[Federal Register Volume 66, Number 17 (Thursday, January 25, 2001)]
[Proposed Rules]
[Pages 7725-7736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2126]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 66, No. 17 / Thursday, January 25, 2001 /
Proposed Rules
[[Page 7725]]
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 36, 54, 61, 64, 65, and 69
[CC Docket Nos. 96-45, 98-77, 98-166, and 00-256; FCC 00-448]
Multi-Association Group (MAG) Plan for Regulation of Interstate
Services of Non-Price Cap Incumbent Local Exchange Carriers and
Interexchange Carriers
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rule.
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SUMMARY: In this document, the Commission seeks comment on a petition
for rulemaking submitted by the Multi-Association Group (MAG). The
Petition sets forth an interstate access reform and universal service
supported proposal for incumbent local exchange carriers subject to
rate-of-return regulation. The MAG offers its plan as a comprehensive
solution to regulatory issues facing non-price cap carriers.
DATES: Comments are due on or before February 26, 2001. Reply comments
are due on or before March 12, 2001. Written comments by the public on
the proposed and/or modified information collections discussed in this
Further Notice of Proposed Rulemaking are due on or before February 26,
2001. Written comments must be submitted by the Office of Management
and Budget (OMB) on the proposed and/or modified information
collections on or before March 26, 2001.
ADDRESSES: All filings must be sent to the Commission's Secretary,
Magalie Roman Salas, Office of the Secretary, Federal Communications
Commission, 445 12th Street, SW., Washington, DC 20554. In addition to
filing comments with the Secretary, a copy of any comments on the
information collection(s) contained herein should be submitted to Judy
Boley, Federal Communications Commission, Room 1-C804, 445 12th Street,
SW, Washington, DC 20554, or via the Internet to [email protected] and to
Edward C. Springer, OMB Desk Officer, 10236 NEOB, 725 17th Street, NW.,
Washington, DC 20503, or via the Internet to [email protected]. Parties
who choose to file by paper should also submit their comments on
diskette. These diskettes should be submitted to Wanda Haris,
Competitive Pricing Division, Common Carrier Bureau, Federal
Communications Commission, 445 Twelfth Street, S.W., Room 5-A452,
Washington, DC 20554. Parties who choose to file by paper and comment
on the universal service aspect of the MAG plan should also submit one
paper copy of the comments to Sheryl Todd, Accounting Policy Division,
Common Carrier Bureau, Federal Communications Commission, 445 Twelfth
Street, S.W., Room 5-B540, Washington, DC 20554. In addition,
commenters must send diskette copies to the Commission's copy
contractor, International Transcription Services, Inc., 1231 20th
Street, N.W., Washington, D.C. 20037.
FOR FURTHER INFORMATION CONTACT: William Scher, Attorney, Common
Carrier Bureau, Accounting Policy Division, (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM) in CC Docket Nos. 96-45, 98-77, 98-166,
and 00-256 released on January 5, 2001. The full text of this document
is available for public inspection during regular business hours in the
FCC Reference Center, Room CY-A257, 445 Twelfth Street, S.W.,
Washington, DC, 20554.
This NPRM contains proposed information collection(s) subject to
the Paperwork Reduction Act of 1995 (PRA). It has been submitted to the
Office of Management and Budget (OMB) for review under the PRA. OMB,
the general public, and other Federal agencies are invited to comment
on the proposed information collections contained in this proceeding.
Paperwork Reduction Act
The NPRM contains a proposed information collection. The
Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and OMB to comment on the
information collection(s) contained in this NPRM, as required by the
PRA, Public Law 104-13. Public and agency comments on the proposed and/
or modified information collections discussed in this Notice of
Proposed Rulemaking are due on or before February 26, 2001. Written
comments must be submitted by the Office of Management and Budget (OMB)
on the proposed and/or modified information collections on or before
March 26, 2001.
Comments should address: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Control Number: None.
Title: Multi-Association Group (MAG) Plan for Regulation of
Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers
and Interexchange Carriers.
Form No.: N/A.
Type of Review: Proposed New collections.
Respondents: Business or other for-profit.
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No. of Est. time per Total annual
Title respondents response burden
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1. Tariff Filing................................................ 65 2 130
2. Annual Data Filings:
a. Special Access Rate Reporting............................ 64 1 64
b. Filing the Effective Per Line Support and a Geographic 1501* 2 2502
Description And Map........................................
3. Periodic Data Filings:
[[Page 7726]]
a. Reporting of Mergers & Acquisitions...................... 20 80 1600
b. Filing of Low-end Adjustments With NECA.................. 4 20 80
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*Based on the number of study areas.
Total Annual Burden: 4376.
Cost to Respondents: $0.
Needs and Uses: The Commission is seeking comment on a proposal
filed by a Multi-Association Group (MAG). The MAG plan proposes to
reform the interstate access charge structure for non-price cap
carriers, to establish explicit interstate access universal service
support for non-price cap carriers that will be sustainable in an
increasingly competitive marketplace, and to require interexchange
carriers to offer their services that are available in other areas in
the non-price cap carriers' service areas. Affected carriers may be
required to file tariffs and to make periodic and annual data filings.
The information will be used to determine compliance with Commission
rules and eligibility for interstate access universal service support.
Synopsis of NPRM
I. Introduction
1. In this NPRM, we seek comment on a Petition for Rulemaking
submitted by the MAG. The Petition sets forth an interstate access
reform and universal service support proposal for incumbent local
exchange carriers (LECs) subject to rate-of-return regulation (rate-of-
return or non-price cap carriers). It is designed to be implemented
over a five-year period beginning on July 1, 2001.
2. The MAG offers its plan as a comprehensive solution to
regulatory issues facing non-price cap carriers, and asks that the
Commission adopt the plan without modification as an integrated
package. The MAG plan is modeled in some respects on the CALLS plan
adopted for price cap carriers. The MAG plan would increase the
recovery of common line costs through flat, non-traffic sensitive
charges. For carriers that elect a transition to a new form of
incentive-based regulation, it provides for reduced per-minute access
rates, and a new, explicit interstate access universal service subsidy
to make up for any shortfall in carriers' revenues. The MAG plan also
proposes to eliminate the current funding caps on high-cost loop
support for rural carriers. The MAG believes its plan would have many
benefits, including a more efficient access rate structure, more
explicit universal service support, and new incentives for carriers to
increase efficiency and invest in new technologies.
