § 69.153 of this chapter, Carrier

Common Line charges under § 69.154 of

this chapter, and Marketing under

§ 69.156 of this chapter, using Base

Period lines. Price Cap CMT Revenue

does not include the price cap LEC

universal service contributions as of

July 1, 2000. The Price Cap CMT

revenue does not include the pooled

local switching revenue outlined in

paragraph (bb) of this section.

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38695

(dd) Price Cap Index (PCI). An index

of prices applying to each basket of

services of each carrier subject to price

cap regulation, and calculated pursuant

to § 61.45.

(ee) Price cap regulation. A method of

regulation of dominant carriers

provided in §§ 61.41 through 61.49.

(ff) Price cap tariff filing. Any tariff

filing involving a service subject to price

cap regulation, or that requires

calculations pursuant to §§ 61.45, 61.46,

or 61.47.

(gg) [Reserved]

(hh) Rate. The tariffed price per unit

of service.

(ii) Rate increase. Any change in a

tariff which results in an increased rate

or charge to any of the filing carrier’s

customers.

(jj) Rate level change. A tariff change

that only affects the actual rate

associated with a rate element, and does

not affect any tariff regulations or any

other wording of tariff language.

(kk) Regulations. The body of carrier

prescribed rules in a tariff governing the

offering of service in that tariff,

including rules, practices,

classifications, and definitions.

(ll) Restructured service. An offering

which represents the modification of a

method of charging or provisioning a

service; or the introduction of a new

method of charging or provisioning that

does not result in a net increase in

options available to customers.

(mm) Rural Company. A company

that, as of December 31, 1999, was

certified to the Commission as a rural

telephone company.

(nn) Service Band Index (SBI). An

index of the level of aggregate rate

element rates in a service category,

which index is calculated pursuant to

§ 61.47.

(oo) Service category. Any group of

rate elements subject to price cap

regulation, which group is subject to a

band.

(pp) Supplement. A publication filed

as part of a tariff for the purpose of

suspending or canceling that tariff, or

tariff publication and numbered

independently from the tariff page

series.

(qq) Target Rate. The applicable

Target Rate shall be defined as follows:

(1) For regional Bell Operating

Companies and GTE, $0.0055 per ATS

minute of use;

(2) For a holding company with a

holding company average of less than 19

Switched Access End User Common

Line charge lines per square mile served

such company may elect to use a Target

Rate of $0.0095 with respect to all

exchanges owned by that holding

company on July 1, 2000, or which that

holding company is, as of April 1, 2000,

under a binding and executed contract

to purchase;

(3) For other price cap local exchange

carriers, $0.0065 per ATS minute of use.

(rr) Tariff. Schedules of rates and

regulations filed by common carriers.

(ss) Tariff publication, or publication.

A tariff, supplement, revised page,

additional page, concurrence, notice of

revocation, adoption notice, or any

other schedule of rates or regulations

filed by common carriers.

(tt) Tariff year. The period from the

day in a calendar year on which a

carrier’s annual access tariff filing is

scheduled to become effective through

the preceding day of the subsequent

calendar year.

(uu) Text change. A change in the text

of a tariff which does not result in a

change in any rate or regulation.

(vv) United States. The several States

and Territories, the District of Columbia,

and the possessions of the United

States.

(ww) Corridor service. ‘‘Corridor

service’’ refers to interLATA services

offered in the ‘‘limited corridors’’

established by the District Court in

United States v. Western Electric Co.,

Inc., 569 F. Supp. 1057, 1107 (D.D.C.

1983).

(xx) Toll dialing parity. ‘‘Toll dialing

parity’’ exists when there is dialing

parity, as defined in § 51.5 of this

chapter, for toll services.

(yy) Loop-based services. Loop-based

services are services that employ

Subcategory 1.3 facilities, as defined in

§ 36.154 of this chapter.

(zz) Zone Average Revenue per Line.

The Price Cap CMT Revenue per Line

allocated to a particular state-defined

zone used for deaveraging of UNE loop

prices. The Zone Average Revenue per

Line is computed according to the

following formula:

Zone Average Revenue Per Line = (25%

* (Loop + Port)) + U

Where:

Loop = the price for unbundled loops in

a UNE zone.

Port = price for switch ports in that UNE

zone.

U(Uniform revenue per line adjustment)

=

U = [(Price Cap CMT Revenue Per Line

Month in a study area * LEC Base

Period Lines)¥(25% * Σ (LEC Base

Period Lines in a UNE Zone ×

((Loop + Port ) for all zones)))] ÷

LEC Base Period Lines in a study

area.

10. Amend § 61.41 by revising

paragraphs (c) and (d) to read as follows:

§ 61.41 Price cap requirements generally.

* * * * *

(c) The following rules in this

paragraph (c) apply to telephone

companies subject to price cap

regulation, as that term is defined in

§ 61.3(ee), which are involved in

mergers, acquisitions, or similar

transactions.

(1) Any telephone company subject to

price cap regulation that is a party to a

merger, acquisition, or similar

transaction shall continue to be subject

to price cap regulation notwithstanding

such transaction.

(2) Where a telephone company

subject to price cap regulation acquires,

is acquired by, merges with, or

otherwise becomes affiliated with a

telephone company that is not subject to

price cap regulation, the latter telephone

company shall become subject to price

cap regulation no later than one year

following the effective date of such

merger, acquisition, or similar

transaction and shall accordingly file

price cap tariffs to be effective no later

than that date in accordance with the

applicable provisions of this part 61.

(3) Notwithstanding the provisions of

§ 61.41(c)(2), when a telephone

company subject to price cap regulation

acquires, is acquired by, merges with, or

otherwise becomes affiliated with a

telephone company that qualifies as an

‘average schedule’ company, the latter

company may retain its ‘average

schedule’ status or become subject to

price cap regulation in accordance with

§ 69.3(i)(3) of this chapter and the

requirements referenced in that section.

(d) Local exchange carriers that

become subject to price cap regulation

as that term is defined in § 61.3(ee) shall

not be eligible to withdraw from such

regulation.

11. Amend § 61.42 by removing

paragraphs (d)(6) and (e)(2)(v) through

(e)(2)(vii) and revising paragraphs (d)(1),

(d)(3), (d)(5), (e)(2)(i) through (e)(2)(iv),

and adding paragraph (e)(3), to read as

follows:

§ 61.42 Price cap baskets and service

categories.

* * * * *

(d) * * *

(1) A basket for the common line,

marketing, and certain residual

interconnection charge interstate access

elements as described in §§ 69.115,

69.152, 69.153, 69.154, 69.155, 69.156,

and 69.157 of this chapter. For purposes

of §§ 61.41 through 61.49, this basket

shall be referred to as the ‘‘CMT basket.’’

* * * * *

(3) A basket for trunking services as

described in §§ 69.110, 69.111, 69.112,

69.125(b), 69.129, and 69.155 of this

chapter. For purposes of §§ 61.41

38696 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

through 61.49, this basket shall be

referred to as the ‘‘trunking basket.’’

* * * * *

(5) A basket for special access services

as described in § 69.114 of this chapter.

* * * * *

(e) * * *

(2) The trunking basket shall contain

such switched transport as the

Commission shall permit or require,

including the following service

categories and subcategories:

(i) Voice grade entrance facilities,

voice grade direct-trunked transport,

voice grade dedicated signalling

transport,

(ii) High capacity flat-rated transport,

including the following service

subcategories:

(A) DS1 entrance facilities, DS1

direct-trunked transport, DS1 dedicated

signalling transport, and

(B) DS3 entrance facilities, DS3 directtrunked transport, DS3 dedicated

signalling transport.

(iii) Tandem-switched transport, as

described in § 69.111 of this chapter;

and

(iv) Signalling for tandem switching,

as described in § 69.129 of this chapter.

