[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Rules and Regulations]
[Pages 52307-52325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25188]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 64 and 68
[CC Docket 96-128; FCC 96-388]
Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Federal Communications Commission (``Commission'') adopts
a Report and Order implementing Section 276 of the Communications Act
of 1934, as amended by the Telecommunications Act of 1996 (``1996
Act''). In the Report and Order, the Commission adopts new rules and
policies governing the payphone industry that: establish a plan to
ensure fair compensation for ``each and every completed intrastate and
interstate call using [a] payphone[,]'' discontinue intrastate and
interstate carrier access charge payphone service elements and payments
and intrastate and interstate payphone subsidies from basic exchange
services, prescribe nonstructural safeguards for Bell Operating Company
(``BOC'') payphones, permit the BOCs to negotiate with payphone
location providers on the interLATA carrier presubscribed to their
payphones, permit all payphone service providers to negotiate with
location providers on the intraLATA carrier presubscribed to their
payphones, and adopt guidelines for use by the states in establishing
public interest payphones to be located ``where there would otherwise
not be a payphone[.]'' As set forth in the Report and Order and
explained below, the Commission is issuing the Report and Order to
comply with the statutory mandate of Section 276 of the 1996 Act of
``promot[ing] competition among payphone service providers and
promot[ing] the widespread deployment of payphone services to the
benefit of the general public * * *.''
EFFECTIVE DATES: The revision of the heading of subpart M and the
authority citation of part 64 and the amendment to Sec. 64.1301 and new
Sec. 64.1340 become effective November 6, 1996. The amendments to
Sec. 64.703 and new Sec. 64.1330 become effective December 16, 1996.
Section 64.1301 is removed and Secs. 64.1300, 64.1310 and 64.1320
become effective October 7, 1997. Sections 68.2 and 68.3 become
effective April 15, 1997.
FOR FURTHER INFORMATION CONTACT: Michael Carowitz, 202-418-0960,
Enforcement Division, Common Carrier Bureau.
[[Page 52308]]
SUPPLEMENTARY INFORMATION: On June 4, 1996, the Commission adopted a
Notice of Proposed Rulemaking (``NPRM'') [61 FR 33074] to implement
Section 276 of the Telecommunications Act of 1996. This is a summary of
the Commission's Report and Order in CC Docket No. 96-128, adopted and
released on September 20, 1996. The full text of the Report and 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 the Report and Order may also be purchased
from the Commission's duplicating contractor, International
Transcription Services, 2100 M Street, N.W., Suite 140, Washington,
D.C. 20037, (202) 857-3800. The Report and Order contains new or
modified information collections subject to the Paperwork Reduction Act
of 1995 (PRA). It has been submitted to the Office of Management and
Budget (OMB) for review under the PRA. OMB, the general public, and
other federal agencies are invited to comment on the new or modified
information collections contained in this proceeding.
Parties must file any petitions for reconsideration of the Report
and Order within 30 days from release of that document. The Commission
waives the requirements of Section 1.4 of its rules to establish this
new date of public notice in light of the deadline established in the
1996 Act to complete this proceeding. Parties may file oppositions to
the petitions for reconsideration pursuant to Section 1.106(g) of the
rules, except that oppositions to the petitions must be filed within
seven (7) days after the date for filing the petitions for
reconsideration. The Commission will not issue a separate notice of any
petitions for reconsideration; the Report and Order serves as notice to
all interested parties of the due dates for petitions and oppositions.
In addition, the Commission waives Section 1.106(h) of the rules and
will not accept reply comments in response to oppositions. The
Commission concludes that these actions are necessary to complete all
Commission action in this proceeding, which involves issues concerning
the expedited implementation of the 1996 Act, by the statutory deadline
of November 8, 1996. The Commission will consider all relevant and
timely petitions and oppositions before final action is taken in this
proceeding.
Petitions for reconsideration must comply with Sections 1.106 and
1.49 and all other applicable sections of the Commission's rules.
Petitions also must clearly identify the specific portion of the Report
and Order for which relief is sought. If a portion of a party's
arguments does not fall under a particular topic listed in the outline
of the Report and Order, such arguments should be included in a clearly
labeled section at the beginning or end of the filing. Parties may not
file more than a total of ten (10) pages of ex parte submissions,
excluding cover letters. This 10 page limit does not include: (1)
written ex parte filings made solely to disclose an oral ex parte
contact; (2) written material submitted at the time of an oral
presentation to Commission staff that provides a brief outline of the
presentation; or (3) written material filed in response to direct
requests from Commission staff. Ex parte filings in excess of this
limit will not be considered as part of the record in this proceeding.
To file a petition for reconsideration in this proceeding parties
must file an original and ten copies of all petitions and oppositions.
Petitions and oppositions should be sent to the Office of the
Secretary, Federal Communications Commission, Washington, DC 20554. If
parties want each Commissioner to have a personal copy of their
documents, an original plus fourteen copies must be filed. In addition,
participants should submit two additional copies directly to the Common
Carrier Bureau, Enforcement Division, Room 6008, 2025 M Street NW,
Washington, D.C. 20554. The petitions and oppositions will be available
for public inspection during regular business hours in the Dockets
Reference Room (Room 230) of the Federal Communications Commission,
1919 M Street, NW., Washington, DC 20554. Copies of the petition and
any subsequently filed documents in this matter may be obtained from
ITS, Inc., 2100 M Street, NW., Suite 140, Washington, DC 20037, (202)
857-3800.
Paperwork Reduction Act
The Report and Order contains a new or modified information
collection. The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the following information
collections contained in the Report and Order as required by the
Paperwork Reduction Act of 1995, Public Law No. 104-13. OMB
notification of action is due 60 days from the date of publication of
the Report and Order in the Federal Register. Comments should address:
(a) whether the proposed or modified information collection is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Control Number: None.
Title: Implementation of the Payphone Reclassification and
Compensation Provisions of the Telecommunications Act of 1996, CC
Docket No. 96-128.
Form No.: N/A.
Type of Review: New collections.
Respondents: State, local or tribal government; business or other
for-profit, including small businesses.
------------------------------------------------------------------------
Estimated Total
Number of time per Annual
Section/title respondents response burden
(hours) (hours)
------------------------------------------------------------------------
a. State Review/Removal of State
Regulations Concerning Adequacy
of Local Coin Rate Disclosure... 50 50 2,500
b. State Review/Removal of Market
Entry or Exit Requirements...... 50 50 2,500
c. State Showing of Proof of
Market Failure for Exception to
Market-Rate Local Coin Call
Requirement..................... 50 50 2,500
d. State Review/Removal of
Adequacy of Provision of Public
Interest Payphones.............. 50 50 2,500
e. Payphone Providers'
Transmission of Specific
Payphone Coding Digits.......... 1 197 20 3,940
f. Interexchange Carriers'
Provision of Tracking of All
Compensable Calls............... 275 100 27,500
g. Interexchange Carriers'
Initiation of Annual
Verification of Per Call
Tracking Functions.............. 275 20 5,500
h. LEC Verification of Disputed
ANIs and Maintaining and Making
Available the Verification Data. 400 .5 800
i. LEC Provision of Timely
Notification of Payphone
Disconnection................... 400 .5 200
j. LEC Indication on the
Payphone's Monthly Bill That the
Amount Due is for Payphone
Services........................ 400 10 4,000
[[Page 52309]]
k. LEC Tariff Filings............ 400 100 40,000
l. Reclassification of LEC-Owned
Payphones....................... 400 100 40,000
m. Reclassification of AT&T
Payphones....................... 1 100 100
n. Payphone Provider's
Verification of its Status to
IXC Paying Compensation......... 1 197 1 197
o. Payphone Provider's Posting of
Local Coin Call Rate on Each
Payphone Placard................ 197 20 3,940
------------------------------------------------------------------------
1 This estimate was obtained by reference to the Regulatory Flexibility
Analysis in the Implementation of the Local Competition Provisions of
the Telecommunications Act of 1996, Report and Order, CC Docket No. 96-
98, FCC 96-325 (rel. August 8, 1996).2 Id.
Total Annual Burden: 136,177 hours.
Estimated Costs per Respondent: $0.
Needs and Uses: The new and modified collections in this Report and
Order are necessary to implement the provisions of Section 276 of the
Telecommunications Act of 1996.
OMB Approval Number: 3060-0721.
Title: Report of Local Exchange Companies (``LECs'') of Cost
Accounting Studies.
Form No.: N/A.
Type of Review: Revised Collection.
Respondents: Business or other for-profit, including small
businesses.
Number of Respondents: 400.
Estimated Time per Response: 50 hours.
Total Annual Burden: 20,000 hours.
Estimated Cost per Respondent: $0.
Needs and Uses: Pursuant to the mandate in Section 276(b)(1)(A) to
``establish a per call compensation plan to ensure that all payphone
service providers are fairly compensated for each and every completed
intrastate and interstate call'', 47 U.S.C. Sec. 276(b)(1)(A),
incumbent LECs are required to offer individual central office coin
transmission services to payphone service providers (``PSPs'') under a
nondiscriminatory, public tariffed offering if the LECs provide those
services for their own operations. Because the incumbent LECs may have
an incentive to charge their competitors unreasonably high prices for
these services, the Commission requires them to submit cost support for
their central office coin services, on a one-time basis. The report
would contain engineering studies, time and wage studies, and other
cost accounting studies to identify the direct cost of central office
coin services. This will ensure that the services are reasonably priced
and do not include subsidies.
OMB Approval Number: 3060-0719.
Title: Quarterly Report of IntraLATA Carriers Listing Payphone
Automatic Number Identification (ANIs).
Form No.: N/A.
Type of Review: Revised collection.
Respondents: Business or other for-profit, including small
businesses.
Number of Respondents: 400.
Estimated Time per Response: 3.5 hours.
Total Annual Burden: 5,600 hours.
Estimated Cost per Respondent: $0.
Needs and Uses: Pursuant to the mandate in Section 276(b)(1)(A) to
``establish a per call compensation plan to ensure that all payphone
service providers are fairly compensated for each and every completed
intrastate and interstate call'', 47 U.S.C. Sec. 276(b)(1)(A),
intraLATA carriers are required to provide to interexchange carriers
(``IXCs'') a quarterly report listing payphone automatic payphone
identifications (``ANIs''). Without provision of this report,
resolution of disputed ANIs would be rendered very difficult. IXCs
would not be able to discern which ANIs pertain to payphones and
therefore would not be able to ascertain which dial-around calls were
originated by payphones for compensation purposes. There would be no
way to guard against possible fraud. Without this collection, lengthy
investigations would be necessary to verify claims. The report allows
IXCs to determine which dial-around calls are made from payphones. The
data, which must be maintained for at least 18 months after the close
of a compensation period, will facilitate verification of disputed
ANIs. The Order does not specify the manner in which IntraLATA carriers
must provide carrier-payors with the list of payphone ANIs. IntraLATA
carriers are free to use any technologies at their disposal to
distribute the necessary information, including innovative approaches
such as posting the information on the Internet or distributing the
information via electronic mail.
OMB Approval Number: 3060-0723.
Title: Public Disclosure of Network Information by Bell Operating
Companies (``BOCs'').
Form No.: N/A.
Type of Review: Revised collections.
Respondents: Business or other for-profit, including small
businesses.
Number of Respondents: 7.
Estimated Time per Response: 50 hours.
Total Annual Burden: 350 hours.
Estimated Cost per Respondent: $0.
Needs and Uses: Pursuant to Section 276(b)(1)(C) provisions that
prescribe a set of nonstructural safeguards for BOC payphone services,
to foster development of competition in the provision of local
telephone service, 47 U.S.C. Sec. 276(B)(1)(C), the BOCs are required
to publicly disclose changes in their networks or new network services
at two different points in time. First, disclosure would occur at the
``make/buy'' point: when a BOC decides to make for itself, or procure
from an unaffiliated entity, any product whose design affects or relies
on the network interface. Second, a BOC would publicly disclose
technical information about a new service 12 months before it is
introduced. If the BOC could introduce the service within 12 months of
the make/buy point, it would make a public disclosure at the make/buy
point. In no event, however, would the public disclosure occur less
than six months before the introduction of the service. Without
provision of these reports, the industry would be unable to ascertain
whether the BOCs designing new network services or changing network
technical specifications are to the advantage of their own payphones,
or might disadvantage BOC payphone competitors. The requirement for a
minimum 6-month period of public disclosure prior to the introduction
of a new service is vital to ensure that BOCs do not design new network
services or change network technical specifications to the advantage of
their own payphones.
OMB Approval Number: 3060-0724.
