[Federal Register Volume 62, Number 152 (Thursday, August 7, 1997)]
[Proposed Rules]
[Pages 42457-42469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20958]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 54 and 69

[CC Docket No. 96-45; 97-160; FCC 97-256]


Federal-State Board on Universal Service and Forward-Looking 
Mechanism for High Cost Support for Non-Rural LECs

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: On July 18, 1997, the Commission adopted a Further Notice of 
Proposed Rulemaking (FNPRM) to establish a forward-looking mechanism to 
determine high cost support for non-rural local exchange carriers 
(LECs). In the FNPRM, the Commission seeks further comment on the 
platform design and input variables the Commission should adopt in a 
forward-looking economic cost mechanism to estimate the costs of the 
telephone network necessary to provide universal service to high cost 
areas.

DATES: Interested parties may file comments concerning the platform 
designs of the switching, interoffice trunking, signaling, and local 
tandem components on or before August 8, 1997, and parties should 
submit corresponding reply comments on or before August 18, 1997. 
Comments concerning the platform design features determining customer 
location, including the geographic unit for cost calculations and the 
algorithm measuring customer distribution and line counts, should be 
submitted on or before September 2, 1997, and reply comments regarding 
these components should be submitted on or before September 10, 1997. 
Comments discussing the platform-design issues relating to outside 
plant investment, including the algorithms determining plant mix, 
installation and cable costs, drop lengths, structure sharing, the 
fiber-copper cross-over point, digital loop carriers, and the wireless 
threshold must be submitted on or before September 24, 1997, with reply 
comments submitted on or before October 3, 1997. Comments discussing 
all platform issues not otherwise addressed, including the components 
addressing general support facilities, expenses, and support areas, and 
all input values issues must be submitted by October 17, 1997, with 
reply comments due on or before October 27, 1997.

ADDRESSES: Parties should send their comments or reply comments to 
Office of the Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Room 222, Washington, D.C. 20554. Parties should also 
send copies of their comments to the individuals listed on the Service 
List included as Attachment A. Parties should also file one copy of any 
documents filed in this docket with the Commission's copy contractor, 
International Transcription Services, Inc., 1231 20th Street, N.W., 
Washington, D.C. 20036. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC 
Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 
20554. Commenters may also file informal comments or an exact copy of 
formal comments electronically via the Internet at <http://
gullfoss.fcc.gov/cgi-bin/websql/cgi-bin/comment/comment.hts>. Only one 
copy of electronically-filed comments must be submitted. A commenter 
must note whether an electronic submission is an exact copy of formal 
comments on the subject line. A commenter also must include its full 
name and Postal Service mailing address its submission.
    Parties are also asked to submit their comments and reply comments 
on diskette. Such diskette submissions are in addition to and not a 
substitute for the formal filing requirements addressed above. See 
section IV. C., paragraph 90, under Supplementary Information for 
further details. Parties submitting diskettes should submit them to 
Sheryl Todd of the Common Carrier Bureau, 2100 M Street, N.W., Room 
8611, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Valerie Yates, Legal Counsel, Common 
Carrier Bureau, (202) 418-1500, or Sheryl Todd, Common Carrier Bureau, 
(202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the FNPRM adopted and 
released by the Commission on July 18, 1997. The full text of this 
FNPRM is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room 239), 1919 M St., NW, 
Washington, DC.
    The FNPRM divides the issues related to developing model platform 
components and input values into four broad groups, and establishes a 
series of comment and reply comment deadlines that, together, create a 
staged approach to the model development process during which the 
Common Carrier Bureau, acting pursuant to delegated authority, will 
provide guidance to the model proponents.
    The FNPRM requests comment on platform and input issues related to 
the following groups of issues: switching, interoffice trunking, 
signaling, and local tandem investment; customer location; outside 
plant design and investment; and other miscellaneous issues including 
general support facilities, depreciation, expenses, and support areas. 
The FNPRM also requests comment on how the Commission should determine 
the measure of local usage that should be included in the definition of 
universal service.

Summary of Notice of Proposed Rulemaking

I. Modeling Forward-Looking Economic Cost

    1. Introduction. In the May 1997 Report and Order on Universal 
Service the Federal Communications Commission adopted a plan for 
establishing universal service support mechanisms for rural, insular, 
and high cost areas that will replace the current patchwork of implicit 
subsidies with explicit support based on the forward-looking economic 
cost of providing supported services. The Commission adopted a forward-
looking economic cost methodology that will calculate universal service 
support in four steps. First, the Commission will estimate the forward-
looking economic costs of providing universal service in rural, 
insular, and high cost areas. Second, the Commission established a 
nationwide revenue benchmark calculated on the basis of average revenue 
per line. Third, the Commission will calculate the difference between 
the forward-looking economic cost and the benchmark. Fourth, federal 
support will be 25 percent of that difference, corresponding to the 
percentage of loop costs allocated to the interstate jurisdiction. The 
Commission further decided to use forward-looking economic cost studies 
conducted by state commissions that choose to submit such cost studies 
to determine universal service support.
    2. In the Universal Service Order, the Commission concluded that 
support for universal service should be based on the forward-looking 
economic cost of constructing and operating the network facilities and 
functions used to provide the services. The Commission additionally 
concluded that a state could elect to submit its own cost study to 
calculate the level of universal service support available to carriers 
in its state, if the state's study meets the criteria outlined in the 
Order. That study must be based on forward-looking economic cost 
principles, be supported by publicly available data and computations, 
and be the same cost

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study that is used by the state to determine intrastate universal 
service support levels pursuant to section 254(f). In the Order, the 
Commission asked states to elect, by August 15, 1997, whether they will 
conduct their own forward-looking economic cost studies. States that 
elect to conduct such studies must file them with the Commission on or 
before February 6, 1998.
    3. The Commission is currently considering two models, BCPM and 
Hatfield, to use as a mechanism to calculate forward-looking economic 
cost for providing universal service. The BCPM and Hatfield models 
produce dramatically different results, even when modeling a network 
over the same geographic area, because of differences in both their 
platform design and their input values. Both models are composed of 
modules representing the different components of an exchange network. 
These components include customer location, outside plant investment, 
switching, interoffice trunking, signaling, and local tandem 
investment, general support facilities, depreciation, other expenses, 
and the support area. Each module consists of related platform design 
assumptions and input values. The Commission concluded in the Order 
that the Commission would select a platform by the end of 1997, and 
that the Commission would select a complete mechanism, including 
inputs, by August 1998. The Commission's methodology will be 
implemented on January 1, 1999. In the FNPRM, the Commission has 
adopted specific procedures and documentation requirements to allow the 
Commission, state regulators, and the parties to compare and validate 
the models most effectively.
    4. The Commission expects that all future submissions of the 
platforms of the two models will be flexible enough to incorporate 
revisions within the individual component algorithms. Because the 
design features for the components vary in complexity, the Commission 
concludes that a graduated submission and review process will permit 
the Commission, the states, and the public, to evaluate all features 
thoroughly. The Commission concludes that, besides affording the 
Commission sufficient time to evaluate the more complex platform 
components, requiring proponents to present individual components for 
final submission in stages will prevent constant revisions of an entire 
platform from disrupting the evaluation process.
A. Procedures for Revising the Models
    5. Staged Platform Submission Schedule. The Commission requires 
that comments concerning the platform design of the switching, 
interoffice trunking, signaling, and local tandem components must be 
submitted on or before August 8, 1997, and that parties should submit 
corresponding reply comments on or before August 18, 1997. Comments 
concerning the platform design features determining customer location, 
including the geographic unit for cost calculations and the algorithm 
measuring customer distribution and line counts, must be submitted to 
the Commission on or before September 2, 1997 and reply comments 
regarding these components must be submitted on or before September 10, 
1997. Comments discussing the outside plant investment components, 
including the algorithms determining plant mix, installation and cable 
costs, drop lengths, structure sharing, the fiber-copper cross-over 
point, digital loop carriers, and the wireless threshold must be 
submitted on or before September 24, 1997, with reply comments 
submitted on or before October 3, 1997. Comments discussing all 
platform issues not otherwise addressed, including the components 
addressing general support facilities, expenses, and support areas must 
be submitted by October 17, 1997, with reply comments due on or before 
October 27, 1997.
    6. Commission Guidance. Before and during the initial comment and 
reply comment periods, the Commission intends to hold one or more 
public workshops on particular model platform components. Further, 
prior to the Commission's adoption of a particular platform in December 
1997, the Common Carrier Bureau will issue orders and public notices on 
a regular basis explaining its analysis of the model submissions and 
industry comments and selecting particular design features. The 
Commission will work with the states throughout this process so that 
the selected mechanism reflects the concerns of state regulatory 
authorities in developing forward-looking economic cost methodologies 
for state universal service programs or for cost studies to be 
submitted in this proceeding.
    7. Inputs Submission. Although the Commission has stated its 
intention to select default input values by August 1998, it must 
receive the proponents' input submissions in order to evaluate a 
model's performance. The Commission requires that comments regarding 
all input values be submitted by October 17, 1997. Reply comments must 
be submitted by October 27, 1997. In addition, commenters should 
provide explanation and documentation of their suggestions in order to 
establish that their suggestions are reasonable, accurate, and reflect 
forward-looking cost.
    8. Additional Revision Procedures. The Commission requests that the 
current models be modified, if necessary, to generate output reports 
that: (a) Show costs by element of the network; (b) disaggregate study 
area expenses, investments, taxes, and return according to USOA 
accounts; and (c) calculate study area support as the difference 
between CBG cost and the benchmark for every CBG in a study area. 
Parties providing the models under consideration shall provide the 
Commission with a clear and comprehensive programmers' flow chart 
because the current models are unclear as to how the calculations are 
being made. The Commission also requests that the models be revised, if 
necessary, to employ the NECA telephone company study area names and 
identification codes in all subsequent revisions. In addition, to 
enable the Commission and commenters to manage their resources most 
effectively, the Commission requests that the parties submitting models 
give the Commission and commenters reasonable advance warning of the 
approximate date when they expect to release a new version of a model. 
Also, if a party intends to release a new version of a model that is 
designed to work with a software or hardware product that differs from 
the previous version, the Commission requests that party give the 
Commission and others reasonable advance notice of what hardware and 
software they must secure to operate and evaluate the new version of 
the model. Finally, the Commission requests that a party that releases 
a new version of a model clearly indicate the major changes that have 
been made, and, in particular, any additions to the model. The 
Commission requests that the model proponents file complete 
documentation including all third-party information, studies, and 
surveys used by the models. The Commission understands that some of 
this information is proprietary and cannot be released to the public, 
and encourages parties to use the Commission's procedures for 
submitting proprietary information to the Commission wherever 
necessary.
    9. The models under consideration do not presently include any 
information on Alaska and insular areas. In the Order, however, the 
Commission

