Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31099 

EPA may publish any comment received 

to its public docket. Do not submit 

electronically any information you 

consider to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Multimedia submissions (audio, video, 

etc.) must be accompanied by a written 

comment. The written comment is 

considered the official comment and 

should include discussion of all points 

you wish to make. EPA will generally 

not consider comments or comment 

contents located outside of the primary 

submission (i.e. on the web, cloud, or 

other file sharing system). 

For additional submission methods, 

the full EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

https://www2.epa.gov/dockets/ 

commenting-epa-dockets. 

FOR FURTHER INFORMATION CONTACT: For 

further information on this document, 

please contact Elizabeth Kopits, 

National Center for Environmental 

Economics, Office of Policy, 1200 

Pennsylvania Avenue NW, Mail Code 

1809T, Washington, DC 20460, Phone: 

(202) 566–2299; kopits.elizabeth@

epa.gov. 

SUPPLEMENTARY INFORMATION: This 

document extends the public comment 

period for the proposed rule to ensure 

that the public has sufficient time to 

review and comment on the proposal. 

EPA is proposing this rule under 

authority of 5 U.S.C. 301, in addition to 

the authorities listed in the April 30th 

document. 

Dated: June 27, 2018. 

Brittany Bolen, 

Acting Associate Administrator, Office of 

Policy. 

[FR Doc. 2018–14330 Filed 7–2–18; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 51 and 61 

[WC Docket No. 18–156; FCC 18–76] 

8YY Access Charge Reform 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the 

Commission proposes to migrate 

interstate and intrastate originating end 

office and tandem switching and 

transport charges for toll free (8YY) calls 

to bill-and-keep, continuing the reform 

efforts that began with the 2011 USF/ 

ICC Transformation Order. The 

Commission also proposes to cap 8YY 

database query rates at the lowest rate 

charged by any price cap local exchange 

carrier, and to limit charges to one 

database query charge per call, 

regardless of the number of carriers are 

in the call path or the number of 

database queries conducted. These 

proposals should limit unreasonably 

inflated charges and reduce or eliminate 

incentives for parties to engage in the 

types of abuse described in the record. 

DATES: Comments must be submitted on 

or before September 4, 2018. Reply 

comments must be submitted on or 

before October 1, 2018. 

ADDRESSES: You may submit comments, 

identified by WC Docket No. 18–156, by 

any of the following methods: 

• Federal Communications 

Commission’s Website: http://

apps.fcc.gov/ecfs//. Follow the 

instructions for submitting comments. 

• People with Disabilities: Contact the 

FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by email: FCC504@fcc.gov 

or phone: 202–418–0530 or TTY: 888– 

835–5322. 

For detailed instructions for 

submitting comments and additional 

information on the rulemaking process, 

see the SUPPLEMENTARY INFORMATION

section of this document. 

FOR FURTHER INFORMATION CONTACT: Irina 

Asoskov, Wireline Competition Bureau, 

Pricing Policy Division at 202–418–2196 

or at Irina.Asoskov@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Further 

Notice of Proposed Rulemaking (FNPRM 

or Notice), FCC 18–76, released on June 

8, 2018. A full-text version of the 

Further Notice of Proposed Rulemaking 

may be obtained at the following 

internet address: https://docs.fcc.gov/ 

public/attachments/fcc-18-76a1.pdf. 

I. Background 

1. AT&T first introduced interstate 

toll free service, using 800 numbers, in 

1967. The defining characteristic of that 

service, then known as Inward Wide 

Area Telecommunications Service 

(WATS), was that such calls were paid 

for by the company that received the 

calls and had subscribed to the toll free 

service. At the time, and for many years 

after, interstate calling rates were 

substantial, so the calling party received 

significant financial benefit from 

making a toll free call rather than a 

direct-dialed long distance (or toll) call. 

Today, by contrast, the prevalence of 

unlimited minutes plans for both 

wireless and wireline service and the 

advent of the internet and other 

advances in communications have 

reduced the financial benefit to the 

calling party of being able to make a 

telephone call and not pay for the toll 

portion of the call. 

2. Nonetheless, many businesses and 

consumers continue to find 8YY 

numbers useful. Demand for 8YY 

numbers continues to grow. In fact, the 

Commission recently authorized a new 

833 code to supplement the 800, 888, 

877, 866, 855, and 844 codes already in 

use for 8YY calling. The record offers 

several explanations for the continued 

demand for 8YY numbers. A toll free 

number can give a business a national 

presence and ‘‘project a professional 

image.’’ Toll free numbers can also act 

as a powerful branding tool, particularly 

if the subscriber can obtain a vanity 

number, such as 1–800–FLOWERS, that 

promotes its business. Many businesses 

also use toll free numbers to track the 

effectiveness of their advertising and 

marketing strategy. These marketing 

efforts increase the demand for toll free 

numbers, as businesses need to assign 

unique numbers to each advertising 

campaign or even to different segments 

of the same advertising campaign. 

3. The record indicates that 8YY 

minutes of use appear to be increasing, 

at least relative to other originating 

access minutes. As a result, according to 

some commenters, 8YY calls account for 

a substantial majority of originating 

access minutes. We seek comment on 

parties’ experiences regarding demand 

for 8YY numbers and legitimate minutes 

of use. We also invite parties to provide 

additional information regarding the 

usefulness of 8YY numbers and demand 

for 8YY services. 

A. History of Intercarrier Compensation 

for 8YY Calls 

4. Following the breakup of AT&T, 

the Commission analyzed the treatment 

of toll free originating and terminating 

switched access charges for purposes of 

carrier revenue recovery. In addition to 

end office rate elements, the 

Commission allowed LECs to recover a 

portion of fixed local loop costs through 

the carrier common line (CCL) charge 

that LECs were allowed to recover from 

IXCs. In devising the CCL rate element 

for toll free calls, the Commission 

recognized that toll free calls generally 

‘‘originated over regular local loops and 

terminated over a dedicated access line 

to the 8YY subscriber’s premises.’’ The 

Commission referred to the originating 

end of such calls as the ‘‘open end’’ and 

the terminating end as the ‘‘closed end.’’ 

In the 1986 WATS Order, the 

Commission placed the bulk of CCL 

charges on terminating access minutes, 


sradovich on DSK3GMQ082PROD with PROPOSALS
31100 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

allowing carriers to recover the rest of 

their loop costs through traffic-sensitive 

charges. The Commission also exempted 

the ‘‘closed end’’ of the call from the 

CCL charges, based on a finding that the 

costs of the closed end of a toll free call 

were covered by special access charges. 

Exempting the ‘‘closed end’’ of 8YY 

calls from CCL charges, however, meant 

that ‘‘800 traffic would be exempt from 

carrier common line charges altogether, 

despite the fact that it makes use of the 

public switched network.’’ In other 

words, because LECs recovered the bulk 

of their loop costs from terminating 

access charges, and the terminating end 

of toll free calls was exempt from the 

CCL charge, LECs were not able to 

recover from IXCs the loop costs 

associated with originating 8YY calls. 

The Commission allowed LECs to 

recover their loop costs by treating the 

originating (open) end of interstate 8YY 

calls as terminating for purposes of 

assessing the CCL charge. 

5. In 1997, the Commission reaffirmed 

its prior decision that the ‘‘open end’’ of 

an 8YY call should be treated as the 

terminating end for access charge 

purposes. The Commission noted that 

‘‘an IXC is unable to influence the end 

user’s choice of access provider for 

originating access services because the 

end user on the terminating end is 

paying for the [8YY] call.’’ In the early 

2000s, the Commission eliminated the 

CCL charge, but did not specifically 

address 8YY services. At present, 

originating carriers receive payments 

from 8YY providers for originating 

interstate toll free calls through 

originating end office, tandem switching 

and transport, and database query 

charges. 

6. Database query charges. From 

1967, when AT&T first introduced toll 

free service, until late 1986, ‘‘LECs were 

unable to provide access for 800 service 

to any IXC other than AT&T.’’ In 1986, 

the Bell Operating Companies (BOCs) 

and other LECs began offering other 

IXCs 8YY access through an NXX-based 

methodology, whereby the first three 

digits following the 800 prefix of the 

dialed number were associated with a 

specific IXC. Toll free subscribers 

seeking a particular 800 number had to 

obtain it from the IXC to which the NXX 

in that number had been assigned and 

could not change carriers without 

changing their 800 number. For 

example, if MCI had been assigned all 

numbers beginning with 800–468, then 

someone who wanted to subscribe to 

800–468–3927 (800–GO–TEXAS) would 

have to do business with MCI. In 1989, 

the BOCs and some other carriers began 

developing ‘‘common channel signaling 

networks based on the CCS7 protocol,’’ 

in which their CCS7 networks would be 

linked with databases containing the 

800 service information. The 

Commission established a separate 

access element for the database cost 

recovery. The Commission required 

LECs to ‘‘develop rates for 800 data base 

access based only on their data-basespecific costs’’ and expressed an 

expectation that the costs associated 

with the 800 number database would be 

‘‘relatively modest.’’ 

7. In 1993, the Commission 

determined that the newly-created 800 

database was ‘‘absolutely necessary to 

the provision of 800 service using the 

data base access system’’ and concluded 

that access to the database must be 

provided pursuant to tariff. In contrast 

to NXX-based routing, which relied on 

LECs using their central office switches 

to process 800 calls, the new routing 

technology required originating LECs to 

route 8YY calls through a switch 

equipped with a ‘‘service switching 

point’’ (SSP). The SSP would then 

‘‘suspend’’ routing of the call until it 

determined where to send it by 

transmitting a query over the signaling 

system 7 (SS7) to a regional service 

control point (SCP). The SCP would 

regularly obtain routing information 

from the central (SMS/800) database. 

Not all end offices of the LECs that 

owned an SCP were connected to the 

SCP. 8YY calls from consumers served 

by end offices that were not connected 

to an SCP were routed to one of the 

LEC’s tandem switches equipped with 

an SCP and the call would be processed 

from there. Those LECs that did not own 

an SCP could purchase query services 

from a LEC that did. 

8. In a series of orders, the 

Commission determined that certain 

costs associated with the provision of 

8YY database query services were 

reasonable and allowed price cap and 

rate-of-return carriers to include them in 

their rate calculations. 

B. Access Charge Reforms Adopted in 

the USF/ICC Transformation Order 

9. In the USF/ICC Transformation 

Order, the Commission found that, over 

time, the intercarrier compensation 

system had become ‘‘riddled with 

inefficiencies and opportunities for 

wasteful arbitrage.’’ To rid the system of 

arbitrage schemes that impose ‘‘undue 

costs on consumers, inefficiently 

diverting capital away from more 

productive uses such as broadband 

deployment’’ and to provide incentives 

to transition telecommunications 

networks to IP technology, the 

Commission adopted a national, default 

bill-and-keep framework as the ultimate 

end state of all telecommunications 

traffic exchanged with a LEC. As the 

first step in implementing that 

framework, the Commission adopted a 

multi-year transition to bill-and-keep for 

many terminating access charges, 

determined that ‘‘the originating access 

regime should be reformed,’’ and 

capped most originating access charges, 

with the exception of intrastate 

originating access charges of rate-ofreturn carriers. The cap applied to a 

wide range of originating access charges, 

including, but not limited to, database 

query charges. The Commission also 

adopted bill-and-keep as the default 

compensation regime for non-access 

traffic between LECs and commercial 

mobile radio service (CMRS) providers, 

thus bringing that traffic into parity with 

CMRS-related access traffic, which had 

long been subject to bill-and-keep. 

10. Based on a determination that 

concerns regarding network 

inefficiencies, arbitrage, and costly 

litigation were ‘‘less pressing with 

respect to originating access’’ than with 

respect to terminating access, the 

Commission did not adopt any further 

reforms to originating access charges. In 

a Further Notice of Proposed 

Rulemaking that accompanied the USF/ 

ICC Transformation Order, the 

Commission sought comment on the 

steps it should take to transition 

originating access and transport to billand-keep, as well as issues related to 

8YY traffic. The Commission sought 

comment on the timing, transition, and 

possible need for a recovery mechanism 

for the remaining rate elements. The 

Commission explained that access 

charges for originating 8YY traffic have 

been treated similarly to terminating 

access charges for non-8YY calls. It 

sought comment on ‘‘the appropriate 

treatment of 8YY originated minutes’’ 

and on whether 8YY access reform 

should be treated differently from 

originating access reform more 

generally. Comments regarding these 

issues were mixed. 

C. 8YY Routing and Related Access 

Elements 

11. To understand how the current 

8YY system allows for arbitrage and 

fraud, it is necessary to understand the 

typical wireline call path for, and 

intercarrier charges associated with, 

8YY calls. As described by various 

commenters, when a wireline customer 

places a call to an 8YY number, the call 

is initially carried by the caller’s LEC to 

that carrier’s end office switch. At that 

point, the LEC may conduct the 

database query from the end office 

switch to the SCP, where it obtains the 

routing information. Then the LEC may 

route the call to a tandem switch which 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31101 

may or may not be owned by the same 

LEC. If the LEC did not conduct the 

database query at its end office, then it 

may conduct the query from a tandem 

office, or it may rely on a third-party 

tandem provider to perform the 

database query. Once the routing 

information has been obtained, the call 

is then routed to the IXC—either 

directly, or through an intermediate 

provider—and, ultimately, the 8YY 

customer. 

12. Under our current rules, the LEC 

that originates an 8YY call is entitled to 

charge the IXC that terminates the 8YY 

call originating access charges for the 

specific services provided, which would 

typically include originating end office 

switching, database queries, interoffice 

transport and, often, tandem switching 

and transport. The amount of access 

charges an originating LEC receives for 

such calls is dependent on the 

applicable switching and transport 

rates, including the number of miles 

that are subject to the transport charge, 

which is billed on a per-minute, permile basis. In some cases, the 

originating LEC and a third-party 

tandem provider bill the IXC separately, 

but some intermediate carriers submit 

one bill for originating and tandem and 

transport charges to the IXC and 

subsequently reimburse the originating 

carrier pursuant to an agreement 

between the originating LEC and the 

tandem carrier. Because database 

queries can originate from either an end 

office or a tandem office, tandem 

providers can also charge the IXC for 

database queries. According to AT&T, it 

is not unusual for an IXC to be assessed 

a database dip charge by both the LEC 

that originates an 8YY call, and by the 

tandem provider that picks up that call. 

AT&T claims that database queries 

account for a significant share— 

approximately 19 percent—of the 

originating access charges it is billed for 

8YY calls. 