Title: Annual Report of IXCs Listing the Compensation Amount Paid
to Payphone Providers and the Number of Payees.
Form No.: N/A.
Type of Review: Revised collection.
Respondents: Business or other for-profit, including small
businesses.
Number of Respondents: 275.
Estimated Time per Response: 2 hours.
Total Annual Burden: 550 hours.
Estimated Cost per Respondent: $0.
[[Page 52310]]
Needs and Uses: Pursuant to the mandate in Section 276(b)(1)(A) to
``establish a per call compensation plan to ensure that all payphone
service providers are fairly compensated for each and every completed
intrastate and interstate call'', 47 U.S.C. Sec. 276(b)(1)(A), IXCs,
who are responsible for paying per-call compensation to payphone
providers, are required to provide annual reports to the Common Carrier
Bureau listing the amount of compensation paid to payphone providers
and the number of payees. Without provision of this report, the
Commission would be unable to ensure that all the IXCs are paying their
respective compensation obligations. The report is intended to be very
brief, and the reporting requirement will be terminated after the
carriers have filed their reports for the 1999 calendar year. In
addition, for further flexibility, the Chief, Common Carrier Bureau, is
delegated the authority to establish the details, as necessary, of this
annual report, including the authority to extend or limit the scope of
this report.
OMB Approval Number: 3060-0726.
Title: Quarterly Report of IXCs Listing the Number of Dial Around
Calls for Which Compensation is Being Paid to Payphone Owners.
Form No.: N/A.
Type of Review: Revised collections.
Respondents: Business or other for-profit, including small
businesses.
Number of Respondents: 275.
Estimated Time per Response: 2 hours.
Total Annual Burden: 550 hours.
Estimated Cost per Respondent: $0.
Needs and Uses: Pursuant to the mandate in Section 276(b)(1)(A) to
``establish a per call compensation plan to ensure that all payphone
service providers are fairly compensated for each and every completed
intrastate and interstate call'', 47 U.S.C. Sec. 276(b)(1)(A), IXCs,
who are responsible for paying per-call compensation to payphone
providers are required to provide to payphone providers a quarterly
report listing the dial-around calls made from each payphone provider's
payphones. Without provision of this report, payphone providers would
be unable to ascertain the compensation amount to be paid by the IXCs.
The report allows each payphone provider to determine how many dial-
around calls to the IXC generating the report were originated by each
of the payphone provider's payphones. The Commission weighed several
alternatives to achieve optimum efficiency and the least burdensome
approach, before imposing this requirement. This requirement is imposed
on the IXCs because they have the greatest ability and incentive to
establish the most efficient means of administering the payment of
compensation.
SUMMARY OF REPORT AND ORDER
I. Background
1. Section 276(b)(1)(A) of the 1996 Act directs the Commission to
establish a compensation plan to ensure ``that all payphone service
providers are fairly compensated for each and every completed
intrastate and interstate call'' from their payphones. Section
276(b)(1)(B) mandates that the Commission ``discontinue the intrastate
and interstate carrier access charge payphone service elements and
payments * * * and all intrastate and interstate subsidies from basic
exchange and exchange access revenues.'' In addition, Section
276(b)(1)(D) directs the Commission to consider whether BOCs should be
granted certain rights already available to all other payphone service
providers (``PSPs'') to participate in the location provider's
selection of presubscribed interLATA carrier, while Section
276(b)(1)(E) grants certain rights to all PSPs to participate in the
selection of presubscribed intraLATA carriers. Together with the other
subsections of Section 276, these three provisions help to establish
regulatory parity for all PSPs, whether independent payphone providers
or incumbent LECs (both independent LECs and BOCs).
II. Discussion
2. In the Report and Order, the Commission adopts new rules and
policies governing the payphone industry that: (1) establish a plan to
ensure fair compensation for ``each and every completed intrastate and
interstate call using [a] payphone[;]'' (2) discontinue intrastate and
interstate carrier access charge payphone service elements and payments
and intrastate and interstate payphone subsidies from basic exchange
services; (3) prescribe nonstructural safeguards for Bell Operating
Company (``BOC'') payphones; (4) permit the BOCs to negotiate with
payphone location providers on the interLATA carrier presubscribed to
their payphones; (5) permit all payphone service providers to negotiate
with location providers on the intraLATA carrier presubscribed to their
payphones; and (6) adopt guidelines for use by the states in
establishing public interest payphones to be located ``where there
would otherwise not be a payphone[.]''
3. The Telecommunications Act of 1996 fundamentally changes
telecommunications regulation. The 1996 Act erects a ``pro-competitive
deregulatory national framework designed to accelerate rapid private
sector deployment of advanced telecommunications and information
technologies and services to all Americans by opening all
telecommunications markets to competition.'' In this proceeding the
Commission advances the twin goals of Section 276 of the Act of
``promot[ing] competition among payphone service providers and
promot[ing] the widespread deployment of payphone services to the
benefit of the general public * * *.'' To this end, the Commission
seeks to eliminate those regulatory constraints that inhibit the
ability both to enter and exit the payphone marketplace, and to compete
for the right to provide services to customers through payphones. At
the same time, the Commission recognizes that a transition period is
necessary to eliminate the effects of some long-standing barriers to
full competition in the payphone market. For this reason, the
Commission will continue for a limited time to regulate certain aspects
of the payphone market, but only until such time as the market evolves
to erase these sources of market distortions.
A. Compensation for Each and Every Completed Intrastate and Interstate
Call Originated by Payphones
4. In the Report and Order, consistent with Section 276, the
Commission establishes a plan to ensure fair compensation for all
calls. The Commission concludes that fair compensation can be ensured
best when the PSP can track the calls made from the payphone on a call-
by-call basis and be assured efficient payment for those calls; when
the market can set a fair rate for the call; and when the caller has
the information necessary to make an informed choice as to whether to
make the call and incur the compensation charge.
1. Payphone Calls Subject to this Rulemaking and Compensation Amount
5. The Commission concludes that, once competitive market
conditions exist, the most appropriate way to ensure that PSPs receive
fair compensation for each call is to let the market set the price for
individual calls originated on payphones. It is only in cases where the
market does not or cannot function properly that the Commission needs
to take affirmative steps to ensure fair compensation, such as in the
following situations. First, because the Telephone Operator Consumer
Services Improvement Act (TOCSIA) requires all payphones to
[[Page 52311]]
unblock access to alternative operator service providers (OSPs) through
the use of access codes (including 800 access numbers), PSPs cannot
block access to toll free numbers generally. However, TOCSIA does not
prohibit an interexchange carrier (IXC) from blocking subscriber 800
numbers from payphones, particularly if the IXC wants to avoid paying
the per-call compensation charge on these calls. This uneven bargaining
between parties necessitates the Commission's involvement. Second, the
Commission concludes that each state should, in light of the instant
proceeding, examine and modify its regulations applicable to payphones
and PSPs, particularly those rules that impose market entry or exit
requirements, and others that are not competitively neutral and
consistent with the requirements of Section 276 of the Act. The
Commission concludes that, for purposes of ensuring fair compensation
through a competitive marketplace, states need only remove those
regulations that restrict competition, and they need not address those
regulations that, on a competitively neutral basis, provide consumers
with information and price disclosure. Third, the Commission concludes
that callers should have information in every instance about the price
of the calls they make from payphones. To this end, the Commission
requires that each payphone clearly indicate the local coin rate within
the informational placard on each payphone.
6. While the most appropriate way to ensure fair compensation is to
let the market set the price for individual payphone calls, the
Commission concludes that this transition to market-based rates should
occur in two phases. Because local exchange carriers (LECs) will
terminate, pursuant to Section 276(b)(1)(b), subsidies for their
payphones within one year of the effective date of the rules adopted in
this proceeding, LECs will not be eligible to receive compensation
under Section 276(b)(1)(a) until that termination date. This one-year
period before per-call compensation is effective, as discussed below,
will be the first phase of implementing the rules adopted in this
proceeding. During this first phase, states may continue to set the
local coin rate in the same manner as they currently do. States may,
however, move to market-based local coin rates anytime during this one-
year period. In addition, the states must conduct its examination of
payphone regulations during this one-year period to review and remove,
if necessary, those regulations that affect competition, such as entry
and exit restrictions. IXCs will pay compensation for access code calls
and subscriber 800 calls on a flat-rate basis. In addition, all
payphones must provide free access to dialtone, emergency calls, and
telecommunications relay service calls for the hearing disabled.
7. In the second phase, which will begin one year after the
effective date of rules adopted in this proceeding, LECs will have
already terminated the subsidies prohibited by Section 276(b)(1)(B),
and per-call tracking capabilities will be in place. The carriers to
whom payphone calls are routed will be responsible for tracking each
compensable call and remitting per-call compensation to the PSP. During
this second year, which is the first year of per-call compensation (as
opposed to flat-rate compensation), the market will be allowed to set
the rate for local coin calls, unless the state can show that there are
market failures within the state that would not allow market-based
rates. In addition, during the second phase, which will be the first
year of per-call compensation (after the initial year of flat-rate
compensation), to allow the Commission to ascertain the status of
competition in the payphone marketplace, the Commission concludes that
IXCs must pay PSPs a default rate of $.35 for each compensable call,
which may be changed by mutual agreement. PSPs will be required to post
the local coin rate they choose to charge at each payphone. During the
second phase, the Commission may review, at the Commission's option,
the deregulation of local coin rates nationwide and determine whether
marketplace disfunctions exist, such as locational monopolies caused by
the size of the location with an exclusive PSP contract or the caller's
lack of time to identify potential substitute payphones, and should be
addressed by the Commission. If the Commission finds that the
deregulation of local coin rates warrants a modification of its
approach due to market failures, the Commission may choose to set a cap
on the number of calls subject to compensation from particular
payphones to limit the exercise of locational market power. Absent such
a finding, at the conclusion of the second phase, the market-based
local coin rate at these payphones will be the default compensation
rate for all compensable calls in absence of an agreement between the
PSP and the carrier-payor.
8. Ensuring Fair Compensation. To ensure fair compensation, the
Commission concludes that it must provide for compensation for access
code calls and subscriber 800 and other toll-free number calls, whether
they are intrastate or interstate in destination.
9. The Commission concludes that it must ensure fair compensation
for 0+ calls that use BOC payphones. The Commission concludes that once
the BOCs reclassify their payphones and terminate all subsidies,
pursuant to Section 276(b)(1)(B), they may receive the per-call
compensation established by the Report and Order, so long as they do
not otherwise receive compensation for use of their payphones in
originating 0+ calls. The Commission concludes further that, in the
absence of a contract providing compensation to the PSP for intraLATA
0+ calls, the PSP shall be eligible to collect per-call compensation
from the carrier to whom the call is routed. The Commission also
concludes that when a caller dials ``0'' and the payphone subsequently
translates this digit, unbeknownst to the caller, into an 800 access
number (i.e., as a way of presubscribing the payphone to a particular
IXC), such a call is not compensable as an access code call, because it
does not put the caller into contact with an alternative carrier.
10. The Commission concludes that PSPs should receive compensation
for international calls. The Commission concludes that it has authority
under Sections 4(i) and 201(b) of the Communications Act of 1934, as
amended, to ensure that PSPs are fairly compensated for international
as well as interstate and intrastate calls using their payphones in the
United States.
11. Local Coin Calls. The Commission concludes that full and
unfettered competition is the best way of achieving Congress' dual
objectives to promote ``competition among payphone service providers
and promote the widespread deployment of payphone services to the
benefit of the general public.'' Once competitive conditions exist, the
Commission believes that the market should set the compensation amount
for all payphone calls, including local coin calls. Because the
Commission has an obligation under Section 276 to ensure that the
compensation for all local coin calls is fair, it concludes that the
market should be allowed to set the price for all compensable calls,
including a local coin call.
12. Section 276(b)(1)(A) gives the Commission both the jurisdiction
to ensure fair compensation for local coin calls and the mandate to
establish a plan to compensate PSPs on a per-call basis. Based on the
record in this proceeding, the Commission concludes that a
deregulatory, market-based approach to setting local coin rates is
appropriate, because existing local coin rates are not
[[Page 52312]]
necessarily fairly compensatory. The Commission recognizes, however,
that the competitive conditions, which are a prerequisite to a
deregulatory, market-based approach, do not currently exist and cannot
be achieved immediately. Many states impose regulations on PSPs,
including certain requirements that must be fulfilled before a PSP can
enter or exit the payphone marketplace. In addition, in some locations,
because of the size of the location with an exclusive PSP contract or
the caller's lack of time to identify potential substitute payphones,
the PSP may be able to charge an inflated rate for local calls based on
its monopoly, pursuant to an exclusive contract with the location
provider, on all payphones at the location. The Commission concludes
that such monopoly arrangements, in the absence of regulatory
oversight, could impair competition.