* * * * *

(3) The special access basket shall

contain special access services as the

Commission shall permit or require,

including the following service

categories and subcategories:

(i) Voice grade special access, WATS

special access, metallic special access,

and telegraph special access services;

(ii) Audio and video services;

(iii) High capacity special access, and

DDS services, including the following

service subcategories:

(A) DS1 special access services; and

(B) DS3 special access services;

(iv) Wideband data and wideband

analog services.

12. Revise § 61.45 to read as follows:

§ 61.45 Adjustments to the PCI for Local

Exchange Carriers.

(a) Local exchange carriers subject to

price cap regulation shall file

adjustments to the PCI for each basket

as part of the annual price cap tariff

filing, and shall maintain updated PCIs

to reflect the effect of mid-year

exogenous cost changes.

(b)(1)(i) Adjustments to local

exchange carrier PCIs, in those carriers’

annual access tariff filings, the traffic

sensitive basket described in

§ 61.42(d)(2), the trunking basket

described in § 61.42(d)(3), the special

access basket described in § 61.42(d)(5)

and the Interexchange Basket described

in § 61.42(d)(4)(i), shall be made

pursuant to the following formula:

PCIt¥1 = PCIt¥1[1+w[GDP¥PI¥X] + Z/

R]

Where the terms in the equation are

described:

GDP–PI = For annual filings only, the

percentage change in the GDP–PI

between the quarter ending six

months prior to the effective date of

the new annual tariff and the

corresponding quarter of the

previous year. For all other filings,

the value is zero.

X = For the CMT, traffic sensitive, and

trunking baskets, for annual filings

only, the factor is set at the level

prescribed in paragraphs (b)(1)(ii)

and (iii) of this section. For the

interexchange basket, for annual

filings only, the factor is set at the

level prescribed in paragraph

(b)(1)(v) of this section. For the

special access basket, for annual

filings only, the factor is set at the

level prescribed in paragraph

(b)(1)(iv) of this section. For all

other filings, the value is zero.

g = For annual filings for the CMT

basket only, the ratio of minutes of

use per access line during the base

period, to minutes of use per access

line during the previous base

period, all minus 1.

Z = The dollar effect of current

regulatory changes when compared

to the regulations in effect at the

time the PCI was updated to PCIt¥1,

measured at base period level of

operations.

Targeted Reduction = the actual

possible dollar value of the (GDP–

PI–X) reductions that will be

targeted to the ATS Charge

pursuant to § 61.45(i)(3). The

reductions calculated by applying

the (GDP–PI–X) portion of the

formula to the CCL element within

the CMT basket will contain the ‘‘g’’

component, as defined above.

R = Base period quantities for each rate

element ‘‘I’’, multiplied by the price

for each rate element ‘‘I’’ at the time

the PCI was updated to PCIt¥1.

w = R + Z, all divided by R (used for

the traffic sensitive, trunking, and

special access baskets).

wix = R—(access rate in effect at the time

the PCI was updated to PCIt¥1 x

base period demand) + Z, all

divided by R.

PCIt = The new PCI value.

PCIt¥1 = the immediately preceding PCI

value.

(b)(1)(ii) The X value applicable to the

baskets specified in §§ 61.42(d)(1),

(d)(2), and (d)(3), shall be 6.5%, to the

extent necessary to reduce a tariff

entity’s ATS charge to its Target Rate as

set forth in § 61.3(qq). Once an LEC

tariff entity’s ATS Charge is equal to the

Target Rate as set forth in § 61.3(qq) for

the first time (the former NYNEX

telephone companies may be treated as

a separate tariff entity), then, except as

provided in paragraph (b)(1)(iii) of this

section, X is equal to GDP–PI and no

further reductions will be mandated

(i.e., if applying the full X-factor

reduction for a given year would reduce

the ATS charge below the Target Rate as

set forth in § 61.3 (qq), the amount of Xfactor reduction applied that year will

be the amount necessary to reach the

Target Rate as set forth in § 61.3 (qq)).

A filing entity does not reach the Target

Rate as set forth in § 61.3(qq) in any year

in which it exercises an exogenous

adjustment pursuant to § 61.45(d)(vii).

For companies with separate tariff

entities under a single price cap, the

following rules shall apply:

(A) Targeting amounts as defined in

§ 61.45(i)(1)(i) shall be identified

separately, using the revenue for each of

the tariff entities under the cap.

(B) Each tariff entity shall only be

required to use the amount of targeting

necessary to get to the Target Rate as set

forth in § 61.3 (qq).

(b)(1)(iii)(A) Except as provided in

paragraph (b)(1)(iii)(B) of this section,

once the Tariff Entity’s Target Rate as

set forth in § 61.3 (qq) is achieved, the

X-factor for the CMT basket will equal

GDP–PI as long as GDP–PI is less than

or equal to 6.5% and greater than 0%.

If GDP–PI is greater than 6.5%, and an

entity has eliminated its CCL and multiline business PICs charges, the X-factor

for the CMT basket will equal 6.5%, and

all End User Common Line charges,

rates and nominal caps, will be

increased by the difference between

GDP–PI and the 6.5% X-factor. If GDP–

PI is less than 0, the X-factor for the

CMT basket will be 0.

(B) For tariff filing entities with a

Target Rate of $0.0095, or for the portion

of a filing entity consolidated pursuant

to § 61.48(o) that, prior to such

consolidation, had a Target Rate of

$0.0095, in which the ATS charge has

achieved the Target Rate but in which

the carrier common line (CCL) charge

has not been eliminated, the X-factor for

the CMT basket will be 6.5% until the

earlier of June 30, 2004, or until CCL

charges are eliminated pursuant to

paragraph (i)(4) of this section.

Thereafter, in any filing entity in which

a CCL charge remains after July 1, 2004,

the X-factor for the CMT basket will be

determined pursuant to paragraph

(b)(1)(iii)(A) of this section as if CCL

charges were eliminated.

(b)(1)(iv) For the special access basket

specified in § 61.42(d)(5), the value of X

shall be 3.0% for the 2000 annual filing.

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38697

The value of X shall be 6.5% for the

2001, 2002 and 2003 annual filings.

Starting in the 2004 annual filing, X

shall be equal to GDP–PI for the special

access basket.

(b)(1)(v) For the interexchange basket

specified in § 61.42(d)(4), the value of X

shall be 3.0% for all annual filings.

(b)(2) Adjustments to local exchange

carrier PCIs and average price cap CMT

revenue per line, in tariff filings other

than the annual access tariff filing, for

the CMT basket described in

§ 61.42(d)(1), the traffic sensitive basket

described in § 61.42(d)(2), the trunking

basket described in § 61.42(d)(3), the

interexchange basket described in

§ 61.42(d)(4), and the special access

basket described in § 61.42(d)(5), shall

be made pursuant to the formulas set

forth in paragraph (b)(1)(i) of this

section, except that the ‘‘w(GDP–PI–X)’’

component of those PCI formulas shall

not be employed.

(c) Effective July 1, 2000, the prices of

the CMT basket rate elements, excluding

special access surcharges under § 69.115

of this chapter and line ports in excess

of basic under § 69.157 of this chapter,

shall be set based upon Average Price

Cap CMT Revenue Per Line month.

(d) The exogenous cost changes

represented by the term ‘‘Z’’ in the

formula detailed in paragraphs (b)(1)(i)

of this section shall be limited to those

cost changes that the Commission shall

permit or require by rule, rule waiver,

or declaratory ruling.