3. The specifics of the MAG plan are set forth in the Petition, in
particular Exhibits 1 (Detailed Description) and 3 (Proposed Rules).
II. Issues for Comment
4. The MAG offers its plan as a comprehensive solution to
regulatory issues facing non-price cap carriers, and asks that the
Commission adopt the plan without modification as an integrated
package. We seek comment on whether we should adopt the MAG plan in its
entirety, as requested by the MAG members. We also seek comment on
whether, in the event that we do not adopt the MAG plan in its
entirety, there are specific aspects of the proposal that we should
adopt or incorporate into any of our captioned proceedings. In
addition, we seek comment on the impact, if any, of the MAG plan on
other pending proceedings before the Commission. We also seek comment
on the process through which the Commission should evaluate the MAG
plan. In particular, we ask how we may best address the concerns that
may be raised by parties who are not members of the MAG.
5. We invite interested parties from all industry segments,
including competitive LECs, IXCs, and wireless providers, as well as
consumer groups and state commissions, to submit comments on the MAG
plan. Parties should comment on the public policy implications of the
MAG plan and/or particular aspects of the plan, including its potential
effects on the competition and universal service goals of the 1996 Act,
and whether and how it would promote consumer welfare. What would the
net impact of the MAG proposal be on non-price cap carrier revenues?
Parties also should address how small business entities, including
small incumbent LECs and new entrants, will be affected by the MAG
plan. We briefly discuss several of the major issues raised by the MAG
plan that we encourage interested parties specifically to address in
their comments.
6. Access Rate Structure. We seek comment on the access rate
structure aspects of the MAG plan. Are the proposed reforms, which in
some respects are modeled on the CALLS plan adopted for price cap
carriers, appropriate for non-price cap carriers? Are they likely to
achieve the competitive and consumer benefits anticipated by the MAG
members? Is continued maintenance of lower SLC caps for non-price cap
carriers than for price cap carriers consistent with section 254 of the
1996 Act? Is a two-path scheme necessary to accommodate diversity among
non-price cap carriers? Would the potential regulatory complexity of
this two-tiered approach have practical or administrative consequences?
Would the MAG plan benefit all non-price cap carriers, regardless of
size and/or operating conditions? Are larger carriers with relatively
low costs more likely than small carriers to elect Path A? If so, would
the result be inflation of Path B access rates? What are the
characteristics of companies that are likely to elect Path B? Is it
appropriate as a legal or policy matter to restrict RAS to Path A
carriers? Would it be appropriate to close out our rate-of-return
proceeding and keep the rate of return at its current level of 11.25
percent for Path B carriers? We invite parties to comment on these and
any other issues related to the MAG plan's proposed reform of the
interstate access rate structure for non-price cap carriers.
7. Universal Service Support. Unlike the CALLS plan, the MAG plan
does not estimate the amount of implicit support in access rates, or
place a ceiling on the proposed new access subsidy, RAS. Is it
appropriate to cap interstate access support for price cap carriers but
not for non-price cap carriers? To what extent is RAS likely to
increase the size of the universal service fund, and how will RAS
support levels change over time? What impact will such increases have
on consumers? Is the increase likely to be offset by decreases in
access rates and charges resulting from implementation of the MAG plan?
Should RAS be available to support special access services, which have
not been defined as supported services by the Commission? If the
Commission creates RAS as a residual support mechanism, should LTS be
retained as a separate interstate access subsidy? Should we adopt a
provision similar to
[[Page 7727]]
that included in the CALLS Order for recovery of universal service
contributions through a separate rate element or line item?
8. Incentive-Based Regulation. Would the MAG incentive-based
approach create appropriate economic incentives for operating
efficiency and investment? Is it likely to encourage long term
investment? Is it likely to encourage investment in high-speed
infrastructure? Is the proposed ability of carriers to fix or adjust
RPL at any time likely to reinforce ``lumpy'' investment patterns
(significant investment in a single year, rather than a steady flow of
investment), and/or encourage cost inflation? How would consumers
benefit from any of the efficiency gains that incentive-based
regulation is expected to produce?
9. In addition, to what extent is the MAG incentive-based approach
likely to increase non-price cap carrier revenues? Does an inflation
factor equal to the GDP Price Index accurately reflect changes in costs
per line experienced by the carriers that can be expected to select
Path A? Should an X-factor or consumer productivity dividend be
included in RPL? Is a low-end adjustment necessary where carriers
retain the option to remain under rate-of-return regulation, and at
what level should it be set? How would the Commission evaluate the
validity of low-end adjustment showings if carriers are no longer
required to report cost data annually? What are the costs and benefits
of permitting carriers to elect on a study area basis when to convert
to incentive-based regulation and whether to continue pooling? Is the
five-year transition period proposed by the MAG an appropriate
transition period to incentive-based regulation? We invite commenters
to address these issues and any others when discussing the incentive-
based regulation proposals in the MAG plan.
10. Advanced Services. One goal of the MAG plan is to promote the
deployment of advanced services to rural areas, a goal shared by the
Commission. We seek comment on the validity of the MAG's premise that
universal service funding caps and regulatory uncertainty have
diminished non-price cap carriers' incentives to invest in new
technologies. Does the MAG plan represent the best means of promoting
the deployment of advanced services in rural areas, or are there
alternative means that would better accomplish this goal? Does the MAG
plan require the use of universal service funding to support advanced
services or infrastructure capable of providing advanced services?
11. Mergers and Acquisitions. Is elimination of the all-or-nothing
rule, as proposed in the MAG plan, warranted? Cost shifting concerns
prompted the Commission to adopt the rule in 1993; do these concerns
remain valid today? Likewise, is the proposed elimination of the freeze
of study areas for non-price cap carriers warranted? Does the MAG plan
adequately address gaming concerns that would arise if Sec. 54.305 of
the Commission's rules were eliminated? Are there alternative ways to
address the underlying concerns raised by the MAG that limits on
universal service support discourage non-price cap carriers in rural
areas from acquiring and upgrading telephone exchanges? We invite the
Joint Board to comment on the universal service implications of these
MAG proposals.