13. Based on these concerns, the Commission concludes that the
overall transition to market-based local coin rates should not occur
immediately. As discussed below, LECs will not be required to
terminate, pursuant to Section 276(b)(1)(b), certain subsidies
associated with their payphones until April 15, 1997. LECs will not be
eligible to receive per-call compensation under Section 276(b)(1)(a)
for one year, when all such subsidies are terminated. For this one-year
period, the states will be responsible for both ensuring that PSPs are
fairly compensated for local coin calls and protecting consumers from
excessive rates. Eventually, when fully competitive conditions exist,
the marketplace will address both concerns. The Commission concludes
that, during this one-year period before per-call, as opposed to flat-
rate, compensation becomes effective, states may continue to set the
local coin rate in the same manner as they currently do. States may,
however, move to market-based local coin rates anytime during this one-
year period, and are encouraged to do so. In addition, the Commission
concludes that during the same period, the states should take
additional action to ensure that payphone competition is promoted. The
Commission believes that ease of entry and exit in this market will
foster competition and allow the market, rather than regulation, to
dictate the behavior of the various parties in the payphone industry.
To this end, each state should examine and modify its regulations
applicable to payphones and PSPs, removing, in particular, those rules
that impose market entry or exit requirements. The Commission concludes
that, for purposes of ensuring fair compensation through a competitive
marketplace, the states should remove only those regulations that
affect payphone competition; the states remain free at all times to
impose regulations, on a competitively neutral basis, to provide
consumers with information and price disclosure. In addition, the
states at all times must ensure that access to dialtone, emergency
calls, and telecommunications relay service calls for the hearing
disabled is available from all payphones at no charge to the caller.
14. At the conclusion of this first one-year period, the market
will be allowed to set the price for a local coin call, as discussed
more fully above. However, the Commission concludes that it should make
an exception to the market-based approach for states that are able to
demonstrate to the Commission that there are market failures within the
state that would not allow market-based rates. Such a detailed showing
could consist of, for example, a detailed summary of the record of a
state proceeding that examines the costs of providing payphone service
within that state and the reasons why the public interest is served by
having the state set rates within that market. In addition, under the
Commission's deregulatory, market-based approach, when states have
concerns about possible market failures, such as that of payphone
locations that charge monopoly rates, they are empowered to act by, for
example, mandating that additional PSPs be allowed to provide
payphones, or requiring that the PSP secure its contract through a
competitive bidding process that ensures the lowest possible rate for
callers. If a market failure persists after such action, the state
should recommend the matter to the Commission for possible
investigation. In addition, during the second phase, after the initial
year of flat-rate compensation, the Commission may review, at its
option, the deregulation of local coin rates nationwide and determine
whether marketplace disfunctions, such as locational monopolies where
the size of the location or the caller's lack of time to identify
potential substitute payphones, exist and should be addressed by the
Commission. At this point, if the Commission finds that the
deregulation of local coin rates warrants a modification of its
approach due to market failures, the Commission may choose, for
example, to set a cap on the number of calls subject to compensation
from particular payphones to limit the exercise of locational market
power. Absent such a finding, at the conclusion of the second phase,
the market-based local coin rate at these payphones will be the default
compensation rate for all compensable calls in absence of an agreement
between the PSP and the carrier-payor.
15. With regard to ``411'' directory-assistance calls, the
Commission noted that, while incumbent LECs in many jurisdictions
currently do not charge the payphone caller for ``411'' calls made from
their own phones, the LECs charge independent payphone providers for
directory-assistance calls made from their payphones, and are not
always allowed by the state to pass those charges on to callers. The
Commission concludes that it must ensure fair compensation for ``411''
and other directory assistance calls from payphones by permitting the
PSP to charge a market-based rate for this service, although a PSP may
decline to charge for this service if it chooses. In addition, to help
ensure that a LEC does not discriminate in favor of its own payphones,
the Commission concludes that if the incumbent LEC imposes a fee on
independent payphone providers for ``411'' calls, then the LEC must
impute the same fee to its own payphones for this service.
16. Completed Calls. The Commission concludes that a ``completed
call'' is a call that is answered by the called party. The Commission
has previously found that, where an 800 calling card call is routed
through an IXC's platform, it should not be viewed as two distinct
calls--one to the platform and one to the called party. In addition, in
Florida Public Telecommunications Ass'n v. FCC, the United States Court
of Appeals for the District of Columbia Circuit emphasized the one-call
nature of a subscriber 800 call from the caller's point of view. To
comply with this the mandate of Section 276, the Commission concludes
that multiple sequential calls made through the use of a payphone's
``#'' button should be counted as separate calls for compensation
purposes.
17. The Commission concludes that Section 276(b)(1)(A) was not
intended to apply to both incoming and outgoing calls. Because PSPs may
block incoming calls, they are able to restrict use of their payphones
if they are concerned about a lack of compensation. For this reason,
the Commission concludes that incoming calls are not within the purview
of Section 276, and it is not required, as a result, to address them in
the order.
18. Payphone Fraud. The Commission has recognized, since it first
addressed the issue of compensation for subscriber
[[Page 52313]]
800 calls in 1991, that a PSP ``could attach an autodialer to a
payphone and have it place repeated 800 calls * * * to increase the
amount of compensation [it] receives.'' Section 227(b)(1) of the Act
states that it is unlawful for any person to use an autodialer to call
``any service for which the called party is charged for the call[.]''
The Commission concludes that this provision bars the use of
autodialers to generate payphone compensation by calling toll-free 800
numbers, which are billed to the called party. The Commission will
aggressively take action against those involved in such fraud. The
Commission has the authority under the 1996 Act and its rules to take
civil enforcement action against a payphone provider who deliberately
violates the Commission's compensation rules by placing toll-free calls
simply to obtain compensation from the carriers. More importantly, such
activity may be fraud by wire and subject to criminal penalties.
19. The Commission has previously adopted a definition of
``payphone'' in the access code call compensation proceeding, although
the definition is used only for purposes of the billing and collection
of the compensation in that proceeding. It concluded that payphones
appearing on the LEC-provided customer-owned, coin-operated telephone
(``COCOT'') lists were payphones that are eligible for compensation. If
a payphone provider does not subscribe to an identifiable payphone
service, or if its payphone is omitted from the COCOT list in error,
the provider is required to provide alternative verification
information to the IXC paying compensation. The Commission concludes
that this definition of ``payphone,'' regardless if the payphone in
question is independently- or LEC-provided, will be sufficient for the
payment of compensation as mandated by Section 276 and the instant
proceeding. In addition, as discussed below, all payphones will be
required to transmit specific payphone coding digits as a part of their
automatic number identification (``ANI''), which will assist in
identifying them to compensation payors. Beyond the immediate purposes
of paying compensation, the Commission concludes that a payphone is any
telephone made available to the public on a fee-per-call basis,
independent of any other commercial transaction, for the purpose of
making telephone calls, whether the telephone is coin-operated or is
activated either by calling collect or using a calling card.
20. Compensation Amount. Because the Commission has established
that the payphone marketplace has low entry and exit barriers and will
likely become increasingly competitive, it concludes that the market
(or the states, where there are special circumstances) is best able to
set the appropriate price for payphone calls in the long term. The
Commission concludes further that the appropriate per-call compensation
amount ultimately is the amount the particular payphone charges for a
local coin call, because the market will determine the fair
compensation rate for those calls. For example, if the rate at a
particular payphone is $.35, absent an agreement between the PSP and
the carrier-payor for a different amount, then the PSP should receive
$.35 for each compensable call (access code, subscriber 800, and
directory assistance). If a rate is compensatory for local coin calls,
then it is an appropriate compensation amount for other calls as well,
because the cost of originating the various types of payphone calls are
similar. Although the Commission tentatively concluded in the NPRM that
PSPs should be compensated for their costs in originating calls, as
these costs are measured by appropriate cost-based surrogates, the
Commission now concludes that deregulated local coin rates are the best
available surrogates for payphone costs and are superior to the cost
surrogate data provided by the commenters.
21. The Commission concludes that the per-call compensation amount
equal to the local coin rate is a default rate that will apply only in
the absence of a negotiated agreement between the parties. PSPs, IXCs,
subscriber 800 carriers, and intraLATA carriers may agree on an amount
for some or all compensable calls that is either higher or lower than
the local coin rate at a given payphone. In absence of an agreement,
the PSP shall be entitled to receive compensation for compensable calls
at a per-call rate equal to its local coin rate, which represents the
market-based rate for a call at the payphone in question.
22. To allow the Commission to ascertain the status of competition
in the payphone marketplace, it concludes that it should establish the
default per-call rate for two years before leaving it to the market to
set rate, absent any changes in the Commission's rules. More
specifically, for the first year after the effective date of the rules
adopted in this proceeding, IXCs will pay flat-rate compensation to
PSPs. After the initial year, when per-call tracking capabilities will
be in place, the Commission concludes that IXCs will be required to pay
a default rate of $.35 per call, which is the local coin rate in four
of the five states that have deregulated their local calling rates. The
Commission concludes that the market-based rate in these states is the
best evidence of a per-call compensation amount that will fairly
compensate PSPs. Therefore, for the limited purpose of calculating
compensation for PSPs for the first two years of compensation (one year
of flat-rate and one year of per-call compensation), the Commission
will use a default rate of $.35 per call, which is the rate in the
majority of states that have allowed the market to determine the
appropriate local coin rate. The carrier-payor and the PSP may agree to
a compensation rate that is different, and, therefore, the default rate
would not apply. For coinless payphones, which by definition do not
have a local coin rate, the default rate will remain $.35 per call for
as long as this rate is fairly compensable under Section 276(b)(1)(A).
23. Section 276(d) states that ``in this section, the term
`payphone service' means the provision of public or semi-public pay
telephones * * *.'' Pursuant to this definition, all subsidies for
semi-public payphones are terminated under Section 276(b)(1)(B), just
as they are for public payphones, ``in favor of a compensation plan as
specified in subparagraph (A)[.]'' Therefore, the Commission concludes
that semi-public payphones are entitled to receive per-call
compensation in the same manner as public payphones.
24. The Commission rejects the argument by four states that Section
276 applies only to payphones provided by the BOCs. While Section
276(a), which the states cite as support for their argument, applies
only to the BOCs, as do Sections 276(b)(1)(C) and Section 276(b)(1)(D),
the remainder of Section 276 applies to all payphones, regardless of
their provider. Therefore, based on the plain language of the statute,
the Commission concludes that Section 276 grants us the requisite
authority to adopt rules that apply to all payphones, regardless of
their provider, except where the language clearly applies only to the
BOCs.
2. Entities Required To Pay Compensation
25. The Commission concludes that the primary economic beneficiary
of payphone calls should compensate the PSPs. It concludes that the
``carrier-pays'' system for per-call compensation places the payment
obligation on the primary economic beneficiary in the least burdensome,
most cost effective manner. The Commission has previously adopted such
an approach in the access code compensation proceeding, and the
compensation
[[Page 52314]]
participants have created a payment system that is an appropriate model
for this proceeding. In addition, under the carrier-pays system,
individual carriers, while obligated to pay a specified per-call rate
to PSPs, have the option of recovering a different amount from their
customers, including no amount at all. The Commission concludes further
that all IXCs that carry calls from payphones are required to pay per-
call compensation.
26. The Commission concludes that it is the underlying, facilities-
based carrier that should be required to pay compensation to the PSP in
lieu of a non-facilities-based carrier that resells services, for
example, to specific subscribers or to debit card users. Although the
Commission has concluded that the primary economic beneficiary of
payphone calls should bear the burden of paying compensation for these
calls, it concludes that, in the interests of administrative efficiency
and lower costs, facilities-based carriers should pay the per-call
compensation for the calls received by their reseller customers. The
Commission concludes further that the facilities-based carriers may
recover the expense of payphone per-call compensation from their
reseller customers as they deem appropriate, including negotiating
future contract provisions that would require the reseller to reimburse
the facilities-based carrier for the actual payphone compensation
amounts associated with that particular reseller. While the Commission
has not placed the burden of paying per-call compensation directly on
resellers or debit card providers, it concludes that the underlying
carrier must begin paying compensation on all compensable calls
facilitated by its reseller and debit card customers and it is, in
turn, permitted to impose the payphone compensation amounts on these
customers.