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concluded that non-rural carriers in Alaska and the insular areas begin 
receiving support based on a forward-looking mechanism at the same time 
as other non-rural carriers (i.e., January 1, 1999). Accordingly, the 
Commission asks that parties discuss the input values or model design 
features that would allow the mechanism adopted in this proceeding to 
determine support for non-rural carriers in Alaska and insular areas.
    10. Hybrid Models. The Commission will determine the design 
components of the platform and input values that will most accurately 
estimate carriers' forward-looking economic costs for the mechanism 
that it will adopt. Although they share some design features, BCPM and 
Hatfield differ in many respects and possess different strengths and 
weaknesses. The Commission encourages the proponents of Hatfield and 
BCPM to refine their models by incorporating portions of the other's 
model where appropriate. Whether the Commission chooses to create its 
own model or whether it relies upon a model developed by the industry, 
the Commission seeks comment on the ramifications of combining features 
of the two models. The Commission seeks comment on whether alternative 
platform components or assumptions, not currently included in either 
Hatfield or BCPM, could be incorporated into Hatfield, BCPM, or a 
hybrid model created by the Commission.
B. Platform Design Components and Input Values

i. Customer Location

    11. Geographic Unit. A geographic unit is the size of the serving 
area over which cost is calculated. The Commission seeks comment on 
whether it should adopt an area smaller than a CBG as the geographic 
unit for customer location and cost calculation in the platform design. 
The Commission seeks comment on whether using CBGs, CBs, or grid cell 
data would allow the Commission to calculate the cost of providing 
universal service more accurately and would better target support. 
Advocates of using geographic units smaller than CBGs should also 
discuss the technical feasibility of their proposal and the 
availability of relevant data at the proposed level of detail.
    12. Distribution of Customers. Customers may be clustered in towns, 
spread uniformly over regions, or otherwise distributed across CBGs. In 
dealing with the distribution of customers, the models use algorithms 
to project the customer distribution within a geographic unit in order 
to estimate the cost of the outside cables required to serve customers. 
In general, BCPM uses a uniform customer distribution algorithm, which 
assumes that customers are spread evenly across an entire CBG. In rural 
areas, BCPM eliminates areas from the CBG data that are more than 500 
feet from any road, based on its assumption that households are located 
within 500 feet of a road. Several commenters criticized the assumption 
present in BCPM that households are evenly distributed across a 
geographic unit. In contrast to BCPM, Hatfield uses a clustering 
algorithm. The Hatfield algorithm first removes the empty space within 
each CBG by removing CBs when census data indicates that they do not 
contain any population. In low-population-density CBGs, the Hatfield 
algorithm clusters 85 percent of the population within a town. For 
dense areas, Hatfield uses a clustering algorithm that establishes two 
clusters if more than fifty percent of the CBG is empty and four 
clusters where 50 percent or less of the CBG is empty. Finally, in CBGs 
where the line density is so high that customer locations must 
necessarily be ``stacked,'' the Hatfield algorithm assumes that the 
population lives in multi-unit dwellings.
    13. The Commission tentatively concludes that a clustering 
algorithm would more accurately distribute customers within some CBGs 
and would consequently generate more accurate estimates of loop length 
and, therefore, of the cost of the outside plant. Furthermore, the 
Commission tentatively concludes that, if a model presumes that 
customers are clustered, the accuracy of the position of the population 
cluster relative to the wire center is important to an accurate 
prediction of the necessary support amount. The Commission therefore 
tentatively concludes that the selected mechanism should calculate 
population clusters' proximity to wire centers with more precision that 
the models currently permit. The Commission seeks comment on these 
tentative conclusions and also seeks comment on how BCPM's uniform 
distribution algorithm and Hatfield's clustering algorithm could be 
modified to provide more accurate information regarding the locations 
of customers. The Commission also seeks comment on how to improve both 
models' accuracy in assigning CBGs to serving wire centers.
    14. The Commission seeks comment on whether, instead of the methods 
currently used by either Hatfield or BCPM, an alternate method should 
be used to locate population in carrier serving areas. Generally, the 
Commission seeks comment on whether loop lengths should be more closely 
linked with actual loop statistics. The Commission seeks comment on 
whether a method that combines actual geographical maps, census data, 
and the location of the serving wire centers would estimate customer 
location, and therefore costs, better than the algorithms currently 
used by the models. The Commission specifically seeks comment on 
whether the following proposal would be a more accurate method by which 
to estimate the distribution of customers. In relation to locating 
residential population, the Commission notes that census data provide 
the number of households within a CB as well as internal point 
coordinates and polygon vertex coordinates. The Commission seeks 
comment on what currently available commercial mapping software, if 
any, could be used to identify the location of customers in all CBs 
within a service territory. The Commission further seeks comment on 
whether a model should impose a uniform grid over an ILEC's service 
territory in order to create subscriber population clusters, 
determining the size of the cluster according to the technology 
constraints of electronic systems that are used to provide universal 
service, such as Asymmetric Digital Subscriber Line (ADSL) and High bit 
rate Digital Subscriber Line (HDSL) technologies, rather than basing 
cluster sizes on census data. The Commission seeks comment on whether 
this approach is more representative of the engineering design of a 
network because it does not rely on census-mapping conventions. The 
Commission seeks comment on whether this proposal could be incorporated 
into either Hatfield, BCPM, or any hybrid model that the Commission may 
develop. The Commission also seeks comment on whether any alterations 
in either BCPM or Hatfield would be necessary to incorporate this 
proposal into either model or a potential hybrid model.
    15. Line Count. The selected mechanism must estimate a line count 
at the wire center, CBG, or CB level if the Commission concludes that 
cost estimates should be developed at those levels. Both models use a 
``closing factor,'' i.e. a ratio of line counts, as provided by the 
NECA and ARMIS databases, compared to the models' estimates, to adjust 
the estimates produced by their algorithms to reflect the actual ILEC 
line counts. Neither model clearly discloses the closing factors for 
all lines that are used in their line count calculations. Because 
reliable line counts are necessary for

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determining accurate cost estimates, it appears that reasonable 
estimates of the number of lines in each CBG, CB, or grid cell are 
necessary to calculate universal service support, even if the 
Commission decides to provide support on a wire center basis. The 
Commission tentatively concludes that the sizes and uses of models' 
closing factors should be evident to the user so that they may be 
evaluated. The Commission seeks comment on whether the selected 
mechanism should adopt a maximum closing factor of 10 percent, as 
suggested by the state members of the Joint Board. The Commission also 
seeks comment on whether other data sources could be used to enhance 
the models' algorithms or be used to create an alternative method for 
determining line counts. The Commission seeks comment on whether, for 
example, the Commission should assign business lines to geographic 
units by using commercially produced maps that give the coordinates of 
all businesses located in the U.S. along with their employment by 
standard industrial classification (SIC) code. The Commission seeks 
comment on whether such a method should use some multiple of the 
employment data to estimate the number of business lines in each grid 
block. Alternatively, the Commission seeks comment on whether there are 
any databases that use zip code information or precise latitude and 
longitude (geo-coding) information that could be used to improve the 
line-count estimation process.
    16. Interested parties may file comments on all issues regarding 
customer location on or before September 2, 1997, and reply comments on 
or before September 10, 1997.