(1) Subject to further order of the

Commission, those exogenous changes

shall include cost changes caused by:

(i) The completion of the amortization

of depreciation reserve deficiencies;

(ii) Such changes in the Uniform

System of Accounts, including changes

in the Uniform System of Accounts

requirements made pursuant to § 32.16

of this chapter, as the Commission shall

permit or require be treated as

exogenous by rule, rule waiver, or

declaratory ruling;

(iii) Changes in the Separations

Manual;

(iv) [Reserved]

(v) The reallocation of investment

from regulated to nonregulated activities

pursuant to § 64.901 of this chapter;

(vi) Such tax law changes and other

extraordinary cost changes as the

Commission shall permit or require be

treated as exogenous by rule, rule

waiver, or declaratory ruling;

(vii) Retargeting the PCI to the level

specified by the Commission for carriers

whose base year earnings are below the

level of the lower adjustment mark,

subject to the limitation in § 69.731 of

this chapter. The allocation of LFAM

amounts will be allocated pursuant to

§ 61.45(d)(3). This section shall not be

applicable to tariff filings during the

tariff year beginning July 1, 2000, but is

applicable in subsequent years;

(viii) Inside wire amortizations;

(ix) The completion of amortization of

equal access expenses.

(2) Local exchange carrier specified in

§§ 61.41(a)(2) or (a)(3) shall, in their

annual access tariff filing, recognize all

exogenous cost changes attributable to

modifications during the coming tariff

year in their Subscriber Plant Factor and

the Dial Equipment Minutes factor, and

completions of inside wire

amortizations and reserve deficiency

amortizations.

(3) Exogenous cost changes shall be

apportioned on a cost-causative basis

between price cap services as a group,

and excluded services as a group. Total

exogenous cost changes thus attributed

to price cap services shall be recovered

from services other than those used to

calculate the ATS charge.

(e) [Reserved]

(f) The exogenous costs caused by

new services subject to price cap

regulation must be included in the

appropriate PCI calculations under

paragraphs (b) and (c) of this section

beginning at the first annual price cap

tariff filing following completion of the

base period in which such services are

introduced.

(g) In the event that a price cap tariff

becomes effective, which tariff results in

an API value (calculated pursuant to

§ 61.46) that exceeds the currently

applicable PCI value, the PCI value shall

be adjusted upward to equal the API

value.

(h) [Reserved]

(i)(1)(i) Price cap local exchange

carriers that are recovering revenues

through rates pursuant to §§ 69.106,

69.108, 69.109, 69.110, 69.111, 69.112,

69.113, 69.118, 69.123, 69.124, 69.125,

69.129, or § 69.155 of this chapter shall

target, to the extent necessary to reduce

the ATS Charge to the Target Rate as set

forth in § 61.3 (qq) for the first time, any

PCI reductions associated with the

dollar impact of application of the

(GDPPI–X) portion of the formula in

§ 61.45(b)(1)(i) to the traffic sensitive

and trunking baskets. In order to

calculate the actual dollars to transfer to

the trunking and traffic sensitive

baskets, carriers will first determine the

‘‘Targeted Revenue Differential’’ that

will be transferred to the trunking and

traffic sensitive baskets to reduce the

ATS Charge to the Target Rate as set

forth in § 61.3(qq). The Targeted

Revenue Differential shall be applied

only to the trunking and traffic sensitive

baskets to the extent necessary to reduce

the ATS charge to the Target Rate as set

forth in § 61.3 (qq), and shall not be

applied to reduce the PCIs in any other

basket or to reduced average price cap

CMT Revenue per line, except as

provided in § 61.45(i)(4).

(ii) For the purposes of § 61.45(i)(1)(i),

Targeted Revenue Differential will be

determined by adding together the

following amounts:

(A) R * (GDP–PI¥X) for the traffic

sensitive basket, trunking basket, and

the CMT basket excluding CCL

revenues; and

(B) CCL Revenues * [(GDP–PI–X¥(g/

2)]/[1 + (g/2)]

Where ‘‘g’’ is defined in

§ 61.45(b)(1)(i).

(2) Until a tariff entity’s ATS Charge

equals the Target Rate as set forth in

§ 61.3 (qq) for the first time, the

Targeted Revenue Differential will be

targeted to reduce the following rates for

that tariff filing entity, in order of

priority:

(i) To the residual per minute

Transport Interconnection Charge, until

that rate is $0.00; then

(ii) To the Information Surcharge,

until that rate is $0.00; then

(iii) To the other Local Switching

charges and Switched Transport charges

until the tariff entity’s ATS Rate equals

the Target Rate as set forth in § 61.3(qq)

for the first time. In making these

reductions, the reductions to Local

Switching rates as a percentage of total

X-factor reductions must be greater than

or equal to the percentage proportion of

Local Switching revenues to the total

sum of revenues for Local Switching,

Local Switching Trunk Ports, Signalling

Transfer Point Port Termination,

Switched Direct Trunked Transport,

Signalling for Switched Direct Trunked

Transport, Entrance Facilities for

switched access traffic, Tandem

Switched Transport, and Signalling for

Tandem Switching (i.e., Local

Switching gets at least its proportionate

share of reductions).

(3) After a price cap LEC reaches the

Target Rate as set forth in § 61.3(qq)

level, the ATS Rate will be recalculated

each subsequent Annual Filing. This

process will identify the new ATS

Charge for the new base period level.

Due to change in base period demand

and inclusion of new services for that

annual filing, the absolute level of a

tariff entity’s ATS Charge may change.

The resulting new ATS Charge level

will be what that tariff entity will be

measured against during that base

period. For example, if a company

whose target is $0.0055 reached the

Target Rate during the 2000 annual

filing, that level may change to $0.0058

in the 2001 annual filing due to change

in demand and inclusion of new

38698 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

services. Therefore, it will be the

$0.0058 average rate that the tariff entity

will be measured against for all nonannual filings. Likewise, if that same

company was at the Target Rate during

the 2000 filing, that level may change to

$0.0053 average rate in the 2001 annual

filing due to change in demand and

inclusion of new services. In that case,

it will be at the $0.0053 average rate that

the tariff entity will be measured.

(4) A company electing a $0.0095

Target Rate will, in the tariff year it

reaches the Target Rate, apply any

Targeted Revenue Differential remaining

after reaching the Target Rate to reduce

Average Price Cap CMT Revenue per

Line month until the CCL charge is

eliminated. In subsequent years, until

the earlier of June 30, 2004 or when the

CCL charge is eliminated, tariff filing

entities with a Target Rate of $0.0095, or

the portion of a filing entity

consolidated pursuant to § 61.48(o) that,

prior to such consolidation, had a Target

Rate of $0.0095, will reduce Average

Price Cap CMT Revenue per Line month

according to the following method:

(i) Filing entity calculates the

maximum allowable carrier common

line revenue, as defined in § 61.46(d)(1),

that would be permitted in the absence

of further adjustment pursuant to this

paragraph;

(ii) Filing entity identifies maximum

amount of dollars available to reduce

Average Price Cap CMT Revenue per

Line month by the following:

(CMT revenue in a $0.0095 Area less

CCL revenue in a $0.0095 Area) *

(GDPPI–X) + (CCL Revenue in a $0.0095

Area) * [GDPPI–X¥(g/2)]/[1+(g/2)]

(iii) The Average Price Cap CMT

Revenue per Line month shall then be

reduced by the lesser of the amount

described in paragraph (i)(4)(i) of this

section and the amount described in

paragraph (i)(4)(ii) of this section,

divided by base period Switched Access

End User Common Line Charge lines.

* * * * *

13. Revise § 61.46 to read as follows:

§ 61.46 Adjustments to the API.