13. Thus, in the case of 8YY traffic, 

originating carriers involved in the call 

have incentives to route calls in ways 

that maximize the compensation they 

receive—regardless of whether they 

receive those access revenues directly or 

indirectly, via shared revenue 

arrangements. Moreover, the current 

system encourages bad actors to place 

fraudulent, or otherwise illegitimate, 

robocalls with the sole purpose of 

generating originating access revenues. 

These inflated charges raise costs for 

both IXCs and 8YY subscribers, which 

have no control over the choice of 

originating and intermediate providers. 

14. While we have described the 

typical call paths for 8YY calls as laid 

out by commenters in the current 

record, to further our understanding of 

the issues, we invite commenters to 

provide additional information about 

their experiences with various call paths 

associated with 8YY calls. 

D. More Recent Procedural History 

15. On September 30, 2016, AT&T 

filed a petition seeking forbearance 

from, among other things, rules related 

to the tariffing of 8YY database query 

charges. AT&T alleged that ‘‘some LECs 

are engaged in schemes to overcharge’’ 

for certain originating 8YY traffic and 

claimed that ‘‘arbitrage schemes are 

increasingly shifting to 8YY.’’ AT&T 

pointed to a ‘‘wide variation in the 

tariffed charges’’ for 8YY database 

queries and asserted that the rates it had 

negotiated in contracts with some 

providers were generally lower—and 

more uniform—than the tariffed rates 

for those services. 

16. Other IXCs echoed many of 

AT&T’s concerns. Verizon argued that 

‘‘[t]raffic pumping involving sham 8YY 

calls already is a serious arbitrage 

problem’’ and Sprint agreed that the 

charges for 8YY database queries are 

‘‘unjustifiably high.’’ Even parties that 

opposed the forbearance petition 

acknowledged that the variances in 8YY 

database query charges may create 

arbitrage opportunities. AT&T withdrew 

its petition before the Commission 

reached a decision. 

17. Subsequently, on May 19, 2017, 

the Ad Hoc Telecommunications Users 

Committee (Ad Hoc) filed an ex parte 

letter, urging the Commission to require 

carriers to ‘‘apply the per minute 

charges for terminating traffic to the 

originating or ‘open’ end of 8YY calls.’’ 

Ad Hoc asserts that the Commission 

could reduce or eliminate incentives to 

use 8YY for arbitrage and access 

stimulation schemes if it were to treat 

originating 8YY calls the same as 

terminating access calls for purposes of 

intercarrier compensation. 

18. In a public notice dated June 29, 

2017, the Wireline Competition Bureau 

invited interested parties to update the 

record on issues raised by the 

Commission in the USF/ICC 

Transformation Order with respect to 

access charges for 8YY. We incorporate 

the comments from the June 29, 2017 

Public Notice and the FNPRM portion of 

the USF/ICC Transformation Order into 

this record and seek further comment on 

issues related to 8YY access charge 

reform, as discussed in greater detail 

below. 

II. Alleged Abuses of the 8YY 

Intercarrier Compensation Regime 

19. Parties raise concerns about 

abuses of the 8YY intercarrier 

compensation regime. Based on the 

current record in this proceeding, we 

propose to revise our rules to change the 

incentives that are leading to these 

reported abuses. 

20. In the USF/ICC Transformation 

Order, the Commission acted to ‘‘reduce 

arbitrage and competitive distortions’’ 

which had occurred over time. 

However, commenters allege that 

because the Commission left originating 

access charges ‘‘largely unreformed and 

expensive,’’ abuses of the intercarrier 

compensation system with respect to 

8YY service have flourished. The record 

currently includes descriptions of at 

least four different categories of schemes 

by which carriers are reported to be 

exploiting the current regime governing 

intercarrier compensation for 

originating 8YY traffic. In the interest of 

having a robust record, we seek 

additional comment on the existence, 

prevalence, and impact of each of these 

reported schemes and on any other 

8YY-related schemes that commenters 

propose we address. 

21. Benchmarking abuse. Currently, 

pursuant to the competitive LEC 

benchmarking rule, competitive LECs 

are permitted to tariff interstate access 

charges at a level no higher than the 

tariffed rate for such services offered by 

the incumbent LEC serving the same 

geographic area. Commenters complain 

that some competitive LECs aggregate 

8YY traffic from originating LECs and 

instead of ‘‘benchmark[ing] its 

originating tandem switched transport 

rates to the rates tariffed by the 

incumbent LEC in the area where the 

call originated, the CLEC bills the higher 

rates tariffed by the incumbent LEC in 

the area where the call is handed off to 

the IXC.’’ We seek comment on this 

practice and on whether it is a 

legitimate practice or an improper 

attempt to exploit a loophole in the 

Commission’s rules. Are there examples 

of other forms of potential 

benchmarking abuse in addition to the 

one we describe here? How prevalent is 

benchmarking abuse? How much does it 

cost individual IXCs or 8YY subscribers 

in additional access charges? Are there 

legitimate reasons a LEC would choose 

to hand off 8YY traffic in an area other 

than where the call originated? 

22. Mileage pumping. Because 

originating carriers charge IXCs for 

transport on a per-minute, per-mile 

basis, the farther they transport the 

originating traffic, the greater the 

compensation they receive from the IXC 

serving the 8YY subscriber. As a result, 

originating carriers have an incentive to 

artificially inflate their mileage in order 

to maximize the transport rates they 

charge to the IXC, particularly if 


sradovich on DSK3GMQ082PROD with PROPOSALS
31102 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

transport rates are materially higher 

than transport costs, as some 

commenters’ filings suggest. In fact, 

AT&T alleges that carriers engage in 

‘‘mileage pumping’’ schemes, in which 

‘‘a CLEC tariffs a per-mile charge for 

transport and then either (i) bills the 

IXC for transport it does not actually 

provide . . . or (ii) inefficiently routes 

traffic long distances—sometimes more 

than a hundred miles—to inflate the 

number of miles applied to the per-mile 

transport charge.’’ We seek comment on 

this practice. Are there other examples 

of mileage pumping schemes that differ 

from the ones described by AT&T? If so, 

please describe them. How prevalent are 

mileage pumping schemes? How much 

do they cost 8YY providers or 

subscribers in inflated charges? Are 

there legitimate reasons a carrier would 

haul traffic 100 miles or more before 

handing it off to an IXC? 

23. Traffic pumping. There is also 

evidence in the record that companies 

are using traffic pumping schemes to 

exploit inflated access rates. As 

described by commenters, in these 

schemes, a traffic pumper enters into a 

revenue sharing agreement with a LEC 

and subsequently uses automated 

software to place illegitimate calls to 

8YY numbers. These calls often use auto 

dialers or ‘‘robocallers’’ to target 

Interactive Voice Response (IVR) 

systems and use varying means to keep 

the IVR engaged, preventing the call 

from ending. The LEC then bills the IXC 

for the calls—including the artificially 

inflated minutes of use—and shares the 

proceeds with the traffic pumper. These 

‘‘[a]nnoying and disruptive 8YY calls’’ 

waste the targeted businesses’ resources 

and ‘‘devalue [providers’] 8YY 

products.’’ We seek comment on this 

practice. How prevalent are traffic 

pumping schemes involving toll free 

calls? Are there examples of 8YY traffic 

pumping schemes that differ materially 

from those already described in the 

record? We encourage parties to 

quantify the costs these schemes impose 

on 8YY providers and subscribers. 

24. Database queries. As the least 

regulated rate element of the 8YY traffic 

flow, database queries also appear to 

have been the subject of abuse. 

Commenters point out substantial 

variance in database charges and 

contend that query charges are excessive 

and unrelated to actual costs. For 

example, AT&T provides numerous 

examples of database query charges, 

ranging from as low as $0.0015 to as 

high as $0.015. IXCs also claim that 

there are times when they are billed for 

multiple queries on a single call. We 

invite commenters to provide 

information about the actual cost of a 

database query to a LEC compared to the 

amount IXCs are being assessed for the 

database dips. We also seek comment on 

the impact on IXCs and their customers 

of paying these database charges. Are 

there ways for IXCs to determine 

whether a call has been ‘‘dipped’’ more 

than once? Is there any legitimate reason 

for a call to be subjected to multiple 

dips? 

25. Other abuses. We also seek 

comment on whether there are any other 

abuses related to 8YY access charges 

that are not described above. If so, what 

are they? What impact do any other 

8YY-related abuses have on carriers and 

on 8YY subscribers? To the extent that 

commenters identify other abuses of the 

8YY system, we seek comment on 

whether our proposed reforms would 

sufficiently address those abuses. If not, 

what additional measures would we 

need to take to eliminate those abuses? 

III. Addressing Alleged Abuses of the 

8YY Intercarrier Compensation Regime 

26. To address abuses of the current 

8YY intercarrier compensation system, 

we propose to move, over time, all 

originating interstate and intrastate end 

office and tandem switching and 

transport charges related to 8YY calls to 

bill-and-keep. To avoid a flash cut to 

bill-and-keep for originating 8YY access 

charges, we propose a three-year 

transition period. We propose to allow 

originating carriers to recover their costs 

primarily through end-user charges, 

though we invite comment on allowing 

some recovery through Connect 

America Fund (CAF) support. We also 

propose to cap 8YY database query rates 

nationwide and to prohibit carriers from 

assessing more than one database query 

charge per call, even if more than one 

carrier handles the call before it is 

handed off to an IXC. Additionally, we 

seek comment on other issues related to 

8YY traffic, including alternative 

approaches to address abuses related to 

8YY calls. 

A. Moving 8YY Originating End Office 

and Tandem Switching and Transport 

Charges to Bill-and-Keep 

27. Consistent with the bill-and-keep 

framework the Commission adopted as 

‘‘a default framework and end state for 

all intercarrier compensation traffic,’’ 

we propose moving all interstate and 

intrastate originating access charges 

related to 8YY calls to bill-and-keep, 

except for database query charges. We 

seek comment on this proposal. We also 

seek comment on an alternative 

approach that would transition all 

originating interstate and intrastate end 

office 8YY access charges to bill-andkeep but move 8YY tandem switching 

and transport to bill-and-keep only 

where the originating carrier also owns 

the tandem. 

1. Moving Most Elements of Originating 

8YY Access Charges to Bill-and-Keep 

Should Curtail Abuses of 8YY Calls 

28. The current record shows that toll 

free subscribers are burdened by 

unpredictable and uncontrollable call 

volumes and associated charges for calls 

to their 8YY numbers. With the 

proliferation of unlawful robocalls, the 

volume of traffic routed to 8YY numbers 

no longer depends on the ‘‘promotional 

efforts’’ of the 8YY subscriber. Indeed, 

just the opposite is true—fraudulent 

calls are only ‘‘controllable from the 

originating point.’’ And there is 

significant evidence that some carriers 

are exploiting loopholes in the current 

intercarrier compensation system to 

inflate their bills to IXCs that serve 8YY 

customers. The intercarrier 

compensation system needs to adapt to 

this new reality. 

29. Accordingly, in an effort to 

combat the abuses that appear to plague 

the existing 8YY regime, we propose to 

move interstate and intrastate 

originating 8YY end office, tandem 

switching and transport access charges 

to bill-and-keep. Consistent with the 

USF/ICC Transformation Order, we 

propose to allow carriers to negotiate 

private agreements that depart from billand-keep, but not permit carriers to 

tariff any originating end office or 

tandem switching and transport charges 

related to 8YY traffic. We seek comment 

on this approach. Are there any 

obstacles that would prevent carriers 

from moving to bill-and-keep for these 

charges? Would our proposal adequately 

address the problems currently plaguing 

the 8YY industry? As explained below, 

we expect our proposed changes to have 

numerous benefits, including: Removing 

incentives for abuse, reducing costs for 

consumers, potentially lowering rates or 

improving service for 8YY subscribers, 

encouraging the transition to IP services, 

and reducing the number of disputes 

over intercarrier compensation. 

30. The basic logic underpinning our 

proposal is that each carrier should be 

responsible for the costs of the parts of 

the call path which it has discretion to 

choose. Should we adopt any 

exceptions to the proposal? For 

example, are there instances where an 

IXC, or some other party, may require 

the originating LEC to route traffic 

through a specific tandem? If so, should 

the originating LEC be allowed to charge 

the IXC for the costs it incurs in using 

that tandem? If the originating LEC 

routes 8YY traffic over a tandem that it 

does not own, how should the 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31103 

originating LEC and the tandem owner 

recover their respective costs? Should 

the originating LEC be required to pay 

the tandem owner for the use of the 

tandem and recover those costs from its 

own end users? Are there situations 

where such an arrangement would not 

be just and reasonable? 

31. Curtailing abuses. We seek 

comment on the extent to which our 

proposals will curtail 8YY abuses. In the 

USF/ICC Transformation Order, the 

Commission found that, over time, billand-keep will ‘‘eliminate wasteful 

arbitrage schemes and other behaviors 

designed to take advantage of or avoid 

above-cost interconnection rates.’’ The 

Commission’s prediction has proven 

accurate, as filings submitted in this 

proceeding indicate that the transition 

to bill-and-keep has reduced fraud and 

abuse related to terminating traffic. 

However, the reforms adopted in the 

USF/ICC Transformation Order did not 

address 8YY traffic, and the record in 

this proceeding shows an increase in 

certain types of abuses ‘‘designed to take 

advantage’’ of the intercarrier 

compensation system, such as the 

inefficient routing of 8YY calls. 

32. In light of the positive outcome of 

bill-and-keep for terminating traffic, we 

expect that our proposed reforms to 8YY 

originating access charges will eliminate 

abuses—including benchmarking, 

mileage pumping, and traffic pumping 

schemes—related to 8YY calls. All of 

these schemes arise from carriers’ ability 

to bill IXCs inflated access charges 

relating to 8YY traffic. Moving the 

access elements associated with these 

abuses to bill-and-keep should eliminate 

any ability to profit from these 

activities. We expect the proposed 

reforms will provide originating carriers 

with the incentive to be as efficient and 

cost-effective as possible in routing 8YY 

traffic. We seek comment on this 

expectation. 

33. Based on the current record in this 

proceeding, we propose to revise our 

rules to change the incentives that are 

leading to abuses of the intercarrier 

compensation system for 8YY. We seek 

comment on each of these alleged 

abuses, including mileage pumping, 

traffic pumping, benchmarking abuse, 

and excessive and unnecessary database 

dips. How should our rules be modified 

to curb such abuses? Will moving 

originating end office and tandem 

switching and transport rates for 8YY 

calls to bill-and-keep discourage carriers 

from engaging in traffic or mileage 

pumping? We seek comment on any 

costs and burdens on small entities 

associated with the proposed rules, 

including data quantifying the extent of 

those costs or burdens. 

