[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Rules and Regulations]
[Pages 65619-65622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32695]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 69

[CC Docket Nos. 96-262 and 91-213; FCC 97-401]


Access Charge Reform; Transport Rate Structure and Pricing

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In the Third Report and Order, FCC 97-401, adopted and 
released November 26, 1997 (Third Report and Order), in its Access 
Charge Reform and Transport Rate Structure Pricing proceedings, the 
Commission amends its cost allocation rules to increase the allocation 
of certain general purpose computer and other general support 
facilities (GSF) costs by price cap local exchange carriers (LECs) to 
their nonregulated billing and collection categories and the Third 
Report and Order also requires affected price cap LECs to reduce their 
price cap indices (PCIs) and related basket indices to ensure that 
their regulated access and interexchange services do not continue to 
recover GSF costs attributable their nonregulated billing and 
collection services. These rule amendments and related exogenous 
adjustments are intended to reduce the subsidization of

[[Page 65620]]

nonregulated services by regulated services, foster competition in the 
provision of these services, and move access charges to more 
economically efficient levels.

EFFECTIVE DATE: December 17, 1997.

FOR FURTHER INFORMATION CONTACT: Allen A. Barna or Richard Lerner, 
Competitive Pricing Division, Common Carrier Bureau, (202) 418-1530.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Report and Order adopted and released November 26, 1997. The full text 
is available for inspection and copying during normal business hours in 
the FCC Reference Center, Room 239, 1919 M St., N.W., Washington, D.C. 
The complete text also may be obtained through the World Wide Web at 
http://www.fcc.gov/Bureaus/Common__Carrier/Orders/1997/fcc97401.wp, or 
may be purchased from the Commission's Copy Contractor, International 
Transcription Service, (202) 857-3800, 1231 20th Street, N.W., 
Washington, DC 20036. On May 16, 1997, the Commission adopted a First 
Report and Order in the Access Charge Reform proceeding, FCC 97-158, 62 
FR 31868 (June 11, 1997) and 62 FR 48485 (September 16, 1997), that 
included a Further Notice of Proposed Rulemmaking (Further Notice), 62 
FR 31040 (June 6, 1997). The Further Notice sought comment on several 
specific proposals regarding the allocation of costs attributable to 
general purpose computers and other general support facilities (GSF) 
used by incumbent LECs to provide nonregulated billing and collection 
services to interexchange carriers. On May 7, 1997, the Commission 
adopted a Second Report and Order in CC Docket No. 96-262, FCC 97-159, 
62 FR 31939 (June 11, 1997), that addressed separate matters in this 
proceeding. The rule amendments adopted in the Third Report and Order 
were made in response to the Further Notice and the comments received 
in the response to the Further Notice or otherwise in the course of 
these proceedings. This Third Report and Order was submitted to OMB for 
review under the Paperwork Reduction Act of 1995, 44 U.S.C. Secs. 3501-
3520. The Commission received emergency approval of this collection 
from OMB on December 9, 1997.

Final Regulatory Flexibility Act Analysis and Certification

    1. In the Further Notice, the Commission stated that it intended to 
limit the scope of its proposals regarding the allocation of general 
purpose computer and general support facilities (GSF) costs to 
incumbent price cap LECs. That Further Notice tentatively concluded 
that, because all such LECs have more than 1500 employees, they would 
not qualify as small entities. Because the Commission intended to limit 
the scope of its proposals to such incumbent price cap LECs, it stated 
that these options, if adopted, would not affect small entities. 
Currently, 14 incumbent LECs are subject to price cap regulation. The 
Commission sought comment on these proposals and tentative conclusions. 
No comments were received specifically concerning the conclusion that 
price cap carriers were not small entities or the limitation of the 
proposed rules to such carriers. As noted in the Third Report and 
Order, however, one comment was received concerning the impact on 
smaller carriers of the first of the two options presented, the special 
study option. That option was not adopted in the Third Report and 
Order. Given that comment and for the reasons described in the Further 
Notice and this Third Report and Order, the Commission certified that 
the Regulatory Flexibility Act (RFA), 5 U.S.C. Sec. 601 et seq., did 
not apply to this rulemaking proceeding because none of the rule 
amendments adopted in the Third Report and Order would have a 
significant economic impact on a substantial number of small entities. 
This certification conforms to the RFA, as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996. The RFA, 5 U.S.C. 
Secs. 601 et seq., has been amended by the Contract with America 
Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996) 
(CWAAA). Title II of the CWAAA is the Small Business Regulatory 
Enforcement Fairness Act of 1996 (SBREFA). We hereby affirm this 
analysis.
    2. The Commission is sending a copy of this final certification, 
along with this Third Report and Order, in a report to Congress 
pursuant to the SBREFA, 5 U.S.C. Sec. 801(a)(1)(A), and to the Chief 
Counsel for Advocacy of the Small Business Administration, 5 U.S.C. 
Sec. 605(b).