12. Geographic Rate Averaging and Rate Integration. We seek comment
on the proposed pricing rules in the MAG plan that would be applicable
to IXCs. Among other things, we invite parties to address whether all
IXC minimum monthly charges should be prohibited, or whether IXCs
should only be required to offer at least one calling plan without such
charges. In addition, how would the Commission ensure that IXCs comply
with the MAG's proposed requirements, given the fact that the
Commission does not regulate the rates of IXCs?
III. Procedural Issues
A. Ex Parte Presentations
13. This is a permit but disclose 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.
B. Initial Regulatory Flexibility Act
14. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the proposals in this NPRM. Written public comments are requested on
the IRFA. These comments must be filed in accordance with the same
filing deadlines as comments on the rest of this NPRM, and should have
a separate and distinct heading designating them as responses to the
IRFA. The Commission will send a copy of the NPRM, including this IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration
(SBA) in accordance with the RFA. In addition, the NPRM and IRFA (or
summaries thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
15. The Commission has initiated this proceeding to consider
interstate access charge and universal service reforms for rate-of-
return carriers proposed by the MAG. The MAG plan would raise SLCs for
all rate-of-return carriers to the price cap carriers' SLC caps and
permit deaveraging of the SLCs. The plan would also extend the Lifeline
program to cover the increased SLCs and eliminate the cap on high cost
loop support and the corporate operations expense limitation. In other
respects, the plan would permit rate-of-return carriers to continue
under the current access charge and universal service regulatory
regimes, or elect the alternatives available in the MAG plan. The MAG
plan would also require IXCs to pass through to customers savings
realized from reduced access rates and to offer the same optional
calling plans to rural and urban customers alike.
16. Rate-of-return carriers electing the alternative regulatory
approach proposed by the MAG plan would commence a five-year transition
plan for interstate access charges and universal service funding. The
MAG plan would, for example: establish an ``incentive'' method for
compensating NECA pool members electing the incentive approach based on
inflation-adjusted, revenue per line amounts; reduce per minute access
charges to $0.016; establish low-end earnings levels; consolidate the
two NECA pools into one pool; provide for certain pricing flexibility
if a non-price cap carrier elects to remove one or more study areas
from the NECA pool; and make certain of the options, including
participation in the NECA pool, available on a study-area basis. The
plan also establishes procedures for introducing new services and for
the treatment of mergers and acquisitions. The plan would also
establish an additional, explicit universal service subsidy for non-
price cap carriers electing the incentive approach of the MAG plan
(known as rate averaging support), make universal service support
payments portable, and permit carriers to deaverage the universal
service support into three zones per wire center. Settlements with non-
price cap carriers would be handled by NECA whether a carrier elected
to convert to incentive-based regulation under Path A of the MAG plan
or remain under rate-of-return regulation. A rate-of-return carrier
could elect to tariff its offerings for one or more study areas itself,
which would give it additional pricing flexibility, but would
[[Page 7728]]
require it to forgo any rate averaging support.
2. Legal Basis
17. This rulemaking action is supported by sections 4(i), 4(j),
201-205, 254, and 403 of the Communications Act of 1934, as amended.
3. Description and Estimate of the Number of Small Entities to Which
the NPRM Will Apply
18. The RFA directs agencies to provide a description of, and,
where feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
``small entity'' as having the same meaning as the term ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act, unless the Commission has developed one or more definitions that
are appropriate to its activities. Under the Small Business Act, a
``small business concern'' is 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.
19. We have included small incumbent carriers in this RFA analysis.
As noted, a ``small business'' under the RFA is one that, inter alia,
meets the pertinent small business size standard (e.g., a telephone
communications business having 1,500 or fewer employees), and ``is not
dominant in its field of operation.'' The SBA's Office of Advocacy
contends that, for RFA purposes, small incumbent carriers are not
dominant in their field of operation because any such dominance is not
``national'' in scope. We have therefore included small incumbent
carriers in this RFA analysis, although we emphasize that this RFA
action has no effect on the Commission's analyses and determinations in
other, non-RFA contexts.
20. Local Exchange Carriers. Neither the Commission nor the SBA has
developed a definition for small providers of local exchange services.
The closest applicable definition under the SBA rules is for telephone
communications companies other than radiotelephone (wireless)
companies. According to the most recent Telecommunications Industry
Revenue data, 1,348 incumbent carriers reported that they were engaged
in the provision of local exchange services. We do not have data
specifying the number of these carriers that are either dominant in
their field of operations, are not independently owned and operated, or
have more than 1,500 employees, and thus are unable at this time to
estimate with greater precision the number of local exchange carriers
that would qualify as small business concerns under the SBA's
definition. Of this number, 13 entities are price cap carriers that
would not be subject to the rules, if adopted. Consequently, we
estimate that fewer than 1,335 providers of local exchange service are
small entities or small incumbent local exchange carriers that may be
affected by the proposed rules.
21. Competitive Local Exchange Carriers. Neither the Commission nor
the SBA has developed a definition of small providers of local exchange
service. The closest applicable definition under SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies. The most reliable source of information regarding the number
of competitive LECs nationwide of which the Commission is aware appears
to be the data that the Commission collects annually in connection with
the Telecommunications Relay Service (TRS). According to the
Commission's most recent data, 129 companies reported that they were
engaged in the provision of either competitive access provider services
or competitive LEC services. The Commission does not have data
specifying the number of these carriers that are either dominant in
their field of operations, are not independently owned and operated, or
have more than 1,500 employees, and thus is unable at this time to
estimate with greater precision the number of competitive LECs that
would qualify as small business concerns under the SBA's definition.
Consequently, the Commission estimates that fewer than 129 providers of
local exchange service are small entities or small competitive LECs
that may be affected by these proposals.
22. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services. The closest applicable definition
under the SBA rules is for telephone communications companies other
than radiotelephone (wireless) companies. According to the most recent
Carrier Locator data, 738 carriers reported that their primary
telecommunications service activity was the provision of interexchange
services. We do not have data specifying the number of these carriers
that are not independently owned and operated or have more than 1,500
employees, and thus are unable at this time to estimate with greater
precision the number of IXCs that would qualify as small business
concerns under the SBA's definition. Consequently, we estimate that
there are less than 738 small entity IXCs that may be affected by the
proposed rules.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
23. The MAG plan is a proposal submitted by four associations
representing rate-of-return carriers. Under the MAG proposal, all rate-
of-return LECs would be required to modify their access tariffs to
comply with the new SLC caps, which may be deaveraged. Rate-of-return
LECs selecting Path A must adjust their traffic sensitive rates
(carrier common line, local switching, transport, and transport
interconnection charge) to comply with the composite access rate or CAR
target. Rate-of-return carriers electing incentive-based regulation for
one or more study areas must establish revenue per line or RPL
compensation amounts that will be inflation-adjusted annually, after
which they will not be required to file cost data with NECA. The MAG
proposes that Path A carriers with study areas participating in the
pool's switched traffic sensitive tariff, but not in the special access
tariff, must provide the special access rates of those study areas to
NECA by March 1 prior to the annual filing to support NECA's
calculation of pool transport rates. The MAG plan also proposes that
rate-of-return carriers choosing to deaverage their universal service
support file the effective per-line support amount for each universal
service zone and a geographic description and map of each such zone
with the Commission, the relevant state regulatory agency, and USAC.
Rate-of-return carriers would be required to notify the Commission and
the affected state regulatory commission before incorporating acquired
telephone exchanges or lines into existing study areas, rather than
having to file a waiver to do so, as is currently required. The MAG
plan proposes that Path A carriers under incentive-based regulation and
participating in the NECA pool be required to perform a twelve-month
cost study of the acquired lines within eighteen months of the
acquisition. Finally, the plan would permit a Path A carrier subject to
incentive-based regulation (whether in or out of the NECA pool) to file
a cost study with NECA seeking a low-end adjustment if its earnings
fall below 10.75 percent (if five or fewer study areas are served) or
10.25 percent (if more than five study
[[Page 7729]]
areas are served). It is not clear whether, on balance, the proposals
will increase or decrease rate-of-return carriers' administrative
burdens.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
24. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
25. The proposals in the MAG plan could have varying positive or
negative impacts on rate-of-return carriers, including any such small
carriers. Because most of the changes are actually elective options, a
small entity should be able to assess the impacts as part of its
decision-making process. The alternative to consideration of adopting
the MAG proposal at this time would be to continue in effect the
existing access charge and universal service fund rules applicable to
these small carriers, or adopting a portion, or a modified version, of
the MAG plan. Public comments are welcomed on modifications of the MAG
proposal that would reduce any potential impacts on small entities.
Specifically, suggestions are sought on different compliance or
reporting requirements that take into account the resources of small
entities; clarification, consolidation, or simplification of compliance
and reporting requirements for small entities that would be subject to
the rules; and whether waiver or forbearance from the rules for small
entities is feasible or appropriate. Comments should be supported by
specific economic analysis.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
26. None.
IV. Comment Filing Procedures
27. Pursuant to Secs. 1.415 and 1.419 of the Commission's rules,
interested parties may file comments on or before February 26, 2001 and
reply comments on or before March 12, 2001. Comments may be filed using
the Commission's Electronic Comment Filing System (ECFS) or by filing
paper copies.
28. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail to [email protected], and
should include the following words in the body of the message, ``get
form your e-mail address>.'' A sample form and directions will be sent
in reply.
29. Parties who choose to file by paper must file an original and
four copies of each filing. If more than one docket or rulemaking
number appear in the caption of this proceeding, commenters must submit
two additional copies for each additional docket or rulemaking number.
All filings must be sent to the Commission's Secretary, Magalie Roman
Salas, Office of the Secretary, Federal Communications Commission, 445
12th Street, SW., Washington, DC 20554.
30. Parties who choose to file by paper should also submit their
comments on diskette. These diskettes should be submitted to: Wanda
Harris, Competitive Pricing Division, 445 12th Street, SW., Washington,
DC 20554. Such a submission should be on a 3.5-inch diskette formatted
in an IBM compatible format using Word or compatible software. The
diskette should be accompanied by a cover letter and should be
submitted in ``read only'' mode. The diskette should be clearly labeled
with the commenter's name, proceeding (including the docket number, in
this case CC Docket No. 00-256, type of pleading (comment or reply
comment), date of submission, and the name of the electronic file on
the diskette. The label should also include the following phrase ``Disk
Copy--Not an Original.'' Each diskette should contain only one party's
pleadings, preferably in a single electronic file. In addition,
commenters must send diskette copies to the Commission's copy
contractor, International Transcription Service, Inc., 1231 20th
Street, NW., Washington, DC 20037.
31. Parties who choose to file by paper and comment on universal
service aspects of the MAG plan also should submit one paper copy of
the comments to Sheryl Todd, Accounting Policy Division, 445 12th
Street, SW., Room 5-B540, Washington, DC 20554.
32. Written comments by the public on the proposed and/or modified
information collections are due on or before February 26, 2001. Written
comments must be submitted by the Office of Management and Budget (OMB)
on the proposed and/or modified information collections on or before
March 26, 2001. In addition to filing comments with the Secretary, a
copy of any comments on the information collections contained herein
should be submitted to Judy Boley, Federal Communications Commission,
Room 1-C804, 445 12th Street, SW., Washington, DC 20554, or via the
Internet to [email protected] and to Edward Springer, OMB Desk Officer,
10236 NEOB, 725--17th Street, NW., Washington, DC 20503.
V. Ordering Clauses
33. Pursuant to the authority contained in sections 4(i), 4(j),
201-205, 254, and 403 of the Communications Act of 1934, as amended,
this Notice of Proposed Rulemaking is adopted.
34. It is further ordered that the Commission's Consumer
Information Bureau, Reference Information Center, shall send a copy of
this Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects
47 CFR Part 36
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
47 CFR Part 54
Reporting and recordkeeping requirements, Telecommunications,
Telephone.
47 CFR Part 61
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
47 CFR Part 64
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
47 CFR Part 65
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
[[Page 7730]]
47 CFR Part 69
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Proposed Rules
For the reasons set forth in the preamble, the Federal
Communications Commission proposes to amend 47 CFR Parts 36, 54, 61,
64, 65, and 69 as follows:
PART 36--JURISDICTIONAL SEPARATIONS PROCEDURES; STANDARD PROCEDURES
FOR SEPARATING TELECOMMUNICATIONS PROPERTY COSTS, REVENUES,
EXPENSES, TAXES AND RESERVES FOR TELECOMMUNICATIONS COMPANIES
Subpart F--Universal Service Fund
1. The authority citation for part 36 continues to read as follows:
Authority: 47 U.S.C. Secs. 151, 154(i) and (j), 205, 221(c),
254, 403 and 410.
