[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Rules and Regulations]
[Pages 26497-26502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12347]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 69

[CC Docket 96-128; DA 98-642]


Implementation of the Pay Telephone Reclassification and 
Compensation Provisions of the Telecommunications Act of 1996; AT&T 
Request for Limited Waiver of the Per-Call Compensation Obligation

AGENCY: Federal Communications Commission.

ACTION: Final rule; clarification and waivers

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SUMMARY: The Common Carrier Bureau adopted a Memorandum Opinion and 
Order (``Order''), which grants interexchange carriers (``IXCs'') a 
waiver of the payphone compensation requirements of the Payphone Orders 
to enable them to pay to payphone service providers (``PSPs'') per-
phone instead of per-call compensation for subscriber 800 and access 
code calls from payphones when payphone-specific coding digits are not 
available from those payphones. The Order also serves as a companion to 
the Bureau Coding Digit Waiver Order, because in the Order the Bureau 
grants IXCs a waiver of the per-call compensation requirement so they 
may pay per-phone instead of per-call compensation for the payphones 
for which the Bureau granted waivers in the Bureau Waiver Order and the 
Bureau Coding Digit Waiver Order.

DATES: Effective April 3, 1998.

FOR FURTHER INFORMATION CONTACT: Rose Crellin, Formal Complaints and 
Investigations Branch, Enforcement Division, Common Carrier Bureau, 
(202) 418-0960.

SUPPLEMENTARY INFORMATION: This is a summary of the Bureau's Memorandum 
Opinion and Order in CC Docket No. 96-128 [DA 98-642], adopted on April 
3, 1998, and released on April 3, 1998. The full text of the Memorandum 
Opinion and Order (``Order'') is available for inspection and copying 
during normal business hours in the FCC Reference Center, Room 239, 
1919 M Street, N.W., Washington, D.C. The complete text of this 
decision also may be purchased from the Commission's duplicating 
contractor, International Transcription Services, 1231 20th Street, 
N.W., Washington, D.C. 20036.