ii. Outside Plant Investment

    17. Outside plant investment includes every part of an ILEC's 
network infrastructure connecting the wire center to customer 
locations.
    18. Plant Mix. The outside plant consists of a mix of aerial, 
underground, and buried cable. It appears that while both models have 
made many improvements, the failure of both BCPM and Hatfield to 
incorporate terrain factors into their plant-mix tables seriously 
undermines the accuracy of the outside plant costs predicted by each 
model. The Commission finds that an efficient carrier will vary its 
plant mix according to the population density of an area. The 
Commission, therefore, tentatively concludes that the assignment of 
plant mix defined by the selected mechanism should reflect both terrain 
factors and line density zones. Specifically, the Commission 
tentatively concludes that relatively more feeder and distribution 
cable should be assigned to aerial installation for all population 
density groups in wire centers characterized by ``hard rock'' 
conditions than those in wire centers with other terrain conditions. 
The Commission seeks comment on these tentative conclusions. The 
Commission also seeks comment on identifying the terrain that would 
lead an efficient firm to minimize forward-looking costs by using 
aerial plant and on whether climate conditions, such as the possibility 
that a hurricane will destroy aerial plant, will affect an efficient 
carrier's decision to deploy aerial plant.
    19. The Commission directs the models' proponents to justify fully 
the default values they selected for their outside-structure plant mix, 
noting that recent installations of outside structure may more closely 
meet forward-looking design criteria than do historical installations. 
The Commission seeks comment on these issues and encourages parties to 
file documentation supporting suggestions to alter either Hatfield or 
BCPM's input values or default assumptions concerning plant mix. The 
Commission also seeks comment on the input values that will accurately 
reflect the level of impact that varying terrain conditions have on 
costs.
    20. Installation and Cable Costs. The forward-looking economic cost 
mechanism must estimate the cost of installing wire and cable 
facilities as part of the overall cost of building a network to provide 
supported services. These costs can be expected to vary by soil type 
and line density zone. The default values for installation costs 
included in BCPM and Hatfield represent their proponents' estimates of 
the total cost of installing wire and cable facilities. Both BCPM and 
Hatfield make assumptions about soil conditions and population density 
to estimate the cost of installing buried and underground cable. 
Specifically, the models use different numbers of density zones. It 
appears that a greater number of density zones helps identify high and 
low cost areas more accurately; too many density zones, however, would 
make the data calculations too complex. The Commission tentatively 
concludes that the selected mechanism should specify costs for 
installation of aerial cable, buried cable, and underground cable that 
incorporate terrain factors and line density zones. The Commission 
seeks comment on this tentative conclusion.
    21. In the Majority State Members' Second Report, state members 
expressed preference for BCPM's approach because they found that 
Hatfield's approach did not adequately account for the effect of 
different types of installation activity on outside plant costs, and 
because using a multiplier will overestimate costs in some areas and 
underestimate costs in other areas. Based on the majority state 
member's recommendations, the Commission tentatively concludes that the 
selected mechanism should adopt BCPM's approach of prescribing 
additional costs to account for additional expenses caused by difficult 
terrain, rather than Hatfield's approach of using cost multipliers. The 
Commission seeks comment on this tentative conclusion, on how this 
tentative conclusion would affect cost estimates, and on the 
appropriate input values for such additional expenses. In addition, the 
Commission seeks comment on the majority state members' conclusion that 
it is not reasonable to assume, as Hatfield does, that an installer 
could simply increase its use of distribution cable by 20 percent to 
avoid burying cable in difficult soil conditions.
    22. The Commission tentatively concludes that the selected 
mechanism should specify costs per foot for conduit installation that 
vary by line density zone, as proposed in both BCPM and Hatfield. The 
Commission also tentatively concludes that the mechanism should define 
density zones based on lines per square mile, as in Hatfield. The 
Commission seeks comment on these tentative conclusions and on the 
number of density zones that should be included in the selected 
mechanism. The Commission invites comment on how to calculate forward-
looking economic costs of conduit installation and welcomes data on any 
recent conduit installations, including conduit installed for purposes 
other than the construction of telephone networks.
    23. The Commission tentatively concludes that materials and 
installation costs should be separately identified by both density zone 
and terrain type. The Commission seeks comment on the default input 
values that the selected mechanism should use, and asks parties to 
present supporting cost data. The Commission seeks comment on the 
accuracy of the values in BCPM's cost tables and of Hatfield's cost 
multipliers, and encourages parties to submit company records or other 
industrial data to support their position. The Commission also seeks 
comment on the cost of installing aerial, buried, and underground 
cable, regardless of whether it is used to provide telephone service, 
and encourage parties to submit detailed cost data on any recent cable 
installations. In addition, the Commission seeks comment on whether

[[Page 42461]]

it would be possible to use national statistical averages of contractor 
construction prices and independent verification of the cost of 
installation of distribution plant to verify these costs. The 
Commission also seeks comment on whether a labor cost variable should 
be incorporated into the selected mechanism.
    24. Because the Commission has received no documentation confirming 
that feeder and distribution cable installation costs should differ, 
the Commission tentatively concludes that the selected mechanism will 
adopt Hatfield's assumption that such costs are identical. The 
Commission seeks comment on this tentative conclusion and encourage 
parties to submit documentation in support of their positions.
    25. Drops. A drop is the connection between a residence or business 
and the distribution cable. In BCPM and Hatfield, several cost elements 
are combined under the general heading of drops. These cost elements 
include the cost of the copper or fiber loop that extends from the 
distribution cable to the residence or business, the terminal and 
splice investment, and the pedestal costs. BCPM estimates the drop 
length as the distance from the corner of the residential lot to the 
center of the residential lot. Hatfield assigns pre-determined loop 
lengths for each of seven density zones. The lengths are longer in low 
density areas than elsewhere. In general, the drop lengths are longer 
in BCPM than in Hatfield.
    26. The Commission seeks comment on whether the selected mechanism 
should estimate drop lengths or should incorporate predetermined drop 
length assumptions. The Commission also seeks comment on the accuracy 
of Hatfield's assumed drop lengths. Because an efficient carrier's 
network must include drops in order to provide the supported services, 
the Commission tentatively concludes that the selected mechanism will 
determine the forward-looking economic cost of drops, including 
installation, terminal, splice, and pedestal costs. The Commission 
invites comment on the accuracy of the estimated costs of these items 
under the proposed models.
    27. Structure Sharing. Structure sharing describes the practice of 
sharing facilities such as poles, trenches, and conduits with other 
utilities. BCPM assumes that an efficient telecommunications carrier 
will not benefit very much from sharing. BCPM's default input values 
assign between 50 and 100 percent of the costs of the poles and between 
80 and 100 percent of the cost of trenches and conduits used by 
telephone companies to those companies. The Hatfield model assumes 
utilities will engage in substantial sharing; for the most part, 
Hatfield's default input values assign between 25 percent and 50 
percent of the costs of shared facilities to telephone companies. Both 
models alter the percentages of costs they assume will be shared 
depending on the type of structure (buried, conduit, or aerial) and on 
the line density zone.
    28. Because it appears that an efficient carrier would vary its 
sharing levels according to installation activity and terrain, as BCPM 
assumes, the Commission tentatively concludes that the selected 
mechanism should adopt BCPM's categories for installation activities 
and terrain conditions. The Commission seeks comment on BCPM's 
estimates for the relative frequency for each type of installation 
activity. The Commission tentatively concludes that the selected 
mechanism should also include line density zones in its estimates of 
sharing and the Commission seeks comment on whether, because it 
tentatively concludes above that Hatfield's line density zones are 
superior, the selected mechanism should use Hatfield's line density 
zones to estimate sharing. The Commission seeks comment on how BCPM's 
assumptions would need to be altered to accommodate Hatfield's line 
density zones.
    29. The Commission tentatively concludes that Hatfield incorrectly 
assumes that carriers benefit from sharing for such cable and that the 
selected mechanism will assign 100 percent of costs to the telephone 
company for cable that is buried using a cable plow. The Commission 
also tentatively concludes that Sprint's suggested value of 66 percent 
is an acceptable aggregate default input value for the percent of costs 
assigned to the telephone company for all other shared facilities. The 
Commission also seeks comment on AT&T's contention that changes to the 
regulatory climate will increase the extent to which carriers are 
required or are willing to share structures.
    30. Loop Design. The loop plant constitutes a significant part of 
the network cost that the models calculate. The two models, however, 
differ greatly in their assumptions regarding loop design and 
standards. In selecting the loop design components for the selected 
mechanism, the Commission seeks to implement its conclusion that the 
mechanism employ the least-cost, most-efficient and reasonable 
technology for providing the supported services and the Act's provision 
that universal service support be sufficient. The Commission will 
consider fiber-copper cross-over point, loop standards, and digital 
loop carriers in its selection process.
    31. Fiber-Copper Cross Over Point. The fiber-copper cross-over 
point determines when carriers will use fiber cable instead of copper 
cable in their feeder plant. In addition, a carrier's decision 
regarding the fiber-copper cross-over point will affect whether that 
carrier uses loading coils, because loading coils are used to extend 
the viable length of copper cable.
    32. The Joint Board recommended that the choice between fiber and 
copper should reflect the least-cost method of placing loop facilities, 
and the Commission agreed in the Order that ``the technology assumed 
must be the least-cost, most-efficient, and reasonable technology'' and 
that the ``model must include the capability to examine and modify the 
critical assumptions and engineering principles * * * includ[ing] * * * 
fiber-copper cross-over points * * * '' Neither the BCPM nor Hatfield 
proponents have submitted studies showing whether their cross-over 
points are designed to reflect the Commission's least-cost criterion.
    33. The Commission tentatively concludes, based on the comments of 
NCTA/ETI and the recommendation of the majority state members of the 
Joint Board, that the BCPM maximum cross-over default value should be 
set at 18,000 feet rather than 12,000 feet, and seek comment on this 
tentative conclusion. The Commission seeks comment on whether the BCPM 
fiber/copper cross-over point can also be set at 18,000 feet when the 
copper loop length is extended to 18,000 feet. The Commission also 
seeks comment on the impact on the costs for digital loop carriers of 
their decision regarding the appropriate fiber-copper cross-over point.
    34. Loop Standards. WorldCom contends that the Commission should 
specify one of more loop design standards in order to create greater 
certainty in loop modeling process. WorldCom states that the two loop 
standards that the Commission should consider are the Revised 
Resistance Design (RRD) and the Carrier Serving Area (CSA) Standards. 
WorldCom contends that because the CSA standard will also enable LECs 
to offer video dialtone services, which would have significant 
commercial value, the universal service fund should not pay for LEC 
entry into this new market against competitors that would not receive 
universal service funding. The Commission seeks comment on whether