3. Ability of Carriers To Track Calls From Payphones
27. Based on the information in the record, the Commission
concludes that the requisite technology exists for IXCs to track calls
from payphones. The Commission recognizes, 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
put into place.
28. The Commission concludes further that, as stated in the NPRM,
it is the responsibility of the carrier, whether it provides intraLATA
or interLATA services, as the primary economic beneficiary of the
payphone calls, to track the calls it receives from payphones, although
the carrier has the option of performing the tracking itself or
contracting out these functions to another party, such as a LEC or
clearinghouse. In other words, while the Commission assigns the burden
of tracking on the carrier receiving the call from a payphone, parties
to a contract may find it economically advantageous to place this
tracking responsibility on another party. The Commission declines to
require LECs or PSPs to perform per-call tracking themselves. Neither
LECs nor PSPs are the primary economic beneficiaries of payphone calls.
The Commission concludes, however, that LECs, PSPs, and the carriers
receiving payphone calls should be able to take advantage of each
other's technological capabilities through the contracting process. To
this end, the Commission concludes that no standardized technology for
tracking calls is necessary, and that IXCs may use the technology of
their choice to meet their tracking obligations.
29. The Commission concludes that each payphone should be required
to generate 07 or 27 coding digits within the ANI for the carrier to
track calls. Currently under the Commission's rules, LECs are required
to tariff federally originating line screening (``OLS'') services that
provide a discrete code to identify payphones that are maintained by
non-LEC providers. The Commission concludes that LECs should be
required to provide similar coding digits for their own payphones.
30. In view of the current difficulties in tracking such calls, the
Commission concludes that a transition is warranted for requiring
carriers to track compensable calls. Therefore, the Commission requires
carriers to provide for tracking of all compensable calls they receive
from payphones, through any arrangement they choose, as soon as
possible, but no later than one year from the effective date of the
rules adopted in this proceeding. Until that date, carriers must pay
flat-rate compensation, as specified below.
31. The Commission recognizes that implementing a per-call tracking
capability will require new investments for some carriers, particularly
small carriers, but it concludes that the mandate of Section 276 that
the Commission ensure a fair ``per call compensation plan'' for ``each
and every completed intrastate and interstate call'' requires these
carriers to provide tracking for calls for which they receive revenue,
even though they previously did not have to compensate the PSP for many
of these calls. The Commission concludes further that, by permitting
carriers to contract out their per-call tracking responsibility, and by
allowing a transition for tracking subscriber 800 calls, it will have
taken the appropriate steps to minimize the per-call tracking burden on
small carriers. In addition, the Commission concludes that, to parallel
the obligation of the facilities-based carrier to pay compensation, the
underlying facilities-based carrier has the burden of tracking calls to
its reseller customers, and it may recover that cost from the reseller,
if it chooses.
32. The Commission concludes that carriers should be required to
initiate an annual verification of their per-call tracking functions to
be made available for FCC inspection upon request, to ensure that they
are tracking all of the calls for which they are obligated to pay
compensation. The Commission requires this verification for a one-year
period, the 1998 calendar year, and delegates to the Chief, Common
Carrier Bureau, the authority to establish the form and content, if
necessary, of the verification documentation of these per-call tracking
capabilities. The Commission concludes that requiring carriers to
maintain the appropriate records and certify as to the accuracy of both
the data and the tracking methodology would facilitate the prompt and
accurate payment of per-call compensation. The Commission also
concludes that PSPs should be allowed to inspect this certification,
apart from any proprietary network data. In addition, the Commission
expects that the PSPs and carriers performing the tracking will work
together to reconcile or explain any PSP data that are inconsistent
with the annual certification.
4. Administration of Per-Call Compensation
33. The Commission concludes that it should adopt a direct-billing
arrangement between IXCs and PSPs, once tracking capabilities are in
place, that would build on the arrangement established in the access
code call compensation proceeding, with the addition of the requirement
that these carriers must send back to each PSP a statement indicating
the number of toll-free and access code calls that each carrier has
received from each of that PSP's payphones. This arrangement places the
burden of billing and collecting compensation on the parties who
benefit the most from calls from payphones--carriers and PSPs. As with
the tracking of calls, carrier-payors are free to use clearinghouses,
similar to
[[Page 52315]]
those that exist for access code call compensation, or to contract out
the direct-billing arrangement associated with the payment of
compensation.
34. The Commission requires that the carrier responsible for paying
compensation file each year a brief report with the Common Carrier
Bureau listing the total compensation paid to PSPs for intrastate,
interstate, and international calls; the number of compensable calls
carried by the carrier; and the number of payees. This requirement will
apply to calendar year 1998, when tracking capabilities are in place
and compensation is being paid on a per-call basis. The Commission
concludes further that, once per-call compensation is routinely paid by
IXCs, this reporting requirement will be terminated after the carriers
have filed their reports for the 1998 calendar year. Carrier-payors
should file their reports as soon as possible after the end of the
calendar year, but no later than the end of the first quarter of the
following year. To implement the reporting requirement, the Commission
delegates to the Chief, Common Carrier Bureau, the authority to
establish the form and content, if necessary, of the annual report
listing the total amount of compensation paid to PSPs, including the
authority to extend or limit the scope of this report.
35. The Commission concludes that it must establish minimal
regulatory guidelines for the payphone industry regarding resolution of
disputed ANIs to give LECs a greater incentive to provide accurate and
timely verification of ANIs for independently provided payphones. While
any party may file a complaint with the Commission about disputed ANIs,
the Commission concludes that the better practice is for LECs who
maintain the list of ANIs to work with both carrier-payors and PSPs to
resolve disputes more efficiently and quickly before lodging a
complaint with the Commission. The Commission also concludes that it
should require that each LEC must submit to each carrier-payor on a
quarterly basis a list of ANIs of all payphones in the LEC's service
area (called the ``COCOT list'' in the access code call compensation
proceeding).
36. The Commission concludes that the following guidelines will
facilitate the proper verification of payphone ANIs by LECs. First,
LECs must provide a list of payphone ANIs to carrier-payors within 30
days of the close of each compensation period (i.e., each quarter).
Second, LECs must provide verification of disputed ANIs on request, in
a timely fashion. Such verification data must be maintained and
available for at least 18 months after the close of a compensation
period. Third, once a LEC makes a positive identification of an
installed payphone, the carrier-payor must accept claims for that
payphone's ANI until the LEC provides information, on a timely basis,
that the payphone has been disconnected. Fourth, a LEC must respond to
all requests for ANI verification, even if the verification is a
negative response. Carrier-payors are not required to pay compensation
once the LEC verifies that the particular ANI is not associated with a
COCOT line for which compensation must be paid. Fifth, carrier-payors
should be able to refuse payment for compensation claims that are
submitted long after they were due. Carriers should not refuse payment
on timeliness grounds, however, for ANIs submitted by a PSP up to one
year after the end of the period in question. Further, the period for a
PSP to bring a complaint to the Commission based on an ANI disputed by
the carrier-payor will not begin to accrue until the carrier-payor
issues a final denial of the claim. The Commission concludes that the
guidelines, as outlined above, will facilitate the proper verification
of payphones without imposing undue burdens on LECs, PSPs, or carrier-
payors.
37. Because a carrier-payor's administrative expenses are
presumably reduced through the payment of compensation on a quarterly,
as opposed to monthly, basis, the Commission concludes that the
reasonable trade-off is that the carrier remains liable, as discussed
above, for compensation claims that are submitted within one year of
the end of the compensation period in question. The parties may
themselves revisit this issue if they elect a shorter compensation
period. Sprint argues that a carrier should be allowed to defer
payments to individual PSPs until the amount due aggregates to $10 from
that carrier to the particular PSP for all of its payphones. The
Commission agrees and concludes that such a requirement would reduce
the administrative expenses associated with the payment of
compensation. If PSPs would like to charge interest on overdue payments
from IXCs, as suggested by APCC, they should negotiate such a provision
in their compensation agreement with the particular carrier.
38. The Commission concludes that the payment of compensation would
be facilitated and some disputes avoided if LECs were required to state
affirmatively on their bills to PSPs that the bills are for payphone
service. The Commission concludes that LECs, who have knowledge that a
particular phone line is used for a payphone, must indicate on that
payphone's monthly bill that the amount due is for payphone service.
The Commission also agrees with CompTel's suggestion that the
registration of all payphones with a central resource or clearinghouse
would reduce administrative costs for all parties and would avoid
duplication of efforts. The Commission declines, however, to mandate
the creation of a central resource or clearinghouse for compensation
purposes, and believes that the parties themselves are better able to
establish such a resource that would be directly connected to the
payment of compensation.
5. Interim Compensation Mechanism
39. Because the IXCs required to pay compensation to PSPs are not
required to track individual compensable calls until one year from the
effective date of the rules adopted in this proceeding, the Commission
concludes that PSPs should be paid monthly compensation on a flat rate
by IXCs with annual toll revenues in excess of $100 million, beginning
on the effective date of the rules adopted in this proceeding. Unlike
the per-call compensation mechanism adopted in the Report and Order,
the interim flat-rate compensation obligation applies to both
facilities-based IXCs and resellers that have respective toll revenues
of $100 million per year. This flat-rate monthly compensation will
apply proportionally to individual IXCs, based on their respective
annual toll revenues. For reasons of administrative convenience of the
parties, the Commission concludes that it should model the interim
mechanism adopted in the Report and Order on that set forth in the
access code call compensation proceeding. In the access code
compensation proceeding, CC Docket No. 91-35, the Commission excused
several carriers from the obligation to pay flat-rate compensation for
originating access code calls, because they certified that they were
not providers of ``operator services,'' as defined by TOCSIA. The
Commission notes that Section 276's requirement that it ensure fair
compensation for ``each and every completed intrastate and interstate
call,'' including access code calls, supersedes the compensation
obligations established in CC Docket No. 91-35, including the waivers
granted to AT&T and Sprint. Because Section 276 is the statutory
authority for mandating per-call compensation for all compensable
calls, including access code calls, the statutory exclusion in TOCSIA
for those carriers that are not providers of ``operator services'' is
no
[[Page 52316]]
longer a basis for being excused from the obligation to pay either the
total flat-rate compensation amount established in the instant
proceeding, or a portion thereof.
40. When the Commission adopted a compensation mechanism for
interstate access code calls, it concluded that, because they did not
involve use of a ``carrier-specific access code'' and were routed
directly to an end user, subscriber 800 calls were not within the class
of calls for which TOCSIA directed the Commission to consider
compensation. The Commission, therefore, limited compensation to
interstate ``access code calls.'' In the Florida Payphone decision, the
United States Court of Appeals for the District of Columbia Circuit
found no reason to distinguish between the routing of access code calls
and subscriber 800 calls. Therefore, it reversed and remanded the case
to the Commission to ``consider the need to prescribe compensation for
subscriber 800 calls `routed to providers of operator services that are
other than the presubscribed provider of operator services.' '' For the
limited purpose of calculating compensation for PSPs on a flat-rate
basis until per-call compensation becomes mandatory the Commission will
use a rate of $.35 per call, which is the rate in the majority of
states that have allowed the market to determine the appropriate local
coin rate.
41. The Commission next re-examines the average number of access
code calls originated by a payphone per month. In 1992, the Commission
found that the average was 15 calls. As summarized below, data on the
record in the instant proceeding indicate that the average number of
access code calls per month is now considerably higher. In addition,
similar data show the volume of subscriber 800 calls generated by the
average payphone.
42. Based on the call volume data provided by the PSPs, the
Commission concludes that, for purposes of calculating flat-rate
compensation, that the average payphone originates a combined total of
131 access code calls and subscriber 800 calls per month. When 131
calls per month is multiplied by the $.35 compensation amount, the
monthly flat-rate compensation amount is $45.85. The Commission
concludes that this $45.85 flat-rate amount must be paid by carriers,
proportionally to their annual toll revenues, to PSPs. This flat-rate
obligation applies to access code calls and subscriber 800 calls
originated on or after the effective date of the rules adopted in this
proceeding. PSPs that are affiliated with LECs will not be eligible for
this interim compensation until the first day following their
reclassification and transfer of payment equipment along with the
termination of subsidies, as discussed below.
B. Reclassification of Incumbent LEC-Owned Payphones
43. In the foregoing Part, the Commission establishes rules and
guidelines to ensure that PSPs are fairly compensated for calls
originating at their payphones. For certain PSPs--those who are LECs--
the new compensation arrangement can be implemented only upon the
discontinuance of the regulatory system under which they now recover
their costs of providing payphone service. In this Part, the Commission
describes the necessary steps for the LECs' transition to the new
compensation framework, and sets a schedule for the LECs' implementing
actions.