MEMORANDUM OPINION AND ORDER

I. Introduction

    1. In the Order, the Common Carrier Bureau (``Bureau'') grants 
interexchange carriers (``IXCs'') a waiver of the payphone compensation 
requirements of the Payphone Orders <SUP>1</SUP> to enable them to pay 
to payphone service providers (``PSPs'') per-phone instead of per-call 
compensation for subscriber 800 and access code calls from payphones 
when payphone-specific coding digits are not available from those 
payphones. On March 9, 1998, the Bureau adopted a Memorandum Opinion 
and Order clarifying the payphone-specific coding digit requirements 
set forth in the Payphone Orders and granting limited waivers of the 
requirement that local exchange carriers (``LECs'') provide payphone-
specific-coding digits to PSPs, and that PSPs provide coding digits 
from their payphones to IXCs, before PSPs can receive per-call 
compensation from IXCs for subscriber 800 and access code 
calls.<SUP>2</SUP> The Order serves as a companion to the Bureau Coding 
Digit Waiver Order, because in the order the Bureau grants IXCs a 
waiver of the per-call compensation requirement so they may pay per-
phone instead of per-call compensation for the payphones for which the 
Bureau granted waivers in the Bureau Waiver Order <SUP>3</SUP> and the 
Bureau Coding Digit Waiver Order.<SUP>4</SUP>
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    \1\ Implementation of the Pay Telephone Reclassification and 
Compensation Provisions of the Telecommunications Act of 1996, CC 
Docket No. 96-128, Report and Order, 61 FR 52307 (October 7, 1996) 
(``Report and Order''); Order on Reconsideration, 61 FR 65341 
(December 12, 1996), (``Order on Reconsideration'') (together the 
``Payphone Orders''). The Payphone Orders were affirmed in part and 
vacated in part. See Illinois Public Telecomm. Ass'n v. FCC, 117 
F.3d 555 (D.C. Cir. 1997) (``Illinois Public Telecomm.''). See also 
Second Report and Order, 13 FCC Rcd 1778 (1997) (``Second Report and 
Order''), pets. for recon. pending, review pending, MCI Telecomm. 
Corp. v. FCC, D.C. Circuit No. 97-1675 (filed November 7, 1997); 
Sprint Corp. v. FCC, D.C. Circuit No. 97-1685 (filed November 13, 
1997); Personal Communications Industry Association v. FCC, D.C. 
Circuit No. 97-1709 (filed December 1, 1997); Illinois Public 
Telecommunications Association v. FCC, D.C. Circuit No. 97-1713 
(filed December 3, 1997).
    \2\ See Bureau Coding Digit Waiver Order, Memorandum Opinion and 
Order, CC Docket No. 96-128, DA 98-481 at paras. 19-20 (rel. March 
9, 1998), 63 FR 20534 (April 27, 1998).
    \3\ Implementation of the Pay Telephone Reclassification and 
Compensation Provisions of the Telecommunications Act of 1996, 62 FR 
58659 (October 30, 1997), (Bureau Waiver Order).
    \4\ This waiver order relies on the record established for the 
Bureau Coding Digit Waiver Order 63 FR 20534 (April 27, 1998), and 
ex partes received subsequent to the release of that order. Pleading 
Cycle Established for Petitions to Waive Payphone Coding Digits, 
Public Notice, 12 FCC Rcd 17,340 (1997) (Public Notice).
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    2. Moreover, in the Order, the Bureau addresses a letter filed by 
AT&T Corporation (``AT&T'') requesting that AT&T, and other similarly 
situated IXCs, receive a waiver to pay per-phone rather than per-call 
compensation when payphone-specific coding digits are not available for 
a payphone. The Order grants in part AT&T's request that AT&T and other 
similarly situated IXCs be permitted to compensate PSPs on a per-phone 
basis, where payphone-specific coding digits are not available. The 
Order concludes that the waiver granted therein, which allows IXCs to 
pay per-phone compensation when payphone-specific coding digits are not 
available from a payphone, is necessary to ensure that PSPs receive 
fair compensation while LECs, PSPs, and IXCs transition to providing 
and receiving payphone-specific coding digits to identify calls from 
payphones. In the Order, the Bureau also concludes that granting the 
waiver and allowing IXCs to pay per-phone instead of per-call 
compensation where payphone-specific coding digits are not available is 
in the public interest.
    3. The Bureau Coding Digit Waiver Order required that payments be 
remitted at least on a quarterly basis. That order required that the 
payment for the October 1997 through December 31, 1997 period must be 
paid no later than April 1, 1998. In the Order, however, the Bureau 
notes that the waiver granted therein will require some IXCs to obtain 
additional information and calculate their per-phone compensation 
amounts, and that these IXCs may need additional time to make the 
payments to PSPs for the October 1997 through December 31, 1997 period 
for payphone compensation. Thus, the Bureau stated that IXCs may make 
this payment no later than April 30, 1998, but must include additional 
interest for the period after April 1, 1998, at the rate of 11.25 
percent per year, if the payment is not made by April 1, 1998.
    4. The waiver granted in the Order is effective on April 3, 1998, 
to ensure that all PSPs continue to receive compensation, as required 
by the Payphone Orders and the Second Report and Order. Without this 
waiver, many

[[Page 26498]]