[[Page 42462]]

it should adopt any loop design standards in the forward-looking 
economic cost mechanism, and if so, which standard should be adopted.
    35. Digital Loop Carriers. Digital loop carriers (DLCs) connect 
fiber feeder cables and copper loops. DLCs transform electric signals 
carried on the copper loops into optical signals carried on fiber lines 
and vice versa. Most large DLCs can assign multiple subscriber lines to 
a single electronic channel rather than assigning one channel per 
subscriber line. Both Hatfield and the BCPM assume that, when they are 
to be used, DLCs would be one of two sizes, depending upon the number 
of subscriber lines connected to them. BCPM assumes the larger DLC will 
be used for more than 672 subscriber lines. Hatfield, by contrast, 
switches to the larger DLC at 384 subscriber lines, but allows 
adjustment of this level as a variable.
    36. Although both Hatfield and BCPM assume extensive deployment of 
DLCs, their cost estimates differ significantly. The Commission seeks 
comment on the models' assumptions regarding the number of subscriber 
lines that should trigger the use of a large DLC. The Commission also 
requests comment on whether the models should consider use of DLCs of 
more than two sizes; the Commission particularly seeks comment on 
whether DLCs smaller than those used in the model are available and 
under what circumstances such smaller DLCs might be used. The 
Commission also requests comment on the impact of the fiber-copper 
cross-over on the number and size of DLCs needed in the network.
    37. The Commission seeks comment on whether the models should also 
compare the cost of extending fiber to fewer points in the CBG, placing 
larger DLCs at those points, and running copper to customers including 
the possible additional cost of repeater electronics on the longer 
copper loops. The Commission seeks discussion of how to calculate the 
forward-looking economic cost of DLCs. Parties should discuss whether 
the models' current inputs for these costs are reasonable, as well as 
Sprint's proposed BCPM modification.
    38. Wireless Threshold. Once the level of support a carrier will 
receive is determined, the carrier may use whatever technology it 
prefers to provide the supported services; the level of support it 
receives is not dependent upon the technology it uses. Both BCPM and 
Hatfield, however, estimate the costs of providing the supported 
services using engineering assumptions based on wireline technology.
    39. In light of the contention by RUS that wireless service does 
not necessarily cost less than $10,000.00 per loop, the Commission 
seeks comment on whether the cost of a loop should be capped at 
$10,000.00 in all cases. The Commission agrees with the wireless 
commenters that, to the extent practical, the selected mechanism should 
estimate the cost of providing the supported services using wireless 
technology in areas where wireless technology is likely to be the 
least-cost, most efficient technology. The Commission notes, however, 
that it has received almost no information regarding how to estimate 
such costs, or the criteria that the selected mechanism should use to 
determine whether wireline or wireless service is more economical. 
Thus, the Commission seeks comment on the feasibility of including an 
additional component in the mechanism that would compare the cost of 
providing service via a wireless network with the cost of providing 
service via a wireline network and would choose the lowest-cost 
technology to calculate the costs of providing the supported services. 
The Commission seeks comment on whether, because wireless companies 
must currently determine whether it is economical for them to enter a 
particular market, wireless companies have already developed such 
models. The Commission strongly encourages commenters supporting the 
inclusion of engineering assumptions regarding wireless technology in 
the mechanism to submit models or other assumptions that they believe 
should be included. The Commission further encourages commenters to 
submit data about the cost and types of wireless networks and their 
components in support of their suggestions, and reminds commenters that 
any wireless component that might be added to the selected mechanism 
must also meet the Commission's criteria.
    40. The Commission notes that BCM was first filed with the 
Commission in December 1995. The Commission seeks comment on the length 
of time necessary to develop a mechanism that compares the cost of 
wireless engineering with the cost or wireline engineering. 
Specifically, the Commission seeks comment on whether modeling wireless 
technology would be less complex than modeling wireline technology, and 
therefore whether a wireless platform could be developed by December 
1997, and a complete mechanism, including inputs, by August 1998, in 
accordance with the Commission's schedule. In the alternative, the 
Commission seeks comment on whether the development of a competitive 
bidding mechanism would be a better way to capture the differing costs 
between wireline and wireless technology.
    41. Because the Commission is uncertain whether or not it will be 
able to develop a mechanism that includes the cost of wireless 
technology within their schedule, it seeks comment on whether basing 
support amounts on the cost of wireline technology will be consistent 
with section 254 and with the Commission's universal service goals. The 
Commission tentatively concludes that providing support based on the 
cost of a wireless network to provide the supported services would meet 
the statutory directive that support be ``sufficient.'' The Commission 
seeks comment on this tentative conclusion. The Commission also seeks 
comment on whether basing support solely on wireline costs, when 
wireless technology may offer a less expensive option, would be 
consistent with the Commission's conclusion that the mechanism should 
use the least-cost, most-efficient technology available. The Commission 
additionally seeks comment on whether the models should include 
assumptions that would consider microwave, satellite, or other non-
wireline technologies in situations where such technologies could allow 
the provision of universal service more cost-effectively than wireline 
technology.
    42. Additional Outside Plant Input Value Issues. The Commission 
must determine what input values it should use for the following 
components of outside plant: manholes, poles, anchors, guys, aerial 
cable, and building attachments, network interface devices, service 
area interfaces, and fill factors. The Commission seeks data 
demonstrating the forward-looking economic cost for each component, 
including materials and installation, for inclusion in the selected 
mechanism.
    43. Poles, Anchors, Guys, Aerial Cable, and Building Attachments. 
The Commission seeks comment on what the accurate input values should 
be for the forward-looking economic cost of materials and installation 
for poles. The Commission seeks comment on the reasonableness of the 
type of materials chosen by each model. The Commission also seeks 
comment on whether installation costs for poles should vary with 
terrain. Commenters should submit cost documentation in support of 
their suggested input values. The Commission also seeks comment on 
whether BCPM's materials and installation cost estimates for anchors 
and guys are accurate, and whether

[[Page 42463]]

Hatfield's pole materials and installation costs are sufficient to 
cover the cost of anchors and guys. The Commission also seeks comment 
on whether the selected mechanism should identify separately costs for 
poles, guys, and anchors. Parties should submit cost data in support of 
their suggested input values. Because both models include them, the 
Commission tentatively concludes that the selected mechanism should 
include pole spacing input values. The Commission seeks comment on this 
tentative conclusion and on the pole spacing input values that we 
should use. In light of the models' similar input values, the 
Commission seeks comment on whether the models' input values for these 
costs are accurate or on whether averaging the two sets of input values 
would provide an accurate calculation of these costs. Commenters should 
submit cost documentation in support of their suggested input values.
    44. The Commission tentatively concludes that the selected 
mechanism should include feeder and distribution cable costs for both 
copper and fiber. The Commission seeks comment on the forward-looking 
costs of copper and fiber cable. The Commission specifically seeks 
comment on whether, as the BCPM proponents contend, buried cable and 
underground cable are less expensive than aerial cable. Commenters 
should submit cost documentation in support of their suggested input 
values.
    45. Network Interface Devices. A network interface device (NID) is 
a device that connects the wiring that belongs to a customer, and is 
located inside a customer's premises, to the loop facilities outside a 
customer's premises. The Commission tentatively concludes that it 
should prescribe NID costs in the selected mechanism. The Commission 
tentatively concludes that Hatfield correctly separates the cost of 
protection blocks from the cost of the NID, and correctly distinguishes 
between the cost of a residential NID and a business NID, and that the 
selected mechanism should incorporate these distinctions. The 
Commission seeks comment on these tentative conclusions, and on the 
correct input values that should be used for NID and related costs. 
Such comments should be supported with cost data wherever possible.
    46. Service Area Interfaces. The Service Area Interface (SAI) is 
the physical interface between distribution and feeder cable. The SAI 
is usually located outside buildings, but is located inside buildings 
when the feeder plant terminates in the basement of a high-rise 
building. The Commission tentatively concludes that the selected 
mechanism should include the cost of SAI for various cable sizes, and 
should assume different costs for indoor and outdoor cable as Hatfield 
does. The Commission seeks comment on this tentative conclusion. In 
light of the wide disparities in SAI costs assigned by the mechanisms, 
the Commission seeks comment on the forward-looking economic costs of 
SAIs, and encourages parties to submit additional data on these costs.
    47. Fill Factors and Utilization. A cable fill factor is the 
percentage of the total usable capacity of cable that is expected to be 
used rather than the amount available in reserve. The Commission notes 
that, over time, the models' estimates for fill factors have converged. 
The Commission seeks comment on the fill factor that should be used for 
the selected mechanism. In light of the similarities between the 
models, the Commission seeks comment on whether their input values are 
accurate and how the differences between the values may be reconciled. 
The Commission encourages parties to submit engineering data or other 
relevant documentation in support of the fill factor that they favor.
    48. Dates for Comments on Outside Plant Investment. Interested 
parties may file comments regarding the design of the outside plant 
investment components, including the algorithms determining plant mix, 
installation and cable costs, drop lengths, structure sharing, the 
fiber-copper cross-over point, digital loop carriers, and the wireless 
threshold on or before September 24, 1997, and reply comments on or 
before October 3, 1997. Interested parties may file comments regarding 
all input values regarding outside plant input investment on or before 
October 17, 1997, and reply comments on or before October 27, 1997.