44. Section 276(b)(1)(B) directs the Commission to ``discontinue
the intrastate and interstate carrier access charge payphone service
elements and payments in effect on such date of enactment, and all
intrastate and interstate payphone subsidies from basic exchange and
exchange access revenues, in favor of a [per-call] compensation
plan[.]'' Currently, incumbent LEC payphones, classified as part of the
network, recover their costs from Carrier Common Line (CCL) charges
assessed on those carriers that connect with the incumbent LEC. In
order to comply with Section 276(b)(1)(B) by removing payphone costs
from the CCL charge and all intrastate and interstate payphone
subsidies from basic exchange and exchange access revenues, the
Commission adopts requirements on: (1) the prospective classification
of incumbent LEC payphones as Customer Premises Equipment (CPE); (2)
the transfer of incumbent LEC payphone equipment assets from regulated
to nonregulated status; (3) the termination of access charge
compensation and all other subsidies for incumbent LEC payphones; and
(4) the classification of AT&T payphones.
1. Classification of LEC Payphones as CPE
i. CPE Deregulation
45. The Commission concludes that to best effectuate the 1996 Act's
mandate that access charge payphone service elements and payphone
subsidies from basic exchange and exchange access revenues be
discontinued, incumbent LEC payphones should be treated as deregulated
and detariffed CPE. The Commission determined in Computer II that CPE
should be deregulated and detariffed to ensure that the costs
associated with regulated services are separated from the competitive
provision of the equipment used in conjunction with those services. The
Commission concluded that CPE should be unbundled from its underlying
transmission service in order to prevent improper cross-subsidization.
Consistent with this prior finding, it concludes that LEC payphones
must be treated as unregulated, detariffed CPE in order to ensure that
no subsidies are provided from basic exchange and exchange access
revenues or access charge payphone service elements as required by the
Act.
ii. Unbundling of Payphone Services
46. The Commission concludes, pursuant to Computer II, Section 201,
202, and 276 of the Act, and previous CPE decisions, that incumbent
LECs must offer individual central office coin transmission services to
PSPs under nondiscriminatory, public, tariffed offerings if the LECs
provide those services for their own operations. Under Computer II, all
carriers must unbundle basic transmission services from CPE. Moreover,
Section 202 of the Act prohibits a carrier from discriminating
unreasonably in its provision of basic service. The Commission
concludes that incumbent LECs must provide coin service so competitive
payphone providers can offer payphone services using either instrument-
implemented ``smart payphones'' or ``dumb'' payphones that utilize
central office coin services, or some combination of the two in a
manner similar to the LECs. Because the incumbent LECs have used
central office coin services in the past, but have not made these
services available to independent payphone providers for use in their
provision of payphone services, the Commission requires that incumbent
LEC provision of coin transmission services on an unbundled basis be
treated as a new service under the Commission's price cap rules.
Because incumbent LECs may have an incentive to charge their
competitors unreasonably high prices for these services, the Commission
concludes that the new services test is necessary to ensure that
central office coin services are priced reasonably. Incumbent LECs not
currently subject to price cap regulation must submit cost support for
their central office coin services, pursuant to Sections 61.38, 61.39,
or 61.50(i) of the Commission's rules. Incumbent LECs must file tariffs
with the Commission for these services no later than January 15, 1997.
To the extent that this requirement precludes
[[Page 52317]]
the BOCs from complying with the Computer II, Computer III, and ONA
network information disclosure requirements, the Commission waives the
notice period in order to ensure that these services are provided on a
timely basis consistent with the other deregulatory requirements of
this order. Pursuant to this waiver, network information disclosure on
the basic network payphone services must be made by the BOCs by January
15, 1997.
47. The Commission concludes that tariffs for payphone services
must be filed with the Commission as part of the LECs' access services
to ensure that the services are reasonably priced and do not include
subsidies. This requirement is consistent with the Section 276
prescription that all subsidies be removed from payphone operations.
Accordingly, the Commission concludes that Computer III tariff
procedures and pricing are more appropriate for basic payphone services
provided by LECs to other payphone providers. Pursuant to Section
276(c), any inconsistent state requirements with regard to this matter
are preempted.
iii. Other LEC Payphone Services
48. The Commission concludes that incumbent LECs should provide
certain other services to other payphone providers if they provide
those services to their own payphone operations. These services must be
made available by the LEC or its affiliate to other payphone providers
on a comparable basis in order to ensure that other payphone providers
do not receive discriminatory service from the LECs once LEC payphones
are deregulated, and to ensure that other payphone providers can
compete with LEC payphone operations. The Commission concludes that
fraud protection, special numbering assignments, and installation and
maintenance of basic payphone services should be available to other
providers of payphone services on a nondiscriminatory basis. Validation
services are required by another proceeding. Regarding billing and
collection services, the Commission concludes that if a LEC provides
basic, tariffed payphone services that will only function in
conjunction with billing and collection services from the LEC, the LEC
must provide the billing and collection services it provides to its own
payphone operations for these services to independent payphone
providers on a nondiscriminatory basis. The Commission expects this
requirement to apply, for example, in situations where coin services
require the LEC to monitor coin deposits and such information is not
otherwise available to third parties for billing and collection. It
adopts this requirement to ensure that when a LEC has structured its
payphone services in a way that they could not operate without the LECs
billing and collection services, those services will be available to
other payphone providers on the same basis they are available to the
LEC.
iv. Registration and Demarcation Point for Payphones
49. The Commission amends its Part 68 rules to provide for the
registration of central-office-implemented coin payphones to enable
independent payphone providers as well as the LECs to utilize ``dumb''
payphones. Under the Coin Registration Order, 49 FR 27763 (July 6,
1984), and current Part 68 rules, only instrument-implemented payphones
can be registered for connection to the network. Amending the
Commission's rules enables independent payphone providers to have the
same choices as LECs in providing payphone services. Accordingly, the
Commission adopts amendments to Section 68.2(a)(1) and Section 68.3 of
the Commission's rules to facilitate registration of both instrument-
implemented and central-office-implemented payphones. The Commission
grandfathers existing LEC payphones from the Commission's revised Part
68 requirements, unless the basic functionality in the payphones is
changed. The Commission requires incumbent LECs to submit proposed
interconnection requirements to effectuate such interconnection within
90 days of the effective date of this order. The California Payphone
Association (CPA) filed before the Commission a Petition for Rule
Making requesting that Section 68.2(a)(1) of the rules be amended to
allow for the registration of all coin-operated telephones and that the
Commission re-examine and clarify its interpretation of Section
68.2(a)(1). The Commission notes that its decision in the Report and
Order addresses the relief requested in the CPA petition. The Report
and Order also effectively grants a petition filed by the Public
Telephone Council to treat payphones as CPE, and resolves the issues
raised in RM 8723 regarding exclusion of public payphones from end user
access charges.
50. Consistent with the Commission's objective of treating
incumbent LEC and independent payphone providers' payphones in a
similar manner, the Commission concludes that the demarcation point
must be the same as incumbent LECs use for independent payphone
providers today. Accordingly, the demarcation for all new LEC payphones
must be consistent with the minimum point of entry, demarcation point
standards for other wireline services. The Commission grandfathers the
location of all existing LEC payphones in place on the effective date
of this order because of the difficulty and cost of moving these
payphones to meet the Commission's new demarcation point requirements.
Similarly, the Commission does not require that network interfaces be
placed for existing LEC payphones unless these payphones are
substantially refurbished, for example, upgraded from dumb to smart
payphones or replaced.
2. Reclassification or Transfer of Payphone Equipment to Nonregulated
Status
51. The Commission's nonstructural safeguards include the cost
allocation rules and affiliate transactions rules adopted in the Joint
Cost Order. Under those rules, the BOCs and other incumbent LECs must
classify each of their activities as regulated or nonregulated in
accordance with the Commission's requirements. The Commission now
requires that the BOCs and other incumbent LECs, subject to the
Commission's joint cost rules, classify their payphone operations as
nonregulated for Part 32 accounting purposes. The Commission notes,
however, that the BOCs or other incumbent LECs are free to provide
these services using structurally separate affiliates if they choose to
do so. Therefore, the discussion below will address two possible
approaches a carrier may take in reclassifying its payphone activities
as nonregulated: (1) A carrier may maintain its payphone assets on the
carrier's books but treat the assets as nonregulated, or (2) a carrier
may transfer its payphone assets to a separate affiliate engaged in
nonregulated activities.
i. Specific Assets Reclassified or Transferred
52. The payphone assets to be reclassified or transferred include
all facilities related to payphone service, including associated
accumulated depreciation and deferred income tax liabilities. The
Commission, however, does not include as payphone assets to be
reclassified or transferred the loops connecting the payphones to the
network, the central office ``coin-service,'' or operator service
facilities supporting incumbent LEC payphones because these are part of
network equipment necessary to support basic telephone services.
[[Page 52318]]
ii. Accounting Treatment for Assets Reclassified or Transferred
53. Whether a carrier should account for the transfer or
reclassification of the payphone assets from regulated to nonregulated
status at ``fair market value'' or the net book value of the assets is
determined on whether a carrier maintains the assets in its regulated
Part 32 accounts or instead transfers the payphone assets to a separate
affiliate or an operating division within the carrier that is treated
as an affiliate.
54. Carriers that do not transfer the payphone assets to a separate
affiliate make no reclassification accounting entries to their Part 32
regulated accounts. The reclassification of these assets to
nonregulated status is accomplished instead through the operation of
Part 64 cost allocation rules. Accordingly, the Commission concludes
that payphone investment in Account 32.2351, Public telephone terminal
equipment, and any other assets used in the provision of payphone
service, along with the associated accumulated depreciation and
deferred income tax liabilities should be directly assigned or
allocated to nonregulated activities pursuant to cost allocation rules.
LECs should establish whatever Part 64 cost pools are needed and should
file revisions to their cost allocations manuals within sixty (60) days
prior to the effective date of the change.
55. Carriers that transfer their payphone assets to either a
separate affiliate or an operating division that has no joint and
common use of assets or resources with the LEC and maintains a separate
set of books in accordance with Section 32.23(b) of the Commission's
rules must account for the transfer according to the affiliate
transactions rules of Section 32.27(c) which require that the transfer
be recorded at the higher of fair market value or cost less all
applicable valuation reserves (net book cost). Fair market value has
been defined as ``the price at which the property would change hands
between a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of
relevant facts.'' The Commission concludes, that in instances when the
transfer of payphone assets is governed by Section 32.27(c), it is
appropriate that the going concern value associated with the payphone
business be taken into consideration in determining fair market value.
Such going concern value should include intangible assets such as
location contracts that add value to the payphone business. These
intangible assets would be considered in the theoretical purchase price
negotiated by a willing buyer and seller. The Commission does not
believe, however, that the intangible asset value of BOC or LEC brand
names should be included in the determination of going concern or fair
market value because a BOC or a LEC would not transfer the right to use
its brand name to a third party willing buyer.
56. The difference in accounting treatment for payphone assets
either reclassified as nonregulated pursuant to the Commission's Part
64 cost allocation rules or transferred to a separate affiliate and
accounted for in accordance with the Commission's Part 32 affiliate
transactions rules stems primarily from the fact that in one instance
there is no transfer, only a reallocation of assets to nonregulated
status, and in the other instance, there has been an actual transfer.
In addition, in the first instance the Commission's rules are designed
to promote fair cost allocation between regulated and nonregulated
activities; in the second instance, the Commission's rules are designed
to protect against cross-subsidies between separate companies by
capturing any appreciated value of assets transferred on the books of
the carrier.
iii. Other Matters
57. The Commission requires the LECs to reclassify any pay
telephone investments recorded in Account 32.2351, Public telephone
terminal equipment, and other assets used in the provision of payphone
service, along with the associated accumulated depreciation and
deferred income tax liabilities, from regulated to nonregulated status
pursuant to the Commission's Part 64 and Part 32 rules by April 15,
1997 when the associated revised tariffs are effective. The Commission
thus agrees with Ameritech that it should adopt its tentative
conclusion that a phase-in period is unnecessary.
3. Termination of Access Charge Compensation and Other Subsidies
58. In the telephone network, payphones, as well as all other
telephones, are connected to the local switch by means of a subscriber
line. The costs of the subscriber line that are allocated to the
interstate jurisdiction are recovered through two separate charges: a
flat-rate SLC assessed upon the end-user customer who subscribes to
local service; and a per-minute CCL charge assessed upon IXCs that
recovers the balance of the interstate subscriber line costs not
recovered through the SLC. LEC payphone costs are also included in the
CCL charge. The CCL charge, however, applies to interstate switched
access service that is unrelated to payphone service costs. While
independent payphone providers are required to pay the SLC for the loop
used by each of their payphones, LECs have not been required to pay
this charge because the subscriber lines connected to LEC payphones
have been recovered entirely through the CCL charge.