2. In Sec. 36.601, add the following sentence to the end of
paragraph (c) to read as follows:
Sec. 36.601 General.
* * * * *
(c) The indexed cap on the Universal Service Fund as described in
this subsection shall no longer apply as of July 1, 2001. The
Administrator shall recalculate the Universal Service Fund without such
cap as of July 1, 2001.
3. In Sec. 36.621, revise paragraph (a)(4) introductory text to
read as follows:
Sec. 36.621 Study area total unseparated loop cost.
(a) * * *
(4) Corporate Operations Expenses, Operating Taxes and the benefits
and rent portions of operating expenses, as reported in Sec. 36.611(e)
attributable to investment in C&WF Category 1.3 and COE Category 4.13.
This amount is calculated by multiplying the total amount of these
expenses and taxes by the ratio of the unseparated gross exchange plant
investment in C&WF Category 1.3 and COE Category 4.13, as reported in
36.611(a), to the unseparated gross telecommunications plant
investment, as reported in Sec. 36.611(f). Total Corporate Operations
Expense, for purposes of calculating universal service support
payments, beginning July 1, 2001 shall be the actual average monthly
per-line Corporate Operations Expense.
* * * * *
4. In Sec. 36.622, add paragraphs (d) and (e) to read as follows:
Sec. 36.622 National and study area average unseparated loop costs.
* * * * *
(d) Beginning July 1, 2001, the National Average Unseparated Loop
Cost per Working Loop shall be calculated pursuant to Sec. 36.621 and
Sec. 36.622(a), without any of the caps formerly required in this part.
(e) The National Exchange Carrier Association shall calculate
support for loop-related costs on a per-loop basis for study areas of
Path A LECs, as defined in Sec. 61.3 of this chapter, that elect Path A
incentive regulation for such study areas initially by adjusting such
support as calculated for each such study area for the year prior to
such election to reflect the annual percentage change in the GDP Price
Index (GDP-PI), the estimate of the Chain-Type Price Index for Gross
Domestic Product published by the United States Department of Commerce,
and dividing such adjusted support by the study area's number of loops
for the prior year reported pursuant to Sec. 36.611. After election of
incentive regulation for a study area, a Path A LEC may provide the
Administrator with data updated to the date of such election, and the
Administrator will adjust support for loop-related costs based on such
data coincident with its time schedule. For each year subsequent to the
year of election, the Administrator shall calculate per-line support
for loop-related costs annually by adjusting the previous year's level
of support to reflect the annual percentage change in the GDP-PI. The
Administrator shall calculate the total annual support for loop-related
costs for each such study area under incentive regulation by
multiplying the adjusted per-loop support by the number of loops in
that study area reported pursuant to Sec. 36.611.
5. The definition of ``Study area'' in Part 36, Appendix-Glossary,
is revised to read as follows:
* * * * *
Study area. Study area boundaries shall be frozen as they are on
November 15, 1984, except that Path A LECs and Path B LECs, as defined
in Sec. 61.3, may alter study area boundaries when they acquire
exchanges or lines from another telephone company, including a company
subject to price cap regulation, so long as they notify the Common
Carrier Bureau and the affected state regulatory commission or
commissions of their intent to do so 30 days before the completion of
such transaction. In such transaction with a Path A LEC or Path B LEC,
the study area boundaries of a company subject to price cap regulation
shall be adjusted accordingly.
* * * * *
PART 54--UNIVERSAL SERVICE
Subpart A--General Information
6. In Sec. 54.5, add the following definitions in alphabetical
order to read as follows:
Sec. 54.5 Terms and definitions.
* * * * *
Path A incentive regulation. ``Path A incentive regulation'' is the
form of regulation established in Sec. 61.62 of this chapter.
Path A LEC. A ``Path A LEC'' is an ILEC as defined in Sec. 61.3 of
this chapter.
Subpart D--Universal Service Support for High Cost Areas
7. Add a new paragraph (g) to Sec. 54.301 to read as follows:
Sec. 54.301 Local switching support.
* * * * *
(g) The Administrator shall calculate local switching support on a
per-line basis for study areas of Path A LECs that elect Path A
incentive regulation for such study areas initially by adjusting the
local switching support for each such study area for the year prior to
such election to reflect the annual percentage change in the Department
of Commerce's Gross Domestic Product--Chained Price Index (GDP-PI) and
by dividing such adjusted support by its number of working loops for
the prior year. After election of incentive regulation for a study
area, a Path A LEC may provide the Administrator with data updated to
the date of such election, and the Administrator will adjust local
switching support based on such data coincident with its time schedule.
For each year subsequent to the year of election, the Administrator
shall calculate per-line local switching support annually by adjusting
the previous year's level of support to reflect the annual percentage
change in the GDP-PI. The Administrator shall calculate the total
annual local switching support for each such study area under incentive
regulation by multiplying the adjusted per-line local switching support
by the number of working loops in that study area reported pursuant to
Sec. 36.611.
8. In Sec. 54.303, paragraph (a) is revised and paragraph (b)(5) is
added to read as follows:
Sec. 54.303 Long term support.
(a) Beginning July 1, 2001, an eligible telecommunications carrier
that
[[Page 7731]]
participates in the association pool shall receive Long Term Support.
* * * * *
(b) * * *
(5) The Administrator shall calculate Long Term Support on a per-
line basis for study areas of Path A LECs that elect incentive
regulation for such study areas initially by adjusting the Long Term
Support for each such study area for the year prior to such election to
reflect the annual percentage change in the GDP-PI and dividing such
adjusted amount by its number of working loops for the prior year. For
each year subsequent to the year of election, the Administrator shall
calculate per-line Long Term Support annually by adjusting the previous
year's level of support to reflect the annual percentage change in the
GDP-PI. The Administrator shall calculate the total annual Long Term
Support for each such study area under incentive regulation by
multiplying the adjusted per-line Long Term Support by the number of
working loops in that study area reported pursuant to Sec. 36.611 of
this chapter.
