Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Notices 19591

1This includes video dialtone trials and

commercial applications.

2LECs with annual operating revenues of $100

million or more are required to file a CAM with the

Commission. CAMs contain information regarding

the carriers’ allocation of costs between regulated

and nonregulated activities. See 47 C.F.R. § 64.903.

3See Telephone Company-Cable Television

Cross-Ownership Rules, Section 63.54–63.58,

Further Notice of Proposed Rulemaking, First

Report and Order and Second Further Notice of

Inquiry, 56 FR 65464 (Dec. 17, 1991) (First Report

and Order), recon., 7 FCC Rcd 5069 (1992), aff’d,

National Cable Television Association v FCC, No.

91–1649 (D.C. Cir. Aug. 26, 1994) (NCTA v. FCC);

Telephone Company-Cable Television CrossOwnership Rules, Sections 63.54–63.58, Second

Report and Order, Recommendation to Congress,

and Second Further Notice of Proposed

Rulemaking, 57 FR 41106 (Sep. 9, 1992) (Second

Report and Order), aff’d, Memorandum Opinion

and Order on Reconsideration and Third Further

Notice of Proposed Rulemaking, 59 FR 63909 (Dec.

12, 1994) (‘‘VDT Recon Order’’), appeal pending

sub nom. Mankato Citizens Telephone Company v.

FCC, No. 92–1404 (D.C. Cir. filed September 9,

1992).

4Cable Communications Policy Act of 1984, Pub.

L. No. 98–549, § 613(b), 98 Stat. 2779 (codified at

47 U.S.C. § 533(b)).

5 VDT Recon Order at para. 173.

6By ‘‘other services’’ we mean telephone and

other services provided by LECs.

7 In this Responsible Accounting Officer (‘‘RAO’’)

Letter, we only address the accounting

classifications, format and content requirements for

LEC subsidiary records and CAM filing

requirements. We plan to address the format and

content for LEC video dialtone quarterly reports in

a separate notice and comment proceeding.

8 VDT Recon Order at para. 173.

9 47 C.F.R. § 32.11

31, 1995, and released April 12, 1995.

The complete text of this Order may be

purchased from the Commission’s copy

contractor, International Transcription

Service, (202) 857–3800, 2100 M Street,

N.W., Suite 140, Washington, D.C.

20037.

2. The Order asserted that Mr. George

E. Rodgers has applied for renewal of

his amateur service station and operator

licenses.

3. The Order asserted further that, in

Commonwealth of Pennsylvania v.

Rodgers, Docket No. 2300–93 (Court of

Common Pleas, Chester County, Pa.),

Mr. Rodgers was convicted upon four

counts of violating Section 6301(a)

[corruption of minors] of the

Pennsylvania Criminal Code and upon

four counts of violating Section

3126(a)(1) [indecent assault] of the

Pennsylvania Criminal Code.

4. The Order alleged that, in view of

the criminal convictions described

above, Mr. Rodgers apparently lacks the

requisite qualifications for a renewal of

his amateur service licenses.

5. The Order designated Mr. Rodger’s

application for hearing before an

Administrative Law Judge and at a time

and location to be determined by the

order of the Chief Administrative Law

Judge upon the following issues:

(a) To determine whether, in light of

the facts determined in Commonwealth

of Pennsylvania v. Rodgers, supra,

George E. Rodgers is qualified to renew

his amateur service licenses.

(b) To determine, in light of the

foregoing issue, whether granting

George E. Rodger’s application would

serve the public interest, convenience

and necessity.

6. The Order placed the burden on

proceeding with the introduction of

evidence and the burden of proof upon

the respondent as to all issues.

Federal Communications Commission.

Howard Davenport,

Chief, Enforcement Division.

[FR Doc. 95–9633 Filed 4–18–95; 8:45 am]

BILLING CODE 6712–01–M

Accounting and Reporting

Requirements for Video Dialtone

Service

In Reply Refer To: RAO Letter 25, DA

95–703.

Adopted: March 31, 1995.

Released: April 3, 1995.