Paperwork Reduction Act

    3. The Federal Communications Commission (Commission) has received 
Office of Management and Budget (OMB) approval for the following public 
information collections pursuant to the Paperwork Reduction Act of 
1995, Public Law 104-13. An agency may not conduct or sponsor and a 
person is not required to respond to a collection of information unless 
it displays a currently valid control number.
    OMB Approval Number: 3060-0760.
    Title: Access Charge Reform Third Report and Order.
    Expiration Date: May 31, 1998.
    Frequency of Response: One-time requirement.
    Respondents: Business and other for profit.
    Number of Respondents: Approximately 14 respondents.
    Description: A one-time burden of 4 hours per respondent for all 14 
respondents to calculate their exogenous price cap index (PCI) 
adjustments plus an additional one-time average burden of 318 hours per 
respondent for 4 of these respondents to make the necessary additional 
tariff filings.
    Estimated Annual Burden: A one-time burden of 54 hours for all 
respondents to calculate the exogenous adjustments and an additional 
one-time burden of 1272 hours for four of these respondents for a total 
one-time burden of 1328 hours for this group of respondents.
    Estimated Annual Reporting and Recordkeeping Cost Burden: $600 per 
respondent.
    Description: In the Third Report and Order, the Commission adopts, 
consistent with principles of cost causation and economic efficiency, 
that, where price cap LECs use general purpose computers and other 
general support facilities (GSF) to provide nonregulated billing and 
collection services to interexchange carriers, such GSF costs should 
not be allocated to these LECs' regulated access and interexchange 
categories but, instead, should be allocated to their nonregulated 
billing and collection categories. The related collection of 
information follows:
    a. In the Third Report and Order, the Commission requires affected 
price cap LECs to make certain exogenous adjustments to their 
respective price cap indices (PCIs) and related basket indices. LECs 
affected by this Third Report and Order are those price cap LECs that 
use regulated assets to provide nonregulated billing and collection 
services to interexchange carriers. For the purposes of estimating the 
information collection burdens, we assume all price cap LECs are 
affected by the Third Report and Order. Such LECs must determine the 
amount of GSF costs that they allocated to their respective access and 
interexchange categories during 1996 and then calculate the amount of 
such costs that would have been allocated to those categories during 
that year if the rule changes adopted in this Third Report

[[Page 65621]]

and Order had been in effect at that time. Once that difference is 
determined, each affected price cap LEC is required to make an 
exogenous adjustment to its PCIs and related basket indices to prevent 
the earlier misallocation of these costs from continuing to inflate the 
rates charges for regulated services. Separate from the possible tariff 
filing burden described below, we estimate that it would take each of 
these price cap LECs four (4) hours to complete the steps necessary to 
determine the amount of the exogenous price cap index (PCI) and related 
basket adjustments required by the Third Report and Order. Because we 
assume this particular burden applies to all 14 price cap LECs, we 
estimate the total burden to be 56 hours as indicated above.
    b. Under the Third Report and Order, affected price cap LECs are 
required to make tariff revision filings on or before December 17, 
1997, to implement these exogenous price cap adjustments. The 
Commission scheduled these filings to coincide with other access reform 
tariff filings to be made by price cap LECs on or before December 17, 
1997, under other orders in the Access Charge Reform proceeding. 
Because most of these 14 price cap LECs have not yet made such filings, 
there should be little or no additional tariff filing burdens 
associated with these LECs' compliance with this Third Report and 
Order. For the four price cap LECs that have already made access reform 
tariff filings under other orders, we estimate that there will be an 
additional tariff filing burden of 1272 hours for these LECs as a 
group. Because this estimated additional burden of 1272 hours reflects 
an average burden of 318 hours for each of these four LECs, we have 
used the latter figure above to facilitate calculation of the overall 
hour burdens.
    4. The public reporting burden for this collection of information 
is noted above. Comments regarding the burden estimates or any other 
aspect of this collection of information, including suggestions for 
reducing the burden, may be mailed to Performance Evaluation and 
Records Management, Federal Communications Commission, Washington, D.C. 
20554.