9. In Sec. 54.305, add a sentence at the end of the section to read
as follows:
Sec. 54.305 Sale or transfer of exchanges.
* * * This section shall not apply to non-price cap LECs as defined
in Sec. 61.3 of this chapter.
10. In Sec. 54.307, paragraph (a)(1) is revised to read as follows:
Sec. 54.307 Support to a competitive eligible telecommunications
carrier.
(a) * * *
(1) A competitive eligible telecommunications carrier shall receive
support for each line it serves based on the support the ILEC receives
for each line. A Path A LEC's per-line support for purposes of this
section shall be the effective per-line support per zone calculated in
Sec. 54.321(b).
* * * * *
11. Add Secs. 54.319 and 54.321 to subpart F to read as follows:
Sec. 54.319 Rate averaging support.
(a) Beginning July 1, 2001, Path A LECs with study areas that
participate in the pool administered by the association as of July 1,
2001 shall receive Rate Averaging Support (RAS).
(b) The Association shall calculate RAS as described in this
paragraph.
(1) The common line component of RAS will be calculated as the
difference between the pool's projected common line revenue requirement
for Path A LECs and the sum of revenues of Path A LECs from end user
common line charges and carrier common line (CCL) charges described in
part 69 of this chapter of these rules and Long Term Support (LTS) of
Path A LECs. The common line component of RAS will be distributed among
study areas of Path A LECs subject to incentive regulation based on the
difference between their individual common line revenue requirements
and the sum of their individual revenues from end user common line
charges and CCL charges that are consistent with the targeted CAR and
their individual LTS.
(2) The traffic sensitive switched component of RAS will be
calculated as the difference between the pool's projected traffic
sensitive switched revenue requirement for Path A LECs and the sum of
Path A LECs' projected revenues from the traffic sensitive elements
that constitute the CAR as defined in Sec. 69.130 and local switching
support (LSS) of Path A LECs. The traffic sensitive component of the
RAS will be distributed among Path A study areas based on the
difference between their individual traffic sensitive switched revenue
requirements and the sum of their individual revenues from the traffic
sensitive elements that constitute the CAR as defined in Sec. 69.130
and their individual LSS.
(3) The special access component of RAS will be calculated based on
identifying the difference between projected special access revenue
requirements and special access billed revenues for all those study
areas of Path A LECs participating in the pool and subject to incentive
regulation with revenue retention ratios greater than one. This
component of the RAS would be distributed only to Path A study areas
with revenue retention ratios greater than one based on their base year
individual revenue retention ratios.
(c) The Association will calculate RAS annually, but the
Association may adjust RAS on a monthly basis to reflect any delay in
reporting of actual lines and billed revenues to bring Path A incentive
settlements and revenues into balance beginning with periods after June
30, 2006.
(d) Path B LECs and non-pooling Path A LECs as defined in Sec. 61.3
of this chapter are not eligible to receive RAS.
Sec. 54.321 Adjustments to per-line universal service support;
disaggregation.
(a) The Administrator shall increase per-line universal service
support as calculated in this part and in part 36 to reflect any
expansion in the supported services listed in Sec. 54.101 or if the
Commission or Congress acts to stimulate the deployment of new
services, adjust such support to reflect costs that Path A LECs and
Path B LECs incur in complying with new state or federal regulations as
the Commission shall permit by rule or order, which, subject to further
order of the Commission, include but are not limited to regulations
concerning number portability, the Communications Assistance in Law
Enforcement Act, the completion of the amortization of depreciation
reserve deficiencies, changes in the Uniform System of Accounts
requirements made pursuant to Sec. 32.16 of this chapter, changes in
the Separations Manual, state and federal tax law changes, and changes
in rules governing affiliate transactions and cost allocation; and
adjust such support to reflect changes in Lifeline support per
Sec. 54.403.
(b) Within each study area, a Path A LEC or Path B LEC may define
up to three zones per wire center and allocate to each a different
percentage of the total universal service support per line provided to
that study area under this part and part 36 of this chapter. Universal
service support for purposes of this calculation section shall include
Rate Averaging Support, if any, as calculated in Sec. 54.319. Such
allocation must be reasonably related to such LEC's costs of providing
service in the various zones, and must remain in effect for at least
four years. For each such zone, such LEC will calculate the effective
per-line support amount within each zone by dividing the percentage of
the study area's total universal service support allocated to that zone
by the total number of lines within that zone. Such LEC must file the
effective per-line support amount for each zone, together with a
geographic description and map of each such zone, with the Commission,
the Administrator, and the public utility commission of the state in
which the study area is located.
(c) If a Path A LEC that participates in the pool administered by
the Association and is under incentive regulation acquires or merges
with an exchange or study area, for the first eighteen months after the
date of the transaction, the universal service support for the acquired
lines will be set at the average support of all Path A study areas in
the pool under incentive regulation. The acquiring LEC must perform a
cost study of the acquired lines for a consecutive twelve-month period
within the first eighteen months after acquisition, and the support for
the acquired lines will be calculated according to the cost study. If
the acquired lines are included in an existing study area of the
acquiring LEC, the LECs would receive an automatic waiver from the
price cap rules of parts 61 and 69 of this chapter so that
[[Page 7732]]
individual exchanges from price cap companies may convert to incentive
regulation.
PART 61--TARIFFS
Subpart A--General
12. In Sec. 61.3, add the following definitions in alphabetical
order to read as follows:
Sec. 61.3 Definitions.
* * * * *
(aaa) Non-price cap LEC. An incumbent Local Exchange Carrier for
which price cap regulation is not mandatory and does not apply.
* * * * *
(bbb) Path A. A method of regulation provided in Secs. 61.60
through 61.62.
(ccc) Path A incentive regulation. A method of regulation of Path A
LECs provided in Sec. 61.62.
(ddd) Path A incentive study area. A study area for which a Path A
LEC has elected Path A incentive regulation.
(eee) Path A LEC. A non-price cap LEC that chooses Path A pursuant
to Sec. 61.60.
(fff) Path A transition period. The period from July 1, 2001,
through June 30, 2006.