iii. Switching

    49. Mix of Host, Stand-Alone, and Remote Switches. Switches can be 
designated as either host switches, stand-alone switches, or remote 
switches. Both a host switch and a stand-alone switch can provide a 
full complement of switching services without relying on another 
switch. A remote switch relies on a host switch to supply a complete 
array of switching functions and for interconnection with other 
switches. Proponents of both models claim that they detect no 
difference in switching costs based on the type of switch used, and 
therefore their models do not distinguish among the different switch 
types. A review of 1996 depreciation filings, however, shows that large 
ILECs are purchasing fewer host switches and more remote switches. 
Suggesting that choices about switch type could affect the total cost 
computed more than the models currently suggest, the Joint Board 
expressed concern that the models did not distinguish among types of 
switches. The Commission, therefore, tentatively concludes that the 
selected mechanism should include an algorithm that will place host 
switches in certain wire centers and remote switches in other wire 
centers. Based on ILECs' decisions, as revealed in the depreciation 
filings, to deploy more remote switches, the Commission tentatively 
concludes that the host-remote arrangement is more cost-effective in 
many cases than employing stand-alone switches. The Commission seeks 
comment on this tentative conclusion, and urges parties to provide 
engineering and cost data to demonstrate the most cost-effective 
deployment of switches in general and host-remote switching 
arrangements in particular. The Commission also seeks detailed comment 
describing how to design an algorithm to predict this deployment 
pattern. The Commission seeks comment on how to obtain information that 
would verify or refute the assertion of the models' proponents that 
there is no cost difference between host switches and remote switches.
    50. Capacity Constraints. BCPM does not include any switch capacity 
limitations, but Hatfield includes a number of switch capacity 
constraints. The Commission tentatively concludes that the selected 
mechanism should assign more than one switch to a wire center whenever 
the mechanism predicts that any one of a set of capacity constraints 
would be exceeded. The Commission seeks comment on this tentative 
conclusion and on what capacity constraints the selected mechanism 
should adopt. Parties are encouraged to provide technical data to 
support any proposed capacity constraints.
    51. Switch Costs. In the Order, the Commission agreed with the 
state members of the Joint Board that estimating the switching 
investment cost is a significant unresolved problem of the cost models. 
Proponents of the models are apparently having difficulty acquiring 
accurate estimates of switch costs because of the lack of public 
information on those costs. The Joint Board concluded that the 
convergence of the models' switch cost estimates should alleviate this 
lack of information. They urged the Commission and its staff to perform 
additional analysis and to

[[Page 42464]]

obtain more reliable switch cost information.
    52. BCPM switching cost estimates are based on the results of a 
survey of large ILECs that asked ILECs to report the switching costs 
they use as inputs for ILEC Switching Cost Information System (SCIS) 
model runs. BCPM model proponents estimated a switching curve based on 
the answers to the survey. The Hatfield model combines public 
information and information from other unnamed industry sources to 
develop switching cost estimates. The model proponents fit a 
logarithmic curve to three data points to determine the relationship 
between switch-cost per line and switch-line size. Hatfield reduces the 
per-line cost of the switch below the logarithmic curve by assuming 
more efficient use of trunk and line cards.
    53. Pursuant to the Joint Board's recommendation, Commission staff 
examined information regarding switching costs from several sources. 
The Commission's found data supports the models' assumptions, and imply 
that the current switching costs of small companies should be higher 
than the current switching costs of large companies. The Commission, 
therefore, tentatively concludes that the selected mechanism should 
incorporate the Commission staff's estimates of switching costs because 
these estimates are based on filings with the Commission that record 
actual ILEC switch purchases. The Commission seeks comment on this 
tentative conclusion. The Commission also seeks comment on whether 
there is an alternative data source for these costs that would provide 
a better estimate of the current cost of switches. The Commission also 
seeks comment on the reasonableness of using the default input values 
from BCM2, as suggested by Sprint. In addition, the Commission seeks 
comment on whether it should incorporate the cost of growth lines into 
their switching cost estimate and, if so, how it should incorporate 
these costs, and what data sources it should use for the cost of growth 
lines.
    54. Percent of Switch Assigned to Port and to Provision of 
Universal Service. The models differ with respect to the percentage of 
switch costs they assign to the port and the percentage of switch costs 
that is assigned to the provision of universal service. The models 
divide the switch investment between two basic functions: port and 
usage. BCPM uses local-usage dial equipment minutes (DEM) to divide 
switch costs between the costs of providing universal service and the 
costs of providing all other services. In contrast, Hatfield assigns 30 
percent of switch cost to port costs and assigns all of the port costs 
to the cost of providing universal service. Hatfield further divides 
the 70 percent of switch cost it assigns to usage between local traffic 
and toll traffic on the basis of conversation minutes and includes the 
cost of local traffic in the cost of universal service. The BCPM 
proponents state that both models could be adjusted so that they assign 
less than 100 percent of local usage to the provision of universal 
service, and vary the portion of traffic sensitive access usage 
assigned to the provision of universal service.
    55. The Commission tentatively concludes that switch costs should 
be divided between line-side port and usage costs. The Commission 
tentatively concludes, however, not to adopt either of the models' 
assumptions regarding the percentage of the switch investment that is 
associated with the port. The Commission seeks comment on these 
tentative conclusions and on whether it can use the information that 
ILECs must file in response to their Access Charge Reform Order to 
determine the percentage of the switch investment to be allocated to 
the port function. The Commission also seeks comment on a reasonable 
percentage of switch costs to include in the port function.
    56. In light of the difficulty in obtaining information on 
switching costs and the proportion of the switch to be included in the 
port function, the Commission seeks comment on whether it should 
undertake a detailed engineering study of several of the large host 
switches currently being deployed by ILECs (such as the Nortel DMS-100 
and the Lucent 5ESS) and associated remote switches and smaller 
switches (such as the Nortel DMS-10) to ascertain what portions of the 
switch equipment are associated with the port function. The Commission 
seeks comment on whether such an engineering study could result in 
useful information about the portions of switch that are associated 
with the port function and the costs of that equipment. The Commission 
also seeks comment on whether alternative data sources are available 
for the purpose of estimating current switching cost. If so, the 
Commission seeks comment on how to obtain and use that information. The 
Commission tentatively concludes that all of the port cost and a 
percentage of the usage cost are costs of providing universal service. 
The Commission tentatively concludes that the percentage of the usage 
cost that should be assigned to the cost of providing universal service 
should be determined by the amount of local usage included in the 
definition of supported services that it will adopt, as a percentage of 
total usage that the model predicts on the network. The Commission 
seeks comment on these tentative conclusions.
    57. Interested parties may file comments on the platform design 
relating to switching on or before August 8, 1997, and reply comments 
on or before August 18, 1997. Interested parties may file comments on 
the input values relating to switching on or before October 17, 1997, 
and reply comments on or before October 27, 1997.

iv. Interoffice Trunking, Signaling, and Local Tandem Investment

    58. The Commission recognizes two uses for interoffice trunking, 
signaling, and local tandem facilities: (1) The completion of local 
calls and (2) transport to an IXC point of presence (POP). Because 
transport for interexchange service is not a supported service, the 
selected mechanism will estimate only the cost of interoffice trunking, 
signaling, and local tandem facilities used for the completion of local 
calls. BCPM employs a simple multiplier to estimate the portion of 
total interoffice trunking, signaling, and local tandem costs that 
should be attributed to supported services. Hatfield treats these 
facilities on a more disaggregated basis. Both models allow the user to 
alter the input values to their transport equations. Because 
interoffice trunking, signaling, and local tandem facilities are an 
integral part of the network necessary to provide the supported 
services, the Commission tentatively concludes that the selected 
mechanism should calculate specific cost estimates for the interoffice 
elements necessary to provide these functionalities. Because Hatfield's 
platform design can generate cost estimates at this level of 
specificity, but BCPM's cannot, the Commission tentatively concludes 
that only Hatfield's platform is currently adequate in this regard. The 
Commission seeks comment on this tentative conclusion and on the 
accuracy of Hatfield's transport algorithm. The Commission also seeks 
comment on the accuracy of the specific interoffice trunking, 
signaling, and local tandem input values proposed by Hatfield.
    59. Interested parties may file comments concerning design issues 
on or before August 8, 1997, and reply comments on or before August 18, 
1997. Interested parties may file comments on the issues relating to 
input values on or before October 17, 1997, and reply comments on or 
before October 27, 1997.

[[Page 42465]]

v. General Support Facilities

    60. General support facilities (GSF) include the investment and 
expenses related to vehicles, land, buildings, and general purpose 
computers. General purpose computers comprise the largest share of the 
investment and expenses in this category; buildings also comprise a 
large share. BCPM computes investment in the GSF category for items 
other than buildings as a percentage of all other plant investment. 
Building investment is computed as a percentage of switching equipment 
investment. BCPM sets GSF expenses at a fixed amount per line based on 
data from its ILEC surveys. Hatfield also segregates some buildings 
from the GSF category in computing GSF investment but, instead of 
segregating all buildings as BCPM does, Hatfield only segregates 
buildings that house switches (i.e., wire center buildings). To compute 
GSF investment not related to wire center buildings that house 
switches, Hatfield uses ARMIS data to compute a ratio of ILECs' GSF 
investment to ILECs' total-plant-in-service investment. This ratio is 
then applied to the total-plant-in-service investment that the model 
computes to arrive at the amount of GSF investment not related to wire 
center buildings. For investment in wire center buildings, Hatfield 
uses a table of values based on a set number of square feet per switch 
in use and number of lines served. For GSF expenses, Hatfield uses the 
ARMIS ratios described above to reach an expense amount. The Commission 
concluded in their Access Charge Reform Order that the current 
allocation of GSF costs enables ILECs to recover through regulated 
interstate access charges costs associated with the ILECs' nonregulated 
billing and collecting functions.
    61. The Commission requests comment on the appropriate platform 
assumptions to compute GSF investment and expenses. The Commission 
seeks comment on how it may remove costs for nonregulated activities 
from costs for regulated activities to incorporate the appropriate 
amount of GSF investment and expenses into a forward-looking mechanism. 
The Commission also seeks comment on whether a more accurate GSF 
computation would depend on factors tied to the cost of computers, 
because much GSF investment and expense is for general purpose 
computers. Assuming GSF investment is tied more closely to computer 
costs, the Commission also seeks comment on whether the selected 
mechanism should account for the increasing use of computers by 
businesses generally. Also, because a large share of GSF expense is 
attributable to the cost of land, the Commission tentatively concludes 
that GSF expenses should vary by state with reference to differences in 
land values. The Commission requests comment on this tentative 
conclusion. Commenters should critique the assumptions regarding GSF 
investment and expenses that are currently included in BCPM and 
Hatfield. Commenters advocating a platform that requires an input ratio 
to calculate GSF expenses should discuss what that input ratio level 
should be, and provide supporting cost data if possible.
    62. Interested parties may file comments regarding GSF issues on or 
before October 17, 1997, and reply comments on or before October 27, 
1997.