59. The Commission concludes that to implement Section 276
(b)(1)(B) of the 1996 Act, incumbent LECs must reduce their interstate
CCL charges by an amount equal to the interstate allocation of payphone
costs currently recovered through those charges. LECs subject to the
price cap rules would treat this as an exogenous cost change to the
Common Line basket pursuant to Section 61.45(d) of the Commission's
rules. The incumbent LECs' residential SLC is limited to $3.50 per
month and their multi-line business SLC is currently subject to a $6.00
per month cap. Those LECs with interstate subscriber line costs that
exceed this amount recover a portion of the interstate costs of
subscriber lines through the CCL charge. The issue of the appropriate
interstate SLC has been referred to a Federal-State Joint Board.
60. Incumbent LECs today generally recover payphone costs allocated
to the interstate jurisdiction through the per-minute carrier CCL
charge they assess on IXCs and other interstate access customers for
originating and terminating interstate calls. The incumbent LEC
assesses the independent payphone provider a SLC (at the multi-line
business rate) to recover the payphone common line costs associated
with that phone. In the case of competitive payphones, an independent
payphone provider recovers its payphone costs out of the revenue it
receives from end users, premises owners, and OSPs to whom its
payphones are presubscribed. The 1996 Act mandates that the Commission
``discontinue the intrastate and interstate carrier access charge
payphone service elements and payments * * * and all intrastate and
interstate subsidies from basic exchange and exchange access
revenues[.]''
61. Accordingly, the Commission adopts rules that provide for the
removal from regulated intrastate and interstate rate structures of all
charges that recover the costs of payphones (i.e., the costs of
payphone sets, not including the costs of the lines connecting those
sets to the public switched network, which, like the lines
[[Page 52319]]
connecting competitive payphones to the network, will continue to be
treated as regulated). Therefore, the Commission concludes that
incumbent LECs must file revised CCL tariffs with the Common Carrier
Bureau no later than January 15, 1997 to reduce their interstate CCL
charges by an amount equal to the interstate allocation of payphone
costs currently recovered through those charges, scheduled to take
effect April 15, 1997. LECs subject to the price cap rules must treat
this as an exogenous cost change to the Common Line basket pursuant to
Section 61.45(d)(1)(v) of the Commission's rules. Incumbent LECs must
identify and report accounts that contain costs attributable to their
payphone operations. Incumbent LECs must identify specific cost pools
and allocators that are required to capture the nonregulated investment
and expenses associated with their payphone operations. LECs must file
this information with the Common Carrier Bureau by January 15, 1997.
62. LECs that file tariffs pursuant to Section 61.38 or Section
61.39, rate-of-return regulation, or Section 61.50, optional incentive
regulation, must file tariffs to revise interstate CCL rates to remove
the payphone investment and any other assets used in the provision of
payphone service along with the accumulated depreciation and deferred
income tax liabilities from the common line costs recovered through
those rates. As stated previously, these LECs must reclassify payphone
assets from regulated to nonregulated activity pursuant to Part 64
rules. Expenses incurred after payphones are deregulated should be
classified as nonregulated expenses. The CCL rate reduction must
account for overhead costs assigned to common line costs as a result of
payphone investment and expenses. The Commission requires these LECs to
recalculate their CCL rates, using the same data and methods they used
to develop their current CCL rates, except those calculations should
exclude payphone costs.
63. Price cap LECs are also required to revise their CCL rates,
using the following method to remove payphone costs from their CCL
rates. First, price cap LECs should develop a common line revenue
requirement using ARMIS costs for calendar year 1995. Second, price cap
LECs are required to develop a payphone cost allocator equal to the
payphone costs in Section 69.501(d) divided by total common line costs,
based on 1995 ARMIS data. Each LEC is required to reduce its PCI in the
common line basket by this payphone cost allocator minus one.
64. The Commission requires, pursuant to the mandate of Section
276(b)(1)(B), incumbent LECs to remove from their intrastate rates any
charges that recover the costs of payphones. Revised intrastate rates
must be effective no later than April 15, 1997. Parties did not submit
state-specific information regarding the intrastate rate elements that
recover payphone costs. States must determine the intrastate rates
elements that must be removed to eliminate any intrastate subsidies
within this time frame.
65. Finally, the Commission concludes that, to avoid discrimination
among payphone providers, the multiline business SLC must apply to
subscriber lines that terminate at both LEC and competitive payphones.
It concludes that the removal of payphone costs from the CCL and the
payment or imputation of a SLC to the subscriber line that terminates
at a LEC nonregulated payphone will result in the recovery of LEC
payphone costs on a more cost-causative basis consistent with the
requirements of the 1996 Act. No action the Commission takes in the
Report and Order affects the authority of states to address the state
ratemaking implications of reclassification or transfer of payphone
assets.
4. Deregulation of AT&T Payphones
66. The Commission concludes that AT&T payphones must be
deregulated, detariffed and treated as CPE. The Commission concluded
that there is a competitive market for payphones, and, pursuant to
Section 276, subsidies must be removed from payphone service. AT&T
payphones have been treated like BOC payphones for regulatory purposes.
It would be incongruous to deregulate payphone equipment owned by all
other carriers except AT&T. The Commission concludes, therefore, that
AT&T payphones must be removed from regulation and treated as
independent PSPs' payphones. Accordingly, the Commission requires that
AT&T follow the same procedures discussed above for valuing LEC
payphone assets and transferring them to nonregulated status. After
deregulation, AT&T payphones will be subject to the same requirements
as independent payphone provider payphones.
67. With regard to the issue of bundling of transmission capacity
and payphone CPE, the Commission does not have a sufficient record to
revise, with regard to payphone CPE, the Commission's conclusion in the
Computer II proceeding that there are public interest benefits in
unbundling CPE from the underlying transmission service. The issue of
IXC CPE bundling will be addressed in the Interstate, Interexchange
Marketplace proceeding.
C. Nonstructural Safeguards for BOC Provision of Payphone Service
68. The foregoing parts establish a compensation arrangement that
applies equally to the payphone operations of the BOCs, other LECs,
AT&T and PSPs not affiliated with LECs. In this part, the Commission
addresses certain operating requirements that are imposed only on the
BOCs' payphone operations.
69. Section 276(b)(1)(C) directs the Commission to ``prescribe a
set of nonstructural safeguards for Bell operating company payphone
service to implement the provisions of paragraphs (1) and (2) of
subsection (a), which safeguards shall, at a minimum, include the
nonstructural safeguards equal to those adopted in the Computer
Inquiry--III (CC Docket No. 90-623) proceeding[.]'' As referred to in
Section 276(b)(1)(C), Section 276(a) provides that a BOC ``(1) shall
not subsidize its payphone service directly or indirectly from its
telephone exchange service operations or its exchange access
operations; and (2) shall not prefer or discriminate in favor of its
payphone service.''
a. Nonstructural Safeguards
70. In addition to the accounting safeguards that the Commission
will adopt with respect to payphone services in the accounting
safeguards proceeding, it concludes that the Computer III and ONA
nonstructural safeguards will provide an appropriate regulatory
framework to ensure that BOCs do not discriminate or cross-subsidize in
their provision of payphone service. The Commission and the BOCs have
substantial experience in the application of these safeguards that will
facilitate their use in the context of BOC payphone services. Pursuant
to these requirements, the Commission notes that any basic services
provided by a BOC to its payphone affiliate must be available on a
nondiscriminatory basis to other payphone providers and that payphone
providers may request additional unbundled payphone services through
the 120 day ONA service request process. To ensure that the BOCs comply
with the Computer III and ONA nonstructural separation requirements for
the provision of payphone services, the Commission requires that,
within 90 days following publication of a summary of the Report and
Order in the Federal Register, BOCs must file CEI plans describing how
they will comply with the Computer III unbundling, CEI parameters,
accounting requirements, CPNI requirements as
[[Page 52320]]
modified by Section 222 of the 1996 Act, network disclosure
requirements, and installation, maintenance, and quality
nondiscrimination requirements. Except for the Commission's Part 64
cost allocation rules and Part 32 affiliate transaction rules, the
Commission declines to apply the Computer III nonstructural safeguards
to other LECs.
b. BOC CEI Plans
71. The Commission requires that each BOC file, within 90 days
following publication of a summary of the Report and Order in the
Federal Register, an initial CEI plan describing how it intends to
comply with the CEI equal access parameters and nonstructural
safeguards for the provision of payphone services. In Computer III, CEI
plans have been an integral part of ensuring that BOCs do not
discriminate in providing basic underlying services to enhanced
services providers. The Commission likewise requires the filing of CEI
plans for payphone services, even though the Commission has
traditionally only required such plans for the BOC provision of
enhanced services, to ensure that the BOCs provide payphone services in
a nondiscriminatory manner and consistent with other Computer III and
ONA requirements. Finally, the Commission concludes that this
requirement is consistent with the requirement in Section 276 that the
Commission establish safeguards, at a minimum, ``equal to those adopted
in the Computer III Inquiry.''
72. In a CEI plan, a BOC must describe how it intends to comply
with the CEI ``equal access'' parameters for the specific payphone
service it intends to offer. The CEI equal access parameters include:
interface functionality; unbundling of basic services; resale;
technical characteristics; installation, maintenance, and repair; end
user access; CEI availability; minimization of transport costs; and
availability to all interested customers or enhanced service providers.
73. In its CEI plan, a BOC must explain how it will unbundle basic
payphone services. Thus, a BOC must indicate how it plans to unbundle,
and associate with a specific rate element in a tariff, the basic
services and basic service functions that underlie its provision of
payphone service. Nonproprietary information used by the BOC in
providing the unbundled basic services will be made available as part
of CEI. In addition, any options available to the BOC in the provision
of such basic services or functions would be included in the unbundled
offerings.
74. A BOC also must explain in its CEI plan how it will comply with
the CPNI requirements. The Commission has continued to require
compliance with the Computer III and ONA CPNI requirements that are not
inconsistent with Section 222 of the 1996 Act, which was immediately
effective. In the CPNI NPRM, the Commission is currently examining a
carrier's obligations under the CPNI provisions of the 1996 Act.
75. BOCs must comply with the Computer III and ONA network
information disclosure requirements. The BOCs cannot design new network
services or change network technical specifications to the advantage of
their own payphones. Pursuant to these rules, the BOCs must disclose
information about changes in their networks or new network services at
two different points in time. First, disclosure must occur at the
``make/buy'' point: when a BOC decides to make for itself, or procure
from an unaffiliated entity, any product whose design affects or relies
on the network interface. Second, a BOC must publicly disclose
technical information about a new service 12 months before it is
introduced. If the BOC can introduce the service within 12 months of
the make/buy point, it would make a public disclosure at the make/buy
point. The public disclosure, however, must not occur less than six
months before the introduction of the service.
76. In addition, BOCs must comply with the Computer III and ONA
requirements regarding nondiscrimination in the quality of service,
installation, and maintenance. BOCs must indicate in their CEI plans
how they will comply with these requirements. The Commission does not
impose any new continuing reporting requirement because BOCs are
already subject to reporting requirements pursuant to Computer III and
ONA. BOCs must report on payphone services as they do for other basic
services.
D. Ability of BOCs to Negotiate With Location Providers on the
Presubscribed Interlata Carrier
77. Section 276(b)(1)(D) of the 1996 Act directs the Commission to
eliminate the court-ordered competitive barrier prohibiting the BOCs
from participating in the selection of presubscribed interLATA carriers
to their payphones, unless the Commission finds such activity to be
contrary to the public interest.
78. Payphone providers, both PSPs and independent LECs, compete in
the market for payphone services by offering location providers a
commission on coin and 0+ traffic originating from the payphones
located on the location providers' premises. In turn, these payphone
service providers earn revenues by contracting for the presubscription
of 0+ traffic originating from their payphones. The 1996 Act directs
the Commission to provide similar rights to the BOCs, unless the
Commission determines it is not in the public interest. The Commission
concludes that it would not be contrary to the public interest to allow
the BOCs to negotiate with location providers with respect to the
selecting and contracting for the interLATA carriers presubscribed to
their payphones. The Commission first finds that the payphone industry
is competitive and characterized by low barriers to entry which would
act to prevent the BOCs from exercising market power in the provision
of payphone services. The Commission explains that, although the BOCs
currently have a large share of the payphone services market, there are
also thousands of competitors. These competitors range in size from
very small entities with only a handful of payphones, to the major long
distance companies. The Commission finds that the existence of these
many small competitors demonstrates that entry is relatively easy and
does not require investment or scale levels that would deter many
potential competitors. The Commission also concludes that any ability
that the BOCs might have to raise prices to end users above competitive
levels is severely restricted by the ability of end users to dial
around the presubscribed interLATA carrier. The Commission explains
that a sustained effort by the BOCs to pass on monopoly price levels to
consumers would induce more end users to take advantage of this
alternative.