PSPs would not be compensated for payphone calls that began October 7, 
1997, because the LECs servicing them are not yet able to provide 
payphone-specific coding digits, and some of the IXCs are unable to 
identify certain payphone calls. The immediate implementation of the 
waiver is crucial to the Commission's efforts to ensure fair 
compensation for all PSPs, encourage the deployment of payphones, and 
enhance competition among PSPs, as mandated by Section 276.
    5. The Second Report and Order, established a default compensation 
rate of $0.284 per call, absent a negotiated agreement, for subscriber 
800, access code, inmate, and 0+ calls. In the Order the Commission 
also extended the default per-call compensation period from one to two 
years, for the first two years of per-call compensation, i.e., from 
October 7, 1997 until October 6, 1999, to allow participants, including 
IXCs, LECs, and PSPs, additional time to adjust to market-based per-
call payphone compensation for subscriber 800 and access code calls.
    6. In the Payphone Orders, the Commission imposed a requirement 
that, by October 7, 1997, LECs transmit payphone-specific coding digits 
to PSPs, and that PSPs transmit those digits from their payphones to 
IXCs. The Commission also required IXCs to implement methods to track 
payphone calls. In the Order on Reconsideration, the Commission 
clarified that the provision of payphone-specific coding digits is a 
prerequisite to payphone per-call compensation payments by IXCs to PSPs 
for subscriber 800 and access code calls and that each payphone must 
transmit coding digits that ``specifically identify it as a payphone, 
and not merely as a restricted line.'' Finally, that order clarified 
that LECs must make available to PSPs, on a tariffed basis, such coding 
digits as part of their ANI for each payphone.
    7. On October 7, 1997, the Bureau provided, on its own motion, a 
limited waiver until March 9, 1998, for those payphones from which the 
necessary coding digits to identify individual payphone calls were not 
provided. The limited waiver was to afford LECs, IXCs, and PSPs an 
extended transition period for the provision of payphone-specific 
coding digits without further delaying the payment of per-call 
compensation for each and every call originated from a payphone as 
required by Section 276 of the Communications Act. This limited waiver 
applies to the requirement that LECs provide payphone-specific coding 
digits to PSPs, and that PSPs provide coding digits from their 
payphones before they can receive per-call compensation from IXCs for 
subscriber 800 and access code calls. The Bureau stated, however, that 
LECs and PSPs capable of transmitting coding digits for some or all of 
their serving area remained obligated to do so.
    8. On March 9, 1998, in the Bureau Coding Digit Waiver Order, the 
Bureau clarified the requirements established in the Payphone Orders 
for the provision of payphone-specific coding digits by LECs and PSPs, 
to IXCs. Specifically, the Bureau clarified that flexible automatic 
numbering identification (``FLEX ANI'') and automatic number 
information indicators (``ANI ii'') are the methods to provide 
payphone-specific coding digits that comply with the requirements of 
the Payphone Orders. The Bureau also clarified the requirement for 
federal tariffs that LECs must file pursuant to the Payphone Orders. 
The Bureau also granted permissions and waivers under Part 69 of the 
Commission's rules allowing LECs to establish rate elements to recover 
the costs of implementing FLEX ANI to provide payphone-specific coding 
digits for per-call compensation. In addition, the Bureau granted, on 
its own motion, limited waivers to LECs, PSPs, and IXCs to facilitate 
the transition to per-call compensation and affirmed its grant, in the 
Bureau Waiver Order, of a limited waiver of five months, until March 9, 
1998, to those LECs and PSPs who asserted that they could not provide 
payphone-specific coding digits as required by the Payphone Orders.
    9. In the Bureau Coding Digit Waiver Order, the Bureau emphasized 
that the IXC obligation to pay per-call compensation established in the 
Payphone Orders remains in effect. As required in the Bureau Waiver 
Order, payphones appearing on the LEC-provided lists of payphones are 
eligible for per-call compensation even if they do not transmit 
payphone-specific coding digits. As required in the Payphone Orders and 
the Second Report and Order, absent a negotiated agreement, IXCs must 
pay per-call compensation of $0.284, for all calls not otherwise 
compensated that they receive from payphones. LECs that have certified 
to the IXC that they comply with the requirements of the Payphone 
Orders must receive per-call compensation.

II. Discussion

A. AT&T Request for Per-phone Compensation

    10. Beginning October 7, 1997, IXCs were required to pay 
compensation on a per-call basis. AT&T states, however, that it will be 
unable to pay per-call compensation because of the waiver granted in 
the Bureau Waiver Order, which provides LECs and PSPs an extended time 
period within which to provide payphone-specific coding digits.
    11. In the Order, the Bureau grants, in part, AT&T's request that 
the Bureau waive the payphone compensation provisions and permit IXCs 
to pay per-phone--instead of per-call--compensation when payphone-
specific coding digits are not provided with a payphone call's ANI. In 
the Report and Order, the Commission concluded that the requisite 
technology exists for IXCs to track calls from payphones. The 
Commission recognized, however, that tracking capabilities vary from 
carrier to carrier, and that it may be appropriate, for an interim 
period, for some carriers to pay compensation for ``each and every 
completed intrastate and interstate call'' on a flat-rate basis until 
per-call tracking capabilities are in place. In the Bureau Coding Digit 
Waiver Order, the Bureau explained that the record indicates that LECs, 
PSPs, and IXCs are encountering problems with transitioning to per-call 
compensation. Therefore, the Bureau concluded that AT&T had shown 
special circumstances for IXCs to pay per-phone instead of per-call 
compensation when payphone specific coding digits are not available, 
particularly in light of the waivers granted within the Bureau Waiver 
Order and the Bureau Coding Digit Waiver Order.
    12. Other IXCs also indicate a problem paying per-call compensation 
during the waiver period when payphone-specific coding digits are not 
available and that in certain circumstances, such as payphones served 
by nonequal access switches, payphone-specific coding digits will not 
be available until the switches are replaced. Therefore, the Bureau 
also concludes in the Order that it is in the public interest to grant 
the waiver conditioned upon an IXCs compliance with the methodology set 
forth herein, which allows IXCs to pay per-phone compensation where 
payphone-specific coding digits are unavailable from a payphone. The 
Bureau further stated that it is in the public interest to grant the 
waiver to require per-phone compensation where payphone-specific coding 
digits are unavailable from a payphone, so that there is no further 
delay in the payment of payphone compensation. This waiver is 
consistent with the Commission's conclusion in the Payphone Orders that 
it is