(a) Except as provided in paragraphs

(d) and (e) of this section, in connection

with any price cap tariff filing proposing

rate changes, the carrier must calculate

an API for each affected basket pursuant

to the following methodology:

APIt = APIt–1[S1vi,(pt/pt–1)i]

Where:

API[t] = the proposed API value,

API[t¥1] = the existing API value,

P[t] = the proposed price for rate

element ‘‘i,’’

P[t¥1] = the existing price for rate

element ‘‘i,’’ and

v[i] = the current estimated revenue

weight for rate element ‘‘i,’’

calculated as the ratio of the base

period demand for the rate element

‘‘i’’ priced at the existing rate, to the

base period demand for the entire

basket of services priced at existing

rates.

(b) New services subject to price cap

regulation must be included in the

appropriate API calculations under

paragraph (a) of this section beginning

at the first annual price cap tariff filing

following completion of the base period

in which they are introduced. This

index adjustment requires that the

demand for the new service during the

base period must be included in

determining the weights used in

calculating the API.

(c) Any price cap tariff filing

proposing rate restructuring shall

require an adjustment to the API

pursuant to the general methodology

described in paragraph (a) of this

section. This adjustment requires the

conversion of existing rates into rates of

equivalent value under the proposed

structure, and then the comparison of

the existing rates that have been

converted to reflect restructuring to the

proposed restructured rates. This

calculation may require use of carrier

data and estimation techniques to assign

customers of the preexisting service to

those services (including the new

restructured service) that will remain or

become available after restructuring.

(d) The maximum allowable carrier

common line (CCL) revenue shall be

computed pursuant to the following

methodology:

CCL = CMT¥EUCL¥Interstate Access

Universal Service Support

Mechanism Per Line¥PICC

Where:

CMT = Price Cap CMT Revenue as

defined in § 61.3(cc).

EUCL = Maximum allowable EUCL rates

established pursuant to § 69.152 of

this chapter multiplied by base

period lines.

Interstate Access Universal Service

Support Per Line = the amount as

determined by the Administrator

pursuant to § 54.807 of this chapter

times the number of base period

lines for each customer class and

zone receiving Interstate Access

USF support pursuant to part 54,

subpart J.

PICC = Maximum allowable PICC rates

established pursuant to § 69.153 of

this chapter multiplied by base

period lines.

(e) In no case shall a price cap local

exchange carrier include data associated

with services offered pursuant to

contract tariff in the calculations

required by this section.

14. Amend § 61.47 by revising

paragraphs (e) through (k) to read as

follows:

§ 61.47 Adjustments to the SBI; pricing

bands.

* * * * *

(e) Pricing bands shall be established

each tariff year for each service category

and subcategory within a basket. Each

band shall limit the pricing flexibility of

the service category, subcategory, as

reflected in the SBI, to an annual

increase of a specified percent listed in

this paragraph, relative to the

percentage change in the PCI for that

basket, measured from the levels in

effect on the last day of the preceding

tariff year. For local exchanage carriers

subject to price cap regulation as that

term is defined in § 61.3(ee), there shall

be no lower pricing band for any service

category or subcategory.

(1) Five percent:

(i) Local Switching (traffic sensitive

basket)

(ii) Information (traffic sensitive

basket)

(iii) Database Access Services (traffic

sensitive basket)

(iv) 800 Database Vertical Services

subservice (traffic sensitive basket)

(v) Billing Name and Address (traffic

sensitive basket)

(vi) Local Switching Trunk Ports

(traffic sensitive basket)

(vii) Signalling Transfer Point Port

Termination (traffic sensitive basket)

(viii) Voice Grade (trunking and special

access baskets)

(ix) Audio/Video (special access

basket)

(x) Total High Capacity (trunking and

special access baskets)

(xi) DS1 Subservice (trunking and

special access baskets)

(xii) DS3 Subservice (trunking and

special access baskets)

(xiii) Wideband (special access

basket)

(2) Two percent:

(i) Tandem-Switched Transport

(trunking basket)

(ii) Signalling for Tandem Switching

(trunking basket)

(f) A local exchange carrier subject to

price cap regulation may establish

density zones pursuant to the

requirements set forth in § 69.123 of this

chapter, for any service in the trunking

and special access baskets, other than

the interconnection charge set forth in

§ 69.124 of this chapter. The pricing

flexibility of each zone shall be limited

to an annual increase of 15 percent,

relative to the percentage change in the

PCI for that basket, measured from the

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38699

levels in effect on the last day of the

preceding tariff year. There shall be no

lower pricing band for any density zone.

(g) [Reserved]

(h) [Reserved]

(i)(l) [Reserved]

(2) Effective January 1, 1998,

notwithstanding the requirements of

paragraph (a) of this section, if a local

exchange carrier is recovering

interconnection charge revenues

through per-minute rates pursuant to

§ 69.155 of this chapter, any reductions

to the PCI for the basket designated in

§ 61.42(d)(3) resulting from the

application of the provisions of

§ 61.45(b)(1)(i) and from the application

of the provisions of §§ 61.45(i)(1) and

61.45(i)(2) shall be directed to the SBI

of the service category designated in

§ 61.42(d)(i).

(3) [Reserved]

(4) Effective January 1, 1998, the SBI

reduction required by paragraph (i)(2) of

this section shall be determined by

dividing the sum of the dollar amount

of any PCI reduction required by

§§ 61.45(i)(1) and 61.45(i)(2), by the

dollar amount associated with the SBI

for the service category designated in

§ 61.42(e)(2)(vi), and multiplying the

SBI for the service category designated

in § 61.42(e)(2)(vi) by one minus the

resulting ratio.

(5) Effective July 1, 2000,

notwithstanding the requirements of

paragraph (a) of this section and subject

to the limitations of § 61.45(i), if a local

exchange carrier is recovering an ATS

charge greater than its Target Rate as set

forth in 61.3(qq), any reductions to the

PCI for the Traffic Sensitive or Trunking

baskets designated in §§ 61.42(d)(2) and

61.42(d)(3) resulting from the

application of the provisions of

§ 61.45(b), and the formula in § 61.45(b)

and from the application of the

provisions of §§ 61.45(i)(1), and

61.45(i)(2) shall be directed to the SBIs

of the service categories designated in

§§ 61.42(e)(1) and 61.42(e)(2).

(j) [Reserved]

(k) In no case shall a price cap local

exchange carrier include data associated

with services offered pursuant to

contract tariff in the calculations

required by this section.

15. Amend § 61.48 by removing and

reserving paragraphs (j) and (k), revising

paragraphs (i)(2), (i)(3), (i)(4)

introductory text and (i)(4)(iii), and by

adding paragraphs (l) through (o), to

read as follows:

§ 61.48 Transition rules for price cap

formula calculations.

* * * * *

(i)* * *

(2) Simultaneous Introduction of

Special Access and Transport Zones.

local exchange carrier subject to price

cap regulation that have established

density pricing zones pursuant to

§ 69.123 of this chapter, and whose

special access zone date and transport

zone date occur on the same date, shall

initially establish density pricing zone

SBIs and bands pursuant to the

methodology in §§ 61.47(e) through (f).

(3) Sequential Introduction of Zones

in the Same Tariff Year.

Notwithstanding §§ 61.47(e) through (f),

local exchange carriers subject to price

cap regulation that have established

density pricing zones pursuant to

§ 69.123 of this chapter, and whose

special access zone date and transport

zone date occur on different dates

during the same tariff year, shall, on the

earlier date, establish density pricing

zone SBIs and pricing bands using the

methodology described in §§ 61.47(e)

through (f), but applicable to the earlier

service only. On the later date, such

carriers shall recalculate the SBIs and

pricing bands to limit the pricing

flexibility of the services included in

each density pricing zone category, as

reflected in its SBI, as follows:

* * * * *

(4) Introduction of Zones in Different

Tariff Years. Notwithstanding

§§ 61.47(e) through (f), those local

exchange carriers subject to price cap

regulation that have established density

pricing zones pursuant to § 69.123 of

this chapter, and whose special access

zone date and transport zone date do

not occur within the same tariff year,

shall, on the earlier date, establish

density pricing zone SBIs and pricing

bands using the methodology described

in §§ 61.47(e) through (f), but applicable

to the earlier service only.