34. At least one competitive LEC that 

offers toll free services to businesses and 

also provides originating 8YY services 

opposes proposals to move originating 

access charges to bill-and-keep. This 

carrier asserts that fraudulent toll free 

calls should be addressed on a case-bycase basis through inter-carrier 

cooperation and by the Commission’s 

Enforcement Bureau and the Federal 

Bureau of Investigation. This carrier’s 

contracts require its customers to adopt 

anti-fraud measures and provide 

remedies against customers that are 

suspected of engaging in unlawful 

activity. Do other carriers use similar 

contract provisions? How effective are 

they? What efforts do carriers or their 

customers make to identify illegitimate 

8YY calls? How effective are those 

efforts? What security mechanisms do 

wholesalers or traffic aggregators 

employ to screen incoming calls? What 

obstacles do carriers or 8YY subscribers 

face in distinguishing illegitimate traffic 

from legitimate traffic? We seek 

comment on these and other issues 

related to the alternative approach of 

addressing unlawful toll free calls on a 

case-by-case basis. 

a. Benefits to Consumers 

35. We seek comment on the extent to 

which our proposals will benefit 

consumers. In the USF/ICC 

Transformation Order, the Commission 

concluded that the intercarrier 

compensation regime distorted 

competition because carriers shifted 

their network costs onto other carriers 

and, as a result, consumers could not 

identify and switch to more efficient 

providers. At the same time, the 

Commission observed that ‘‘because the 

calling party chooses the access 

provider but does not pay for the toll 

call, it has no incentive to select a 

provider with lower originating access 

rates.’’ In the 8YY industry, consumers 

who call 8YY telephone numbers are 

not charged directly for the calls, do not 

know what their originating carrier is 

charging for routing their 8YY call and, 

therefore, cannot exercise effective 

consumer choice. Yet, inefficiencies and 

abuses of the intercarrier compensation 

system result in higher prices to 8YY 

subscribers, who must recover their 

costs from their customers—a group that 

likely includes originating 8YY callers. 

Thus, in the end, consumers indirectly 

subsidize inefficiencies and abuses of 

the 8YY intercarrier compensation 

system. 

36. In the USF/ICC Transformation 

Order, the Commission reviewed 

economic evidence and concluded that, 

upon transitioning to bill-and-keep, 

‘‘carriers will reduce consumers’ 

effective price of calling, through 

reduced charges and/or improved 

service quality.’’ The Commission 

further predicted that these ‘‘reduced 

quality-adjusted prices will lead to 

substantial savings on calls made, and 

to increased calling.’’ This prediction 

appears to have proven true. For 

example, while there are several factors 

that may explain increased calling, 

significant growth has occurred in 

wireless subscribership since the 

Commission moved all CMRS traffic to 

bill-and-keep. 

37. We recognize that consumers 

appear to find toll free calling an 

attractive way to reach certain 

businesses and do not expect that to 

change if we move originating access 

charges for 8YY calls to bill-and-keep. 

Given that the Commission has already 

moved wireless calls—including 8YY 

calls from wireless numbers—to billand-keep, consumers’ use of wireless 

services may be instructive in helping 

predict the effects our proposed changes 

will have on consumers’ use of toll free 

services. Are there any lessons we can 

learn from the effect bill-and-keep has 

had on wireless 8YY calls? We seek data 

on whether wireless 8YY originating 

calls have increased or decreased over 

the past five years. Do consumers make 

fewer toll free calls from wireless 

phones than they do from wireline 

phones? Has the number of 8YY calls 

decreased as more people have switched 

to wireless phones as their primary 

method of telecommunications? 

38. We expect that transitioning 8YY 

calls to bill-and-keep will ultimately 

benefit consumers. We invite comment 

on this view and welcome commenters 

to provide economic analysis and data 

in support of their views. 

b. Benefits to 8YY Subscribers 

39. We seek comment on the extent to 

which our proposals will benefit 8YY 

subscribers. Because incentives in the 

8YY industry are misaligned (8YY 

subscribers are paying originating 

carriers that they did not select), 8YY 

subscribers are likely paying higher 

rates than they otherwise would, even 

for legitimate 8YY traffic. We anticipate 

that, by correctly aligning carriers’ 

incentives and pricing signals, bill-andkeep will lead to increased competition 

and ‘‘reduced quality-adjusted prices’’ 

for 8YY subscribers. In addition, we 

predict that moving to bill-and-keep 

will prompt ‘‘carriers [to] engage in 

substantial innovation to attract and 

retain’’ customers. 

40. We seek comment on these 

expectations and predictions. Are our 

proposed changes to the 8YY access 

charge regime likely to result in lower 


sradovich on DSK3GMQ082PROD with PROPOSALS
31104 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

rates for 8YY subscribers? Will our 

proposed changes lead to more 

competition and innovation? In the 

USF/ICC Transformation Order, the 

Commission estimated that ‘‘incumbent 

LECs will, on average, pass through at 

least 50 percent of ICC savings to end 

users, while CMRS providers and 

competitive LECs will pass through at 

least 75 percent of these savings.’’ 

Should we expect similar passthrough 

levels by 8YY providers? Are there 

effects that resulted from the 

Commission’s actions in the USF/ICC 

Transformation Order that might be 

instructive here? 

c. Encouraging the Transition to All-IP 

Services 

41. We seek comment on the extent to 

which our proposals will encourage the 

transition to all-IP services. We are 

concerned that the current 

compensation regime creates 

disincentives for carriers to transition to 

IP. For example, AT&T claims that 

‘‘CLECs engaged in arbitrage are 

resisting agreements to exchange traffic 

in IP format because they are reluctant 

to relinquish high access revenues from 

originating 8YY traffic that would go to 

bill-and-keep under an IP arrangement.’’ 

Are other parties having similar 

experiences? Do other parties share 

AT&T’s concerns that the current 

intercarrier compensation system is 

impeding the transition to all-IP 

services? 

42. There is no obvious justification 

for using tandem switches in an IP 

environment. As a result, carriers might 

be reluctant to transition to IP-based 

services because of concerns about lost 

intercarrier compensation revenues. We 

seek comment on this issue. Are there 

carriers that are reluctant to move to IPbased interconnection due to concerns 

about losing intercarrier compensation 

revenues? Will moving originating 8YY 

access charges—particularly tandem 

switching and transport charges—to 

bill-and-keep expedite the transition to 

IP services? Will it discipline prices? 

Will it improve network efficiency? 

d. Reducing Intercarrier Compensation 

Disputes 

43. We seek comment on the extent to 

which our proposals will reduce 

intercarrier compensation disputes. The 

Commission found in the USF/ICC 

Transformation Order that ‘‘bill-andkeep will . . . reduce ongoing call 

monitoring, intercarrier billing disputes, 

and contract enforcement efforts.’’ 

Similarly, we expect that by eliminating 

the incentives to abuse the intercarrier 

compensation system for 8YY traffic, 

our proposed reforms will allow carriers 

to reduce the resources they currently 

dedicate to monitoring their 8YY call 

traffic and disputing 8YY invoices. 

44. We invite comment on these 

expectations. What would be the 

monetary impact of such savings? Is 

there any reason that our proposed 

reforms would not reduce intercarrier 

disputes related to 8YY calls? Are there 

any other benefits that are likely to arise 

from moving most 8YY intercarrier 

compensation charges to bill-and-keep, 

in addition to the ones already 

discussed in this Notice? 

2. Alternative Proposal 

45. We recognize that our proposal to 

move all tandem switching and 

transport to bill-and-keep is a departure 

from the approach the Commission took 

in reforming terminating access charges. 

In the USF/ICC Transformation Order, 

the Commission adopted bill-and-keep 

for terminating tandem switching and 

transport only where the terminating 

price cap carrier owns the tandem. 

Accordingly, we invite comment on an 

alternative proposal to transition all 

originating interstate and intrastate end 

office 8YY access charges to bill-andkeep, but to move 8YY tandem 

switching and transport to bill-and-keep 

only where the originating carrier also 

owns the tandem. Under this approach, 

we propose to cap the mileage that 

carriers can charge for tandem switching 

and transport based on the number of 

miles between the originating end office 

and the nearest tandem in the same 

local access and transport area (LATA). 

As part of this alternative approach, we 

also propose to cap tandem switching 

and transport rates based on the rates 

charged by the incumbent LEC serving 

the LATA in which the call originates, 

without regard to the rates charged by 

the incumbent LEC serving the area 

where the tandem is located. 

46. We seek comment on whether this 

alternative proposal would adequately 

address abuses in the 8YY marketplace, 

including benchmarking abuse and 

mileage pumping. If we adopt this 

approach, what are the relative benefits 

compared to our proposed framework 

for transitioning all tandem switching 

and transport elements of originating 

toll free traffic to bill-and-keep? For 

example, under this alternative 

approach, would there be less need for 

revenue recovery? How would common 

ownership of the end office and tandem 

be determined? Should we determine 

ownership at the holding company 

level? Is there any reason that an 

originating LEC should not be deemed 

to ‘‘own’’ a tandem that is owned or 

operated by an affiliate of the 

originating LEC? Finally, we seek 

comment on the drawbacks of this 

alternative proposal, particularly 

relative to our proposal to adopt billand-keep as the default methodology for 

all 8YY originating access charges, 

without regard to who owns the tandem. 

B. Providing a Transition Period 

47. We propose to provide a threeyear transition period for moving 

originating end office and tandem 

switching and transport access charges 

for 8YY calls to bill-and-keep. In 

proposing this transition, we 

acknowledge concerns that a ‘‘flash cut’’ 

to bill-and-keep might be ‘‘hugely 

disruptive for originating access 

providers and . . . could prompt 

‘financial distress.’ ’’ Adopting a glide 

path will allow providers to evaluate 

their cost recovery options and make 

any appropriate changes to their enduser rates to offset the loss of 8YY 

access payments. 

48. A three-year transition period 

would be consistent with the 

Commission’s decision, in the USF/ICC 

Transformation Order, to adopt a glide 

path to a bill-and-keep methodology for 

many terminating access charges. That 

decision was prompted by a desire to 

‘‘provide industry with certainty and 

sufficient time to adapt to a changed 

regulatory landscape.’’ As the 

Commission explained, ‘‘adopting a 

gradual glide path to a bill-and-keep 

methodology for intercarrier 

compensation generally . . . will help 

avoid market disruption to service 

providers and consumers’’ and 

‘‘moderate potential adverse effects on 

consumers and carriers of moving too 

quickly.’’ 

49. We propose a three-step transition 

process that corresponds with the 

process for filing annual access tariffs, 

to become effective on July 1 of every 

year. Each step will last one year and 

apply to all LECs that tariff rates related 

to originating 8YY calls. The rules will 

apply directly to incumbent LECs, 

including both rate-of-return carriers 

and price cap LECs, and will apply to 

competitive LECs through the 

continuing application of the existing 

benchmarking rule. At the first step, to 

become effective on July 1 of the base 

year, we propose to require carriers to 

reduce all interstate and intrastate 

originating end office and tandem 

switching and transport tariffed rates for 

8YY calls by one-third. At the second 

step, one year later, we propose to 

require carriers to further reduce their 

originating end office and tandem 

switching and transport rates for 8YY 

calls by an additional one-third. At the 

third and final step, two years after the 

base year filing, we propose to require 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31105 

carriers to move their tariffed rates for 

originating 8YY end office and tandem 

switching and transport to bill-andkeep. We seek comment on this 

proposal. 

50. Do commenters have concerns 

about the adoption of a transition 

period? Should we adopt different 

transition periods for originating end 

office access charges and for tandem 

switching and transport charges? If so, 

why and what should they be? Will our 

proposed transition adequately address 

concerns about problems associated 

with a flash cut? Conversely, would a 

shorter transition of 8YY traffic to billand-keep help speed the transition to IP 

services? Would the proposed transition 

impact some carriers differently than 

others? Are there any other aspects of 

8YY traffic flow that we should address 

when we consider a transition period? 

We also seek comment on our proposed 

rules for effectuating this proposal. Do 

the proposed rules provide sufficient 

guidance for implementing our 

proposed transition period? Are there 

additional issues that we should address 

in the proposed rules to avoid confusion 

during implementation? 

51. Consistent with the rules the 

Commission adopted to implement the 

transition to bill-and-keep for 

terminating end office access services in 

the USF/ICC Transformation Order, we 

propose to require carriers to first 

convert their originating 8YY access 

charges to single composite per-minute 

rates for each of the four categories of 

services being transitioned (interstate 

originating end office access, intrastate 

originating end office access, interstate 

originating tandem switched transport 

access, and intrastate originating 

tandem switched transport access). Our 

proposed rules require LECs to calculate 

their baseline rates—which will be the 

starting point for the rate reductions 

described above—by dividing their 

baseline revenues from a particular 

category of access charges (e.g., 

interstate originating end office access 

charges for toll free calls) by the 

corresponding minutes of use for that 

category. We seek comment on this 

proposed approach. What lessons can be 

learned from implementation of the 

transition to bill-and-keep for 

terminating end office access services 

that we should apply here? Would this 

approach be reasonably straightforward 

to implement? Are there potential 

gaming or other implementation 

concerns about which we should be 

concerned? 

52. In the alternative, should we 

require LECs to reduce all rate elements 

for originating end office and tandem 

switching and transport for toll free 

calls by one-third the first year, by an 

additional one-third the second year, 

and to bill-and-keep the third year? 

Would such an approach be simpler for 

carriers to implement from a tariffing 

and billing perspective? Does it make 

any difference to the carriers paying 

these access charges whether the 

transition involves composite rates? 

What are the advantages and 

disadvantages to one approach as 

compared to the other? Are there 

potential gaming or other 

implementation concerns about which 

we should be concerned if we adopt this 

three-year transition approach? 

53. Unlike the rules the Commission 

adopted in the Transformation Order, 

our proposed rules do not specifically 

address the treatment of fixed charges 

(e.g., non-recurring charges and some 

monthly recurring charges, such as 

those billed on a per-DS1 or per-DS3 

basis). We seek comment on whether we 

should address such charges in 

connection with toll free calls by, for 

example, requiring LECs to allocate 

their fixed charges between 8YY and 

non-8YY calls. Or, should we bring perminute charges related to originating 

toll free calls to bill-and-keep but defer 

action on fixed charges until we address 

originating access charges more broadly 

outside of the toll free context? Does the 

answer to this question depend on 

whether we require LECs to adopt 

composite rates as part of the transition 

of 8YY originating access charges to billand-keep? 