[[Page 26499]]

appropriate for carriers to pay flat-rate or per-phone compensation for 
an interim period until carriers fully implement tracking capabilities. 
The waiver granted therein does not apply if either the ``27'' coding 
digit or FLEX ANI coding digits (``27,'' ``70,'' ``29'') are available 
from a LEC for that payphone and that payphone is able to provide 
payphone-specific coding digits; where the payphone-specific coding 
digit is available, the per-call compensation requirements apply.

B. Per-call and Per-phone Compensation Requirements

1. Compensation Requirements
    13. In the Bureau Waiver Order and the Bureau Coding Digit Waiver 
Order, the Bureau required IXCs to pay per-call compensation. Pursuant 
to the waiver granted in the Order, beginning October 7, 1997, IXCs 
must either pay per-call, or per-phone compensation as described in the 
Order, for payphones that do not provide payphone-specific coding 
digits. IXCs must pay per-call compensation for all payphones capable 
of providing a ``27'' ANI ii coding digit or FLEX ANI coding digits 
(``27,'' ``70,'' ``29'') for compensable calls. IXCs must compensate 
payphones that do not provide payphone-specific coding digits (``27,'' 
``70,'' ``29'') either on a per-call basis or the per-phone method 
described in the Order and set forth in the brief below. Therefore, 
according to the Order, IXCs who choose to pay per-phone compensation 
pursuant to the waiver granted therein, must use payphone call volume 
information that is available to them already to determine the call 
volumes for which a payphone should be compensated when payphone-
specific coding digits are not available for a specific payphone. An 
IXC may chose to compensate those payphones that are not capable of 
providing payphone-specific coding digits on a per-call basis where the 
IXC maintains a per-call tracking mechanism, such as tracking payphone 
calls from payphones that transmit an ``07'' digit and then comparing 
those calls to ANI lists. The Order specifies, however, that an IXC may 
not compensate some payphones that do not provide payphone-specific 
coding digits (but do provide an ``07'' ANI ii coding digit) on a per-
call basis and other payphones that do not provide payphone-specific 
coding digits (but do provide an ``07'' ANI ii coding digit) on a per-
phone basis, except for those payphones that are in the process of 
changing from per-phone to per-call compensation. The Bureau notes that 
the default rate established in the Second Report and Order, $0.284, 
which terminates at the conclusion of per-call compensation--October 7, 
1999--will continue to remain in effect as a default compensation rate, 
absent a negotiated agreement, for calls originated from those 
payphones that are not able to provide payphone-specific coding digits.
    14. LECs must provide ANI lists and lists of end offices that are 
not providing payphone-specific coding digits that specifically 
identify smart and dumb payphones to IXCs. In accordance with the 
compensation mechanism described in the Order, IXCs must pay per-call 
compensation, not per-phone compensation, once FLEX ANI is available in 
an end office. If payphone-specific-coding digits are available for a 
payphone in an end office, the fact that an IXC may decide not to take 
FLEX ANI from the LEC for that end office does not relieve the IXC of 
paying per-call compensation for that payphone once payphone-specific 
coding digits are available. The waiver to pay per-phone compensation 
does not apply in this case.
    15. In the Order, the Bureau also clarifies the requirements set 
forth in the Bureau Coding Digit Waiver Order, that LECs provide IXCs 
and PSPs with certain information on request. Because IXCs choosing to 
pay per-call compensation for smart payphones even when payphone-
specific coding digits are not available will have to compare calls 
with an ``07'' ANI ii digit with a LEC ANI list, the Order requires 
that the LEC ANI lists provided to the IXCs as required in the Bureau 
Coding Digit Waiver Order also indicate whether the smart payphones are 
transmitting the ``07'' digit. LECs also must provide FLEX ANI and ANI 
ii payphone-specific coding digits as soon as they are available on a 
switch to each IXC once the IXC requests the service for payphone 
compensation.
2. Compensation Methodology
    16. IXCs must pay per-call compensation for a payphone if ANI ii 
payphone-specific coding digits (``27'') or FLEX ANI payphone-specific 
coding digits (``27,'' ``70,'' ``29'') are available to the IXC. In the 
Order, the Bureau grants a waiver to IXCs and allows them to compensate 
PSPs on a per-phone basis for those payphones that are not able to 
provide payphone-specific coding digits conditioned upon the IXCs 
compliance with the methodology set forth in the Order. IXCs electing 
to pay per-phone compensation in accordance with the waiver granted in 
the Order, must calculate the average number of subscriber 800 and 
access code calls based on information obtained from BOC dumb payphones 
transmitting the ``27'' coding digit. The Order divides payphones into 
five categories for determining the methodology used to calculate per-
phone compensation: (1) Payphones able to provide payphone-specific 
coding digits; (2) LEC payphones that are not able to provide payphone-
specific coding digits served by equal access switches (except those 
payphones subject to category (5)); (3) independent PSP payphones that 
are not able to provide payphone-specific coding digits served by equal 
access switches (except those payphones subject to category (5)); (4) 
payphones served by non-equal access switches; and (5) payphones on 
equal access switches owned by small and midsized LECs granted a waiver 
from the implementation of FLEX ANI because they are unable to recover 
the cost of FLEX ANI implementation over a reasonable period (``small 
and midsized LEC waiver'') pursuant to paragraph 76 of the Bureau 
Coding Digit Waiver Order.
    17. Although the Order describes the compensation method for these 
categories individually, with the exception of compensation for those 
payphones that are able to provide payphone-specific coding digits, 
IXCs must use call volume information obtained from October 1997 
through March 31, 1998 (the ``sample period''), to establish average 
subscriber 800 and access code call volumes per-phone to compensate 
PSPs for calls originated from their payphones during the fourth 
quarter of 1997 and the first quarter of 1998 (from October 7, 1997 
through March 31, 1998). Thereafter, IXCs paying per-phone compensation 
will base compensation owed to PSPs for payphones that are not able to 
provide payphone-specific coding digits on call volumes obtained from 
BOC dumb payphones that are able to provide payphone-specific coding 
digits representative of the quarter for which compensation is 
owed.<SUP>5</SUP> Regardless of whether a payor pays per-call or per-
phone compensation, each payor must compensate PSPs $0.284 per call, 
adjusted for interest where appropriate. In addition, although the 
compensation mechanism calculates compensation on a monthly basis, 
compensation must be remitted at least on a quarterly basis absent 
alternative arrangements between the PSP and the IXC. Payphones can

