Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26497

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).

2See 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).

4This 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).

Commission’s rules, 47 C.F.R. 0.91,

0.291, the policies and requirements set

forth in the payphone proceeding and

the Per-phone Compensation Waiver

Order are clarified.

Federal Communications Commission.

Robert W. Spangler,

Acting Chief, Enforcement Division, Common

Carrier Bureau.

[FR Doc. 98–12346 Filed 5–12–98; 8:45 am]

BILLING CODE 6712–01–U

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

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 percall 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 1 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.2 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 3 and the Bureau Coding Digit

Waiver Order.4

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 perphone basis, where payphone-specific

coding digits are not available. The

Order concludes that the waiver granted

therein, which allows IXCs to pay perphone compensation when payphonespecific 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 payphonespecific coding digits to identify calls

from payphones. In the Order, the

Bureau also concludes that granting the

waiver and allowing IXCs to pay perphone 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
26498 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

PSPs would not be compensated for

payphone calls that began October 7,

1997, because the LECs servicing them

are not yet able to provide payphonespecific 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 percall 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 LECprovided 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 perphone—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
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26499

5For 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.

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 perphone 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 payphonespecific 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 payphonespecific-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 percall compensation for that payphone

once payphone-specific coding digits

are available. The waiver to pay perphone 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 payphonespecific 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.5 Regardless of

whether a payor pays per-call or perphone 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
26500 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

6The 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 perphone 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.

8To 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.

receive compensation only for those

months that they were in service. 18. IXCs must maintain the

information they use to develop the percall 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 perphone 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 payphonespecific 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 payphonespecific coding digits,6 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 payphonespecific 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 payphonespecific 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.7 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.

c. Independent PSP payphones that

are not capable of providing payphonespecific coding digits. 22. The third

category, independent PSP payphones

that are not capable of providing

payphone-specific coding digits,8 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.

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
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations 26501

9The 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.

10This 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.

be compensated on a per-phone basis

until they are able to provide payphonespecific 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 nonequal 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.9

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 nonequal 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.10 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.

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 flatrate 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 perphone 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 percall compensation from their reseller

customers. As clarified in the Order on

Reconsideration, switched-based

resellers are responsible for paying percall compensation. When facilitiesbased IXCs providing 800 service have

determined that they are not required to

pay compensation on particular 800
26502 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 /Rules and Regulations

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

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 101

[CC Docket No. 92–297; FCC 98–77]

Rules and Policies for Local Multipoint

Distribution Service and for Fixed

Satellite Services

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This action amends the rules

to adopt partitioning and disaggregation

rules for the Local Multipoint

Distribution Service (LMDS). This

action will encourage spectrum

efficiency and the more rapid

deployment of service to the public. The

effect of these rules is to provide LMDS

licensees greater flexibility to respond to

marketplace demands.

EFFECTIVE DATE: May 28, 1998.

FOR FURTHER INFORMATION CONTACT:

Susan Magnotti of the Public Safety and

Private Wireless Division, Wireless

Telecommunications Bureau at 202–

418–0680 or via email at

smagnott@fcc.gov.

SUPPLEMENTARY INFORMATION:

1. This is a summary of the

Commission’s Fourth Report and Order

to allow partitioning and disaggregation

for LMDS spectrum.

2. On March 11, 1997, the

Commission adopted the Second Report

and Order (Second Report and Order),

62 FR 23148; April 29, 1997, Order on

Reconsideration, and Fifth Notice of

Proposed Rule Making (Fifth NPRM), 62

FR 16514; April 7, 1997, wherein it

established service rules to govern

licensing of LMDS and competitive

bidding rules to select among mutually

exclusive LMDS applications. The

Commission concluded that its actions

would open the door for new broadband

wireless services and that LMDS

spectrum could be used to provide

competition to both local exchange

carriers (LECs) and cable television

systems. It envisioned that our LMDS

service and licensing rules would foster

the future growth of this new service

and permit LMDS licensees to satisfy a

broad array of their customer’s

communications needs. In addition, the

Commission permitted partitioning and

disaggregation by LMDS licensees to

encourage spectrum efficiency and the

more rapid deployment of service, and

to leave the decision of determining the

correct size of licenses to the licensees

and the marketplace. It concluded that

allowing partitioning and disaggregation

for LMDS spectrum would create

powerful tools for licensees to

concentrate on core areas or to deliver

services outside of the major market

areas. The Commission further found

that LMDS partitioning and

disaggregation would provide

opportunities for small businesses

seeking to enter the multipoint video

distribution and local telephony

marketplaces.

3. In the Fifth NPRM, the Commission

sought comment on specific procedural,

administrative and operational rules to

govern LMDS partitioning and

disaggregation. It sought comment on

how rights and obligations of LMDS

licensees would be affected if such

licensees were permitted to avail

themselves of the partitioning and

disaggregation options. It also sought

comment on whether there are any

technical or regulatory constraints

unique to the LMDS service that would

render any aspects of partitioning and

disaggregation impractical or

administratively burdensome. In this

connection, the Commission noted that

it had recently adopted specific

procedures for partitioning and

disaggregation in the broadband

Personal Communications Services

(PCS) and sought comment on whether

such procedures would be appropriate

for LMDS. A total of five comments and

five reply comments were received in

response to the Fifth NPRM.

A. Available License Area

4. Background. In the Fifth NPRM, the

Commission tentatively concluded that

parties to a LMDS partitioning

agreement should be afforded flexibility

in defining partitioned license areas. It

sought comment on this tentative

conclusion and, in particular, asked

whether there are any technical or other

issues unique to LMDS that would

dictate a different approach.

5. Discussion. We conclude that

LMDS licensees should have broad

flexibility in defining partitioned

license areas. As we noted in the Fifth

NPRM, such an approach is consistent

with our treatment of partitioning in

other services, particularly broadband

PCS. In addition, we believe that

allowing LMDS licensees to partition

their service areas along any boundaries

they wish will enhance their ability to

respond quickly to consumer demands.

In this connection, we agree with

CellularVision USA, Inc.

(CellularVision) that such an approach

will allow LMDS licensees to consider

unique geographical or market

characteristics when designing their

business plans. We also are concerned

that requiring LMDS partitioned areas to

be based upon a uniform standard, such