54. If we decide to include fixed 

charges as part of our reforms of 

originating access charges for 8YY calls, 

should we dictate a specific 

methodology for allocating such charges 

between toll free and other originating 

traffic? If so, how should the rules 

allocate fixed charges between 8YY and 

non-8YY calls? In the USF/ICC 

Transformation Order, the Commission 

directed carriers to allocate fifty percent 

of their fixed charges to terminating 

access and fifty percent to originating 

access. Should we take a similar 

approach here and direct LECs to 

allocate half of their fixed charges for 

originating access to toll free traffic? Or 

should a greater percentage of fixed 

charges be allocated to toll free 

originating traffic, particularly given 

that filings in the record suggest that toll 

free calls account for significantly more 

than half of all originating access 

minutes billed to IXCs? In the 

alternative, should we allow LECs to 

allocate based on their particular traffic 

data, but establish a default allocation 

for carriers that lack sufficient 

information regarding their traffic data? 

If we establish a default allocation, 

should the percentage be fifty percent 

allocated to 8YY calls? Or should the 

percentage be different? 

55. In the USF/ICC Transformation 

Order, the Commission modified the 

CLEC benchmarking rule and adopted 

‘‘a limited allowance of additional time 

to make tariff filings during the 

transition period’’ in order ‘‘to ensure 

smooth operation of our transition’’ to 

bill-and-keep. We seek comment on 

whether a similar allowance is 

warranted here. For example, should we 

allow competitive LECs that benchmark 

their originating 8YY access charges to 

a competing incumbent LEC an 

additional 15 days from the effective 

date of the tariff to which a competitive 

LEC is benchmarking to make its 

modified tariff filing? Would such an 

allowance be necessary if we adopted 

our alternative proposal and required 

LECs to reduce their individual rate 

elements for toll free calls rather than 

converting their existing charges to 

composite per-minute rates? If all LECs 

were required to reduce their originating 

access rates for 8YY calls by the same 

proportions, would it be necessary to 

give competitive LECs additional time 

after incumbent LECs file their tariffs to 

come into compliance with the 

proposed reductions? We invite 

comments on these issues, as well as 

any other suggested modifications to the 

application of the CLEC benchmarking 

rule during the transition period, based 

on lessons learned during the transition 

to bill-and-keep for terminating access 

charges. 

56. We seek comment on any costs 

and burdens on small entities associated 

with the proposed rule, including data 

quantifying the extent of those costs or 

burdens. We also invite suggested 

modifications to the proposed 

transition. Are there other issues we 

should consider? Are there lessons 

learned during the transition to bill-andkeep for terminating access charges that 

should inform our approach here? Any 

alternative approaches should also be 

supported by data and other evidence 

showing their relative advantages and 

disadvantages. We welcome specific 

comments on the language and the 

potential impact of the proposed rules 

accompanying this item. 

C. Revenue Recovery 

57. Some commenters express 

concerns about the financial impact of 

moving 8YY calls to bill-and-keep and 

argue that some carriers may need a 

source of revenue recovery to mitigate 

the impact of lost access revenues. 

Other commenters express concern that 

moving originating access for 8YY calls 

to bill-and-keep might deter consumers 


sradovich on DSK3GMQ082PROD with PROPOSALS
31106 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

from making toll free calls. The latter 

concerns appear to be based on an 

assumption that carriers will directly 

bill consumers for originating 8YY 

access on a per-call or per-minute basis. 

We do not propose that carriers should 

recover any lost revenue through 8YYspecific charges, whether billed per-call, 

per-minute, or on a flat-rated monthly 

basis. Such an approach would be 

inconsistent with the way most 

customers are billed for voice services 

today (e.g., flat-rated, unlimited calling 

plans). We seek comment on whether 

there are additional steps we should 

take to address concerns that our 

proposed reforms might discourage 

legitimate 8YY calls. 

58. In the USF/ICC Transformation 

Order, the Commission adopted a 

transitional recovery mechanism to 

partially mitigate revenue reductions 

incumbent LECs would experience 

because of these intercarrier 

compensation reform measures. The 

recovery mechanism had two basic 

components. First, the Commission 

defined the revenue incumbent LECs 

were eligible to recover—referred to as 

‘‘Eligible Recovery.’’ The Eligible 

Recovery calculation was different for 

price cap carriers and rate-of-return 

carriers, with the rate-of-return 

calculation based on a more complex 

formula, which included such carriers’ 

2011 interstate switched access revenue 

requirement. Second, the Commission 

specified that incumbent LECs may 

recover Eligible Recovery through 

limited end-user charges, and, where 

eligible, and a carrier elects to receive it, 

support from the CAF. The recovery 

mechanism differed between price cap 

carriers and rate-of-return carriers, with 

CAF ICC support for price cap carriers 

eventually phasing out, but no similar 

sunset for rate-of return carriers. The 

Commission declined to permit 

competitive LECs to participate in the 

recovery mechanism, explaining that, 

because competitive LECs lack market 

power for the provision of these 

services, they were free to recover 

reduced access revenue through regular 

end-user charges. 

59. More recently, in the Technology 

Transitions Order, the Commission 

concluded that incumbent LECs, like 

competitive LECs, are ‘‘non-dominant in 

their provision of interstate switched 

access services.’’ Accordingly, 

incumbent LECs, like competitive LECs, 

should be able to recover revenues they 

may lose as a result of our proposals 

directly from their end users, subject 

only to the discipline of the market. 

This is similar to the approach the 

Commission took with competitive 

LECs in the USF/ICC Transformation 

Order, and to the approach the 

Commission adopted with CMRS 

providers. When those providers were 

transitioned to bill-and-keep, the 

Commission did not provide any 

revenue recovery mechanisms. Instead, 

the Commission relied on the 

competitive market to determine 

whether, and how much, those 

providers could increase their rates to 

recover any revenues lost due to the 

transition to bill-and-keep. 

60. We seek comment on whether 

incumbent LECs, like competitive LECs, 

should be able to recover their lost 

access charge revenues from their end 

users. Should the market determine 

whether any rate increases are 

reasonable? Is there any reason 

consumers would not be able to switch 

providers—for example, moving from a 

wireline LEC to a wireless provider—if 

their existing carrier charges too much 

for its services? Is there any reason LECs 

cannot adjust their end-user rates to 

recover revenues they may lose due to 

our proposed changes to the intercarrier 

compensation regime for originating 

8YY calls? Should we provide any 

additional revenue recovery? For 

example, should we allow incumbent 

LECs to recover lost revenue through 

mechanisms, such as the Access 

Recovery Charge (ARC)? Why would 

carriers need to rely on ARCs if they are 

nondominant in the provision of the 

originating switched access services at 

issue here? If we allow carriers to 

recover lost revenues through ARCs, 

would we need to raise the Residential 

Rate Ceiling, which currently prohibits 

providers from imposing an ARC on any 

consumer paying an inclusive local 

monthly phone rate of $30 or more, in 

order to allow sufficient revenue 

recovery? Would we need to increase 

the existing cap on ARCs? Are there 

other issues to consider if we allow 

price cap carriers and competitive LECs 

to rely on increased ARCs? Are there 

any regulatory barriers that might 

impede incumbent LECs’ ability to 

recover a reasonable amount of lost 

revenue from their end users? Are there 

any state or local regulations that would 

prevent LECs from raising their end-user 

rates to recover reasonable lost revenues 

related to intrastate 8YY calls? 

61. We also propose to exclude from 

any recovery mechanism revenues 

generated by illegitimate or unlawful 

8YY calls, such as those involving 

autodialed calls to toll free numbers, 

because it would be unreasonable for a 

LEC to rely on access revenues 

generated by such calls. We seek 

comment on this issue. We also seek 

comment on how we should determine 

which portion of originating carriers’ 

8YY revenues are legitimate for 

purposes of establishing the need for 

revenue recovery. Do we need to make 

any determinations regarding what 

revenues LECs should reasonably be 

allowed to recover from their end users, 

or can we rely on the competitive 

market to discipline carriers’ switched 

access rates? 

62. Rate-of-return carriers. While we 

propose to allow rate-of-return carriers 

to recover their legitimate 8YY costs 

through reasonable increases in enduser rates—though not through new line 

items—we recognize that many rate-ofreturn carriers, particularly those 

serving rural areas, already require CAF 

ICC support to keep end-user rates at 

acceptable levels. We seek detailed 

comment on the effect transitioning 

originating 8YY charges to bill-and-keep 

will have on rural and high-cost areas. 

Would rate-of-return carriers be 

disproportionately affected compared to 

price cap and competitive LECs? For 

example, for rate-of-return carriers, what 

proportion of originating access 

revenues are attributable to 8YY calls? 

Does this proportion differ significantly 

from that of price cap carriers? What 

effect would our existing rate-averaging 

and rate-integration rules have on our 

proposed reforms? We seek comment on 

the need for originating LECs to replace 

the revenues they currently obtain from 

8YY calls. We urge commenters, 

whenever possible, to provide 

quantifiable data or evidence supporting 

their views. 

63. We also seek comment on whether 

we should provide rate-of-return 

carriers additional CAF ICC support to 

help cover the costs of originating 8YY 

access or to replace some or all of the 

revenue such carriers currently earn 

from originating access on legitimate 

8YY calls. Would using CAF ICC 

support in this manner comport with 

the Commission’s mandate under 

section 254 to advance universal service 

through ‘‘specific, predictable and 

sufficient’’ mechanisms? 

D. Limiting Database Query Charges 

1. Adopting a Uniform Cap 

64. According to at least one 

commenter, database query charges 

comprise a significant proportion of the 

charges IXCs currently pay to 

originating LECs for 8YY calls. From the 

originating carrier’s perspective, the 

database query is a cost a LEC must 

incur in order to route an 8YY call to 

the proper IXC, either by maintaining its 

own SCP database or by paying a thirdparty SCP for the database query. 

65. Nonetheless, we recognize the 

need to rein in any unreasonable 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31107 

charges for database queries. IXCs point 

out that 8YY database query rates vary 

widely among carriers and are typically 

untethered from the costs incurred in 

querying a database. We propose to 

address concerns about excessive and 

irrationally priced rates for database 

query charges by capping those charges 

nationwide at the lowest rate currently 

charged by any price cap LEC. We also 

propose to allow only one database 

query charge per 8YY call. 

66. We invite comment on these 

proposals. In this item, we do not 

propose to move database query charges 

to bill-and-keep. Are there reasons that 

we should consider doing so 

immediately? Should we revisit that 

question after a set period of time? Are 

there harms that might arise if we 

moved other elements of originating 

access for 8YY to bill-and-keep, before 

we moved database query charges to 

bill-and-keep? We also seek comment 

on alternative methods of ensuring that 

database dip charges are just and 

reasonable. 

67. Is the proposed cap on database 

query charges reasonable? Should we 

adopt a transition period for carriers to 

lower their rates to the proposed cap? If 

so, how should we structure such a 

transition period? Should we adopt a 

firm cap, as we propose, or should we 

establish a rebuttable presumption that 

rates above a certain threshold are 

presumptively unjust and unreasonable? 

Should we provide a specific waiver 

process for carriers that can demonstrate 

that their costs for database queries 

exceed the national cap? Should we 

build in automatic reductions to the 

permissible data base query charge to 

account for improvements in 

technology? If so, what amounts and 

over what timeframe? Conversely, 

should we allow adjustments to any rate 

caps to account for inflation? Does this 

proposal create the proper incentives for 

carriers to minimize access costs and 

route 8YY traffic as efficiently as 

possible? We also seek comment on any 

costs and burdens on small entities 

associated with this proposal, including 

data quantifying the extent of those 

costs or burdens. 

2. Determining the Appropriate Cap 

68. AT&T alleges that query rates 

currently range from $0.0015 to $0.015 

per query, and that rates can vary 

widely even among corporate affiliates. 

We seek comment and additional data 

on the variability of 8YY database query 

rates. Do the rate examples provided by 

AT&T accurately reflect carriers’ rates 

for database queries? We recognize that 

the rates were capped at their thencurrent levels by the adoption of the 

USF/ICC Transformation Order, but we 

seek comment on the underlying reason 

for the extreme variability in rates for 

database queries. Are these rates 

reflective of the costs carriers incur in 

providing database dip services? Do 

querying costs vary by geographic 

region? Do query rates (or costs) vary by 

the type of customer? How do 

incumbent LECs set their database query 

rates? What impact have high database 

query rates had on IXCs and 8YY 

subscribers? 

69. Evidence provided by AT&T 

indicates that the lowest rate currently 

charged by a price cap LEC is $0.0015 

per query, charged by CenturyTel. Is 

this correct? If so, is there any reason 

this rate should not serve as a 

nationwide cap for all 8YY database 

query charges? Are rates above $0.0015 

per query unjust and unreasonable? Is 

there any reason to believe this rate is 

below the cost of querying the database? 

Inteliquent observes that, 

[r]ate structures between incumbent local 

exchange carriers trade off non-recurring 

setup charges, monthly recurring 

interconnect charges, 8YY query charge, per 

minute of use switching charges, and per 

minute per mile transport charges. For 

example, although some carriers charge a 

materially higher non-recurring set up charge 

or monthly recurring interconnect charge, 

those higher rates typically are offset by a 

lower per minute of use switching charge. 

Similarly, the 8YY DIP query charge may be 

high because the switched per minute of use 

charge is low, and vice versa. 

70. Is this a correct representation of 

how LECs allocate their charges? Is 

there any reason to believe that 

CenturyTel’s rate of $0.0015 is 

artificially low because CenturyTel 

allocates some database dip costs to 

other originating charges? Should we 

consider a cap based on the average or 

median rates currently charged by 

LECs? 

71. What infrastructure is necessary to 

conduct a database query? How 

expensive is it to become an SCP owner/ 

operator? How many SCP owner/ 

operators are there? Is the market for 

database queries competitive? We 

encourage commenters to provide 

detailed information about the rates 

SCP’s charge for database dips, the costs 

LECs incur in connecting to SCPs, and 

any other costs associated with database 

queries. Are there economies of scale 

associated with database dips? 

72. We understand that Somos is 

offering a new product—RouteLink, 

which ‘‘provides direct access to 

authoritative Toll-Free data,’’ thus 

eliminating any need for an SCP 

intermediary. How many carriers, 

Responsible Organizations 

(‘‘RespOrgs’’), or other entities use 

Somos’s RouteLink? What advantages 

does RouteLink provide compared to 

other ways to connect to Somos’s 

database? What effect, if any, does the 

introduction of RouteLink have on what 

constitutes a reasonable rate for 

database queries? 

3. One Dip per Call 

73. Regarding our proposal to limit 

carriers to one database query charge 

per call, we recognize that the 

Commission has previously declined to 

impose such a requirement on LECs. 

Instead, the Commission deferred the 

matter to an industry association, the 

Ordering and Billing Forum of the 

Exchange Carrier Standards Association. 

Did this Association take any action on 

database query charges? Should the 

Commission act now, given the current 

concerns about carriers billing IXCs for 

more than one query per call? 