79. The Commission also determines that the nonstructural and
accounting safeguards required with respect to the BOCs' payphone
operations are sufficient to deter the BOCs from improperly subsidizing
those operations from their local access services or discriminating in
the provision of local access services to the detriment of their
payphone competitors. As discussed previously, the Commission is
applying all Computer III and ONA nonstructural and accounting
safeguards to the BOCs' provision of payphone services, and requiring
that any basic services provided by a BOC to its own payphone
operations to be available on a nondiscriminatory basis to other
payphone providers. The Commission concludes that these safeguards
provide an appropriate regulatory framework to ensure that BOCs do not
engage in improper subsidization or discriminate
[[Page 52321]]
in the provision of services required by their payphone competitors.
For these reasons, and because it finds that the statutory language
reflects a Congressional determination that structural separation of
the BOCs' payphone operations from their core business is neither
necessary nor appropriate, the Commission declines to impose such
structural separation on the BOCs' payphone business. The Commission
does require that the nonstructural and accounting safeguards
established pursuant to Section 276(b)(1)(C) of the 1996 Act be in
place before the BOCs are allowed to participate in the interLATA
presubscription process for their payphones. Specifically, the Report
and Order requires a BOC to submit and receive approval of an initial
CEI plan filed pursuant to Section 276(b)(1)(C) as a precondition to
being authorized to engage in the conduct authorized by Section
276(b)(1)(D).
80. The Report and Order recognizes that location providers are to
retain the ultimate decision-making authority in determining interLATA
services in connection with the choice of payphone providers. The
Commission finds that if strong competition is established in the
payphone industry, location providers will be assured of the ultimate
choice of the interLATA carrier serving payphones on their premises
through the selection of PSPs. The Commission concludes that
competition in the payphone industry is sufficiently strong to ensure
that location providers have freedom of choice concerning the interLATA
carrier for payphones on their premises. The Commission emphasizes,
however, that a location provider's ability to choose should be
protected from unjust and unreasonable practices which seek to
foreclose meaningful choice. Such practices as unreasonable
interference with pre-existing agreements between location providers
and PSPs or carriers, or conduct which is unduly coercive of the
location provider's right to choose the carrier for payphones on its
premises, may constitute violations of Section 201 of the
Communications Act.
81. The Commission rejects the argument that the presubscription
rights specified in Section 276(b)(1)(D) constitute the provision of
interLATA service subject to the restrictions of Sections 271 and 272
of the 1996 Act. The Commission finds that the statutory language
authorizing the BOCs to ``select and contract with, the carriers that
carry interLATA calls from their payphones,'' grants the BOCs no more
than the right to participate as a contractual intermediary between a
location provider and a third-party interLATA carrier. Such conduct
does not amount to the provision of interLATA telecommunications
service addressed under Sections 271 and 272. The Commission does find,
however, that, for purposes of Section 276, resale by a BOC of
interLATA service for its in-region presubscribed payphones lies
outside of the specific rights granted by Section 276(b)(1)(D) of the
1996 Act, and is subject to the requirements set forth in Section
271(b).
82. The Commission affirms its tentative conclusion in the NPRM
that the 1996 Act grandfathers all contracts in force between location
providers and PSPs or interLATA or intraLATA carriers which were in
force and effect as of February 8, 1996.
E. Ability of Payphone Service Providers to Negotiate With Location
Providers on the Presubscribed Intralata Carrier
83. The Commission affirms its tentative conclusion in the NPRM
that all PSPs should have the right to negotiate with location
providers concerning the intraLATA carriers presubscribed to their
payphones. The Commission also concludes that state regulations which
require the routing of intraLATA calls to the incumbent LEC are
inconsistent with this provision of the 1996 Act. Pursuant to the
specific authority in Section 276(c), the Commission concludes that all
such state requirements are therefore preempted by the Commission's
regulations.
84. The Commission also affirms its tentative conclusion in the
NPRM that intraLATA carriers presubscribed to payphones should be
required to meet the Commission's minimum standards for routing and
handling emergency calls. By mandating the application of minimum
standards to intraLATA carriers presubscribed to payphones, the
Commission seeks to ensure that individuals receive timely and proper
assistance when they rely on payphones for 0- and 911 emergency calls.
F. Establishment of Public Interest Payphones
85. Section 276(b)(2) of the 1996 Act directs the Commission to
``determine whether public interest payphones, which are provided in
the interest of public health, safety, and welfare, in locations where
there would otherwise not be a payphone, should be maintained, and if
so, ensure that such public interest payphones are supported fairly and
equitably.'' The Commission concludes that there is a need to ensure
the maintenance of public interest payphones that serve public policy
interests in health, safety, and welfare, in locations where there
might not otherwise be a payphone as a result of the operation of the
market. The Commission explains that all payphones serve the public
interest by providing access to basic communications services. The
Commission expresses particular concern about the role served by
payphones in providing access to emergency services, especially in
isolated locations and areas with low levels of residential phone
penetration. The Commission recognizes, however, the potential that a
freely competitive marketplace may not provide for payphones in
locations where they serve important public policy objectives, but
which, for various reasons, may not be economically self-supporting.
With the elimination of subsidies which have helped to support such
payphones in the past, as directed by the 1996 Act, it is possible that
many of these payphones could disappear absent the availability of
alternative methods to ensure their existence.
86. The Commission concludes that primary responsibility for
administering and funding public interest payphone programs should be
left to the states, subject to guidelines adopted by the Commission.
The Commission finds that the states are better equipped than the
Commission to respond to geographic and socio-economic factors
affecting the need for such payphones that are too diverse to be
effectively addressed on a national basis.
87. While leaving broad discretion to the states with respect to
the implementation of public interest payphone programs, the Commission
finds that the adoption of certain minimum guidelines is necessary to
meet its statutory obligation to ensure that public interest payphones
are funded fairly and equitably. The Commission adopts as a definition
of ``public interest payphone,'' a payphone which (1) fulfills a public
policy objective in health, safety, or public welfare, (2) is not
provided for a location provider with an existing contract for the
provision of a payphone, and (3) would not otherwise exist as a result
of the operation of the competitive marketplace. The Commission
concludes that reliance on the public interest payphone provisions of
the 1996 Act should be limited to instances where a payphone location
serves a strong public interest that would not be fulfilled by the
normal operation of the market. The Commission also concludes that the
statutory language requires a national guideline that companies
providing public interest payphones be fairly
[[Page 52322]]
compensated for the cost of such services. The states have discretion
with respect to funding their respective public interest payphone
programs, so long as the funding mechanism, (1) ``fairly and
equitably'' distributes the cost of such a program, and (2) does not
involve the use of subsidies prohibited by Section 276(b)(1)(B) of the
1996 Act. State programs supporting public interest payphones are also
subject to the provision of Section 253(b) of the 1996 Act which
requires that such a program be implemented on a ``competitively
neutral basis.'' The Commission specifically recognizes that states may
address the need for public interest payphones by adopting appropriate
rules in conjunction with their state universal service plans pursuant
to Section 254(f) of the 1996 Act. The Commission finds that the
implementation of a public interest payphone program is consistent with
the goals of universal service.
88. Also in furtherance of its statutory responsibility under
Section 276(b)(2), the Commission directs each state to review whether
it has adequately provided for public interest payphones in a manner
consistent with the Report and Order. Each state is required, within
two years of the date of issuance of the Report and Order, to evaluate
whether it needs to take any measures to ensure that payphones serving
important public interests will continue to exist in light of the
elimination of subsidies and other competitive provisions established
pursuant to Section 276 of the 1996 Act, and that any existing programs
are administered and funded consistent with the Commission's rules. The
Commission also provides that interested parties may file petitions
with the Commission challenging state requirements that are believed to
be inconsistent with Section 276(b)(2) or guidelines adopted by the
Commission implementing the provisions of that Section.
G. Other Issues
1. Dialing Parity
89. The Commission affirms its tentative conclusion in the NPRM
that the benefits of dialing parity adopted pursuant to Section
251(b)(3) of the 1996 Act should extend to all payphone location
providers. The Commission finds that dialing parity is an important
element in fostering vigorous competition in the payphone industry, as
in the local exchange and long distance industry, by ensuring that each
customer has the freedom and the flexibility to choose among different
carriers for different services without the burden of dialing access
codes. The Commission concludes that the technical and timing
requirements established pursuant to Section 251(b)(3), and Section
271(c)(2)(B), should apply equally to payphones.
90. The Commission also concludes that the unblocking of carrier
access codes mandated by the Telephone Operator Consumer Services
Improvement Act of 1990 (``TOCSIA''), Section 226 of the Act, and the
Commission's rules for interstate calls, should also apply to
intrastate (including local) access code calls. Given the existence of
compensation and the pro-competitive purpose of Section 276 of the 1996
Act, and the absence of any technical limitations, the Commission finds
that unblocked access for all access code calls from payphones is
required.
2. Letterless Keypads
91. The Commission affirms its tentative conclusion in the NPRM
that the use of letterless keypads on payphones violates both TOCSIA
and the 1996 Act. The Commission finds that an exclusively numeric
payphone keypad defeats a caller's attempt to reach its OSP of choice
through the use of commonly-used ``vanity'' access sequences such as
AT&T's ``1-800-CALL-ATT'' and MCI's ``1-800-COLLECT.'' Such access
sequences, which can be easily remembered by consumers, require the
presence of both alphabetic and numeric characters on payphone keypads.
The Commission finds no plausible purpose for letterless keypads other
than to restrict access to a non-presubscribed carrier. The Commission
determines that it has authority to take enforcement action, including
forfeitures, if such devices are used, and orders that OSPs may not pay
commissions to PSPs utilizing such devices.
3. Oncor Petition
92. The Commission denies the petition of Oncor Communications,
Inc., filed August 7, 1995, requesting that the Commission prescribe
compensation for public payphone premises owners and presubscribed
OSPs. The Commission invited comment on Oncor's petition by Public
Notice released September 12, 1995. The Commission finds that the
presubscribed OSP incurs no costs when a consumer makes an access code
call from a payphone, and it would be inequitable to require any party
to compensate the presubscribed OSP because the caller chose not to use
it. The Commission also notes that the rules adopted in the Report and
Order will ensure that PSPs are fairly compensated for calls that
originate from their payphones, and market forces will ensure that the
PSPs fairly compensate premises owners.
III. Conclusion
93. In the Report and Order, the Commission establishes procedures
that will ensure that all payphone service providers are fairly
compensated for every completed intrastate, interstate and
international call, except for those calls excepted by statute, and
adopts interim compensation until the new compensation procedures are
effective. The Commission also establishes procedures that ensure that
all subsidies from basic exchange and exchange access revenues are
removed simultaneous with the LECs' receipt of compensation for calls
from LEC payphones. The Commission requires the BOCs to comply with
certain nonstructural safeguards for their provision of payphone
service, and allows them to negotiate with location providers for
selecting and contracting with the carriers that provide interLATA
service from their payphones. The Report and Order also sets forth
guidelines for public interest payphones, and establishes guidelines
for states to use in their proceedings for funding of such payphones.
IV. Ordering Clauses
94. Accordingly, pursuant to authority contained in Sections 1, 4,
201-205, 215, 218, 219, 220, 226, and 276 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154, 201-205, 215, 218, 219, 220, 226,
and 276, it is ordered that the policies, rules, and requirements set
forth herein are adopted.
95. It is further ordered, that 47 CFR Part 64, Sections 64.1301
and 64.1340, are amended as set forth below, effective November 6,
1996, and that 47 CFR Part 64, Sections 64.1330 and 64.703 are amended
as set forth below, effective December 16, 1996.
96. It is further ordered, that 47 CFR Part 64, Section 64.1301 is
removed and Sections 64.1300, 64.1310 and 64.1320, are amended as set
forth below, effective October 7, 1997.
97. It is further ordered, that 47 CFR Part 68, is amended as set
forth below, effective April 15, 1997.