* * * * *

(iii) On the first day of the second

tariff year following the tariff year

during which the later date occurs, the

local exchange carriers to which this

paragraph applies shall establish the

separate subindexes provided in

§ 61.47(e), and shall set the initial SBIs

for those density pricing zone categories

that are combined (specified in

paragraphs (i)(4)(i)(A), (i)(4)(i)(B),

(i)(4)(i)(C), (i)(4)(i)(D), (i)(4)(i)(E), and

(i)(4)(i)(G) of this section) by computing

the weighted averages of the SBIs that

applied to the formerly separate zone

categories, weighted by the revenue

weights of the respective services

included in the zone categories.

* * * * *

(l) Average Traffic Sensitive

Revenues. (1) In the July 1, 2000 annual

filing, price cap LECs will make an

additional reduction to rates comprising

ATS charge, and to associated SBI upper

limits and PCIs. This reduction will be

calculated to be the amount that would

be necessary, when calculated as if all

price cap LECs elect to be price cap

LECs, to achieve a total $2.1 billion

reduction in carrier common line and

ATS rates by all price cap LECs,

compared with those rates as they

existed on June 30, 2000 using 2000

annual filing base period demand.

(i) The net change in revenue

associated with Carrier Common Line

Rate elements resulting from:

(A) The removal from access of LEC

contributions to the Federal universal

service mechanisms;

(B) LEC receipts of Interstate Access

USF pursuant to subpart J of part 54;

(C) Changes in End User Common

Line Charges and PICC rates;

(D) Changes in Carrier Common Line

charges due to GDP–PI–X targeting for

$0.0095 filing entities.

(ii) Reductions in Average Traffic

Sensitive charges resulting from:

(A) Targeting of the application of the

(GDPPI–X) portion of the formula in

§ 61.45(b), and any applicable ‘‘g’’

adjustments;

(B) The removal from access of LEC

contributions to the Federal universal

service mechanisms;

(C) Additional ATS charge reductions

defined in paragraph (2) of this section.

(2) Once the reductions in paragraph

(l)(1)(i) and paragraphs (l)(1)(ii)(A) and

(l)(1)(ii)(B) of this section are identified,

the difference between those reductions

and $2.1 billion is the total amount of

additional reductions that would be

made to ATS rates of price cap LECs.

This amount will then be restated as the

percentage of total price cap LEC Local

Switching revenues as of June 30, 2000

using 2000 annual filing base period

demand (‘‘June 30 Local Switching

revenues’’) necessary to yield the total

amount of additional reductions and

taking into account the fact that, if

participating, a price cap LEC would not

reduce ATS rates below its Target Rate

as set forth in § 61.3(qq). Each price cap

LEC then reduces ATS rate elements,

and associated SBI upper limits and

PCIs, by a dollar amount equivalent to

the percentage times the June 30 Local

Switching revenues for that filing entity,

provided that no price cap LEC shall be

required to reduce its ATS rates below

its Target Rate as set forth in § 61.3(qq).

Each carrier can take its additional

reductions against any of the ATS rate

elements, provided that at least a

proportional share must be taken against

Local Switching rates.

(m) Local Switching Revenues. (1)

Price cap local exchange carriers are

38700 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

permitted to pool local switching

revenues in their common line basket

under one of the following conditions.

(i) Any price cap local exchange

carriers that would otherwise have July

1, 2000 price cap reductions as a

percentage of Base Period Price Cap

Revenues at the holding company level

greater than the industry wide total July

1, 2000 price cap revenue reduction as

a percentage of Base Period Price Cap

Revenues may elect temporarily to pool

the amount of the additional reductions

above 25% of the Local Switching

element revenues necessary to yield that

carrier’s proportionate share of a total

$2.1 billion reduction in switched

access usage rates on July 1, 2000. The

basis of the reduction calculation will

be R at PCI (t¥1) for the upcoming tariff

year. The percentage reductions per line

amounts will be calculated as follows:

(Total Price Cap Revenue Reduction/

Base Period Price Cap Revenues) Pooled

local switching revenue for each filing

entity within a holding company that

qualifies under this paragraph (i) will

continue until such pooled revenues are

eliminated under this paragraph.

Notwithstanding the provisions of

§ 61.45(b)(1), once the Average Traffic

Sensitive (ATS) rate reaches the

applicable Target Rate as set forth in

§ 61.3(qq), the Targeted Revenue

Differential as defined in § 61.45(i) shall

be targeted to reducing pooled local

switching revenue until the pooled local

switching revenue is eliminated.

Thereafter, the X-factor for these baskets

will be determined in accordance with

§ 61.45(b)(1).

(ii) Price cap local exchange carriers

other than the Bell companies and GTE

with at least 20% of total holding

company lines operated by companies

that as of December 31, 1999 were

certified to the Commission as rural

carriers, may elect to pool up to the

following amounts:

(A) For a price cap holding company’s

predominantly non-rural filing entities

(i.e., filing entities within which more

than 50% of all lines are operated by

telephone companies other than those

that as of December 31, 1999 were

certified to the Commission as rural

telephone companies), the amount of

the additional reductions to Average

Traffic Sensitive Charge rates as defined

in paragraph (l)(2) of this section, to the

extent such reductions exceed 25% of

the Local Switching element revenues

(measured in terms of June 30, 2000

rates times 1999 base period demand);

(B) For a price cap holding company’s

predominantly rural filing entities (i.e.,

filing entities with greater than 50% of

lines operated by telephone companies

that as of December 31, 1999 were

certified to the Commission as rural

telephone companies), the amount of

the additional reductions to Average

Traffic Sensitive Charge rates as defined

in paragraph (l)(2) of this section.

(2) Allocation of Pooled Local

Switching Revenue to Certain Common

Line Elements.

(i) The pooled local switching

revenue for each filing entity is shifted

to the common line basket within price

caps. Pooled local switching revenue

will not be included in calculations to

determine the eligibility for interstate

access universal service funding.

(ii) Pooled local switching revenue

will be capped on a revenue per line

basis.

(iii) Pooled local switching revenue is

included in the total revenue for the

common line basket in calculating the

X-factor reduction targeted to the traffic

sensitive rate elements, and for

companies qualified under paragraph

(m)(1)(i) of this section, to pooled

elements after the Average Traffic

Sensitive Charge reaches the target

level. For the purpose of targeting Xfactor reductions, companies that

allocate pooled local switching revenue

to other filing entities pursuant to

paragraph (m)(2)(vii) of this section

shall include pooled local switching

revenue in the total revenue of the

common line basket of the filing entity

from which the pooled local switching

revenue originated.

(iv) Pooled local switching revenue

shall be kept separate from CMT

revenue in the CMT basket. CMT rate

elements for each filing entity shall first

be set based on CMT revenue per line

without regard to the presence of pooled

local switching revenue for each filing

entity.

(v) If the rates generated without

regard to the presence of pooled local

switching revenue for multi-line

business (MLB) PICC and/or MLB SLC

are below the nominal caps of $4.31 and

$9.20, respectively, pooled amounts can

be added to these rate elements to the

extent permitted by the nominal caps.

(vi) Notwithstanding the provisions of

§ 69.152(k) of this chapter, pooled local

switching revenue is first added to the

MLB SLC until the rate equals the

nominal cap ($9.20) or the pooled local

switching revenue is fully allocated. If

pooled local switching revenue remains

after applying amounts to the MLB SLC,

notwithstanding the provisions of

§ 69.153 of this chapter, the remaining

pooled local switching revenue may be

added to the MLB PICC until the rate

equals the nominal cap ($4.31) or the

pooled local switching revenue is fully

allocated. Unallocated pooled local

switching revenue may still remain. For

companies pooling pursuant to

paragraph (m)(1)(i) of this section, these

unallocated amounts may not be

recovered from the CCL charge, the

primary residential and single-line

business SLC, a non-primary residential

SLC, or from CMT elements in any other

filing entity.