Specifically, we seek comment on 

whether billing for more than one query 

charge per 8YY call is an unjust and 

unreasonable practice, even if the 

duplicative queries are performed by 

different carriers in the call chain. Is 

there any legitimate reason that an IXC 

should reasonably be expected to pay 

for multiple database queries in 

connection with a single 8YY call? 

E. Legal Authority 

74. In the USF/ICC Transformation 

Order, the Commission determined that 

it had the authority to comprehensively 

reform intercarrier compensation and 

move all interstate and intrastate access 

charges to bill-and-keep, explaining that 

‘‘the legal authority to adopt the billand-keep methodology described herein 

applies to all intercarrier compensation 

traffic.’’ Pursuant to this authority, the 

Commission adopted bill-and-keep as 

the end state for all traffic exchanged 

between carriers and adopted a glide 

path toward that methodology for all 

terminating access charges. 

75. The Commission’s actions in the 

USF/ICC Transformation Order were 

upheld on appeal, including the 

Commission’s decision to prescribe billand-keep as the default methodology for 

intercarrier compensation for various 

categories of traffic. The Court 

specifically rejected challenges to 

Commission’s regulation of originating 

charges, noting that the FCC’s inclusion 

of originating access charges in its 

reform effort was ‘‘reasonable’’ and 

entitled to deference. 

76. Our statutory authority to 

implement changes to pricing 

methodology governing the exchange of 

traffic with LECs flows directly from 

sections 251(b)(5) and 201(b) of the Act. 


sradovich on DSK3GMQ082PROD with PROPOSALS
31108 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

Section 251(b)(5) states that LECs have 

a ‘‘duty to establish reciprocal 

compensation arrangements for the 

transport and termination of 

telecommunications.’’ In addition to 

providing the substantive authority for 

various rules and requirements, the 

Supreme Court in AT&T Corp. v. Iowa 

Utilities Board, held that ‘‘the grant in 

§ 201(b) means what it says: The FCC 

has rulemaking authority to carry out 

the ‘provisions of this Act,’ which 

include §§ 251 and 252.’’ 

77. In addition to our authority to 

reform originating 8YY access charges, 

we also have authority to establish a 

transition plan for moving toward that 

ultimate objective in a manner that will 

minimize market disruptions. Indeed, 

the Commission’s pre-existing regimes 

for establishing reciprocal compensation 

rates for section 251(b)(5) traffic have 

been upheld as lawful, and can be 

applied to originating 8YY traffic, as 

provided by our transitional intercarrier 

compensation rules related to 

‘‘ultimately phasing down’’ originating 

access charges. As the U.S. Court of 

Appeals for the D.C. Circuit has 

recognized, ‘‘[w]hen necessary to avoid 

excessively burdening carriers, the 

gradual implementation of new rates 

and policies is a standard tool of the 

Commission,’’ and the transition ‘‘may 

certainly be accomplished gradually to 

permit the affected carriers, subscribers 

and state regulators to adjust to the new 

pricing system, thus preserving the 

efficient operation of the interstate 

telephone network during the interim.’’ 

78. We invite comment on our legal 

authority to adopt the changes to the 

8YY intercarrier compensation system 

that we are proposing in this Notice. Is 

there any reason that the precedents 

cited above would not apply to our 

current proposals? Does the 

Commission have the authority to create 

a revenue recovery mechanism and to 

cap database query charges as part of its 

reform of 8YY originating access? Does 

the Commission have the authority to 

make these changes pursuant to one or 

more different statutory provisions, 

other than sections 201(b) and 

251(b)(5)? 

F. Related Issues 

1. Role of Intermediate Providers 

79. To better inform our reform 

efforts, we seek comment on the role 

intermediate providers, such as thirdparty tandem providers, or other 

providers that are interposed in the call 

path between an originating carrier and 

8YY providers, play in the 8YY market. 

We also seek comment on how wireless 

8YY calls have been affected by the fact 

that CMRS providers cannot charge 

originating access charges. 

80. Several parties express frustration 

with certain practices employed by 

intermediate providers in the 8YY call 

flow. In particular, some carriers 

complain about the role intermediate 

providers play in facilitating abuses of 

the 8YY intercarrier compensation 

system. We seek comment on whether 

intermediate providers perform a 

legitimate function that should be 

preserved. Once originating 8YY traffic 

moves to bill-and-keep, we expect the 

market will determine how much, if 

anything, aggregators or other 

‘‘middlemen’’ should be paid for their 

services (including database queries). 

Should the Commission provide any 

regulations or guidance regarding the 

offering of these services or 

compensation for these services? Or can 

we rely on the marketplace? 

2. Network Edge 

81. Although we have issued a 

separate Public Notice to refresh the 

record on other intercarrier 

compensation issues, including the 

network edge, we seek comment on 

whether the network edge requires a 

distinct approach in the 8YY context, 

particularly in a scenario where an IXC 

seeks a direct connection for 8YY 

originating traffic. Parties argue that 

some carriers take advantage of the 

Commission’s current rules by 

specifying inefficient transport routes 

for 8YY traffic. Should originating 

carriers be allowed to specify a certain 

transport route, particularly if they are 

financially responsible for the transport? 

Should we develop separate rules for 

certain locations (e.g., Alaska) with 

respect to 8YY traffic? What role, if any, 

should states continue to play in 

determining the network edge for 8YY 

traffic? 

3. Traffic Imbalances 

82. Some parties argue that bill-andkeep is inappropriate for toll free calls 

because the traffic flow is unbalanced, 

i.e., 8YY subscribers are unlikely to call 

consumers and, therefore, the traffic 

always flows from the consumer to the 

8YY subscriber. These arguments do not 

strike us as persuasive. As the 

Commission explained in the USF/ICC 

Transformation Order, ‘‘both parties 

generally benefit from participating in a 

call, and therefore . . . both parties 

should split the cost of the call.’’ This 

reasoning applies to 8YY calls. If callers 

did not benefit from placing an 8YY 

call, then we would expect to see a 

decline in demand for 8YY numbers as 

well as in volume of 8YY calls, 

especially as more and more consumers 

have moved to wireless-only methods of 

telecommunications. This is not the 

case, however, as demand for 8YY 

numbers appears to be growing, as do 

minutes of use. Thus, it is clear that 

8YY calls confer some benefit not only 

to the 8YY subscriber, but also to the 

calling party. 

83. Indeed, the Commission has 

previously ‘‘reject[ed] claims that, as a 

policy matter, bill-and-keep is only 

appropriate in the case of roughly 

balanced traffic.’’ We continue to reject 

such claims and reiterate that ‘‘bill-andkeep is most consistent with the models 

used for wireless and IP networks, 

models that have flourished and 

promoted innovation and investment 

without any symmetry or balanced 

traffic requirement.’’ Nonetheless, we 

seek comment on whether there is a 

legitimate reason to find that traffic 

imbalances make 8YY calls ill-suited for 

bill-and-keep. 

4. CMRS Providers 

84. We do not include CMRS 

providers in our proposals because 

wireless carriers are already subject to 

bill-and-keep for 8YY calls and their 

end-user rates remain largely 

unregulated. We seek comment on 

whether there are any CMRS-related 

issues we need to address in this 

proceeding. Have CMRS providers been 

able to meet their revenue needs for 

originating 8YY calls through preexisting end-user charges? If not, what 

other mechanisms have CMRS providers 

used to meet their revenue needs related 

to originating 8YY calls? 

85. Some commenters assert that 

CMRS providers collect revenue for 

originating 8YY calls pursuant to 

revenue sharing arrangements with 

intermediate providers. We seek 

comment on this allegation. Are there 

wireless carriers that refuse to connect 

directly with other providers in order to 

facilitate revenue sharing arrangements? 

If so, how prevalent is this practice? 

What rationale do wireless providers 

use for refusing direct connection? How 

are 8YY access charges and database 

dips affected by a refusal of direct 

connection? 

86. We also seek comment on what 

lessons we can learn from the wireless 

experience with bill-and-keep as we 

reform originating access for wireline 

8YY calls. What is the typical call path 

for wireless 8YY calls? Does it differ 

materially from the call path for 

wireline 8YY calls? Have wireless rates 

increased to account for access costs for 

which CMRS providers cannot charge 

other carriers? If so, how large have 

these rate increases been? Has 

competition effectively disciplined 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31109 

CMRS providers’ ability to increase 

their rates to account for ‘‘lost’’ access 

charge revenues? 

5. Unintended Consequences 

87. Although we expect our proposals 

to bring numerous benefits to both 

carriers and end users, we do not want 

to overlook any potentially negative 

unintended consequences that could 

result from our proposed reforms. We 

therefore seek comment on the potential 

risks related to our proposals. 

a. Potential Effects on Consumers 

88. Some commenters object that 

moving 8YY calls to bill-and-keep 

would undermine consumer 

expectations that 8YY calls are ‘‘free’’ to 

the calling party. Other parties counter 

that, ‘‘from the beginning,’’ the term 

‘‘toll-free’’ has meant that ‘‘the caller 

doesn’t pay toll—i.e., long distance— 

charges, not that the caller’s monthly 

charge on his or her local bill will never 

change.’’ Under our proposal, 8YY calls 

will remain ‘‘toll free’’ because 

originating callers will not be charged 

for the long-distance portion of the call. 

Nonetheless, we seek comment on 

whether 8YY calls will continue to meet 

consumers’ expectations of ‘‘toll free.’’ 

Would it still be accurate to label these 

calls ‘‘toll free’’ since the long distance, 

or ‘‘toll’’ portion of the call would be 

free to the caller and paid by the 8YY 

subscriber? 

89. Some carriers claim they will need 

to educate their customers if toll free 

calls are no longer ‘‘free.’’ Would any 

consumer education be necessary or 

appropriate if we were to adopt our 

proposals? Do consumers need to be 

informed of the change in our 

originating access charge regime for 8YY 

calls? If so, what would it cost to 

disseminate such information? Who 

should bear the costs of educating 

consumers about these changes? Is there 

any merit to claims that transitioning 

8YY to bill-and-keep would leave 

providers open to ‘‘false advertising’’ 

claims because ‘‘toll free’’ calls will not 

be completely free? Are there any other 

possible negative consequences for 

consumers resulting from transitioning 

8YY traffic to bill-and-keep? 

b. Potential Effects on 8YY Subscribers 

90. Some commenters argue that 

moving originating 8YY access charges 

to bill-and-keep would harm 8YY 

subscribers, because consumers will be 

reluctant to place 8YY calls. Despite 

these concerns, the largest toll free 

subscribers appear to favor transitioning 

8YY traffic to bill-and-keep. Would our 

proposed reforms disproportionately 

affect some 8YY subscribers more than 

others? From the 8YY subscriber 

perspective, do the benefits of 

transitioning to bill-and-keep outweigh 

the adverse consequences from it? 

91. What is the proportion of the 

originating 8YY access charges 

(including end office, tandem switching 

and transport) to the remaining 8YY 

charges that 8YY subscribers pay, on 

average? Will 8YY subscribers continue 

to pay a larger proportion of the total 

costs of an 8YY call, or will the callers 

be responsible for the larger share? Will 

this calculus vary by geography? 

92. We also note that, despite 

evidence of abuse, 8YY numbers 

continue to be in high demand. What 

factors explain this dynamic? It is our 

understanding that this growth in 

demand is at least partially due to 

businesses using 8YY numbers in new 

ways, such as call tracking to determine 

which advertisements generate the most 

responses. Will the transition to billand-keep reduce the benefits of 8YY 

calls? 

c. Other Consequences 

93. In this Notice, we propose to move 

8YY originating end office and tandem 

switching and transport charges to billand-keep before reforming the 

remaining rate elements not yet affected 

by changes in the USF/ICC 

Transformation Order, including non8YY originating traffic. Would doing so 

create new opportunities for abuses of 

the intercarrier compensation system, or 

shift abuses to other forms of originating 

access? If so, how? How would our 

proposed changes affect network 

efficiency? 

94. Are there any other possible 

unintended negative consequences of 

our proposals? Would our proposed 

reforms result in call completion issues, 

as predicted by some commenters? 

Would they ‘‘lead smaller competitors 

to exit all or part of the market?’’ 

6. Additional Proposals for Reform 

95. We invite parties to propose 

additional, or alternative, methods for 

reforming originating 8YY access 

charges. We also seek comment on 

proposals already in the record. We 

encourage commenters to consider how 

any proposal would reduce abusive 

practices related to 8YY calls. We 

particularly invite comparison of the 

relative benefits and drawbacks of these 

proposals compared to the proposals we 

have set forth in the Notice. 

IV. Rule Revisions 

96. We seek comment on the rule 

changes proposed in Appendix A. 

Among other changes, we propose to 

add new definitions for the following 

terms: Baseline Composite Interstate 

Originating End Office Access Rate for 

Toll Free Calls, Baseline Composite 

Interstate Tandem-Switched Transport 

Access Service Rate for Toll Free Calls, 

Baseline Composite Intrastate 

Originating End Office Access Rate for 

Toll Free Calls, Baseline Composite 

Intrastate Tandem-Switched Transport 

Access Service Rate for Toll Free Calls, 

Database Query Charge, and Toll Free 

Call. The proposed rules also discuss 

the proposed transition of originating 

access charges for toll free calls to billand-keep, proposed new limitations on 

database query charges for toll free calls, 

and proposed modifications to the CLEC 

benchmarking rules. What, if any, other 

rule additions or modifications would 

need to be made to codify these 

proposals? Are there any conforming 

rule changes that commenters consider 

necessary? Are there any conflicts or 

inconsistencies between existing rules 

and those proposed herein? We ask 

commenters to provide any other 

proposed actions and rule additions or 

modifications we should consider to 

address the issues regarding 8YY calls 

described in this Notice including 

updates to any relevant comments or 

proposals made in response to the USF/ 

ICC Transformation FNPRM, and the 

June 29, 2017 Public Notice. 

V. Procedural Matters 

97. Filing Instructions. Pursuant to 

§§ 1.415 and 1.419 of the Commission’s 

rules, 47 CFR 1.415, 1.419, interested 

parties may file comments and reply 

comments on or before the dates 

indicated on the first page of this 

document. Comments may be filed 

using the Commission’s Electronic 

Comment Filing System (ECFS). See 

Electronic Filing of Documents in 

Rulemaking Proceedings, 63 FR 24121 

(1998). 

• Electronic Filers: Comments may be 

filed electronically using the internet by 

accessing the ECFS: https://

www.fcc.gov/ecfs/. 

• Paper Filers: Parties who choose to 

file by paper must file an original and 

one copy of each filing. If more than one 

docket or rulemaking number appears in 

the caption of this proceeding, filers 

must submit two additional copies for 

each additional docket or rulemaking 

number. 