Responsible Accounting Officer:

Re: Accounting and Reporting Requirements

for Video Dialtone Service

I. Introduction

This letter provides guidance on

video dialtone accounting to local

exchange carriers (‘‘LECs’’) that receive

Section 214 authorizations to provide

video dialtone service.1 It sets forth

specific guidance on the requirements

for accounting classifications,

subsidiary records, and amendments to

cost allocation manuals (‘‘CAMs’’) for

LECs that provide video dialtone

service.2

II. Background

In 1991 and 1992, the Commission

adopted policies and rules to permit

LECs to assume an expanded role in the

provision of video services in their

telephone service areas.3 In its 1991 and

1992 Orders, the Commission

established a regulatory framework for

telephone companies to provide video

service on a common carrier basis and

provide various related nonregulated

services consistent with the crossownership restrictions imposed by the

Cable Communications Policy Act of

1984 (‘‘1984 Cable Act’’).4 This

regulatory framework is called ‘‘video

dialtone.’’

On November 7, 1994, the

Commission issued the Video Dialtone

Reconsideration Order (‘‘VDT Recon

Order’’). In that Order, the Commission

reaffirmed its basic video dialtone

framework adopted in the Second

Report and Order, and, among other

things, set forth accounting and

reporting requirements for LECs that

offer video dialtone service. The

Commission required carriers offering

video dialtone to establish two sets of

subsidiary accounting records: one to

capture the investment, expense and

revenue wholly dedicated to video

dialtone; the other to capture the

investment, expense and revenue shared

between video dialtone and other

services. 5 Wholly dedicated refers to

investment, expense and revenue

related exclusively to providing video

dialtone service. Shared refers to

investment, expense and revenue

related to providing video dialtone and

other services on a joint or common

basis.6

The VDT Recon Order requires LECs

to file a summary of these subsidiary

accounting records with the

Commission on a quarterly basis. The

Commission delegated authority to the

Common Carrier Bureau to define the

content and format of both the

subsidiary accounting records and the

quarterly reports, and to provide

accounting guidance where necessary

for uniform classification of video

dialtone investment, expense and

revenue.7 Finally, the VDT Recon Order

required LECs to file revisions to their

CAMs to reflect the provision of video

dialtone service.

III. Accounting Classification

The Commission did not change its

Part 32, Uniform System of Accounts for

Telecommunications Companies

(‘‘USOA’’) in the VDT Recon Order, but

it did require carriers to establish

subsidiary accounting records,

consistent with that system, in order to

isolate video dialtone costs and

revenues from other LEC costs and

revenues.8 We therefore require LECs to

maintain in subsidiary records, by

USOA accounts, all wholly dedicated

and shared investment, expense, and

revenue related to providing video

dialtone service. Finally, consistent

with Part 32 of the Commission’s rules,

Class A companies shall use Class A

detail level accounts and Class B

companies shall use Class B detail level

accounts in recording video dialtone

investment, expense and revenue in

subsidiary records.9

A. Investment Classifications

For accounting classification

purposes, video dialtone investment

shall include all plant wholly dedicated

to video dialtone or shared between

video dialtone and other services.

Wholly dedicated investment is defined
19592 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Notices

10See, e.g., Application of New Jersey Bell

Telephone Company for Authority pursuant to

Section 214 of the Communications Act of 1934, 9

FCC Rcd 3677, 3690 at para. 72 (1994).

11 VDT Recon Order at para. 221.

12All employees that incur video dialtone costs

must employ existing time reporting procedures

using some type of function codes. For example,

carriers that currently utilize time reporting

tracking mechanisms in order to identify regulated

and nonregulated activities of support functions,

such as legal services, must continue to use similar

accounting tracking mechanisms for identifying

video dialtone expenses. In addition, expenses

incurred or services provided by LEC affiliates for

LEC provision of video dialtone service must be

identified with unique function codes that indicate

video dialtone expense.