Synopsis of the Third Report and Order

    5.-6. Where LECs use general purpose computer and other general 
support facilities (GSF) to provide nonregulated billing and collection 
services to interexchange carriers, the Further Notice sought comment 
on the existence of significant problems with regard to the existing 
part 69 allocation of these GSF costs to the LECs' regulated access and 
interexchange categories and, if such problems exist, whether the 
Commission should amend Part 69 to increase the allocation of these 
costs to the nonregulated billing and collection categories. 
Specifically, the Commission sought comment on two options to amend 
part 69 to address such misallocation of GSF costs by LECs.
    7. Under the first option, each affected price cap LEC would 
conduct a special study of the uses made of the assets recorded in its 
general purpose computer account (Account 2124) to determine the 
percentage of interstate investment in this account that is actually 
used to provide nonregulated billing and collection services. That 
percentage would be used to allocate an appropriate portion of that 
LEC's Account 2124 investment to its nonregulated billing and 
collection category. Also, under existing Commission rules, this 
allocation of general purpose computer account investment would result 
in similar allocation of the LEC's general purpose computer account 
expenses (Account 6124).
    8. Under the second option, the Commission would require use of a 
general expense allocator to apportion the interstate share of summary 
Account 2110 (Land and support assets) between the billing and 
collection category and all other elements and categories. Any 
investment in Account 2110 not allocated to the billing and collection 
category would then be apportioned among the access elements and the 
interexchange category using the current investment allocator. 
Regarding GSF expenses, the interstate portion of these expenses in 
Account 6120 would be apportioned among all elements and categories, 
including billing and collection, based upon the overall apportionment 
of GSF investment in Account 2110. The Commission also sought comment 
on its proposals to limit the application of these rule changes to 
price cap LECs and to require exogenous adjustments by these LECs to 
prevent the past misallocation of these costs from inflating future 
access rates.
    9. In the Third Report and Order, the Commission acts on the 
proposals made in the Further Notice. In particular, the Commission 
found that significant problems continue to exist with regard to the 
allocation of general purpose computer and other GSF costs to the 
regulated categories. To address those problems, the Commission adopted 
a variation on the second option proposed in the Further Notice. Rather 
than apply the general expense allocator to the entire interstate 
portion of Account 2110, as proposed in the second option, and rather 
than apply that allocator narrowly to only the general purpose computer 
account (Account 2124) as recommended by some commenters, the 
Commission, instead, applied that allocator to four of the accounts 
that comprise Account 2110, as recommended by other commenters. Under 
the four account approach adopted by the Commission, not only the 
general purpose computer account (Account 2124) but also three 
additional accounts, in which LECs also record investment attributable 
to their nonregulated billing and collection activities, will also be 
subject to the general expense allocator. Accordingly, appropriate 
portions of these accounts as well as the general purpose computer 
account (Account 2124) will be allocated the nonregulated billing and 
collection category. No change was needed in the rules applicable to 
the allocation of GSF expense accounts because, in general, such 
expense accounts are allocated in the same manner as their counterpart 
investment accounts. Accordingly, the Commission amended its part 69 
cost allocation rules to provide for the increased allocation of these 
GSF costs to the nonregulated billing and collection categories and 
their reduced allocation to the regulated categories.
    10. In addition, pending decisions in a related proceeding 
involving the allocation of such GSF costs by other LECs, the 
Commission determined that this new allocation rule would apply only to 
price cap LECs. Also, as explained above, the Commission required 
affected price cap LECs to reduce their price cap indices (PCIs) and 
related basket indices to ensure that regulated access and 
interexchange categories do not continue to recover GSF costs 
attributable to these nonregulated billing and collection services.