• Filings can be sent by hand or 

messenger delivery, by commercial 

overnight courier, or by first-class or 

overnight U.S. Postal Service mail. All 

filings must be addressed to the 

Commission’s Secretary, Office of the 

Secretary, Federal Communications 

Commission. 


sradovich on DSK3GMQ082PROD with PROPOSALS
31110 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

• All hand-delivered or messengerdelivered paper filings for the 

Commission’s Secretary must be 

delivered to FCC Headquarters at 445 

12th St. SW, Room TW–A325, 

Washington, DC 20554. The filing hours 

are 8:00 a.m. to 7:00 p.m. All hand 

deliveries must be held together with 

rubber bands or fasteners. Any 

envelopes and boxes must be disposed 

of before entering the building. 

• Commercial overnight mail (other 

than U.S. Postal Service Express Mail 

and Priority Mail) must be sent to 9050 

Junction Drive, Annapolis Junction, MD 

20701. 

• U.S. Postal Service first-class, 

Express, and Priority mail must be 

addressed to 445 12th Street SW, 

Washington, DC 20554. 

98. People with Disabilities. To 

request materials in accessible formats 

for people with disabilities (braille, 

large print, electronic files, audio 

format), send an email to fcc504@fcc.gov 

or call the Consumer & Governmental 

Affairs Bureau at 202–418–0530 (voice), 

202–418–0432 (tty). 

99. Ex Parte Requirements. This 

proceeding shall be treated as a ‘‘permitbut-disclose’’ proceeding in accordance 

with the Commission’s ex parte rules. 

Persons making ex parte presentations 

must file a copy of any written 

presentation or a memorandum 

summarizing any oral presentation 

within two business days after the 

presentation (unless a different deadline 

applicable to the Sunshine period 

applies). Persons making oral ex parte 

presentations are reminded that 

memoranda summarizing the 

presentation must: (1) List all persons 

attending or otherwise participating in 

the meeting at which the ex parte 

presentation was made; and (2) 

summarize all data presented and 

arguments made during the 

presentation. If the presentation 

consisted in whole or in part of the 

presentation of data or arguments 

already reflected in the presenter’s 

written comments, memoranda, or other 

filings in the proceeding, the presenter 

may provide citations to such data or 

arguments in his or her prior comments, 

memoranda, or other filings (specifying 

the relevant page and/or paragraph 

numbers where such data or arguments 

can be found) in lieu of summarizing 

them in the memorandum. Documents 

shown or given to Commission staff 

during ex parte meetings are deemed to 

be written ex parte presentations and 

must be filed consistent with Rule 

1.1206(b). In proceedings governed by 

Rule 1.49(f) or for which the 

Commission has made available a 

method of electronic filing, written ex 

parte presentations and memoranda 

summarizing oral ex parte 

presentations, and all attachments 

thereto, must be filed through the 

electronic comment filing system 

available for that proceeding, and must 

be filed in their native format (e.g., .doc, 

.xml, .ppt, searchable .pdf). Participants 

in this proceeding should familiarize 

themselves with the Commission’s ex 

parte rules. 

100. Paperwork Reduction Act 

Analysis. This document contains 

proposed new and modified information 

collection requirements. The 

Commission, as part of its continuing 

effort to reduce paperwork burdens, 

invites the general public and the Office 

of Management and Budget to comment 

on the information collection 

requirements contained in this 

document, as required by the Paperwork 

Reduction Act of 1995, Public Law 104– 

13. In addition, pursuant to the Small 

Business Paperwork Relief Act of 2002, 

Public Law 107–198, see 44 U.S.C. 

3506(c)(4), we seek specific comment on 

how we might further reduce the 

information collection burden for small 

business concerns with fewer than 25 

employees. 

101. Initial Regulatory Flexibility Act 

Analysis. Pursuant to the Regulatory 

Flexibility Act (RFA), the Commission 

has prepared an Initial Regulatory 

Flexibility Analysis (IRFA) of the 

possible significant economic impact on 

small entities of the policies and actions 

considered in this Notice. The text of 

the IRFA is set forth in Appendix B. 

Written public comments are requested 

on this IRFA. Comments must be 

identified as responses to the IRFA and 

must be filed by the deadlines for 

comments on the NPRM. The 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, will send a copy of 

the NPRM, including the IRFA, to the 

Chief Counsel for Advocacy of the Small 

Business Administration. 

102. Contact Person. For further 

information about this proceeding, 

please contact Irina Asoskov, FCC, 

Wireline Competition Bureau, Pricing 

Policy Division, Room 5–A235, 445 12th 

Street SW, Washington, DC 20554, (202) 

418–2196, irina.asoskov@fcc.gov. 

VI. Initial Regulatory Flexibility 

Analysis 

103. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), the Commission has prepared 

this Initial Regulatory Flexibility 

Analysis (IRFA) of the possible 

significant economic impact on a 

substantial number of small entities by 

the policies and rules proposed in this 

FNPRM. The Commission requests 

written public comments on this IRFA. 

Comments must be identified as 

responses to the IRFA and must be filed 

by the deadlines for comments provided 

on the first page of the FNPRM. The 

Commission will send a copy of the 

Further Notice of Proposed Rulemaking, 

including this IRFA, to the Chief 

Counsel for Advocacy of the Small 

Business Administration (SBA). In 

addition, the FNPRM and IRFA (or 

summaries thereof) will be published in 

the Federal Register. 

A. Need for, and Objectives of, the 

Proposed Rules 

104. In the USF/ICC Transformation 

Order, the Commission adopted a billand-keep framework—under which a 

carrier generally looks to its end users 

to pay for its network costs—‘‘as the 

default methodology for all intercarrier 

compensation traffic.’’ In the FNPRM 

portion of that item, the Commission 

also sought comment on additional 

steps to implement a bill-and-keep cost 

recovery mechanism for certain access 

charges and sought comment on 

outstanding issues subject to reform in 

the future, including originating access 

charges and cost recovery for toll free 

(8YY) calls. In this FNPRM, we propose 

transitioning interstate and intrastate 

originating end office and tandem 

switching and transport charges for 8YY 

traffic to bill-and-keep, consistent with 

the Commission’s reforms and policy 

directives in the USF/ICC 

Transformation Order. In the FNPRM 

we also propose capping database query 

charges associated with 8YY calls. We 

also propose amending our rules to limit 

charges to one database query per 8YY 

call. The FNPRM also asks for comment 

on various issues related to the 8YY 

network generally and 8YY cost 

recovery specifically. 

B. Legal Basis 

105. The legal basis for any action that 

may be taken pursuant to this Notice is 

contained in sections 1, 2, 4(i), 201–206, 

251, 252, 254, 256, 303(r), and 403 of 

the Communications Act of 1934, as 

amended, 47 U.S.C. 151, 152, 154(i), 

201–206, 251, 252, 254, 256, 303(r), and 

403. 

C. Description and Estimate of the 

Number of Small Entities to Which the 

Proposed Rules Will Apply 

106. 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 rule revisions, if adopted. 

The RFA generally defines the term 

‘‘small entity’’ as having the same 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31111 

meaning as the terms ‘‘small business,’’ 

‘‘small organization,’’ and ‘‘small 

governmental jurisdiction.’’ In addition, 

the term ‘‘small business’’ has the same 

meaning as the term ‘‘small-business 

concern’’ under 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. 

107. Small Businesses, Small 

Organizations, Small Governmental 

Jurisdictions. Our actions, over time, 

may affect small entities that are not 

easily categorized at present. We 

therefore describe here, at the outset, 

three broad groups of small entities that 

could be directly affected herein. First, 

while there are industry-specific size 

standards for small businesses that are 

used in the regulatory flexibility 

analysis, according to data from the 

SBA’s Office of Advocacy, in general, a 

small business is an independent 

business having fewer than 500 

employees. These types of small 

businesses represent 99.9% of all 

businesses in the United States, which 

translates to 28.8 million businesses. 

Next, the type of small entity described 

as a ‘‘small organization’’ is generally 

‘‘any not-for-profit enterprise which is 

independently owned and operated and 

is not dominant in its field.’’ 

Nationwide, as of August 2016, there 

were approximately 356,494 small 

organizations, based on registration and 

tax data filed by nonprofits with the 

Internal Revenue Service (IRS). Finally, 

the small entity described as a ‘‘small 

governmental jurisdiction’’ is defined 

generally as ‘‘governments of cities, 

counties, towns, townships, villages, 

school districts, or special districts, with 

a population of less than fifty 

thousand.’’ U.S. Census Bureau data 

from the 2012 Census of Governments 

indicate that there were 90,056 local 

governmental jurisdictions consisting of 

general purpose governments and 

special purpose governments in the 

United States. Of this number, there 

were 37,132 General Purpose 

governments (county, municipal and 

town or township) with populations of 

less than 50,000 and 12,184 Special 

Purpose governments (independent 

school districts and special districts) 

with populations of less than 50,000. 

The 2012 U.S. Census Bureau data for 

most types of governments in the local 

government category show that the 

majority of these governments have 

populations of less than 50,000. Based 

on this data, we estimate that at least 

49,316 local government jurisdictions 

fall in the category of ‘‘small 

governmental jurisdictions.’’ 

108. Wired Telecommunications 

Carriers. The U.S. Census Bureau 

defines this industry as ‘‘establishments 

primarily engaged in operating and/or 

providing access to transmission 

facilities and infrastructure that they 

own and/or lease for the transmission of 

voice, data, text, sound, and video using 

wired communications networks. 

Transmission facilities may be based on 

a single technology or a combination of 

technologies. Establishments in this 

industry use the wired 

telecommunications network facilities 

that they operate to provide a variety of 

services, such as wired telephony 

services, including VoIP services, wired 

(cable) audio and video programming 

distribution, and wired broadband 

internet services. By exception, 

establishments providing satellite 

television distribution services using 

facilities and infrastructure that they 

operate are included in this industry.’’ 

The SBA has developed a small 

business size standard for Wired 

Telecommunications Carriers, which 

consists of all such companies having 

1,500 or fewer employees. Census data 

for 2012 show that there were 3,117 

firms that operated that year. Of this 

total, 3,083 operated with fewer than 

1,000 employees. Thus, under this size 

standard, the majority of firms in this 

industry can be considered small. 

109. Local Exchange Carriers (LECs). 

Neither the Commission nor the SBA 

has developed a size standard for small 

businesses specifically applicable to 

local exchange services. The closest 

applicable NAICS Code category is 

Wired Telecommunications Carriers as 

defined above. Under the applicable 

SBA size standard, such a business is 

small if it has 1,500 or fewer employees. 

According to Commission data, census 

data for 2012 show that there were 3,117 

firms that operated that year. Of this 

total, 3,083 operated with fewer than 

1,000 employees. The Commission 

therefore estimates that most providers 

of local exchange carrier service are 

small entities that may be affected by 

the proposed rules. 

110. Incumbent LECs. Neither the 

Commission nor the SBA has developed 

a small business size standard 

specifically for incumbent local 

exchange services. The closest 

applicable NAICS Code category is 

Wired Telecommunications Carriers as 

defined above. Under that size standard, 

such a business is small if it has 1,500 

or fewer employees. According to 

Commission data, 3,117 firms operated 

in that year. Of this total, 3,083 operated 

with fewer than 1,000 employees. 

Consequently, the Commission 

estimates that most providers of 

incumbent local exchange service are 

small businesses that may be affected by 

the rules and policies adopted. Three 

hundred and seven (307) Incumbent 

Local Exchange Carriers reported that 

they were incumbent local exchange 

service providers. Of this total, an 

estimated 1,006 have 1,500 or fewer 

employees. 

111. Competitive Local Exchange 

Carriers (Competitive LECs), 

Competitive Access Providers (CAPs), 

Shared-Tenant Service Providers, and 

Other Local Service Providers. Neither 

the Commission nor the SBA has 

developed a small business size 

standard specifically for these service 

providers. The appropriate NAICS Code 

category is Wired Telecommunications 

Carriers, as defined above. Under that 

size standard, such a business is small 

if it has 1,500 or fewer employees. U.S. 

Census data for 2012 indicate that 3,117 

firms operated during that year. Of that 

number, 3,083 operated with fewer than 

1,000 employees. Based on this data, the 

Commission concludes that the majority 

of Competitive LECS, CAPs, SharedTenant Service Providers, and Other 

Local Service Providers, are small 

entities. According to Commission data, 

1,442 carriers reported that they were 

engaged in the provision of either 

competitive local exchange services or 

competitive access provider services. Of 

these, an estimated 1,256 have 1,500 or 

fewer employees. In addition, 17 

carriers have reported that they are 

Shared-Tenant Service Providers, and 

all 17 are estimated to have 1,500 or 

fewer employees. Also, 72 carriers have 

reported that they are Other Local 

Service Providers. Of this total, 70 have 

1,500 or fewer employees. 

Consequently, based on internally 

researched FCC data, the Commission 

estimates that most Competitive LECs, 

CAPs, Shared-Tenant Service Providers, 

and Other Local Service Providers are 

small entities. 

112. We have included small 

incumbent LECs in this RFA analysis. 

As noted above, a ‘‘small business’’ 

under the RFA is one that, inter alia, 

meets the pertinent small business size 

standard (e.g., a telephone 

communications business having 1,500 

or fewer employees), and ‘‘is not 

dominant in its field of operation.’’ The 

SBA’s Office of Advocacy contends that, 

for RFA purposes, small incumbent 

LECs are not dominant in their field of 

operation because any such dominance 

is not ‘‘national’’ in scope. We have 

therefore included small incumbent 

LECs in this RFA analysis, although we 

emphasize that this RFA action has no 


sradovich on DSK3GMQ082PROD with PROPOSALS
31112 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

effect on Commission analyses and 

determinations in other, non-RFA 

contexts. 

113. Interexchange Carriers (IXCs). 

Neither the Commission nor the SBA 

has developed a definition for 

Interexchange Carriers. The closest 

NAICS Code category is Wired 

Telecommunications Carriers, as 

defined above. The applicable size 

standard under SBA rules is that such 

a business is small if it has 1,500 or 

fewer employees. U.S. Census data for 

2012 indicate that 3,117 firms operated 

during that year. Of that number, 3,083 

operated with fewer than 1,000 

employees. According to internally 

developed Commission data, 359 

companies reported that their primary 

telecommunications service activity was 

the provision of interexchange services. 

Of this total, an estimated 317 have 

1,500 or fewer employees. 

Consequently, the Commission 

estimates that the majority of IXCs are 

small entities. 