vi. Depreciation

    63. Economic depreciation measures the periodic reduction in the 
market value of an asset over time. When calculating depreciation 
expenses, the models do not simulate the periodic reduction in the 
market value of the assets. Rather, they use ``adjusted projected 
lives'' to recover the current costs of the assets. Under this 
approach, the annual depreciation charges associated with an asset are 
computed by dividing the asset's current cost by its adjusted projected 
life. A shorter life will increase the annual depreciation expense.
    64. Commenters disagree on the depreciation rates to be used as 
inputs to the models. In light of the Commission's conclusion that 
depreciation should be computed within the range specified in their 
rules, the Commission tentatively concludes that it should adopt, as an 
input to their forward-looking cost mechanism, depreciation expenses 
that reflect a weighted average of the rates authorized for carriers 
that are required to submit their rates to us. The Commission requests 
comment on this tentative conclusion. Further, the Commission seeks 
comment on whether adjusted projected lives should reflect the asset 
lives of facilities and equipment dedicated to providing only the 
supported services or whether the asset lives should reflect a decision 
to replace existing plant with plant that can provide broadband 
services.
    65. As noted in the Order, the Commission intends to issue a notice 
of proposed rulemaking in the near future to consider changes to the 
Commission's depreciation rules. The Commission cannot be certain, 
however, that its new rules will be effective in time for states to 
incorporate them in their cost studies, which they must file in 
February 1998. Accordingly, the Commission tentatively concludes that 
the Commission should use the range prescribed in the Commission's 
current rules for purposes of this proceeding, with the understanding 
that it could adjust the depreciation inputs to their mechanism in 
light of the outcome of their depreciation rulemaking. The Commission 
seeks comment on this tentative conclusion, and on whether the states 
should also be permitted to adjust their cost studies to incorporate 
any changes to the depreciation rules. In addition, the Commission asks 
parties to discuss how the inclusion of depreciation rates in the 
selected mechanism would be affected by changes in the Commission's 
depreciation rules.
    66. Interested parties may file comments on depreciation issues on 
or before October 17, 1997, and reply comments on or before October 27, 
1997.

vii. Expenses

    67. BCPM estimates expenses on a per-line basis. These estimates 
are derived from a survey of ILECs. BCPM permits users to vary expense 
estimates for small, medium, and large companies, although the default 
values for BCPM do not vary with company size. In general, Hatfield 
estimates most expenses based on ARMIS data, expressed as ratios of 
investment. BCPM estimates total expenses, as detailed above, at $11.34 
per line per month. Hatfield's estimates of total expenses vary based 
on investment or other costs.
    68. The Commission seeks comment on how to establish forward-
looking expenses for the selected mechanism. The Commission seeks 
comment on which expenses should be calculated on a per-line basis, as 
BCPM does, and which should be calculated as a ratio of investment, as 
Hatfield does. The Commission tentatively concludes that the selected 
mechanism should provide the user with the capability to calculate each 
category of expense based on either line count or other investment, at 
the user's election, and request comment on this tentative conclusion. 
The Commission also seeks comment on whether it should forecast 
expenses and, if so, what forecasting technique it should use. The 
Commission tentatively concludes that users should be able to use 
different expense estimates for small, medium, and large companies, as 
the BCPM allows. The Commission seeks comment on this tentative 
conclusion. The Commission also seeks comment on whether there are

[[Page 42466]]

measures, other than lines and investment to which specific expenses 
should be tied.
    69. The Commission seeks comment on the accuracy of BCPM's default 
input value of $11.34 per line, and urge the proponents of BCPM to 
submit the survey upon which they base their expense inputs. The 
Commission seeks comment on how this value should vary for small, 
medium, and large companies. The Commission seeks comment on whether 
the selected mechanism should use ARMIS data, data from a survey of 
ILECs, or data from some other source.
    70. Plant Specific Expenses. Plant specific expenses include such 
expenses as maintenance of facilities and equipment expenses. BCPM 
estimates the following plant specific expenses on a per-line basis: 
network support (USOA Account 6110); general support (6120); Central 
Office Equipment (COE) switching (6210); operator systems (6220); COE 
transmission (6230); information origination/termination (6310); and 
cable and wire facilities (6410). Hatfield estimates central office 
switching expenses as a percentage of investment in digital switching 
equipment, and circuit equipment expense as a percentage of investment 
for all circuit equipment based on a New England Incremental Cost Study 
rather than an ARMIS ratio of expenses to investment. Hatfield 
estimates NID expense as a yearly per-line expense. Hatfield uses 
separate expense ratios for aerial, buried, and underground cable, 
while BCPM uses a per-line estimate for cable maintenance that does not 
vary with the plant mix. Because the two models differ in their listing 
of plant specific expenses, the two resulting expense estimates may not 
be comparable. Neither model allows plant specific expenses to vary 
with climate or soil type.
    71. BCPM's default per-line per-month values for plant specific 
expenses are: network support--$0.15; general support--$1.20; COE 
switching--$0.34; operator systems--$0.01; COE transmission--$0.23; 
information origination/termination--$0.07; and cable and wire 
facilities--$2.76. Hatfield's default central office switching expense 
factor is 2.69 percent of digital switching investment. Hatfield's 
default circuit equipment expense factor is 0.015 percent of circuit 
equipment investment. Hatfield's default for NID expenses is $1.00 per 
line per year. The state Joint Board members recommend that plant 
specific operating costs be calculated as a percentage of investment, 
and suggest the following percentages: 3.5 percent for cable and wire; 
2.8 percent for central office switching; and 2 percent for 
transmission. The state members also recommend the use of nationwide 
factors that do not vary by company.
    72. The Commission seeks comment identifying and discussing the 
complete set of forward-looking plant-specific expenses for which 
universal service support should be available, and discussing whether 
each of these expenses is best estimated on a per-line basis or by some 
other method. The Commission seeks comment on whether the platforms of 
BCPM and Hatfield are comparable with respect to their expense 
assumptions, whether one of the two generates superior expense 
calculations, or whether expense assumptions of the two should be 
combined, either in one of the two existing models or in a hybrid 
model, to estimate expenses most accurately. The Commission seeks 
comment on what specific input values for each of these expenses should 
be. In addition, the Commission seeks comment on whether maintenance 
expense estimates should depend upon plant mix and, in particular, 
whether an increase in the use of aerial cable also increases 
maintenance expenses. The Commission also seeks comment on whether 
plant specific expenses should vary with such characteristics as 
climate or soil type.
    73. Plant Non-Specific Expenses. Plant non-specific expenses 
include such expenses as engineering, network operations, and power 
expenses. BCPM estimates the following plant non-specific expenses on a 
per-line basis: other property plant (USOA Account 6510); network 
operations (6530); and access (6540). Hatfield calculates network 
operations expense as a percentage of ARMIS-reported network operations 
expense. BCPM's default per-line per-month plant non-specific expenses 
are: other property plant--$0.03; network operations--$1.33; and access 
$0.00. Hatfield's default value for network operations expense is 50 
percent of ARMIS-reported network operations expense. Hatfield contends 
that this percentage is reasonable because forward-looking network 
operations expenses are significantly lower than ARMIS-reported 
expenses for network operations. Hatfield asserts that ARMIS-reported 
expenses reflect excessive staffing at end offices. The Commission 
seeks comment on the complete set of forward-looking plant non-specific 
expenses that should be covered by universal service support, and 
whether the Commission should estimate each of these expenses on a per-
line basis or by some other method. The Commission also seeks comment 
discussing what specific input values for each of these expenses should 
be.
    74. Customer Services. Customer services expenses include 
marketing, billing, and directory listing expenses. BCPM estimates the 
following customer services expenses on a per-line basis: marketing 
(USOA Account 6610) and services (6620). Hatfield estimates the cost of 
bill generation and billing inquiries for end users as a fixed, per-
line expense. Hatfield includes a per-line directory listing expense 
and assigns local number portability expenses on a per-line basis. 
Hatfield also assigns carrier-to-carrier customer service expenses 
(associated with the provision of unbundled network elements) on a per-
line basis. Hatfield excludes marketing (USOA Account 6610) entirely. 
BCPM's per-line per-month default values for customer services expenses 
are: marketing--$0.35 and services--$2.42. State Joint Board members 
suggest that BCPM's services expenses should be reduced 29 percent to 
$1.75 to exclude operator services and directory assistance. They also 
recommend excluding marketing expenses from the cost of supported 
services. Hatfield's default per-line customer service expenses, which 
are based on ARMIS data, are: billing--$1.22 per month; directory 
listing--$0.15 per month; local number portability--$0.25 per month; 
and carrier-carrier customer service--$1.69 per month. The Commission 
seeks comment identifying and discussing the complete set of forward-
looking customer service expenses that should be covered by universal 
service support, and whether each of these expenses is best estimated 
on a per-line basis or by some other method. The Commission also seeks 
comment on specific input values for each of these expenses.
    75. Corporate Operations. Corporate operations expenses include 
general, administrative, human resources, legal, and accounting 
expenses. BCPM estimates the following corporate operations expenses on 
a per-line basis: executive and planning (USOA Account 6710); general 
and administrative (6720); and uncollectibles (6790). Hatfield 
estimates corporate overhead expense as a percentage of total capital 
costs and operations expenses. BCPM's per-line per-month default input 
values for corporate operations expenses are: executive and planning--
$0.14; general and administrative--$2.15; and uncollectibles--$0.17. 
Hatfield's default corporate overhead expense is 10.4 percent of the 
total of capital costs and operations expenses. The Commission seeks 
comment identifying and discussing the complete set of forward-