[[Page 26500]]

receive compensation only for those months that they were in service.
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    \5\ For example, if compensation is due to PSPs for the second 
quarter of 1998, IXCs will pay PSPs based on call volumes collected 
from BOC dumb payphones during April-June 1998.
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    18. IXCs must maintain the information they use to develop the per-
call and per-phone compensation payments to PSPs. In the Report and 
Order, the Commission required that IXCs initiate an annual 
verification of their per-call tracking functions to be made available 
for FCC inspection upon request, for the 1998 calendar year to ensure 
that IXCs are tracking all of the calls for which they are obligated to 
pay compensation. Nothing in the Order relieves IXCs of the 
responsibility of maintaining this information. When paying per-phone 
compensation as described therein, payphone compensation payors should 
note that payments by each payor for each payphone being compensated by 
that payor on a per-phone basis will be the same, although different 
payors will vary in the number of calls for which they must compensate 
payphones receiving per-phone compensation. Payors must be prepared to 
submit their compensation calculations and payment records if requested 
by the Bureau.
    a. Payphones capable of providing payphone-specific coding digits.
    19. The first category, payphones capable of providing payphone-
specific coding digits, must be compensated on a per-call basis. 
Compensation must be remitted at least on a quarterly basis absent 
alternative arrangements between the PSP and the IXC. If a payphone 
that is not able to provide payphone-specific coding digits becomes 
capable of providing payphone-specific coding digits in the first 60 
days of a quarter, then the IXC will be responsible for compensating 
that particular PSP on a per-call--instead of per-phone--basis 
beginning the next quarter. The payor will multiply the number of calls 
received from each PSP's payphone capable of providing payphone-
specific coding digits by $0.284 to compute compensation owed to that 
PSP.
    b. LEC payphones that are not capable of providing payphone-
specific coding digits. 20. The second category, LEC payphones that are 
not able to provide payphone-specific coding digits, will be 
compensated on a per-phone basis. In the Order, the Bureau bases 
compensation for LEC payphones that are not capable of providing 
payphone-specific coding digits on the average number of subscriber 800 
and access code calls realized from BOC dumb payphones that are able to 
provide payphone-specific coding digits. There is insufficient 
information on the record to suggest that LEC payphones that are not 
able to provide payphone-specific coding digits realize different call 
volumes than BOC payphones that are able to provide payphone-specific 
coding digits. Therefore, in the Order, the Bureau found that it is 
appropriate to base compensation for LEC payphones that are not able to 
provide payphone-specific coding digits on call volumes realized by BOC 
payphones that are able to provide payphone-specific coding digits.
    21. To determine the amount of compensation due to LEC payphones 
that are not able to provide payphone-specific coding 
digits,<SUP>6</SUP> the payor will calculate the average number of 
subscriber 800 and access code calls it received from BOC dumb 
payphones that are able to provide payphone-specific coding digits (the 
``27'' coding digit) from October 1, 1997 through March 31, 1998 (the 
sample period). First, the IXC will sum the number of completed 
subscriber 800 and access code calls it received from all BOC dumb 
payphones that were capable of providing payphone-specific coding 
digits during this period and divide by six. This results in the 
average number of subscriber 800 and access code calls received from 
all BOC dumb payphones per month. Second, the payor will obtain from 
the BOCs the number of BOC dumb payphones that were capable of 
providing payphone-specific coding digits as of the first of each month 
