Opinion ID: 421797
Heading Depth: 3
Heading Rank: 2

Heading: The ENFIA Agreement

Text: 18 Several months of public meetings under the aegis of the FCC culminated in the execution, in December 1978, of an Interim Settlement Agreement (ENFIA Agreement). The signatories to the agreement were MCI, Southern Pacific Communications Company (SPCC), United States Transmission Systems, Inc. (USTS), 6 and a number of telephone company parties. In the absence of congressional action defining the interconnection rights and obligations of the signatories, the interim settlement embodied in the ENFIA Agreement was to expire, by its terms, on the effective date of a Commission Order disposing of the related issues in ... [Docket 78-72 ] or in other appropriate proceedings, and directing termination of the Agreement or five years from the effective date of [the] Agreement, whichever occurs first. ENFIA Agreement p 6 n., reprinted in 43 Fed.Reg. 59,129, 59,131 (1978). The maximum five-year term of the ENFIA Agreement was divided into two phases. Phase II, which was to govern the last two years of the agreement, would commence only if, 19 Prior to the end of Phase I, the FCC determines that it is reasonable and in the public interest to implement Phase II and determines an appropriate level of payment for the use of jointly used subscriber plant to be applied during that period. In the event the Commission does not make such determinations, the Agreement will terminate at the end of Phase I. 20 ENFIA Agreement p 11, reprinted in 43 Fed.Reg. at 59,131-32. 21 One of the major stumbling blocks in the negotiations preceding the ENFIA settlement was the difference between the treatment of MTS/WATS-type services and other interstate services, whose users pay only local business rates for connections to local exchange facilities. The parties explicitly recognized this discrimination and the need for prompt resolution of questions concerning the compensation of local telephone companies for use of their facilities by providers of these other interstate services. But they apparently were persuaded that the discrimination issues need not be addressed in the present round of negotiations if doing so would foreclose immediate interim resolution of the other issues. 7 As a result, the parties reached agreement on compensation of local telephone companies for use of their exchange facilities for services within the scope of the ENFIA Agreement as if the charges they established could, after appropriate consideration by the Commission, be ultimately applied to other services which also utilize the local telephone company exchange facilities. ENFIA Agreement p 5, reprinted in 43 Fed.Reg. at 59,131. But the interim nature of their compromise was clear, for the ENFIA Agreement recommended that the FCC resolve the discrimination issues in the most [229 U.S.App.D.C. 211] expeditious proceeding possible. Id. The ENFIA Agreement is thus best characterized as one made by parties agree[d] in principle that all carriers using local exchange facilities in the provision of their interstate services should pay for the use of the ... facilities on a nondiscriminatory basis, and designed primarily to provide time for the Commission to conduct the proceeding(s) necessary to resolve the discrimination questions. ENFIA Agreement p 9, reprinted in 43 Fed.Reg. at 59,131. 22 For the interim period, the ENFIA Agreement set out a formula to determine the monthly charge for each ENFIA line used by OCCs to connect their long distance terminals with local telephone companies' central offices to provide MTS/WATS-type services to local telephone company customers who also subscribe to the OCCs' service. This formula, which is patterned after the method by which local telephone companies are ... compensated for use of exchange facilities for traditional interstate MTS and WATS services, Acceptance Order, 71 F.C.C.2d at 444-45, consists of three elements: 8 23 (1) A charge, determined by reference to local carrier tariffs, for a line between an OCC switch and a local exchange switch. 24 (2) A charge for the traffic sensitive portion of local exchange costs associated with the provision of OCC services. This charge turns primarily on the OCCs' billed minutes of use per month per ENFIA line (MOUs). 25 (3) A charge for the non-traffic sensitive portion of local exchange costs associated with the provision of OCC services. This element, which accounts for the large majority of the ENFIA rate, is derived by multiplying MOUs reported by the OCCs by a subscriber plant cost-per-minute variable known as the Separations Amount, and then discounting the product according to the applicable Factor P. 9 Factor P originally was set at thirty-five percent, but the parties agreed that the discount would be reduced and this percentage would rise as the OCCs' business increased during the first three years of the term of the ENFIA Agreement. If the FCC determined that the ENFIA Agreement should enter Phase II, it also was required to establish an appropriate level for Factor P.