114. Local Resellers. The SBA has 

developed a small business size 

standard for the category of 

Telecommunications Resellers. The 

Telecommunications Resellers industry 

comprises establishments engaged in 

purchasing access and network capacity 

from owners and operators of 

telecommunications networks and 

reselling wired and wireless 

telecommunications services (except 

satellite) to businesses and households. 

Establishments in this industry resell 

telecommunications; they do not 

operate transmission facilities and 

infrastructure. Mobile virtual network 

operators (MVNOs) are included in this 

industry. Under that size standard, such 

a business is small if it has 1,500 or 

fewer employees. Census data for 2012 

show that 1,341 firms provided resale 

services during that year, all of which 

operated with fewer than 1,000 

employees. Thus, under this category 

and the associated small business size 

standard, all of these resellers can be 

considered small entities. 

115. Toll Resellers. The Commission 

has not developed a definition for Toll 

Resellers. The closest NAICS Code 

Category is Telecommunications 

Resellers. The Telecommunications 

Resellers industry comprises 

establishments engaged in purchasing 

access and network capacity from 

owners and operators of 

telecommunications networks and 

reselling wired and wireless 

telecommunications services (except 

satellite) to businesses and households. 

Establishments in this industry resell 

telecommunications; they do not 

operate transmission facilities and 

infrastructure. Mobile virtual network 

operators (MVNOs) are included in this 

industry. The SBA has developed a 

small business size standard for the 

category of Telecommunications 

Resellers. Under that size standard, such 

a business is small if it has 1,500 or 

fewer employees. Census data for 2012 

show that 1,341 firms provided resale 

services during that year. Of that 

number, 1,341 operated with fewer than 

1,000 employees. Thus, under this 

category and the associated small 

business size standard, the majority of 

these resellers can be considered small 

entities. According to Commission data, 

881 carriers have reported that they are 

engaged in the provision of toll resale 

services. Of this total, an estimated 857 

have 1,500 or fewer employees. 

Consequently, the Commission 

estimates that the majority of toll 

resellers are small entities. 

116. Other Toll Carriers. Neither the 

Commission nor the SBA has developed 

a definition for small businesses 

specifically applicable to Other Toll 

Carriers. This category includes toll 

carriers that do not fall within the 

categories of IXCs, operator service 

providers, prepaid calling card 

providers, satellite service carriers, or 

toll resellers. The closest applicable 

NAICS Code category is for Wired 

Telecommunications Carriers, as 

defined above. Under the applicable 

SBA size standard, such a business is 

small if it has 1,500 or fewer employees. 

Census data for 2012 show that there 

were 3,117 firms that operated that year. 

Of this total, 3,083 operated with fewer 

than 1,000 employees. Thus, under this 

category and the associated small 

business size standard, the majority of 

Other Toll Carriers can be considered 

small. According to internally 

developed Commission data, 284 

companies reported that their primary 

telecommunications service activity was 

the provision of other toll carriage. Of 

these, an estimated 279 have 1,500 or 

fewer employees. Consequently, the 

Commission estimates that most Other 

Toll Carriers are small entities that may 

be affected by the rules proposed in the 

Notice. 

117. Prepaid Calling Card Providers. 

The SBA has developed a definition for 

small businesses within the category of 

Telecommunications Resellers. Under 

that SBA definition, such a business is 

small if it has 1,500 or fewer employees. 

According to the Commission’s Form 

499 Filer Database, 500 companies 

reported that they were engaged in the 

provision of prepaid calling cards. The 

Commission does not have data 

regarding how many of these 500 

companies have 1,500 or fewer 

employees. Consequently, the 

Commission estimates that there are 500 

or fewer prepaid calling card providers 

that may be affected by the rules 

proposed in the Notice. 

118. Wireless Telecommunications 

Carriers (except Satellite). This industry 

is comprised of establishments engaged 

in operating and maintaining switching 

and transmission facilities to provide 

communications via the airwaves. 

Establishments in this industry have 

spectrum licenses and provide services 

using that spectrum, such as cellular 

services, paging services, wireless 

internet access, and wireless video 

services. The appropriate size standard 

under SBA rules is that such a business 

is small if it has 1,500 or fewer 

employees. For this industry, U.S. 

Census data for 2012 show that there 

were 967 firms that operated for the 

entire year. Of this total, 955 firms had 

employment of 999 or fewer employees 

and 12 had employment of 1,000 

employees or more. Thus under this 

category and the associated size 

standard, the Commission estimates that 

the majority of wireless 

telecommunications carriers (except 

satellite) are small entities. 

119. The Commission’s own data— 

available in its Universal Licensing 

System—indicate that, as of October 25, 

2016, there are 280 Cellular licensees 

that may be affected by our proposed 

rules. The Commission does not know 

how many of these licensees are small, 

as the Commission does not collect that 

information for these types of entities. 

Similarly, according to internally 

developed Commission data, 413 

carriers reported that they were engaged 

in the provision of wireless telephony, 

including cellular service, Personal 

Communications Service, and 

Specialized Mobile Radio Telephony 

services. Of this total, an estimated 261 

have 1,500 or fewer employees, and 152 

have more than 1,500 employees. Thus, 

using available data, we estimate that 

the majority of wireless firms can be 

considered small. 

120. Wireless Communications 

Services. This service can be used for 

fixed, mobile, radiolocation, and digital 

audio broadcasting satellite uses. The 

Commission defined ‘‘small business’’ 

for the wireless communications 

services auction as an entity with 

average gross revenues of $40 million 

for each of the three preceding years, 

and a ‘‘very small business’’ as an entity 

with average gross revenues of $15 

million for each of the three preceding 

years. The SBA has approved these 

definitions. 

121. Wireless Telephony. Wireless 

telephony includes cellular, personal 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31113 

communications services, and 

specialized mobile radio telephony 

carriers. As noted, the SBA has 

developed a small business size 

standard for Wireless 

Telecommunications Carriers (except 

Satellite). Under the SBA small business 

size standard, a business is small if it 

has 1,500 or fewer employees. 

According to Commission data, 413 

carriers reported that they were engaged 

in wireless telephony. Of these, an 

estimated 261 have 1,500 or fewer 

employees and 152 have more than 

1,500 employees. Therefore, a little less 

than two thirds of these entities can be 

considered small. 

122. All Other Telecommunications. 

The ‘‘All Other Telecommunications’’ 

industry is comprised of establishments 

that are primarily engaged in providing 

specialized telecommunications 

services, such as satellite tracking, 

communications telemetry, and radar 

station operation. This industry also 

includes establishments primarily 

engaged in providing satellite terminal 

stations and associated facilities 

connected with one or more terrestrial 

systems and capable of transmitting 

telecommunications to, and receiving 

telecommunications from, satellite 

systems. Establishments providing 

internet services or voice over internet 

protocol (VoIP) services via clientsupplied telecommunications 

connections are also included in this 

industry. The SBA has developed a 

small business size standard for ‘‘All 

Other Telecommunications,’’ which 

consists of all such firms with gross 

annual receipts of $32.5 million or less. 

For this category, U.S. Census data for 

2012 show that there were 1,442 firms 

that operated for the entire year. Of 

these firms, a total of 1,400 had gross 

annual receipts of less than $25 million. 

Thus a majority of ‘‘All Other 

Telecommunications’’ firms potentially 

affected by our action can be considered 

small. 

D. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

123. In this FNPRM, the Commission 

seeks public comment on additional 

steps to complete its intercarrier 

compensation reform regarding toll free 

or 8YY calls. The transition to complete 

the reform of new intercarrier 

compensation rules could affect all 

carriers, including small entities, and 

may include new administrative 

processes. In proposing these reforms, 

we seek comment on various reporting, 

recordkeeping, and other compliance 

requirements that may apply to all 

carriers, including small entities. We 

seek comment on any costs and burdens 

on small entities associated with the 

proposed rules, including data 

quantifying the extent of those costs or 

burdens. These issues include the 

appropriate path or transition to move 

8YY originating access charges to billand-keep and on the appropriate 

recovery of 8YY database costs. We also 

seek data to analyze the effects of 

proposed reforms and need for revenue 

recovery. 

124. Compliance with a transition to 

a new system for 8YY originating access 

may impact some small entities and 

may include new or reduced 

administrative processes. For carriers 

that may be affected, obligations may 

include certain reporting and 

recordkeeping requirements to 

determine and establish their eligibility 

to receive recovery from other sources 

as 8YY originating access revenue is 

reduced. Modifications to the rules to 

address potential arbitrage opportunities 

will affect certain carriers, potentially 

including small entities. However, these 

impacts are mitigated by the certainty 

and reduced litigation that should occur 

as a result of the reforms adopted. The 

FNPRM seeks comment on several 

issues relating to bill-and-keep 

implementation for 8YY originating 

access as well as cost recovery for 8YY 

database dips. The FNPRM also seeks 

comment on how reduced intercarrier 

compensation revenues in the future 

would impact carriers, and how 

recovery, if any, for those reduced 

revenues should be addressed. The 

Commission asks if the recovery 

approach adopted should be different 

depending on the type of carrier or 

regulation. 

E. Steps Taken To Minimize the 

Significant Economic Impact on Small 

Entities, and Significant Alternatives 

Considered 

125. The RFA requires an agency to 

describe any significant alternatives it 

has considered to the proposed rule 

which minimize any significant impact 

on small entities. These alternatives 

may include (among others): (1) The 

establishment of differing compliance or 

reporting requirements or timetables 

that take into account the resources 

available to small entities; (2) the 

clarification, consolidation, or 

simplification of compliance and 

reporting requirements under the rules 

for such small entities; (3) the use of 

performance rather than design 

standards; and (4) an exemption from 

coverage of the rule, or any part thereof, 

for such small entities. 

126. This FNPRM invites comment on 

a number of proposals and alternatives 

to modify or adopt 8YY originating 

access and database dip rules. As a 

general matter, actions taken as a result 

of our actions should benefit all service 

providers, including small entities, by 

providing greater regulatory certainty 

and by moving toward the 

Commission’s goal of bill-and-keep for 

all access charges. In the FNPRM, we 

encourage small entities to bring to the 

Commission’s attention any specific 

concerns that they have, including on 

any issues or measures that may apply 

to small entities in a unique fashion. We 

especially encourage commenters to 

discuss the proposed transitional 

recovery mechanism to help transition 

LECs away from existing revenues. Our 

proposed tailored approach to 

transitional recovery is designed to 

balance the different circumstances 

facing the different carrier types and 

provide all carriers with necessary 

predictability, certainty, and stability to 

transition from the current intercarrier 

compensation system. The FNPRM also 

seeks comment on other actions the 

Commission could take to further 

discourage or eliminate abuse of the 

intercarrier compensation regime that 

governs 8YY calls. Finally, we seek 

comment on alternatives to our 

proposals that we should consider to 

achieve our objectives with less impact 

on small entities. 

F. Federal Rules That May Duplicate, 

Overlap, or Conflict With the Proposed 

Rules 

127. None. 

I. Ordering Clauses 

128. Accordingly, it is ordered that, 

pursuant to sections 1, 2, 4(i), 201–206, 

251, 252, 254, 256, 303(r), and 403 of 

the Communications Act of 1934, as 

amended, 47 U.S.C. 151, 152, 154(i), 

201–206, 251, 252, 254, 256, 303(r), 403, 

and § 1.1 of the Commission’s rules, 47 

CFR 1.1, this Further Notice of Proposed 

Rulemaking is adopted. 

129. It is further ordered that pursuant 

to applicable procedures set forth in 

§§ 1.415 and 1.419 of the Commission’s 

rules, 47 CFR 1.415, 1.419, interested 

parties may file comments on this 

Further Notice of Proposed Rulemaking 

on or before September 4, 2018 and 

reply comments on or before October 1, 

2018. 

130. It is further ordered that the 

Commission’s Consumer Information 

Bureau, Reference Information Center, 

SHALL SEND a copy of the Further 

Notice of Proposed Rulemaking, 

including the Initial Regulatory 

Flexibility Analysis, to the Chief 

Counsel for Advocacy of the Small 

Business Administration. 


sradovich on DSK3GMQ082PROD with PROPOSALS
31114 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

List of Subjects in 47 CFR Parts 51 and 

61 

Telephone. 

Federal Communications Commission. 

Katura Jackson, 

Federal Register Liaison Officer, Office of the 

Secretary. 

Proposed Rules 

For the reasons discussed in the 

preamble, the Federal Communications 

Commission proposes to amend 47 CFR 

parts 51 and 61 as follows: 

PART 51—INTERCONNECTION 

■ 1. The authority citation for part 51 

continues to read as follows: 

Authority: 47 U.S.C. 151–55, 201–05, 207– 

09, 218, 220, 225–27, 251–54, 256, 271, 

303(r), 332, 1302. 

■ 2. Revise § 51.903 to read as follows: 

§ 51.903 Definitions. 

(a) Access Reciprocal Compensation 

means telecommunications traffic 

exchanged between telecommunications 

service providers that is interstate or 

intrastate exchange access, information 

access, or exchange services for such 

access, other than special access. 

(b) Baseline Composite Interstate 

Originating End Office Access Rate for 

Toll Free Calls means originating End 

Office Access Service billed revenue 

from interstate Toll Free Calls for [Base 

Year ¥ 1] divided by end office 

switching interstate Toll Free calling 

minutes for [Base Year ¥ 1]. 

(c) Baseline Composite Interstate 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls means 

originating Tandem-Switched Transport 

Access Service billed revenue from 

interstate Toll Free Calls for [Base Year 

¥ 1] divided by tandem-switched 

interstate Toll Free calling minutes for 

[Base Year ¥ 1]. 

(d) Baseline Composite Intrastate 

Originating End Office Access Rate for 

Toll Free Calls means originating End 

Office Access Service billed revenue 

from intrastate Toll Free Calls for [Base 

Year ¥ 1] divided by end office 

switching intrastate Toll Free calling 

minutes for [Base Year ¥ 1]. 

(e) Baseline Composite Intrastate 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls means 

originating Tandem-Switched Transport 

Access Service billed revenue from 

intrastate Toll Free Calls for [Base Year 

¥ 1] divided by tandem-switched 

intrastate Toll Free calling minutes for 

[Base Year ¥ 1]. 

(f) Competitive Local Exchange 

Carrier. A Competitive Local Exchange 

Carrier is any local exchange carrier, as 

defined in § 51.5, that is not an 

incumbent local exchange carrier. 

(g) Composite Terminating End Office 

Access Rate means terminating End 

Office Access Service revenue, 

calculated using demand for a given 

time period, divided by end office 

switching minutes for the same time 

period. 

(h) Database Query Charge means a 

charge that is expressed in dollars and 

cents that an originating carrier or 

tandem switch provider assesses upon 

an interexchange carrier for obtaining 

routing information for a Toll Free Call 

and includes any charges for signaling 

or transport services used to obtain such 

routing information. 