for the sample period. The payor will sum the figures and divide by 
six. This is the average number of BOC dumb payphones able to provide 
payphone-specific coding digits during the sample period. Third, the 
payor will divide the average number of calls calculated above in step 
one (1) by the average number of payphones calculated in step two (2). 
This division results in the average call volume per month for BOC dumb 
payphones that are providing the ``27'' coding digit (either through 
ANI ii, or FLEX ANI). This average number will be the number of calls 
for which compensation is due per month to each LEC payphone that is 
not capable of providing payphone-specific coding digits.<SUP>7</SUP> 
Lastly, the payor will multiply the average monthly call volume by 
$0.284 to compute compensation owed per-phone per month. As discussed 
above, this data will be used to compensate payphones for the last 
quarter of 1997 and the first quarter of 1998. Thereafter, LEC dumb 
payphones will be compensated using this same methodology based on call 
volume information obtained from BOC dumb payphones during the 
applicable quarter using three months of data rather than six months of 
data. In the Order, the Bureau declines to adjust call volume 
calculations to account for the possibility that BellSouth may place 
dumb payphones only in the lowest call volume locations. Due to the 
different placement strategies and the variance among payphone types, 
call volumes will vary among BOCs. Therefore, omitting what might be 
the lowest call volume data from the sample would not lead to an 
unbiased estimate of BOC payphone call volumes, because it would 
artificially leave in the highest remaining data.
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    \6\ The Bureau notes that this compensation method is for those 
payphones that are located on equal access switches.
    \7\ In calculating the amount owed to PSPs per-phone for the 
month of October, the payor may divide the monthly average per-phone 
rate for the month by 31 days and subtract for six days to begin 
per-phone compensation on October 7, 1998.
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    c. Independent PSP payphones that are not capable of providing 
payphone-specific coding digits. 22. The third category, independent 
PSP payphones that are not capable of providing payphone-specific 
coding digits,<SUP>8</SUP> also will be compensated on a per-phone 
basis as calculated above for LEC payphones that are not capable of 
providing payphone-specific coding digits. In the Order, the Bureau 
declines to increase the average call volumes calculated above from BOC 
payphone call volumes for independent PSPs payphones, because data on 
the record indicates that the call volumes may be similar, and further, 
in the Report and Order, despite limited (if any) call volumes between 
BOCs and independent payphones, the Commission established one call 
volume for independent and LEC PSPs. In adopting a uniform rate, the 
Commission noted that some differences may exist among various PSPs, 
but found that each PSP should receive the same compensation amount for 
subscriber 800 and access code calls. The Commission also sought to 
allow all competitors equal opportunity to compete for essential 
aspects of the payphone business. In the Order, the Bureau also 
declined to establish separate call volume amounts for the purpose of 
this limited waiver, and concludes instead that call volumes should not 
be treated differently based on ownership characteristics.
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    \8\ To clarify, payphones that will receive compensation under 
the mechanism described in this section are independent payphones 
that are not capable of providing payphone-specific coding digits 
and are served by equal access switches.
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    d. Payphone on non-equal access switches. 23. The fourth category 
involves payphones on non-equal access switches. Non-equal access 
switches do not provide payphone-specific coding digits; therefore, 
theses payphones must