(vii) For companies pooling pursuant

to paragraph (m)(1)(ii) of this section,

pooled local switching revenue that can

not be allocated to the MLB PICC and

MLB SLC rates within an individual

filing entity may not be recovered from

the CCL charge, primary residential and

single-line business SLC or residential/

single-line business SLC charges, but

may be allocated to other filing entities

within the holding company, and

collected by adding these amounts to

the MLB PICC and MLB SLC rates. The

allocation of pooled local switching

revenue among filing entities will be recalculated at each annual filing. In

subsequent annual filings, pooled local

switching revenue that was allocated to

another filing entity will be reallocated

to the filing entity from where it

originated, to the full extent permitted

by the nominal caps of $9.20 and $4.31.

(viii) Notwithstanding the provisions

of § 69.152(k) of this chapter, these

unallocated local switching revenues

that cannot be recovered fully pursuant

to paragraph (m)(2)(vii) of this section

are first added to the MLB SLC of other

filing entities until the resulting rate

equals the nominal cap ($9.20) or the

pooled local switching revenue for the

holding company is fully allocated. If

the pooled local switching revenue can

be fully allocated to the MLB SLC, the

amount is distributed to each filing

entity with a rate below the nominal cap

($9.20) based on its below-cap MLB SLC

revenue as a percentage of the total

holding company’s below-cap MLB SLC

revenue.

(ix) If pooled local switching revenue

remains after applying amounts to the

MLB SLC of all filing entities in the

holding company, pooled local

switching revenue may be added to the

MLB PICC of other filing entities.

Notwithstanding the provisions of

§ 69.153 of this chapter, the remaining

pooled local switching revenue is

distributed to each filing entity with a

rate below the nominal cap ($4.31)

based on its below-cap MLB PICC

revenue as a percentage of the total

holding company’s below-cap MLB

PICC revenue.

(x) If pooled local switching revenue

is added to the MLB SLC but not to the

MLB PICC for a filing entity that

qualified to de-average SLCs without

regard to pooled local switching, the

resulting SLC rates can still be deVerDate 11<MAY>2000 18:04 Jun 20, 2000 Jkt 190000 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\21JNR2.SGM pfrm08 PsN: 21JNR2
Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38701

averaged. Total pooled local switching

is added to the de-averaged zone 1 MLB

SLC rate until the per line rate in zone

1 equals the rate in zone 2 or until the

pooled local switching is fully allocated

to the de-averaged MLB SLC rate for

zone 1. If pooled local switching

revenue remains after the rate in zone 1

equals zone 2, the de-averaged rates of

zone 1 and zone 2 are increased until

the pooled local switching is fully

allocated to the de-averaged MLB SLC

rates of zone 1 and 2 or until those rates

reaches zone 3 MLB SLC rate level. This

process continues until pooled local

switching revenue is fully allocated to

the zone de-averaged rates.

(n) Establishment of the special access

basket, effective July 1, 2000.

(1) On the effective date, the PCI value

for the special access basket, as defined

in § 61.42(d)(5) shall be equal to the PCI

for the trunking basket on the day

preceding the establishment of the

special access basket.

(2) On the effective date, the API

value for the special access basket, as

defined in § 61.42(d)(5) shall be equal to

the API for the trunking basket on the

day preceding the establishment of the

special access basket.

(3) Service Category, Subcategory, and

Density Zone SBIs and Upper Limits.

(i) Interconnection, Tandem Switched

Transport, and Signalling Interconnection will retain the SBIs and upper

limits and remain in the trunking

basket.

(ii) Audio/Video and Wideband will

retain the SBIs and upper limits and be

moved into the special access basket.

(iii) For Voice Grade, the SBIs and

upper limits in both baskets will be

equal to the SBIs and upper limits in the

existing trunking basket on the day

preceding the establishment of the

special access basket. Voice Grade

density zones in the trunking basket

will retain their indices and upper

limits. Voice Grade density zones will

be initialized in the special access

basket when services are first offered in

them.

(iv) For High Cap/DDS, DS1, and DS3

category and subcategories, the SBIs and

upper limits in both baskets will be

equal to the SBIs and upper limits in the

existing trunking basket on the day

preceding the establishment of the

special access basket. SBIs and upper

limits for services that are in both

combined density zones and either

DTT/EF or special access density zones

will be calculated by using weighted

averages of the indices in the affected

zones.

(v) For each DTT/EF-related zone

remaining in the trunking basket, the

values will be calculated by taking the

sum of the products of the DTT/EF

revenues times the DTT/EF index (or

upper limit) and the DTT/EF-related

revenues in the combined zone times

the combined index (or upper limit),

and dividing by the total DTT/EFrelated revenues for that zone.

(vi) For each special access-related

zone in the special access basket, the

values will be calculated by taking the

sum of the products of the special

access revenues times the special access

index (or upper limit) and the special

access-related revenues in the combined

zone times the combined index (or

upper limit), and dividing by the total

special access-related revenues for that

zone.

(o) Treatment of acquisitions of

exchanges with different ATS Target

Rates as set forth in § 61.3(qq):

(1) In the event of that a price cap LEC

acquires a filing entity or portion thereof

from a price cap LEC after July 1, 2000,

and the price cap LEC did not have a

binding and executed contract to

purchase that filing entity or portion

thereof as of April 1, 2000, those

properties retain their pre-existing

Target Rates as set forth in § 61.3(qq). If

those properties are merged into a filing

entity with a different Target Rate as set

forth in § 61.3(qq), the Target Rate as set

forth in § 61.3(qq) for the merged filing

entity will be the weighted average of

the Target Rates as set forth in § 61.3(qq)

for the properties being combined into

a single filing entity, with the average

weighted by local switching minutes.

When a property acquired as a result of

a contract for purchase executed after

April 1, 2000 is merged with $0.0095

Target Rate properties, the obligation to

apply price-cap reductions to reduce

CCL, pursuant to § 61.45(b)(iii) does not

apply to the properties purchased under

contracts executed after April 1, 2000,

but continues to apply to the other

properties.

(2) For sale of properties for which a

holding company was, as of April 1,

2000, under a binding and executed

contract to purchase but which close

after June 30, 2000, but during tariff year

2000, and that are subject to the $0.0095

Target Rate as set forth in § 61.3(qq), the

Average Traffic Sensitive Rate charged

by the purchaser for that property will

be the greater of $0.0095 or the Average

Traffic Sensitive Rate for that property.

PART 69—ACCESS CHARGES

17. The authority citation for part 69

continues to read as follows:

Authority: 47 U.S.C. 154, 201, 202, 203,

205, 218, 220, 254, 403.

18. Revise § 69.4(d) to read as follows:

§ 69.4 Charges to be filed.

* * * * *

(d) Recovery of Contributions to the

Universal Service Support Mechanisms

by Incumbent Local Exchange Carriers.

(1) Incumbent local exchange carriers

other than price cap LECs may recover

their contributions to the universal

service support mechanisms through

carriers’ carrier charges.

(i) [Reserved]

(ii) Non-price cap local exchange

carriers may recover their contributions

to the universal service mechanism by

applying a factor to their carrier

common line charge revenue

requirements.

(2)(i) In lieu of the carriers’ carrier

charges described in paragraph (d)(1) of

this section, price cap local exchange

carriers may recover their contributions

to the universal service support

mechanisms through explicit, interstate,

end-user charges that are equitable and

nondiscriminatory.