(ggg) Path B. A method of regulation provided in Sec. 61.60(d).
(hhh) Path B LEC. A non-price cap LEC that chooses Path B pursuant
to Sec. 61.60.
* * * * *
(iii) Revenue per line (RPL). A settlement method used in Path A
incentive regulation calculated pursuant to Sec. 61.62(a)(1)(B).
* * * * *
Subpart E--General Rules for Dominant Carriers
Sec. 61.39 [Amended]
13. Amend Sec. 61.39(b)(4)(ii) by removing the phrase ``carrier
common line pool'' and adding in its place ``pool administered by the
National Exchange Carrier Association.''
14. In Sec. 61.41(c), add paragraph (c)(4) to read as follows:
Sec. 61.41 Price cap requirements generally.
* * * * *
(c) * * *
(4) Notwithstanding the provisions of Sec. 61.42(c)(1) and (c)(2),
when a Path A LEC or Path B LEC, as defined in Sec. 61.3, acquires
lines, exchanges or study areas from a telephone company subject to
price cap regulation, or acquires, is acquired by, merges with, or
otherwise becomes affiliated with a telephone company subject to price
cap regulation, the Path A LEC or Path B LEC may retain its status as a
Path A LEC or Path B LEC or become subject to price cap regulation in
accordance with Sec. 69.3(i) and the requirements referenced in that
section.
15. Add Secs. 61.60 and 61.62 to subpart E to read as follows:
* * * * *
Sec. 61.60 Regulation of non-price cap LECs.
(a) As of July 1, 2001, non-price cap LECs will be subject to
either Path A or Path B as described in this section and Sec. 61.62.
(b) Non-price cap LECs must notify the Commission no later than
March 1, 2001, whether they elect to be Path A LECs or Path B LECs as
of July 1, 2001. Such LECs must make this election on a per-operating
company basis.
(c) Path A.--(1) During the Path A transition period.
(i) Except as otherwise expressly provided in the Commission's
rules, during the Path A transition period, Path A LECs will continue
under the regulations in place for them prior to July 1, 2001. During
the Path A transition period, a Path A LEC that is a non-price cap LEC
may choose for any of its study areas to recover revenues within the
Association's single pool described in Sec. 69.603 of this chapter on
the same basis that the study area did prior to July 1, 2001. However,
at any time during the Path A transition period, a Path A LEC may
choose to move one or more of its study areas to Path A incentive
regulation as defined in Sec. 61.62.
(ii) If a Path A LEC's study area is settling with the pool at the
start of the plan on a cost basis, it may continue during the Path A
transition period to settle with the pool based on its reported costs.
(iii) A Path A LEC currently operating on an average schedule basis
may choose for one or more of its study areas to remain regulated on
that basis during the transition period. That study area will continue
to settle with the pool based on average schedule settlement formulas.
Path A LECs under average schedule rules may elect Path A incentive
regulation within the pool on a per-study-area basis at any time during
the Path A transition period. Path A LECs with average schedule study
areas could also elect to convert to cost at any time during the
transition period on a per-study area basis, consistent with current
rules, as long as they have not moved to incentive regulation.
(iv) For all Path A LECs within the pool, there will be per-study
area tariff election options during the Path A transition period. For
switched access services, a Path A LEC may elect by study area to
participate in the common line tariff only or the common line and
traffic sensitive tariffs. Special access tariff participation is
optional.
(2) Post-transition period. At the conclusion of the Path A
transition period, all study areas of all Path A LECs not already
subject to Path A incentive regulation will become Path A incentive
study areas.
(d) Path B. (1) Except as otherwise expressly provided in the
Commission's rules, Path B LECs will continue under the regulations in
place for them prior to July 1, 2001. The authorized rate of return as
of July 1, 2000 remains in effect for Path B LECs that continue under
rate-of-return regulation.
(2) During the Path A transition period, a Path B LEC may elect to
become a Path A LEC. After such election and until the end of the Path
A transition period, such LEC, like other Path A LECs, may choose on a
per-study-area basis to be subject to Path A incentive regulation
pursuant to Secs. 61.60 through 61.62. After expiration of the Path A
transition period, all of the study areas of such Path A LEC will
become subject to incentive regulation pursuant to such subsections.
(3) After expiration of the Path A transition period, Path B LECs
that have not become Path A LECs may only be subject to Path A
incentive regulation upon application for and grant of a waiver of this
subsection by the Common Carrier Bureau of the Commission.
(4) Path B LECs may elect to file interstate access rates on a per-
study area basis outside the Association tariffing and pooling process
consistent with the tariff election options in effect prior to July 1,
2001.
Sec. 61.62 Path A Incentive Regulation.
(a) During the Path A transition period.--(1) Study areas
participating in the Association pool.
(i) A study area of a Path A LEC participating in the Association
pool and electing Path A incentive regulation during the Path A
transition period will receive monthly settlement payments, including
explicit universal service support, from the pool that equal the
product of its revenue per line (RPL) for that year and its actual
average monthly access line count. Pool settlements will be based on
the pool's realized rate of return.
(ii) The Association shall calculate the RPL as the revenue
requirement or settlement amount received per average monthly line
count in the base year prior to the study area's conversion to
incentive regulation, adjusted initially for inflation to reflect the
annual
[[Page 7733]]
percentage change in the GDP Price Index (GDP-PI). During the
transition period, the pool settlements for study areas under incentive
regulation will be based on the study area's RPL requirement, but
adjusted for the pool's realized rate of return. The RPL will be
adjusted annually for inflation to reflect the annual percentage change
in the GDP-PI. A Path A LEC may also provide information to the
Association to permit it to update the RPL on a prospective basis to
reflect updated cost study or revenue requirement data up to the point
when the study area converted to Path A incentive regulation. Example:
A study area in the Association pool elects Path A incentive regulation
as of July 1, 2001, the start of the path A transition period. The
revenue figures that the Association will use for calculating the RPL
for that study area will be based on a 1999 cost study or average
schedule revenue requirement data, adjusted for inflation to reflect
the GDP Price Index (GDP-PI). On July 1, 2002, the RPL may be adjusted
for inflation and to include updated 2000 cost study or settlement
data. On July 1, 2003, the RPL will be adjusted for inflation, and it
may be updated to include a half-year of updated 2001 cost study or
settlement data. In all subsequent years, the RPL will be adjusted
annually to include inflation only. Alternatively, a Path A LEC may
notify the Association to set an RPL for a study area based on the
latest data available at the time that the study area converts to Path
A incentive regulation, with no further cost study or settlement
updates. The Association then would adjust the RPL only for inflation.