[[Page 26501]]

be compensated on a per-phone basis until they are able to provide 
payphone-specific coding digits. Both IXCs and LECs have indicated that 
payphones served by nonequal access switches receive lower call volumes 
than other payphones. Parties have provided limited information to 
establish a call volume for these payphones. GTE indicates that it has 
a total of 289 payphones on non-equal access switches, which receive an 
average of 14.35 calls per payphone per month, and a small company in 
Iowa, Heart of Iowa Telecommunications Cooperative, which maintains 11 
payphones, receives an average of 65 calls per payphone per month. 
Based on this limited data submitted on the record illustrating that 
call volumes for payphones on non-equal access switches and switches in 
rural areas receive substantially less calls than BOC dumb payphones, 
in the Order, the Bureau concluded that payphones on non-equal access 
switches cannot be compensated based on the average call volumes for 
BOC dumb payphones. Accordingly, payors must compensate payphones 
served by non-equal access switches based on the weighted average of 
call volumes submitted in this record for payphones served by non-equal 
access switches and payphones served by rural switches, 16 calls per-
phone per month.<SUP>9</SUP>
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    \9\ The weighted average is derived as follows: 289 GTE 
payphones x 14.35 calls per payphone per month = 4147.15 total 
calls. We then determined the total number of calls for the small 
payphone company in Iowa: 11 x 65 = 715 calls. Finally, we found the 
total number of calls to be 4862.15 (4147.15 + 715) and divided that 
by the total number of payphones (300), which results in an average 
call volume of 16 calls per-phone per month.
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    24. In the Order, the Bureau stated that it expected parties to 
submit additional information on the record regarding call volumes for 
non-equal access areas. The Bureau stated that it would consider 
revisions to the compensation methodology for payphones served by non-
equal access switches if it received additional record information on 
call volumes for non-equal access payphones that suggests that call 
volumes are different than the data upon which we rely herein.
    e. Payphones served by LECs granted small and midsize LEC waiver. 
25. In the Bureau Coding Digit Waiver Order, the Bureau granted a 
limited waiver to midsize and small LECs for equal access switches 
where a LEC is unable to recover its costs of implementing FLEX ANI, 
through a monthly charge for no longer than a 10 year period, from all 
payphones in its serving area.<SUP>10</SUP> This waiver is specifically 
granted for small and midsize LECs for which the cost of implementing 
FLEX ANI would be unreasonably burdensome, despite provisions in the 
Bureau Coding Digit Waiver Order for cost recovery. This waiver was 
provided for small and midsize LECs with a small number of payphones 
per switch. Payphones served by LECs that would qualify for this 
waiver, would be located in more rural areas than other payphones and 
thus would have lower call volumes. Therefore, in the Order, the Bureau 
concludes that these payphones should receive per-phone compensation as 
described above for payphones served by nonequal access switches until 
payphone-specific coding digits are available for these payphones. The 
Bureau stated, however, that if it received additional information on 
the record indicating that call volumes are different for small and 
midsized LECs that have deferred FLEX ANI implementation pursuant to 
the small and midsized LEC waiver it may subsequently require different 
call volumes for these two catagories.
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    \10\ This limited waiver for small and midsize LECs that are not 
able to recover their costs of implementing FLEX ANI over up to a 10 
year period is not available to price cap, CLASS A, and Tier 1 LECs. 
In 1996, the Class A LECs included all price cap LECs.
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3. Alternative Per-Call Compensation Methodologies
    26. In the Order, the Bureau declined to adopt the flat-rate 
interim compensation approach set forth in the Payphone Orders, which 
required IXCs with annual toll revenues in excess of $100 million to 
pay, collectively, a flat-rate interim compensation amount of $45.85 
per payphone per month, in shares proportionate to their share of total 
market long distance revenues. In the Order, the Bureau noted that the 
court in Illinois Public Telecomm. vacated the Commission's flat-rate 
interim compensation plan stating that the Commission did not justify 
basing flat-rate compensation on total toll revenues, and therefore, 
acted arbitrarily and capriciously by only requiring payments from the 
largest IXCs. The court further stated that the Commission had not 
shown a nexus between toll revenues and the number of access code and 
subscriber 800 calls a particular carrier carries.
    27. The Order also rejects basing per-phone compensation aggregated 
call volume data supplied by the Coalition because the data is limited 
in nature, accounting for only 20 percent of the payphones, may neglect 
regional variations, may not be representative of all BOCs, and 
provides insufficient information to establish per-phone call volumes 
for small carriers, a problem faced in the allocation method used in 
the Report and Order that was vacated by the court.
    28. In the Order, the Bureau also concludes that a retroactive 
adjustment of payphone compensation for the period covered by the 
Bureau Waiver Order and the Bureau Coding Digit Waiver Order is not 
necessary, because the methodology adopted therein to provide fair 
compensation through a per-phone mechanism that reasonably approximates 
call volumes for PSP payphones.
4. Miscellaneous
    29. The Order also declines to require, as USTA requests, that LECs 
be compensated for all blocked calls, because, USTA argues, blocked 
calls are the result of IXCs using FLEX ANI or LIDB for fraud 
detection, pursuant to CC Docket No. 91-35. The Commission defined a 
completed call as a call answered by the called party. Because a 
blocked call is by definition not a completed call, the Payphone Orders 
do not require such compensation. The Order also declines to require 
that any waiver granted in response to AT&T's request be granted only 
after IXCs have paid interim compensation and only to IXCs that 
demonstrate that they cannot track compensable calls using LEC ANI 
lists.
    30. APCC requests that the Bureau clarify the obligations of 
facilities-based IXCs who provide 800 service to disclose information 
about switch-based resellers who provide 800 number service resold from 
the facilities based carriers so that PSPs can identify who they should 
bill for payphone compensation. APCC indicates that its members are 
unable to identify the switch-based reseller to bill for payphone 
compensation. In the Report and Order the Commission acknowledged that 
telecommunications services are sold in advance, particularly in the 
debit card context, and resold to other carriers, thus making it 
difficult in those situations to identify the carrier liable for per-
call compensation. The Commission also stated that facilities-based 
carriers may recover the expense of payphone per-call compensation from 
their reseller customers. As clarified in the Order on Reconsideration, 
switched-based resellers are responsible for paying per-call 
compensation. When facilities-based IXCs providing 800 service have 
determined that they are not required to pay compensation on particular 
800