(ii) To the extent that price cap local

exchange carriers implement explicit,

interstate, end-user charges to recover

their contributions to the universal

service support mechanisms, they must

make corresponding reductions in their

access charges to avoid any double

recovery.

* * * * *

19. Amend § 69.115 by revising

paragraph (c) to read as follows:

§ 69.115 Special access surcharges.

* * * * *

(c) If the association, carrier or

carriers that file the tariff are unable to

estimate such average usage for a period

ending May 31, 1985, the surcharge for

such period shall be twenty-five dollars

($25) per line termination per month. As

of June 30, 2000, these rates will remain

and be capped at the current levels until

June 30, 2005.

* * * * *

20. Revise § 69.152 to read as follows:

§ 69.152 End user common line for price

cap local exchange carriers.

(a) A charge that is expressed in

dollars and cents per line per month

shall be assessed upon end users that

subscribe to local exchange telephone

service or Centrex service to the extent

they do not pay carrier common line

charges. A charge that is expressed in

dollars and cents per line per month

shall be assessed upon providers of

public telephones. Such charge shall be

assessed for each line between the

premises of an end user, or public

telephone location, and a Class 5 office

that is or may be used for local exchange

service transmissions.

38702 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

(b) [Reserved]

(c) The charge for each subscriber line

associated with a public telephone shall

be equal to the monthly charge

computed in accordance with paragraph

(k) of this section.

(d)(1) Beginning July 1, 2000, in a

study area that does not have

deaveraged End User Common Line

Charges, the maximum monthly charge

for each primary residential or singleline business local exchange service

subscriber line shall be the lesser of:

(i) The Average Price Cap CMT

Revenue Per Line as defined in

§§ 61.3(d) of this chapter or

(ii) The following:

(A) On July 1, 2000, $4.35.

(B) On July 1, 2001, $5.00.

(C) On July 1, 2002, $6.00.

(D) On July 1, 2003, $6.50.

(2) In the event that GDP-PI exceeds

6.5% or is less than 0%, the maximum

monthly charge in paragraph (d)(1)(ii) of

this section and the cap will be adjusted

pursuant to § 61.45(b)(1)(iii) of this

chapter.

(e)(1) Beginning July 1, 2000, in a

study area that does not have

deaveraged End User Common Line

Charges, the monthly charge for each

non-primary residential local exchange

service subscriber line shall be the

lesser of:

(i) $7.00; or

(ii) The greater of:

(A) The rate as of June 30, 2000 less

reductions needed to ensure over

recovery of CMT Revenues does not

occur; or

(B) Average Price Cap CMT Revenue

Per Line.

(2) In the event that GDP-PI is greater

than 6.5% or is less than 0%, the

maximum monthly charge in paragraph

(e)(1)(i) of this section and the cap will

be adjusted pursuant to § 61.45(b)(1)(iii)

of this chapter.

(3) Where the local exchange carrier

provides a residential line to another

carrier so that the other carrier may

resell that residential line to a residence

that already receives a primary

residential line, the local exchange

carrier may collect the non-primary

residential charge described in

paragraph (e) of this section from the

other carrier.

(f) The charge for each primary

residential local exchange service

subscriber line shall be the same as the

charge for each single-line business

local exchange service subscriber line.

(g) A line shall be deemed to be a

residential subscriber line if the

subscriber pays a rate for such line that

is described as a residential rate in the

local exchange service tariff.

(h) Effective July 1, 1999, only one of

the residential subscriber lines a price

cap LEC provides to a location shall be

deemed to be a primary residential line.

(1) Effective July 1, 1999, for purposes

of § 69.152(h) of this chapter,

‘‘residential subscriber line’’ includes

residential lines that a price cap LEC

provides to a competitive LEC that

resells the line and on which the price

cap LEC may assess access charges.

(2) Effective July 1, 1999, if a

customer subscribes to residential lines

from a price cap LEC and at least one

reseller of the price cap LEC’s lines, the

line sold by the price cap LEC shall be

the primary line, except that if a resold

price cap LEC line is already the

primary line, the resold line will remain

the primary line should a price cap LEC

subsequently sell an additional line to

that residence.

(i) A line shall be deemed to be a

single-line business subscriber line if

the subscriber pays a rate that is not

described as a residential rate in the

local exchange service tariff and does

not obtain more than one such line from

a particular telephone company.

(j) No charge shall be assessed for any

WATS access line.

(k)(1) Beginning on July 1, 2000, for

any study area that does not have

deaveraged End User Common Line

charges and in the absence of voluntary

reductions, the maximum monthly End

User Common Line Charge for multiline business lines will be the lesser of:

(i) $9.20, or

(ii) The greater of:

(A) The rate as of June 30, 2000, less

reductions needed to ensure over

recovery of CMT Revenues does not

occur, or

(B) Average Price Cap CMT Per Line

as defined in § 61.3(d) of this chapter.

Note to paragraph (k)(1): Except when the

LEC reduces the rate through voluntary

reductions, the multi-line business End User

Common Line charge will be frozen until the

study area’s multi-line business PICC and

CCL charge are eliminated.

(2) In the event that GDP–PI is greater

than 6.5% or is less than 0%, the

maximum monthly charge in paragraph

(k)(1)(i) of this section and the cap will

be adjusted pursuant to § 61.45(b)(1)(iii)

of this chapter.

(l)(1) Beginning January 1, 1998, LEC

shall assess no more than one End User

Common Line charge as calculated

under the applicable method under

paragraph (e) of this section for Basic

Rate Interface integrated services digital

network (ISDN) service.

(2) Local exchange carriers shall

assess no more than five End User

Common Line charges as calculated

under paragraph (k) of this section for

Primary Rate Interface ISDN service.

(m) In the event the local exchange

carrier charges less than the maximum

End User Common Line charge for any

subscriber lines, the local exchange

carrier may not recover the difference

between the amount collected and the

maximum from carrier common line

charges or PICCs.

(n) [Reserved]

(o) [Reserved]

(p) [Reserved]

(q) End User Common Line Charge

De-Averaging. Beginning on July 1,

2000, LEC’s may geographically

deaverage End User Common Line

charges subject to the following

conditions:

(1) In order for price cap LEC to be

allowed to de-average End User

Common Line charges within a study

area, the price cap LEC must have state

Commission approved geographically

deaveraged rates for UNE loops within

that study area. Except where a LEC

geographically deaverages through

voluntary reductions, before a price cap

LEC may geographically deaverage its

End User Common Line rates, its

Originating and Terminating CCL and

Multi-line Business PICC rates in that

study area must equal $0.00.

(2) All geographic deaveraging of End

User Common Line charges by customer

class within a study area must be

according to the state commissionapproved UNE loop zone. Solely for the

purposes of determining interstate

subscriber line charges and the

interstate access universal service

support described in §§ 54.806 and

54.807 of this chapter, a price cap LEC

may not have more than four geographic

End User Common Line Charge/USF

zones absent a review by the

Commission. Where a price cap LEC has

more than four state-created UNE zones

and the Commission has not approved

use of additional zones, the price cap

LEC will determine, at its discretion,

which state-created UNE zones to

consolidate so that it has no more than

four zones for the purpose of

determining interstate subscriber line

charges and interstate access universal

service support.

(3) Within a given zone, Multi-line

Business End User Common Line rates

cannot fall below Primary Residential

and Single-Line Business or NonPrimary Residential End User Common

Line charges. Non-Primary End User

Common Line charges cannot fall below

Primary Residential and Single-Line

Business charges.

(4) For any given class of customer in

any given zone, the Zone deaveraged

End User Common Line Charge in that

zone must be greater than or equal to the

Zone deaveraged End User Common

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38703

Line charge in the zone with the next

lower Zone Average Revenue Per Line.