[[Page 42467]]

looking corporate operations expenses that should receive universal 
service support, and whether each of these expenses is best estimated 
on a per-line basis or by some other method. The Commission seeks 
comment on what the specific input values for each of these expenses 
should be.

viii. Other

    76. Interested parties may file comments on the issues relating to 
expenses on or before October 17, 1997, and reply comments on or before 
October 27, 1997.
    77. The Commission also seeks comment on any other issues related 
to the platform and inputs to the forward-looking cost models that are 
currently under consideration. Any such comments should be supported by 
specific data and analysis of the models. The Commission seeks comment 
on whether it should develop a method to adjust the costs estimated by 
their cost mechanism on an annual basis, and if so how it should do so. 
The Commission seeks comment on whether the adjustment mechanism should 
be tied to inflation and include an offset similar to their price cap 
mechanisms. Alternatively, the Commission seeks comment on whether it 
should use the actual cost estimates provided by the selected mechanism 
for a fixed number of years, and re-evaluate and modify the mechanism 
at the end of that period. Interested parties may file comments on 
these issues on or before October 17, 1997, and reply comments on or 
before October 27, 1997.
C. Support Area
    78. A support area is the geographic area used to determine 
universal service support levels. The support area need not be the same 
as the geographic area used by the selected mechanism to calculate the 
cost of providing the supported services. The support area may be an 
aggregation of those geographic areas used to determine cost. For 
example, Hatfield uses CBGs to determine cost and density zones, which 
are an aggregation of CBGs with similar line densities, to calculate 
support. In the Order, the Commission concluded that support areas 
should be no larger than wire centers. While the Commission agreed with 
the Joint Board that the use of smaller support areas would allow for 
better targeting of support and minimize the possibility of ``cream-
skimming,'' the Commission was uncertain that any mechanism that it 
could adopt would accurately predict the number of customers in such 
small areas.
    79. To determine the level of support a particular carrier should 
receive, the Commission must know the number of lines in the support 
area. Carriers currently do not associate lines with a particular CBG, 
CB, or grid cell. They do, however, keep records of the number of lines 
served by each wire center. The Commission seeks comment on whether it 
should provide support according to geographic areas other than the 
geographic areas used to calculate cost. The Commission tentatively 
concludes that the ability of carriers to associate lines with CBGs, or 
other small areas will determine how the Commission defines support 
areas in the future. The Commission seeks comment on the feasibility of 
geo-coding households, as proposed by SBC and Sprint. Interested 
parties may file comments on these issues on or before October 17, 
1997, and reply comments on or before October 27, 1997.

II. Support for Local Usage

    80. The Joint Board recommended that support for voice-grade access 
to the public switched network should include a local usage component. 
In the Order, the Commission agreed with the Joint Board that the 
Commission should determine the measure of local usage to be supported 
by federal universal service mechanisms. The Commission concluded that 
``consumers might not receive the benefits of universal service support 
unless we determine a minimum amount of local usage that must be 
included within the supported services'' because carriers receiving 
universal service support might charge high per-minute rates that 
prevent service from being affordable. The Commission also observed 
that, unless the definition of universal service includes a usage 
component, carriers using technologies (such as wireless) that can 
provide basic access relatively inexpensively but that entail higher 
usage-based costs would have an artificial advantage over carriers 
using technologies that have higher basic access costs and lower usage-
based costs.
    81. The Commission tentatively concludes that a local usage 
component should be included in the definition of universal service to 
ensure that customers realize the benefits of universal service support 
even if they cannot afford high per-minute charges. Failing to include 
a local usage component in the definition of universal service would 
create a bias in favor of carriers (such as wireless carriers) that 
provide service with facilities that allow relatively inexpensive 
access to the network but that have higher usage costs. This bias would 
be exacerbated if the Commission later set support levels using 
competitive bidding. Carriers able to provide relatively inexpensive 
access could underbid competitors, yet customers might not receive 
affordable service because of high usage-based charges.
    82. The Commission seeks comment on the level of local usage that 
should be included. The Commission could prescribe this level to be the 
number of minutes per month used by the average customer subscribing to 
flat-rate local service. Alternatively, the Commission could define the 
level as the product of the average number of calls that are included 
in carriers' measured-rate service and the average call length. The 
Commission seeks comment on other potential ways to calculate the local 
usage component. The Commission also seeks comment on whether it should 
consider the impact of increased Internet usage on average call length 
and, if so, how. Finally, the Commission requests comment on whether 
the local usage component should differ for residential and business 
service. Commenters submitting usage data are requested to segregate 
those data between residential and business users.
    83. The Commission also seeks comment on the connection, if any, 
between the amount of usage that the models assume to determine 
specifications such as switch size and average cost per minute, and the 
amount of usage that should be supported as part of the definition of 
universal service. The Commission tentatively concludes that no 
necessary connection exists between these two measures of usage because 
they serve different purposes within the support mechanisms. For 
example, Hatfield currently determines per-minute switched cost based 
on all usage (local and toll), but determines support based only on 
local usage. Similarly, the Commission tentatively concludes that the 
forward-looking economic cost methodology that it will employ should 
consider all local usage to determine switching capacity and to compute 
average cost per minute, and that it should determine the amount of 
local service to include in the definition of universal service without 
regard to these other measures of usage. Interested parties may file 
comments on all of the issues relating to the level of local usage on 
or before October 17, 1997, and reply comments on or before October 27, 
1997.

[[Page 42468]]

Procedural Matters

III. Ex Parte Presentations

    84. This is a non-restricted notice-and-comment rulemaking 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided that they are disclosed as provided in 
the Commission's rules. See generally 47 CFR 1.1202, 1.1203, 1.1206.

IV. Initial Regulatory Flexibility Act Certification

    85. Section 603 of the Regulatory Flexibility Act (RFA) 
1 requires an Initial Regulatory Flexibility Analysis (IRFA) 
in notice and comment rulemaking proceedings, unless the Commission 
certifies that ``the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.'' 
2 It further requires that the IRFA describe the impact of 
the proposed rule on small entities. The RFA generally defines ``small 
entity'' as having the same meaning as the term ``small business 
concern'' under the Small Business Act, 15 U.S.C. 632.3 The 
Small Business Administration (SBA) defines a ``small business 
concern'' as one that ``(1) is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) meets any additional 
criteria established by the SBA.4 Section 121.201 of the 
Small Business Administration regulations defines a small 
telecommunications entity in SIC code 4813 (Telephone Companies Except 
Radio Telephone) as any entity with 1,500 or fewer employees at the 
holding company level.5 The Commission has determined that 
the RFA is inapplicable to this FNPRM because the non-rural LECs 
affected by the proceeding do not meet these criteria.
---------------------------------------------------------------------------

    \1\ See 5 U.S.C. 601 et seq. The RFA was amended by the ``Small 
Business Regulatory Enforcement Fairness Act of 1996'' (SBREFA), 
Title II of the Contract with America Advancement Act of 1996, 
Public Law 104-121, 110 Stat. 847 (1996) (CWAAA).
    \2\ 5 U.S.C. 605(b).
    \3\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small business concern'' in 15 U.S.C. 632). Pursuant to 5 
U.S.C. 601(3), the statutory definition of small business applies 
``unless an agency after consultation with the Office of Advocacy of 
the Small Business Administration and after opportunity for public 
comment, establishes one or more definitions of such term which are 
appropriate to the activities of the agency and publishes such 
definitions in the Federal Register.''
    \4\ 15 U.S.C. 632.
    \5\ 13 CFR 121.201.
---------------------------------------------------------------------------

    86. The Commission has not adopted a definition of a ``small LEC.'' 
Out of an abundance of caution, however, the Commission did include 
rural LECs in the regulatory flexibility analysis accompanying the 
Order as if rural LECs fell within the definition of ``small entity'' 
for regulatory flexibility purposes.6 The Commission notes 
that the term ``rural'' LEC, which is statutorily defined, is based on 
the population density of and number of access lines in the area 
served.7 For purposes of this certification, however, the 
Commission need not make a conclusive finding on whether the rural LECs 
are small entities for purposes of the RFA, for even if rural LECs were 
``small entities'' under the RFA, the Commission would still certify 
that no regulatory flexibility analysis is necessary because none of 
the proposals in the FNPRM, if adopted, would affect rural LECs. This 
FNPRM seeks comment only on the mechanisms the Commission should use to 
estimate the forward-looking economic costs that non-rural LECs would 
incur to provide universal service in rural, high cost and insular 
areas. In this FNPRM, the Commission does not consider or adopt a 
forward-looking economic cost mechanism for rural LECs. As discussed in 
the Final Regulatory Flexibility Analysis in the Order, the Commission 
has permitted rural carriers to shift to a forward-looking economic 
cost mechanism more gradually than larger carriers.8
---------------------------------------------------------------------------