[[Page 26502]]

number calls because their switch-based reseller customers have 
identified themselves as responsible for paying the compensation, those 
facilities-based carriers must cooperate with PSPs seeking to bill for 
resold services. Thus, a facilities-based carrier must indicate, on 
request by the billing PSP, whether it is paying per-call compensation 
for a particular number. If it is not, then it must identify the switch 
based reseller responsible for paying payphone compensation for that 
particular 800 number. Facilities-based IXCs and switched-based 
resellers may not avoid compensating PSPs by withholding the name of 
the carrier responsible for paying per-call compensation, thereby 
avoiding the requirements of the Payphone Orders and Section 276.

IV. Conclusion and Ordering Clauses

    31. For the foregoing reasons, we grant in part AT&T's letter 
request to pay per-phone compensation to PSPs where payphone-specific 
coding digits are not available. We find that allowing AT&T and other 
similarly situated IXCs to pay per-phone instead of per-call 
compensation based on the methodology set forth above, is in the public 
interest, because it will further the goals of Section 276 of the Act, 
that PSPs be compensated for each and every completed call and will 
ease the transition to per-call compensation.
    32. Accordingly, pursuant to authority contained in Sections 1, 4, 
201-205, 218, 226, and 276 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154, 201-205, 218, 226, and 276, that the 
policies and requirements set forth herein are adopted.
    33. It is further ordered that this order is effective immediately 
upon release thereof.
    34. It is further ordered that AT&T's letter request to pay on a 
per-phone instead of a per-call basis is granted to the extent 
described herein and is otherwise denied.

Federal Communication Commission.
A. Richard Metzger, Jr.,
Chief, Common Carrier Bureau.
[FR Doc. 98-12347 Filed 5-12-98; 8:45 am]
BILLING CODE 6712-01-U