(5) The sum of all revenues per month

that would be generated from all

deaveraged End User Common Line

charges in all zones within a study area

plus Interstate Access USF Support Per

Line (as defined in § 54.807 of this

chapter) for the applicable customer

classes and zones receiving such

support multiplied by corresponding

base period lines, divided by the

number of base period lines in that

study area cannot exceed Average Price

Cap CMT Revenue Per Line as defined

in § 61.3(d) of this chapter for that study

area. In addition, the sum of revenues

per month that would be generated from

all deaveraged End User Common Line

charges in all End User Common Line

charge deaveraging zones within a study

area plus revenues per month from all

End User Common Line charge, multiline business PICC and CCL charges

from study areas within that study area

that have not geographically deaveraged

End User Common Line charges plus

the sum of all Interstate Access USF

Support Per Line (as defined in § 54.807

of this chapter) for the applicable

customer classes and zones receiving

such support, multiplied by the

corresponding base period lines for the

applicable customer classes and zones

within the study area, divided by the

number of total base period lines in the

study area cannot exceed Average Price

Cap CMT Revenue Per Line as defined

in § 61.3(d) of this chapter for the study

area.

(6) Maximum charge. The maximum

zone deaveraged End User Common

Line Charge that may be charged in any

zone is the applicable cap specified in

§ 69.152(d)(1), § 69.152(e)(1)(i) or

§ 69.152 (k)(1)(i) Zone Average Revenue

Per Line is the Price Cap CMT Revenue

Per Line allocated to a particular statedefined zone used for deaveraging of

UNE loop prices. The zone average

revenue per line is computed pursuant

to § 61.3 (zz) of this chapter.

(7) Minimum charge. Except where a

LEC chooses to lower the deaveraged

End User Common Line Charge through

voluntary reductions, the minimum

zone deaveraged End User Common

Line Charge in any zone in a study area

is at least the Minimum EUCL.

Minimum EUCL is Zone Average

Revenue Per Line for the zone with the

lowest Zone Average Revenue Per Line

in that study area plus an amount per

line calculated to recover the difference

between Interstate Access USF Support

Per Line (as defined in § 54.807 of this

chapter) multiplied by base period lines

for the applicable customer class and

zones receiving such support and Study

Area Above Benchmark Revenues, first

from Zone 1 until the End User

Common Line Charges in Zone 1 equal

the End User Common Line Charges in

Zone 2, and then from lines in Zones 1

and 2 equally until the End User

Common Line Charges in those Zones

reach Zone 3 (with all End User

Common Line Charges subject to the

applicable residential and multi-line

business lines nominal caps).

(i) For the purposes of this part,

‘‘Study Area Above Benchmark

Revenues’’ is the sum of all Zone Above

Benchmark Revenues.

(ii) For the purposes of this part,

‘‘Zone Above Benchmark Revenues’’ is

calculated as follows:

Zone Above Benchmark Revenues is

the sum of Zone Above Benchmark

Revenues for Residential and Single-line

Business lines and Zone Above

Benchmark Revenues for Multi-line

Business lines. Zone Above Benchmark

Revenues for Residential and Single-line

Business lines is, within each zone,

(Zone Average Revenue Per Line minus

$7.00) multiplied by all eligible

telecommunications carrier Base Period

Residential and Single-line Business

lines times 12. If negative, the Zone

Above Benchmark Revenues for

Residential and Single-line Business

lines for the zone is zero. Zone Above

Benchmark Revenues for Multi-line

Business lines is, within each zone,

(Zone Average Revenue Per Line

minus $9.20) multiplied by all eligible

telecommunications carrier zone Base

Period Multi-line Business lines times

12. If negative, the Zone Above

Benchmark Revenues for Multi-line

Business lines for the zone is zero.

(8) Voluntary Reductions. A

‘‘Voluntary Reduction’’ is one in which

the LEC reduces prices other than

through offset of net increases in End

User Common Line charge revenues or

Interstate Access USF support received

pursuant to § 54.807 of this chapter, or

through increases in other zone

deaveraged End User Common Line

charges.

21. Amend § 69.153 to read as

follows:

§ 69.153 Presubscribed interexchange

carrier charge (PICC).

(a) A charge expressed in dollars and

cents per line may be assessed upon the

Multi-line business subscriber’s

presubscribed interexchange carrier to

recover revenues totaling Average Price

Cap CMT Revenues Per Line times the

number of base period lines less

revenues recovered through the End

User Common Line charge established

under § 69.152 and Interstate Access

USF Support Per Line (as defined in

§ 54.807 of this chapter) multiplied by

base period lines for the applicable

customer class and zones receiving such

support, up to a maximum of $4.31 per

line per month. In the event the ceilings

on the PICC prevent the PICC from

recovering all the residual common

line/marketing and residual

interconnection charge revenues, the

PICC shall recover all residual common

line/marketing revenues before it

recovers residual interconnection charge

revenues.

(b) If an end-user customer does not

have a presubscribed interexchange

carrier, the local exchange carrier may

collect the PICC directly from the end

user.

(c) [Reserved]

(d) Local exchange carriers shall

assess no more than five PICCs as

calculated under paragraph (a) of this

section for Primary Rate Interface ISDN

service.

(e) The maximum monthly PICC for

Centrex lines shall be one-ninth of the

maximum charge determined under

paragraph (a) of this section, except that

if a Centrex customer has fewer than

nine lines, the maximum monthly PICC

for those lines shall be the maximum

charge determined under paragraph (a)

of this section divided by the customer’s

number of Centrex lines.

(f) [Reserved]

(g) [Reserved]

(h) [Reserved]

22. Amend § 69.154 by revising

paragraph (a)(1) to read as follows:

§ 69.154 Per-minute carrier common line

charge.

(a)* * *

(1) The per-minute rate using base

period demand that would recover the

maximum allowable carrier common

line revenue as defined in § 61.46(d) of

this chapter; or

* * * * *

23. Revise § 69.156 to read as follows:

§ 69.156 Marketing expenses.

Effective July 1, 2000, the marketing

expenses formerly allocated to the

common line and traffic sensitive

baskets, and the switched services

within the trunking basket pursuant to

§ 32.6610 of this chapter and § 69.403

will now be recovered in the CMT

basket created pursuant to § 61.42(d)(1)

of this chapter. These marketing

expenses will be recovered through the

elements outlined in §§ 69.152, 69.153

and 69.154.

24. Revise § 69.157 to read as follows:

38704 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

§ 69.157 Line port costs in excess of

basic, analog service.

To the extent that the costs of ISDN

line ports, and line ports associated

with other services, exceed the costs of

a line port used for basic, analog service,

local exchange carrier may recover the

difference through a separate monthly

end-user charge. As of June 30, 2000,

these rates will be capped until June 30,

2005.

25. Add § 69.158 to read as follows:

§ 69.158 Universal service end user

charges.

To the extent the company makes

contributions to the Universal Service

Support Mechanisms pursuant to

§§ 54.706 and 54.709 of this chapter and

the LEC seeks to recover some or all of

the amount of such contribution, the

LEC shall recover those contributions

through a charge to end users other than

Lifeline users. These contributions are

not a part of any price cap baskets, and

the charge to recover these contributions

is not part of any other element

established pursuant to part 69. Such a

charge may be assessed on a per-line

basis or as a percentage of interstate

retail revenues, and at the option of the

LEC it may be combined for billing

purposes with other end user retail rate

elements. A LEC opting to assess the

USF end-user rate element on a per-line

basis may apply that charge using the

‘‘equivalency’’ relationships established

for the multi-line business PICC for

Primary Rate ISDN service, as per

§ 69.153(d), and for Centrex lines, as per

§ 69.153(e).

[FR Doc. 00–15170 Filed 6–16–00; 12:38 pm]

BILLING CODE 6712–01–U