13 In the VDT Recon Order, the Commission

determined that it was not necessary to make

permanent changes to the Commission’s USOA for

LEC provision of video dialtone. The Commission,

however, required that LECs offering video dialtone

service create subsidiary records to capture wholly

dedicated and shared video dialtone costs. See VDT

Recon Order at para 173. Under the Commission’s

rules, subsidiary records categories are defined as

‘‘* * * segregations of certain regulated costs,

expenses and revenues which must be maintained

and are subject to specific reporting requirements

of this Commission.’’ See 47 C.F.R. § 32.9000.

14Carriers shall record revenues in Part 32

accounts consistent with the category of video

dialtone service set forth in a carrier’s tariff

provisions. See 47 C.F.R. § 32.4999.

as investment that is used exclusively

for the provision of video dialtone

service. Shared investment is defined as

investment that is common to, or used

jointly to provide video dialtone and

other services. Under the VDT Recon

Order, LECs must separately track both

wholly dedicated and shared video

dialtone investment. This requirement

covers both new investment purchased

for the provision of video dialtone and

existing plant converted to video

dialtone use. To track net investment,

subsidiary records must identify, for

each plant account, all accumulated

depreciation, amortization and deferred

income taxes associated with wholly

dedicated and shared video dialtone

investment.

In addition, the Commission

conditioned LEC authorizations to

provide video dialtone service on a

requirement that LECs keep subsidiary

records to identify, by Part 32 plant

account, the cost of plant that is

replaced or retired due to either the

deployment of video dialtone plant or

the deployment of fiber optic network

upgrades as mandated under state

authority in study areas where VDT

deployment occurs.10

B. Expense Classification

Video dialtone expense shall include

all expenses identified with the

exclusive or shared provision of video

dialtone service. In addition to ongoing

expenses incurred in the provision of

video dialtone service, these expenses

shall include all expenses incurred

during the initial development and

deployment stages of video dialtone,

such as research and development

expense and legal services expense.

In order to implement the

Commission’s requirement that the

Common Carrier Bureau ensure that

LEC proposed expense allocations and

overhead loadings associated with video

dialtone tariff filing are reasonable, we

will require separate subsidiary records

for dedicated and shared video dialtone

expenses.11 Carriers must also

separately identify depreciation and

amortization expense associated with

wholly dedicated and shared video

dialtone investment by each Part 32

plant account.

We recognize that some of the

expenses that fall into the shared

category may be the type of expenses

that are tracked by function codes and

some may be the type that are not

tracked by function codes. Expenses not

tracked by function codes are support

functions, such as network support,

general support, corporate operations

and general administrative. Expenses

tracked by function codes shall be

identified as video dialtone expense

using the tracking mechanism.12

Expenses not tracked by function codes

shall be so identified and shall be

classified as shared video dialtone

expenses. These expenses will be

subject to overhead allocation for the

video dialtone tariff filing.

IV. Subsidiary Accounting Records

As required by the VDT Recon Order,

LECs shall create subsidiary accounting

records that identify investment and

expense wholly dedicated to video

dialtone, or shared between video

dialtone and other services.13 Carriers

shall ensure that subsidiary accounting

record entries are readily identifiable by

account title, account number,

subaccount identification, and study

area. These records shall also include all

initial and ongoing transactions that

directly impact investment, expense and

revenue accounts. In order to enhance

our ability to verify LEC compliance

with the Commission’s established

video dialtone accounting and reporting

requirements, carriers shall be required

to have internal accounting controls and

a complete audit trail for each

subsidiary account record. Subsidiary

accounting records must be reconcilable

with total amounts reported in the Part

32 accounts. In addition, LECs shall

maintain these records until such time

as the Commission decides otherwise.

These requirements do not preclude

carriers from creating subaccounts, if

necessary, to capture data necessary to

provide subsidiary record information.

Consistent with the Commission’s

requirements on accounting

classifications and reporting, carriers

shall capture all costs incurred for the

provision of video dialtone, including

the preliminary planning, and research

and development expenses incurred

prior to the Commission’s approval of

Section 214 application. Upon receiving

Section 214 authorization from the

Commission, carriers must establish

subsidiary accounting records and

report the results of these records to the

Commission on a quarterly basis.

