Opinion ID: 382674
Heading Depth: 2
Heading Rank: 1

Heading: Telephone Industry Separations Procedures

Text: 9 Originally, local telephone companies did not receive any compensation from long distance carriers for originating or terminating calls. In Smith v. Illinois Bell Telephone Co., 282 U.S. 133, 149-51, 51 S.Ct. 65, 69-70, 75 L.Ed. 255 (1930), however, the Supreme Court held that the rate base and expenses of a telephone company must be allocated between interstate and intrastate uses for purposes of fixing just and reasonable rates for interstate and intrastate telephone service. Faced with the problems such allocation presented, the telephone companies, state public utility commissions, and federal agencies came to an accommodation in the form of a Separations Manual standardizing allocations procedures. The Manual, which is published by the National Association of Regulatory Utility Commissioners (NARUC) and approved by the FCC, has been revised and is incorporated into the FCC's rules, 47 C.F.R. § 67.1 (1979). See Jurisdictional Separations of Telephone Companies, 16 F.C.C.2d 317, 331 (1969). In 1970 it was revised pursuant to the Ozark Plan, which was recommended by a Federal-State Joint Board convened under section 410(a) of the Communications Act of 1934, 47 U.S.C. § 410(a). See Separation Procedures, 26 F.C.C.2d 247 (1970). 10 Under section 410(c) of the Communications Act, 47 U.S.C. § 410(c), the FCC is required to refer any rulemaking proceeding regarding the jurisdictional separation of common carrier property and expenses between interstate and intrastate operations to a Federal-State Joint Board for a recommended decision. See S.Rep.No.362, 92d Cong., 1st Sess. 5 (1971), reprinted in (1971) 2 U.S.Code Cong. & Admin.News, pp. 1511, 1515 (statute achieves joint participation without abandoning Federal superintendence in the field). Under the separation procedures, AT&T and several other large independent telephone companies provide long-distance public services like MTS (message toll service), which is the regular long distance service available to every home subscriber, and WATS (wide area telecommunication service), which allows business and government subscribers to make interstate calls at fixed volume rates, and the Manual designates a portion of the local exchange costs to be borne by those services. Interstate FX and CCSA private lines, however, are treated differently. Their costs have been assigned wholly to interstate revenue requirements, while the costs of the local exchange service accessed by such lines have been assigned wholly to intrastate revenue requirements. 3 Thus business subscribers to FX/CCSA pay one bill for their private line and another bill for the business local exchange service in the area accessed by that line. 11 Recently, the so-called Execunet decisions, 4 opening up toll services to specialized common carriers, led the FCC to accept an agreement negotiated between AT&T and other telephone company representatives, and the major specialized carriers, which established temporary arrangements for the use of local facilities. See Exchange Network Facilities for Interstate Access (ENFIA), 71 F.C.C.2d 440 (1979). This ENFIA agreement provides rough justice for services like MTS and WATS until other compensation arrangements can be prescribed. As for FX and CCSA, the Commission said that some form of rulemaking or interpretive proceeding would appear necessary, id. at 457, and has recently put forth a tentative plan for prescribing arrangements to compensate local exchange carriers for these and other interstate services by determining the amounts interstate exchange carriers will pay for the use of exchange plant to originate and terminate interstate traffic. 5