(i) Dedicated Transport Access 

Service means originating and 

terminating transport on circuits 

dedicated to the use of a single carrier 

or other customer provided by an 

incumbent local exchange carrier or any 

functional equivalent of the incumbent 

local exchange carrier access service 

provided by a non-incumbent local 

exchange carrier. Dedicated Transport 

Access Service rate elements for an 

incumbent local exchange carrier 

include the entrance facility rate 

elements specified in § 69.110 of this 

chapter, the dedicated transport rate 

elements specified in § 69.111 of this 

chapter, the direct-trunked transport 

rate elements specified in § 69.112 of 

this chapter, and the intrastate rate 

elements for functionally equivalent 

access services. Dedicated Transport 

Access Service rate elements for a nonincumbent local exchange carrier 

include any functionally equivalent 

access services. 

(j) End Office Access Service means: 

(1) The switching of access traffic at 

the carrier’s end office switch and the 

delivery to or from of such traffic to the 

called party’s premises; 

(2) The routing of interexchange 

telecommunications traffic to or from 

the called party’s premises, either 

directly or via contractual or other 

arrangements with an affiliated or 

unaffiliated entity, regardless of the 

specific functions provided or facilities 

used; or 

(3) Any functional equivalent of the 

incumbent local exchange carrier access 

service provided by a non-incumbent 

local exchange carrier. End Office 

Access Service rate elements for an 

incumbent local exchange carrier 

include the local switching rate 

elements specified in § 69.106 of this 

chapter, the carrier common line rate 

elements specified in § 69.154 of this 

chapter, and the intrastate rate elements 

for functionally equivalent access 

services. End Office Access Service rate 

elements for an incumbent local 

exchange carrier also include any rate 

elements assessed on local switching 

access minutes, including the 

information surcharge and residual rate 

elements. End office Access Service rate 

elements for a non-incumbent local 

exchange carrier include any 

functionally equivalent access service. 

Note to paragraph (j): For incumbent local 

exchange carriers, residual rate elements may 

include, for example, state Transport 

Interconnection Charges, Residual 

Interconnection Charges, and PICCs. For nonincumbent local exchange carriers, residual 

rate elements may include any functionally 

equivalent access service. 

(k) Fiscal Year 2011 means October 1, 

2010 through September 30, 2011. 

(l) Incumbent Local Exchange Carrier 

means a Price Cap Carrier or Rate-ofReturn Carrier. 

(m) Price Cap Carrier has the same 

meaning as that term is defined in 

§ 61.3(aa) of this chapter. 

(n) Rate-of-Return Carrier is any 

incumbent local exchange carrier not 

subject to price cap regulation as that 

term is defined in § 61.3(aa) of this 

chapter, but only with respect to the 

territory in which it operates as an 

incumbent local exchange carrier. 

(o) Tandem-Switched Transport 

Access Service means: 

(1) Tandem switching and common 

transport between the tandem switch 

and end office; or 

(2) Any functional equivalent of the 

incumbent local exchange carrier access 

service provided by a non-incumbent 

local exchange carrier via other 

facilities. Tandem-Switched Transport 

rate elements for an incumbent local 

exchange carrier include the rate 

elements specified in § 69.111 of this 

chapter, except for the dedicated 

transport rate elements specified in that 

section, and intrastate rate elements for 

functionally equivalent service. Tandem 

Switched Transport Access Service rate 

elements for a non-incumbent local 

exchange carrier include any 

functionally equivalent access service. 

(p) Toll Free Call means a call to a toll 

free number, as defined in § 52.101(f) of 

this subchapter. 

(q) Transitional Intrastate Access 

Service means terminating End Office 

Access Service that was subject to 

intrastate access rates as of December 

31, 2011; terminating Tandem-Switched 

Transport Access Service that was 

subject to intrastate access rates as of 

December 31, 2011; and originating and 

terminating Dedicated Transport Access 

Service that was subject to intrastate 

access rates as of December 31, 2011. 

■ 3. Add § 51.921 to Subpart J to read 

as follows: 


sradovich on DSK3GMQ082PROD with PROPOSALS
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31115 

§ 51.921 Transition of Originating Access 

Charges for Toll Free Calls. 

(a) Effective [July 1, base year], 

notwithstanding any other provision of 

the Commission’s rules, each Incumbent 

LEC shall calculate: 

(1) A single per-minute Baseline 

Composite Intrastate Originating End 

Office Access Rate for Toll Free Calls for 

each state in which it provides such 

service; 

(2) A single per-minute Baseline 

Composite Interstate Originating End 

Office Access Rate for Toll Free Calls; 

(3) A single per-minute Baseline 

Composite Intrastate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls for each 

state in which it provides such service; 

and 

(4) A single per-minute Baseline 

Composite Interstate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. 

(b) Step 1. Beginning July 1, [base 

year], notwithstanding any other 

provision of the Commission’s rules: 

(1) Each Incumbent LEC shall 

establish rates for intrastate originating 

End Office Access Service for Toll Free 

Calls in each state in which it provides 

such service using the following 

methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year] Target 

Composite Intrastate Originating End 

Office Access Rate for Toll Free Calls. 

The [base year] Target Composite 

Intrastate Originating End Office Access 

Rate for Toll Free Calls means twothirds of the Baseline Composite 

Intrastate Originating End Office Access 

Rate for Toll Free Calls. 

(ii) Beginning [July 1, base year], a 

LEC is prohibited from filing an 

intrastate access tariff that includes an 

Originating End Office Rate for 

intrastate Toll Free Calls that exceeds its 

[base year] Target Composite Intrastate 

Originating End Office Access Rate for 

Toll Free Calls for that particular state. 

(2) Each Incumbent LEC shall 

establish rates for interstate originating 

End Office Access Service for Toll Free 

Calls using the following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year] Target 

Composite Interstate Originating End 

Office Access Rate for Toll Free Calls. 

The [base year] Target Composite 

Interstate Originating End Office Access 

Rate for Toll Free Calls means twothirds of the Baseline Composite 

Interstate Originating End Office Access 

Rate for Toll Free Calls. 

(ii) Beginning [July 1, base year], a 

LEC is prohibited from filing an 

interstate access tariff that includes an 

Originating End Office Rate for 

interstate Toll Free Calls that exceeds its 

[base year] Target Composite Interstate 

Originating End Office Access Rate for 

Toll Free Calls. 

(3) Each Incumbent LEC shall 

establish rates for intrastate originating 

Tandem-Switched Transport Access 

Service for Toll Free Calls in each state 

in which it provides such service using 

the following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year] Target 

Composite Intrastate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. The 

[base year] Target Composite Intrastate 

Originating Tandem-Switched 

Transport Access Service Rate for Toll 

Free Calls means two-thirds of the 

Baseline Composite Intrastate TandemSwitched Transport Access Service Rate 

for Toll Free Calls. 

(ii) Beginning [July 1, base year], a 

LEC is prohibited from filing an 

intrastate access tariff that includes an 

originating Tandem-Switched Transport 

Access Service Rate for intrastate Toll 

Free Calls that exceeds its [base year] 

Target Composite Intrastate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls for that 

particular state. 

(4) Each Incumbent LEC shall 

establish rates for interstate originating 

Tandem-Switched Transport Access 

Service for Toll Free Calls using the 

following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year] Target 

Composite Interstate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. The 

[base year] Target Composite Interstate 

Originating Tandem-Switched 

Transport Access Service Rate for Toll 

Free Calls means two-thirds of the 

Baseline Composite Interstate TandemSwitched Transport Access Service Rate 

for Toll Free Calls. 

(ii) Beginning [July 1, base year], a 

LEC is prohibited from filing an 

interstate access tariff that includes an 

originating Tandem-Switched Transport 

Access Service Rate for interstate Toll 

Free Calls that exceeds its [base year] 

Target Composite Interstate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. 

(c) Step 2. Beginning July 1, [base year 

+ 1], notwithstanding any other 

provision of the Commission’s rules: 

(1) Each Incumbent LEC shall 

establish intrastate rates for originating 

End Office Access Service for Toll Free 

Calls in each state in which it provides 

such service using the following 

methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year + 1] Target 

Composite Intrastate Originating End 

Office Access Rate for Toll Free Calls. 

The [base year + 1] Target Composite 

Intrastate Originating End Office Access 

Rate for Toll Free Calls means one-third 

of the Baseline Composite Intrastate 

Originating End Office Access Rate for 

Toll Free Calls. 

(ii) Beginning July 1, [base year + 1], 

a LEC is prohibited from filing an 

intrastate access tariff that includes an 

Originating End Office Access Rate for 

intrastate Toll Free Calls that exceeds its 

[base year + 1] Target Composite 

Intrastate Originating End Office Access 

Rate for Toll Free Calls for that 

particular state. 

(2) Each Incumbent LEC shall 

establish interstate rates for originating 

End Office Access Service for Toll Free 

Calls using the following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year + 1] Target 

Composite Interstate Originating End 

Office Access Rate for Toll Free Calls. 

The [base year + 1] Target Composite 

Interstate Originating End Office Access 

Rate for Toll Free Calls means one-third 

of the Baseline Composite Interstate 

Originating End Office Access Rate for 

Toll Free Calls. 

(ii) Beginning July 1, [base year + 1], 

a LEC is prohibited from filing an 

interstate access tariff that includes an 

Originating End Office Access Rate for 

interstate Toll Free Calls that exceeds its 

[base year + 1] Target Composite 

Interstate Originating End Office Access 

Rate for Toll Free Calls. 

(3) Each Incumbent LEC shall 

establish rates for originating TandemSwitched Transport Access Service for 

intrastate Toll Free Calls in each state in 

which it provides such service using the 

following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year + 2] Target 

Composite Intrastate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. The 

[base year + 2] Target Composite 

Intrastate Originating Tandem-Switched 

Transport Access Service Rate for 

intrastate Toll Free Calls means onethird of the [base year] Baseline 

Composite Intrastate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. 

(ii) Beginning July 1, [base year + 2], 

a LEC is prohibited from filing an 

intrastate access tariff that includes an 

Originating Tandem-Switched 

Transport Access Service Rate for 

intrastate Toll Free Calls that exceeds its 

[base year + 2] Target Composite 

Originating Tandem-Switched 

Transport Access Service Rate for 

intrastate Toll Free Calls for that 

particular state. 


sradovich on DSK3GMQ082PROD with PROPOSALS
31116 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 

(4) Each Incumbent LEC shall 

establish rates for interstate originating 

Tandem-Switched Transport Access 

Service for Toll Free Calls using the 

following methodology: 

(i) Each Incumbent LEC shall 

calculate its [base year + 2] Target 

Composite Interstate Originating 

Tandem-Switched Transport Access 

Service Rate for Toll Free Calls. The 

[base year + 2] Target Composite 

Interstate Originating Tandem-Switched 

Transport Access Service Rate for Toll 

Free Calls means one-third of the [base 

year] Baseline Composite Interstate 

Originating Tandem-Switched 

Transport Access Service Rate for Toll 

Free Calls. 

(ii) Beginning July 1, [base year + 2], 

a LEC is prohibited from filing an 

interstate access tariff that includes an 

Originating Tandem-Switched 

Transport Access Service Rate for 

interstate Toll Free Calls that exceeds its 

[base year + 2] Target Composite 

Interstate Originating Tandem-Switched 

Transport Access Service Rate for Toll 

Free Calls. 

(d) Step 3. Beginning July 1, [base 

year + 2], notwithstanding any other 

provision of the Commission’s rules, all 

LECs shall, in accordance with bill-andkeep, revise and refile their interstate 

and intrastate switched access 

reciprocal compensation tariffs and any 

state tariffs to remove any intercarrier 

charges applicable to interstate and 

intrastate originating End Office Access 

Service and Tandem-Switched 

Transport Access Service for all 

interstate and intrastate rate elements 

for Toll Free Calls. 

(e) Nothing in this section shall 

prevent a LEC from negotiating a rate for 

Originating End Office Access Service 

for Toll Free Calls or for Originating 

Tandem-Switched Transport Access 

Service for Toll Free Calls that is 

different from its tariffed rates, or that 

is different from bill-and-keep if there is 

no tariffed rate for such services. 

■ 4. Add § 51.923 to Subpart J to read 

as follows: 

§ 51.923 Limitation on Database Query 

Charges for Toll Free Calls. 

(a) Notwithstanding any other 

provision of the Commission’s rules, on 

[the first July 1/annual tariff filing after 

rule adoption], every Incumbent LEC 

shall cap the rates for database query 

charges in its interstate or intrastate 

tariffs at $.0015 per Toll Free Call. 

(b) Notwithstanding any other 

provision of the Commission’s rules, on 

[the first July 1/annual tariff filing after 

rule adoption], LECs involved in the 

routing of a Toll Free Call to a provider 

of Toll Free calling services may not, 

collectively, charge the provider of Toll 

Free calling services more than one 

database query charge per Toll Free 

Call. 

PART 61—TARIFFS 

■ 5. 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, 154(i), 154(j), 201– 

205 and 403, unless otherwise noted. 

■ 6. Amend § 61.26 by revising 

paragraphs (a)(3)(i) and (e) to read as 

follows: 

§ 61.26 Tariffing of Competitive Interstate 

Switched Exchange Access Services. 

(a) * * * 

(3) * * * 

(i) The functional equivalent of the 

ILEC interstate exchange access services 

typically associated with the following 

rate elements: Carrier common line 

(originating); carrier common line 

(terminating); local end office switching; 

interconnection charge; information 

surcharge; tandem switched transport 

termination (fixed); tandem switched 

transport facility (per mile); tandem 

switching; and Database Query Charge, 

as that term is defined in section 

[51.903(m)] of this chapter; 

* * * * * 

(e) Rural exemption. Except as 

provided in paragraph (g) of this 

section, and notwithstanding 

paragraphs (b) through (d) of this 

section, a rural CLEC competing with a 

non-rural ILEC shall not file a tariff for 

its interstate exchange access services 

that prices those services above the rate 

prescribed in the NECA access tariff, 

assuming the highest rate band for local 

switching. In addition to that NECA 

rate, the rural CLEC may assess a 

presubscribed interexchange carrier 

charge if, and only to the extent that, the 

competing ILEC assesses this charge. 

Beginning July 1, 2013, all CLEC 

reciprocal compensation rates for 

intrastate switched exchange access 

services subject to this subpart also shall 

be no higher than that NECA rate. The 

rural exemption in this section does not 

apply to Toll Free Calls. 

* * * * * 

[FR Doc. 2018–14150 Filed 7–2–18; 8:45 am] 

BILLING CODE 6712–01–P 


sradovich on DSK3GMQ082PROD with PROPOSALS