    \6\ Order at paras. 885, 892, 944-50. See also 13 CFR 
121.902(b)(4).
    \7\ We define ``rural'' as those carriers that meet the 
statutory definition of a ``rural telephone company'' set forth at 
47 U.S.C. 153(37).
    \8\ Order at paras. 885, 944-50.
---------------------------------------------------------------------------

    87. The Commission therefore certifies, pursuant to section 605(b) 
of the RFA, that these proposals would not have significant economic 
impact on a substantial number of small entities.9 The 
Commission will send a copy of this Certification, along with this 
FNPRM, in a report to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A), and 
to the Chief Counsel for Advocacy of The Small Business Administration, 
5 U.S.C. 605(b). A copy of this initial certification will also be 
published in the Federal Register.
---------------------------------------------------------------------------

    \9\ 47 U.S.C. 605(b).
---------------------------------------------------------------------------

C. Deadlines and Instructions for Filing Comments
    88. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR Secs. 1.415 and 1.419, 
interested parties may file comments concerning the platform designs of 
the switching, interoffice trunking, signaling, and local tandem 
components must be submitted on or before August 8, 1997, and parties 
should submit corresponding reply comments on or before August 18, 
1997. Comments concerning the platform design features determining 
customer location, including the geographic unit for cost calculations 
and the algorithm measuring customer distribution and line counts, on 
or before September 2, 1997, and reply comments regarding these 
components should be submitted on or before September 10, 1997. 
Comments discussing the platform-design issues relating to outside 
plant investment, including the algorithms determining plant mix, 
installation and cable costs, drop lengths, structure sharing, the 
fiber-copper cross-over point, digital loop carriers, and the wireless 
threshold must be submitted on or before September 24, 1997, with reply 
comments submitted on or before October 3, 1997. Comments discussing 
all platform issues not otherwise addressed, including the components 
addressing general support facilities, expenses, and support areas, and 
all input values issues must be submitted by October 17, 1997, with 
reply comments due on or before October 27, 1997.
    89. The Commission directs all interested parties to include the 
name of the filing party and the date of the filing on each page of 
their comments and reply comments. Comments and reply comments also 
must clearly identify the specific portion of this Further Notice of 
Proposed Rulemaking to which a particular comment or set of comments is 
responsive. If a portion of a party's comments does not fall under a 
particular topic listed in the outline of this Notice, such comments 
must be included in a clearly labelled section at the beginning or end 
of the filing. Irrespective of the length of their comments or reply 
comments, parties shall include a table of contents in their 
documents.10
---------------------------------------------------------------------------

    \10\ Cf. 47 CFR Sec. 1.49(b).
---------------------------------------------------------------------------

    90. Parties should send their comments or reply comments to Office 
of the Secretary, Federal Communications Commission, 1919 M Street, 
N.W., Room 222, Washington, D.C. 20554. Parties should also file one 
copy of any documents filed in this docket with the Commission's copy 
contractor, International Transcription Services, Inc., 1231 20th 
Street, N.W., Washington, D.C. 20036. Comments and reply comments will 
be available for public inspection during regular business hours in the 
FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 
20554. Commenters

[[Page 42469]]

may also file informal comments or an exact copy of formal comments 
electronically via the Internet at <http://gullfoss.fcc.gov/cgi-bin/
websql/cgi-bin/comment/comment.hts>. Only one copy of electronically-
filed comments must be submitted. A commenter must note whether an 
electronic submission is an exact copy of formal comments on the 
subject line. A commenter also must include its full name and Postal 
Service mailing address in its submission. Parties are also asked to 
submit their comments and reply comments on diskette. Such diskette 
submissions are in addition to and not a substitute for the formal 
filing requirements addressed above. Parties submitting diskettes 
should submit them to Sheryl Todd of the Common Carrier Bureau, 2100 M 
Street, N.W., Room 8611, Washington, D.C. 20554. Such a submission 
should be on a 3.5 inch diskette formatted in an IBM compatible form 
using WordPerfect 5.1 for Windows or compatible software. The diskette 
should be submitted in ``read only'' mode. The diskette should be 
clearly labelled with the party's name, proceeding, type of pleading 
(comment or reply comments) and date of submission. Each diskette 
should contain only one party's comments in a single electronic file. 
The diskette should be accompanied by a cover letter.

Ordering Clauses

    91. It is ordered, pursuant to Sections 1, 4(i) and (j), and 254 of 
the Communications Act as amended, 47 U.S.C. Secs. 151, 154(i), 151(j), 
and 254, that the Further Notice of Proposed Rulemaking is hereby 
adopted and comments are requested as described above.
    92. It is further ordered, pursuant to Secs. 0.91 and 0.291 of the 
Commission's rules, 47 CFR 0.91, 0.291, that authority is delegated to 
the Common Carrier Bureau to issue orders in this proceeding directing 
model proponents to make certain changes in their models in order for 
those models to remain under consideration in this proceeding.

List of Subjects

47 CFR Part 54

    Universal service.

47 CFR Part 69

    Communications common carriers.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Attachment A, Service List

The Honorable Reed E. Hundt, Chairman, Federal Communications 
Commission, 1919 M Street, NW., Room 814, Washington, DC 20554
The Honorable Rachelle B. Chong, Commissioner, Federal 
Communications Commission, 1919 M Street, NW., Room 844, Washington, 
DC 20554
The Honorable Susan Ness, Commissioner, Federal Communications 
Commission, 1919 M Street, NW., Room 832, Washington, DC 20554
The Honorable James H. Quello, Commissioner, Federal Communications 
Commission, 1919 M Street, NW., Room 802, Washington, DC 20554
The Honorable Julia Johnson, State Chair, Chairman, Florida Public 
Service Commission, 2540 Shumard Oak Blvd., Gerald Gunter Building, 
Tallahassee, FL 32399-0850
The Honorable David Baker, Commissioner, Georgia Public Service 
Commission, 244 Washington Street, SW., Atlanta, GA 30334-5701
The Honorable Sharon L. Nelson, Chairman, Washington Utilities and 
Transportation Commission, 1300 South Evergreen Park Dr. SW., P.O. 
Box 47250, Olympia, WA 98504-7250
The Honorable Laska Schoenfelder, Commissioner, South Dakota Public 
Utilities Commission, State Capitol, 500 East Capitol Street, 
Pierre, SD 57501-5070
Martha S. Hogerty, Missouri Office of Public Council, 301 West High 
Street, Suite 250, P.O. Box 7800, Jefferson City, MO 65102
Tom Boasberg, Federal Communications Commission, Office of the 
Chairman, 1919 M Street, NW., Room 814, Washington, DC 20554
Charles Bolle, South Dakota Public Utilities Commission, State 
Capitol, 500 East Capitol Street, Pierre, SD 57501-5070
Deonne Bruning, Nebraska Public Service Commission, 300 The Atrium, 
1200 N Street, P.O. Box 94927, Lincoln, NE 68509-4927
James Casserly, Federal Communications Commission, Commissioner 
Ness's Office, 1919 M Street, NW., Room 832, Washington, DC 20554
Rowland Curry, Texas Public Utility Commission, 1701 North Congress 
Avenue, P.O. Box 13326, Austin, TX 78701
Bridget Duff, State Staff Chair, Florida Public Service Commission, 
2540 Shumard Oak Blvd., Tallahassee, FL 32399-0866
Kathleen Franco, Federal Communications Commission, Commissioner 
Chong's Office, 1919 M Street, NW., Room 844, Washington, DC 20554
Paul Gallant, Commissioner Quello's Office, Federal Communications 
Commission, 1919 M Street, NW., Room 802, Washington, DC 20554
Emily Hoffnar, Federal Staff Chair, Federal Communications 
Commission, Accounting and Audits Division, Universal Service 
Branch, 2100 M Street, NW., Room 8617, Washington, DC 20554
Lori Kenyon, Alaska Public Utilities Commission, 1016 West Sixth 
Avenue, Suite 400, Anchorage, AK 99501
Debra M. Kriete, Pennsylvania Public Utilities Commission, North 
Office Building, Room 110, Commonwealth and North Avenues, P.O. Box 
3265, Harrisburg, PA 17105-3265
Sandra Makeeff, Iowa Utilities Board, Lucas State Office Building, 
Des Moines, IA 50319
Philip F. McClelland, Pennsylvania Office of Consumer Advocate, 1425 
Strawberry Square, Harrisburg, PA 17120
Thor Nelson, Colorado Office of Consumer Counsel, 1580 Logan Street, 
Suite 610, Denver, CO 80203
Barry Payne, Indiana Office of the Consumer Counsel, 100 North 
Senate Avenue, Room N501, Indianapolis, IN 46204-2208
Timothy Peterson, Deputy Division Chief, Federal Communications 
Commission, Accounting and Audits Division, 2100 M Street, NW., Room 
8613, Washington, DC 20554
James Bradford Ramsay, National Association of Regulatory Utility 
Commissioners, 1100 Pennsylvania Ave., NW., P.O. Box 684, 
Washington, DC 20044-0684
Brian Roberts, California Public Utilities Commission, 505 Van Ness 
Avenue, San Francisco, CA 94102
Kevin Schwenzfeier, NYS Dept of Public Service, 3 Empire State 
Plaza, Albany, NY 12223
Tiane Sommer, Georgia Public Service Commission, 244 Washington 
Street, SW., Atlanta, GA 30334-5701
Sheryl Todd (plus 8 copies), Federal Communications Commission, 
Accounting and Audits Division, Universal Service Branch, 2100 M 
Street, NW., Room 8611, Washington, DC 20554

[FR Doc. 97-20958 Filed 8-6-97; 8:45 am]
BILLING CODE 6712-01-P