Ordering Clauses

    11. Accordingly, it is ordered, pursuant to sections 1-4, 201-205, 
218, 220, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. Secs. 151-154, 201-205, and 303(r) that the Third Report and 
Order is adopted.
    12. It is further ordered that the provisions in this Order will be 
effective December 17, 1997. Although this date is less than thirty 
days after publication of the rule in the Federal Register, we find 
good cause under 5 U.S.C. Sec. 553(d)(3) to make the rule effective 
less than thirty days after publication, because local exchange 
carriers subject to price cap regulation must file access reform 
tariffs no later than December 17, 1997, in order for them to be 
effective

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by January 1, 1998. In addition, to ensure that the local exchange 
carriers subject to price cap regulation have actual notice of this 
rule immediately following its release, we are serving those entities 
by overnight mail. The collections of information contained are 
contingent upon approval by the Office of Management and Budget.
    13. It is further ordered that, for local exchange carriers subject 
to price cap regulation making tariff revisions pursuant to this Order, 
prior to December 17, 1997, to become effective January 1, 1998, 
Secs. 61.58 and 61.59 of the Commission's rules, 47 CFR 61.58 and 
61.59, are hereby waived. For these purposes, affected local exchange 
carriers shall cite the ``FCC 97-401'' as the authority for making such 
filings.
    14. It is further ordered, that 47 C.F.R., Part 69, is amended as 
set forth in the rule changes.
    15. It is further ordered, that the Commission's Office of Managing 
Director shall send a copy of this Third Report and Order, including 
the Final Regulatory Flexibility Act Analysis and Certification, to the 
Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 69

    Communications Common Carriers, Tariffs.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 69 of title 47 of the Code of Federal Regulations is amended 
as follows:

PART 69--ACCESS CHARGES

    1. The authority citation for part 69 continues to read as follows:

    Authority: 47 U.S.C. Secs. 154 (i) and (j), 201, 202, 203, 205, 
218, 254, and 403.


Sec. 69.30  [Amended]

    2. Section 69.307 is amended by revising paragraph (c) and adding 
new paragraph (d) to read as follows:
* * * * *
    (c) For all local exchange carriers not subject to price cap 
regulation and for other carriers that acquire all of the billing and 
collection services that they provide to interexchange carriers from 
unregulated affiliates through affiliate transactions, from 
unaffiliated third parties, or from both of these sources, all other 
General Support Facilities investments shall be apportioned among the 
interexchange category, the billing and collection category, and Common 
Line, Local Switching, Information, Transport, and Special Access 
elements on the basis of Central Office Equipment, Information 
Origination/Termination Equipment, and Cable and Wire Facilities, 
combined.
    (d) For local exchange carriers subject to price cap regulation and 
not covered by Section 69.307(c), a portion of General purpose computer 
investment (Account 2124), investment in Land (Account 2111), Buildings 
(Account 2121), and Office equipment (Account 2123) shall be 
apportioned to the billing and collection category on the basis of the 
Big Three Expense Factors allocator, defined in Section 69.2 of this 
Part, modified to exclude expenses that are apportioned on the basis of 
allocators that include General Support Facilities investment. The 
remaining portion of investment in these four accounts together with 
all other General Support Facilities investments shall be apportioned 
among the interexchange category, the billing and collection category, 
and Common Line, Local Switching, Information, Transport, and Special 
Access Elements on the basis of Central Office Equipment, Information 
Origination/Termination Equipment, and Cable and Wire Facilities, 
combined.

[FR Doc. 97-32695 Filed 12-11-97; 9:59 am]
BILLING CODE 6712-01-P