98. It is further ordered, that local exchange carriers shall
reclassify their payphone assets and related expenses to nonregulated
status on April 15, 1997.
99. It is further ordered, that carriers required to file a cost
allocation manual pursuant to 47 CFR Section 64.903 or by Commission
order shall file revisions to their manuals implementing the
[[Page 52323]]
reclassification required herein no later than February 14, 1997.
100. It is further ordered, that local exchange carriers shall file
tariff revisions required by paras. 180 to 187 of the Report and Order
on January 15, 1997, to be effective April 15, 1997.
101. It is further ordered, the Bell Operating Companies are
granted waivers of the time requirements of the Computer II and the
Computer III network disclosure requirements in order to provide basic
network payphone services by April 15, 1997. Pursuant to this waiver,
network disclosure notification for these basic network payphone
services must be filed no later than January 15, 1997.
102. It is further ordered, that the Bell Operating Companies shall
file CEI plans for the provision of payphone service not later than
Janaury 6, 1997.
103. It is further ordered, that the waivers of Section 64.1301 of
the Commission's Rules granted to AT&T and Sprint in the proceedings
referenced in para. 119 of the Report and Order are revoked, effective
30 days after publication of a summary of this Report and Order in the
Federal Register.
104. It is further ordered, that the proceedings initiated by our
Memorandum Opinion and Order on Further Reconsideration and Second
Further Notice of Proposed Rulemaking in CC Docket 91-35, 60 FR 48957
(September 21, 1995), Policies and Rules Concerning Operator Service
Access and Pay Telephone Compensation, 10 FCC Rcd 11457 (1995), are
terminated.
105. It is further ordered, that the July 18, 1988 Petition of the
Public Telephone Council for a declaratory ruling that BOC Payphones
should be treated as CPE is dismissed as moot.
106. It is further ordered, that the August 7, 1995 Petition of
Oncor Communications, Inc. Requesting Compensation for Competitive
Payphone Premises Owners and Presubscribed Operator Services Providers
is denied.
107. It is further ordered, that the proceedings entitled Amendment
of Section 69.2 (m) and (ee) of the Commission's Rules to Include
Independent Public Payphones Within the ``Public Telephone'' Exemption
from End User Common Line Access Charges, RM 8723, are terminated.
108. It is further ordered, that the December 28, 1989 Petition of
the California Payphone Association is dismissed as moot.
109. It is further ordered, that the provisions set forth in
Section 1.4 of the Commission's rules establishing the date of public
notice for this Report and Order are waived, and petitions for
reconsideration shall be filed within 30 days of release of this
document, and oppositions to the petitions must be filed within seven
(7) days after the date for filing the petitions for reconsideration.
For purposes of this proceeding, Section 1.106(h) of the Commission's
Rules is waived, and the Commission will not accept replies to
oppositions.
List of Subjects
47 CFR Part 64
Communications common carriers, Payphone compensation, Operator
service access, Telephone.
47 CFR Part 68
Administrative practice and procedure, Communications common
carrier, Communications equipment, Labeling, Reporting and record
keeping requirements, Telephone.
Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.
Rule Changes
Parts 64 and 68 of Title 47 of the Code of Federal Regulations are
amended as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. Effective November 6, 1996, the authority citation for Part 64
is revised to read as follows:
Authority: 47 U.S.C. 154, unless otherwise noted. Interpret or
apply 47 U.S.C. 201, 218, 226, 228, 276 unless otherwise noted.
2. Effective December 16, 1996, Sec. 64.703(b) is amended by
removing the word ``and'' at the end of paragraph (b)(2), and by
redesignating paragraph (b)(3) as paragraph (b)(4); and adding a new
paragraph (b)(3) to read as follows:
Sec. 67.703 Consumer information.
* * * * *
(b) * * *
(3) In the case of a pay telephone, the local coin rate for the pay
telephone location; and
* * * * *
3. Effective November 6, 1996, the heading of Subpart M of Part 64
is revised to read as follows:
Subpart M--Payphone Compensation
4. Effective November 6, 1996, Sec. 64.1301 is amended by revising
the first sentence of paragraph (a) and paragraph (b) to read as
follows:
Sec. 64.1301 Competitive payphone compensation.
(a) Each payphone service provider eligible to receive compensation
shall be paid $45.85 per payphone per month for originating access code
and toll-free calls. * * *
(b) This compensation shall be paid by interexchange carriers
(IXCs) that earn annual toll revenues in excess of $100 million, as
reported in the FCC staff report entitled ``Long Distance Market
Shares.'' Each individual IXC's compensation obligation shall be set in
accordance with its relative share of toll revenues among IXCs required
to pay compensation. For example, if total toll revenues of IXCs
required to pay compensation is $50 billion, and one of these IXCs had
$5 billion of total toll revenues, the IXC must pay $4.585 per payphone
per month.
* * * * *
5. Effective December 16, 1996, Sec. 64.1330 is added to subpart M
to read as follows:
Sec. 64.1330 State review of payphone entry and exit regulations and
public interest payphones.
(a) Each state must review and remove any of its regulations
applicable to payphones and payphone service providers that impose
market entry or exit requirements.
(b) Each state must ensure that access to dialtone, emergency
calls, and telecommunications relay service calls for the hearing
disabled is available from all payphones at no charge to the caller.
(c) Each state must review its rules and policies to determine
whether it has provided for public interest payphones consistent with
applicable Commission guidelines, evaluate whether it needs to take
measures to ensure that such payphones will continue to exist in light
of the Commission's implementation of Section 276 of the Communications
Act, and administer and fund such programs so that such payphones are
supported fairly and equitably. This review must be completed by
September 20, 1998.
6. Effective November 6, 1996, Sec. 64.1340 is added to read as
follows:
Sec. 64.1340 Right to negotiate.
Unless prohibited by Commission order, payphone service providers
have the right to negotiate with the location provider on the location
provider's selecting and contracting with, and, subject to the terms of
any agreement with the location provider, to select and contract with,
the carriers that carry interLATA and intraLATA calls from their
payphones.
[[Page 52324]]
7. Effective October 7, 1997, Sec. 64.1300 is added to subpart M to
read as follows:
Sec. 64.1300 Payphone compensation obligation.
(a) Except as provided herein, every carrier to whom a completed
call from a payphone is routed shall compensate the payphone service
provider for the call at a rate agreed upon by the parties by contract.
(b) The compensation obligation set forth herein shall not apply to
calls to emergency numbers, calls by hearing disabled persons to a
telecommunications relay service or local calls for which the caller
has made the required coin deposit.
(c) In the absence of an agreement as required by paragraph (a) of
this section, the carrier obligated to compensate the payphone service
provider shall do so at a per-call rate equal to its local coin rate at
the payphone in question.
(d) For the initial one-year period during which carriers are
required to pay per-call compensation, in the absence of an agreement
as required by paragraph (a) of this section, the carrier is obligated
to compensate the payphone service provider at a per-call rate of $.35
per call. After this initial one-year period of per-call compensation,
paragraph (c) of this section will apply.
Sec. 64.1301 [Removed]
8. Effective October 7, 1997, Sec. 64.1301 is removed.
9. Effective October 7, 1997, section 64.1310 is added to read as
follows:
Sec. 64.1310 Payphone compensation payment procedures.
(a) It is the responsibility of each carrier to whom a compensable
call from a payphone is routed to track, or arrange for the tracking
of, each such call so that it may accurately compute the compensation
required by Section 64.1300(a).
(b) Carriers and payphone service providers shall establish
arrangements for the billing and collection of compensation for calls
subject to Section 64.1300(a).
(c) Local Exchange Carriers must provide to carriers required to
pay compensation pursuant to Section 64.1300(a) a list of payphone
numbers in their service areas. The list must be provided on a
quarterly basis. Local Exchange Carriers must verify disputed numbers
in a timely manner, and must maintain verification data for 18 months
after close of the compensation period.
(d) Local Exchange Carriers must respond to all carrier requests
for payphone number verification in connection with the compensation
requirements herein, even if such verification is a negative response.
(e) A payphone service provider that seeks compensation for
payphones that are not included on the Local Exchange Carrier's list
satisfies its obligation to provide alternative reasonable verification
to a payor carrier if it provides to that carrier:
(1) A notarized affidavit attesting that each of the payphones for
which the payphone service provider seeks compensation is a payphone
that was in working order as of the last day of the compensation
period; and
(2) Corroborating evidence that each such payphone is owned by the
payphone service provider seeking compensation and was in working order
on the last day of the compensation period. Corroborating evidence
shall include, at a minimum, the telephone bill for the last month of
the billing quarter indicating use of a line screening service.
10. Effective October 7, 1997, Sec. 64.1320 is added subpart M to
read as follows:
Sec. 64.1320 Payphone compensation verification and reports.
(a) Carriers subject to payment of compensation pursuant to Section
64.1300(a) shall conduct an annual verification of calls routed to them
that are subject to such compensation and file a report with the Chief,
Common Carrier Bureau within 90 days of the end of the calendar year,
provided, however, that such verification and report shall not be
required for calls received after December 31, 1998.
(b) The annual verification required in this section shall list the
total amount of compensation paid to payphone service providers for
intrastate, interstate and international calls, the number of
compensable calls received by the carrier and the number of payees.
PART 68--CONNECTION OF TERMINAL EQUIPMENT TO THE TELEPHONE NETWORK
11. The authority citation for Part 68 is revised to read as
follows:
Authority: 47 U.S.C. 151, 154, 155, 201-5, 208, 215, 218, 226,
227, 303, 313, 314, 403, 404, 410, 602.
12. Effective April 15, 1997, Sec. 68.2(a)(1) is revised to read as
follows:
Sec. 68.2 Scope.
(a) * * *
(1) Of all terminal equipment to the public switched telephone
network, for use in conjunction with all services other than party line
service;
* * * * *
13. Effective April 15, 1997, Sec. 68.3 is amended by adding the
definitions of ``central-office implemented telephone'' and
``instrument implemented telephone'' in alphabetical order and removing
the definitions of ``coin-implemented telephone'' and ``coin service''
to read as follows:
Sec. 68.3 Definitions.
* * * * *
Central-office implemented telephone: A telephone executing coin
acceptance requiring coin service signaling from the central office.
* * * * *
Instrument-implemented telephone: A telephone containing all
circuitry required to execute coin acceptance and related functions
within the instrument itself and not requiring coin service signaling
from the central office.
* * * * *
This Attachment will not be published in the Code of Federal
Regulations.
Attachment--Interim Compensation Obligations
----------------------------------------------------------------------------------------------------------------
1995 Total
toll services Percent of Amount per
Company revenues total toll phone per
(dollar in revenues month
millions)
----------------------------------------------------------------------------------------------------------------
AT&T Companies:
AT&T Communications, Inc.................................... $38,069 56.69 $25.9923406
Alascom, Inc................................................ 325 0.48 0.2219000
MCI Telecommunciations Corp................................. 12,924 19.25 8.8241091
Sprint Communications Co.................................... 7,277 10.84 4.9685115
LDDS Worldcom............................................... 3,640 5.42 2.4852799
[[Page 52325]]
Frontier Companies:
Allnet Comm. Svcs. dba Frontier Comm. Svcs.................. 827 1.23 0.5646501
Frontier Communications Intl, Inc........................... 309 0.46 0.2109757
Frontier Comm. of the North Central Region.................. 133 0.20 0.0908083
Frontier Communications of the West, Inc.................... 127 0.19 0.0867117
Cable & Wireless Communications, Inc........................ 700 1.04 0.4779384
LCI International Telecom Corp.............................. 671 1.00 0.4581381
Excel Telecommunications, Inc............................... 363 0.54 0.2478452
Telco Communications Group, Inc............................. 215 0.32 0.1467954
Midcom Communications, Inc.................................. 204 0.30 0.1392849
Tel Save, Inc \9\........................................... 180 0.27 0.1228985
U.S. Long Distance, Inc..................................... 155 0.23 0.1058292
Vartex Telecom, Inc......................................... 125 0.19 0.0853461
General Communication, Inc.................................. 120 0.18 0.0819323
Business Telecom, Inc....................................... 115 0.17 0.0785185
Oncor Communications, Inc................................... 111 0.17 0.0757874
The Furst Group, Inc........................................ 109 0.16 0.0744218
American Network Exchange, Inc.............................. 101 0.15 0.0689597
-----------------------------------------------
Total..................................................... 67,153 100.00 45.85
----------------------------------------------------------------------------------------------------------------
[FR Doc. 96-25188 Filed 10-4-96; 8:45 am]
BILLING CODE 6712-01-P