Subsidiary accounting records for

investment accounts must include, but

shall not be limited to, all telephone

plant in service accounts, associated

accumulated depreciation, deferred

taxes and any associated land and

support assets which contain costs

related to the provision of video

dialtone service. Subsidiary accounting

records for video dialtone investment

accounts must also identify the

investment’s location and whether that

investment is wholly dedicated to video

dialtone or shared between video

dialtone and other services. LECs shall

maintain subsidiary accounting records

so that the content of these records can

be traced from the continuing property

records (‘‘CPRs’’) through the

accounting system to the general ledger

and to the equipment’s physical

location.

Carriers shall use tracking codes that

allow video dialtone expense to be

extracted and summarized from the Part

32 USOA expense accounts. Carriers

may create tracking codes that are

compatible with their existing internal

accounting systems. Carriers may use

either field reporting codes, job function

codes, location codes, or any other

identification codes that permits such

expenses to be audited.

Subsidiary accounting records for

expense shall include all plant-specific

operations expense, plant-nonspecific

operations expense, customer

operations expense, and corporate

operations expense accounts that

contain any costs related to the

provision of video dialtone service.

Subsidiary accounting records for video

dialtone should separately identify

revenues from intrastate and interstate

tariffs.14 Carriers shall identify by

subsidiary record category any

nonregulated video dialtone revenues.

V. Cost Allocation Manual Filing

Requirements

LECs offering video dialtone service

must amend their CAMs to reflect both
Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Notices 19593

15 VDT Recon Order at 330, para. 181.

16See American Telephone & Telegraph

Company’s Permanent Cost Allocation Manual for

the Separation of Regulated and Nonregulated

Costs, 4 FCC Rcd 6930 at para. 6–7 (1989).

17The criteria for switch classification are met if

equipment performs some, but not necessarily all,

of the following basic switching functions: (1)

Attending—monitors for off-hook signals; (2)

Control—determines call destination and assigns

call to available line or trunk; (3) Busy testing—

determines whether the called line/trunk is busy;

(4) Information receiving—receives control and

busy test results; (5) Information transmitting—

transmits control and busy test results to tell the

alerting and interconnection functions whether to

complete the call; (6) Interconnection—connects

subscriber line to subscriber line or subscriber line

to trunk; (7) Alerting—rings the called subscriber’s

line or other signalling means if the call is destined

for another exchange; (8) Supervising—monitors for

call termination so the line can be released. See

Responsible Accounting Officer Letter 21, 7 FCC

Rcd 6075 (1992).

18See Revised Responsible Accounting Officer

Letter 6, 4 FCC Rcd 1965 (1989).

their regulated and nonregulated video

dialtone service as follows:

LECs are required, pursuant to the

VDT Recon Order, to amend their CAMs

prior to providing nonregulated

products or services related to video

dialtone.15 We require carriers that

receive Section 214 authorizations to

provide video dialtone service to

implement these requirements by

revising Section II (Nonregulated

Activities) of their CAMs to include a

detailed description of proposed

nonregulated video dialtone services

that they seek to provide.

CAM revisions must include a

statement indicating whether

nonregulated video dialtone service is

provided through a stand-alone video

dialtone system, or a system shared with

telephony. Carriers must also establish a

new subsection in Section II of their

CAMs that identifies all costs incurred

in the planning and development of

nonregulated activities provided in

conjunction with video dialtone service.

LECs that currently include enhanced

services planning in their CAMs as a

nonregulated activity associated with

their provision of telephone service,

shall be required to amend their CAMs

to specifically identify any planning

associated with the provision of

nonregulated video dialtone service. In

addition, LECs shall amend their

existing ‘‘Nonregulated Services

Matrix’’—which shows nonregulated

products/services and the USOA

accounts associated with these

nonregulated products/services—to list

each individual USOA account affected

by the provision of any nonregulated

video dialtone activity.

LECs must also amend Section VI

(Cost Apportionment Tables) of their

CAMs, so that existing cost allocation

tables include apportionment

procedures for investment and expense

used in the provision of regulated and

nonregulated video dialtone service. We

require LECs to justify and/or amend, if

necessary, their existing cost

apportionment methodology and

allocators for their provision of video

dialtone service. LECs that choose not to

modify their cost apportionment

methodology or allocators for video

dialtone, must also explain why their

existing methodology or allocation

factors are still valid for their regulated,

nonregulated and common cost pools.

In addition, because the allocation for

nonregulated usage of common network

plant is determined by a three-year

forecast of investment usage, LECs shall

revise their forecast usage allocator to

reflect accurately the provision of any

nonregulated video dialtone service

offered on common network plant.

Moreover, carriers that currently do not

provide nonregulated services that use

common network plant, but ‘‘reasonably

anticipate’’ offering such services during

the plant’s three-year forecast usage

period, shall include revised

apportionment procedures for the

nonregulated usage of network plant in

the Section VI, Cost Apportionment

Tables.16

Finally, we require LECs to amend

their CAMs to identify any affiliate

transactions related to their provision of

video dialtone service. LECs must

amend Section V (Affiliate

Transactions) of their CAMs by listing

all transactions with affiliates that

involve video dialtone service. This

listing must contain a brief description

of the nature, terms and frequency of

each transaction. LECs that currently list

transactions involving affiliates

providing video related services in

existing CAMs, must amend such CAMs

to indicate which, if any, specific

transactions relate to the provision of

video dialtone service.

As required by the VDT Recon Order,

LECs shall file CAM revisions within

thirty days after the effective date of

their Section 214 authorization and at

least sixty days prior to providing

nonregulated products or services

related to video dialtone.

VI. Accounting Consistency/Uniformity

Issues

In reviewing various LEC Section 214

applications for video dialtone service,

we have found certain inconsistencies

in the accounting classification of

asynchronous transfer mode (‘‘ATM’’)

equipment. LECs have described ATM

equipment as providing the basic

connection between the various video

servers and various destinations. Some

LECs have provisionally classified ATM

equipment in Account 2212, Digital

electronic switching; other LECs have

classified the same type of equipment in

Account 2232, Circuit equipment. Based

on our analysis of video dialtone ATM

equipment and LEC descriptions of the

functional purpose of such equipment,

we find that, although certain carriers

have classified ATM equipment as

switches, the equipment does not

perform the functions performed by

traditional network switches.17 We find

based on the data before us, that ATM

video dialtone equipment does not, at

this stage of LEC video dialtone

deployment, meet established criteria

for classification as a switch. Therefore,

carriers shall classify ATM equipment

as circuit equipment and record it in

Account 2232, Circuit equipment. Our

decision regarding the accounting

classification for video dialtone ATM

equipment does not in any way

preclude LECs from demonstrating at a

future date any functional change that

should alter this classification.

Finally, we intend to amend RAO

Letter No. 6 shortly to incorporate video

dialtone plant investment within our

existing itemized list of

telecommunications plant in service.18

This letter is issued pursuant to

authority delegated under § 0.291 of the

Commission’s Rules, 47 C.F.R. § 0.291.

Applications for review under Section

1.115 of the Commission’s Rules, 47

C.F.R. § 1.115, must be filed within 30

days of the date of this letter. See 47

C.F.R. § 1.4(b)(2).

If you have any questions, please

contact Kenneth Ackerman or Daniel

Gonzalez at (202) 418–0810.

Kenneth P. Moran,

Chief, Accounting and Audits Division,

Common Carrier Bureau.

[FR Doc. 95–9574 Filed 4–17–95; 8:45 am]

BILLING CODE 6712–01–M

FEDERAL EMERGENCY

MANAGEMENT AGENCY

Public Information Collection

Requirements Submitted to OMB for

Review

ACTION: Notice.

SUMMARY: The Federal Emergency

Management Agency (FEMA) has

submitted to the Office of Management

and Budget the following public

information collection requirements for

review and clearance in accordance

with the Paperwork Reduction Act of

1980, 44 U.S.C. chapter 35.