(iii) Special access settlements for study areas subject to Path A
incentive regulation that participate in the pool will be the product
of a retention ratio, i.e., a factor by which a pool participant keeps
a percentage of the revenue that it bills, and billed revenues. A
retention ratio equal to the base year's retention ratio (adjusted for
rate changes) will apply.
(iv) Exchanges acquired by pool participants may enter the pool. If
a Path A LEC in the pool and under incentive regulation acquires or
merges with an exchange or study area, for the first eighteen months
after the date of the transaction, the RPL for the acquired lines will
be set at the average RPL of all Path A study areas in the pool under
incentive regulation. The acquiring LEC must perform a cost study of
the acquired lines for a consecutive twelve-month period within the
first eighteen months after acquisition, and the RPL for the acquired
lines will be calculated according to the cost study. If the acquired
lines are included in an existing study area of the acquiring LEC, the
RPL for that study area will be the weighted average of the RPLs of the
acquiring study area and the acquired lines. If the acquired lines will
be in a separate study area, the RPL for that study area is calculated
separately from the RPLs of the acquiring LEC's existing study areas.
(2) Study areas not participating in the Association pool.
(i) Path A LECs may elect to file interstate access rates on a per-
study area basis outside the Association tariffing and pooling process.
Once a study area exits the Association pool, it cannot return, absent
a waiver of this and other applicable rules, except that if pool
participants acquire lines or study areas outside the pool, the
acquired lines may reenter the pool.
(ii) Path A LECs that elect the non-pooling option for one or more
of their tariff options will file and administer their own interstate
access tariffs for those tariff options. Interstate access charge rate
elements will be those in the applicable sections of part 69 of this
chapter. End User Common Line Charges must be set, and apply, pursuant
to Sec. 69.104 of this chapter. Non-pooling Path A LECs on Path A
incentive regulation will establish all other switched access rate
elements based on the applicable RPL consistent with paragraph
(a)(1)(ii) of this section. Such rates may initially include universal
service revenues including rate averaging support (RAS) as defined in
Sec. 54.319 of this chapter lost by exiting the pool, but RAS will not
apply in subsequent years for study areas outside the pool. Once the
initial rates are established, they can be de-averaged so long as such
de-averaging does not increase the RPL. Path A LECs will establish
special access rates for study areas outside the pool on a market
basis. Deaveraging, term and volume discounts and contract pricing are
permitted for such special access services. Such LECs may introduce new
interstate access services subject to the tariff filing requirements of
subpart F of part 61. A low end adjustment is available to non-pooling
study areas subject to Path A incentive regulation per
Sec. 61.62(c)(3).
(b) After the Path A transition period.--(1) Study areas
participating in the Association pool. After the Path A transition
period ends, all study areas of Path A LECs that participate in the
pool will receive settlements calculated by the Association as the
product of the study area's RPL and actual line counts. For special
access, settlements will be based on the applicable retention ratio,
multiplied by billed revenues. The Association will make any
adjustments needed to bring the available pool revenues and settlement
claims into balance for Path A LECs once actual data is available. This
adjustment amount will be included in the RAS of Sec. 54.319 of this
chapter on a monthly basis, to reflect any lag in the reporting of
access lines and revenues. The low-end adjustment of Sec. 61.60(c) will
continue to be available.
(2) Study areas not participating in the Association pool. Path A
LECs that elect the non-pooling option for one or more of their study
areas will file and administer their own interstate access tariffs
consistent with paragraph (a)(2) of this chapter. The low end
adjustment of Sec. 61.62(c) will continue to be available.
(c) Path A low end adjustment.--(1) Five or fewer study areas
subject to incentive regulation in the pool. A Path A LEC with five or
fewer study areas that are subject to Path A incentive regulation and
are within the pool may apply for a low end adjustment at the end of a
tariff period for any of its study areas in the pool if the interstate
access rate of return for the prior year for a study area or study
areas is below the authorized level of 11.25% by more than 50 basis
points (i.e., the return is less than 10.75%). Such LEC must apply to
the Association for the adjustment. Such application must include a
cost study demonstrating that the study area or areas earned less than
10.75% for a given year. Upon such a showing, the LEC will receive
payments in twelve equal installments over the following year to bring
the prior year's earnings for the study area or areas up to 10.75%. The
Association will adjust the RAS, as defined in Sec. 54.319 of this
chapter, accordingly. Except in special circumstances, these payments
will terminate at the end of the twelve-month period following the year
in which the study area underearned. Any claim for an adjustment in a
subsequent year would have to be supported by a new cost study. The
accounting for these payments will provide that such payments will not
increase the LEC's earnings for the period in which they are received.
Any claim for a low end adjustment for a year subsequent to that for
which an adjustment already has been made will exclude currently paid
low end adjustment revenues.
(2) More than five study areas subject to incentive regulation in
the pool. A Path A LEC with more than five study areas that are in the
pool and subject to incentive regulation may apply for a low end
adjustment for any of its study areas in the pool at the end of a
tariff period
[[Page 7734]]
if the interstate access rate of return for the prior year for the
study area or areas is below the authorized level of 11.25% by more
than 100 basis points (i.e., the return is less than 10.25%). Such LEC
must apply to the Association for the adjustment. Such application must
include a cost study demonstrating that the study area or areas earned
less than 10.25% for a given year. Upon such a showing, the LEC will
receive payments in twelve equal installments over the following year
to bring the prior year's earnings of the study area or areas up to
10.25%. The Association will adjust the RAS, as defined in Sec. 54.319
of this chapter, accordingly. Except in special circumstances, these
payments would terminate at the end of the twelve-month period
following the year in which the study area underearned. Any claim for
an adjustment in a subsequent year would have to be supported by a new
cost study. The accounting for these payments will provide that such
payments will not increase the LEC's earnings for the period in which
they are received. Any claim for a low end adjustment for a year
subsequent to that for which an adjustment already has been made will
exclude currently paid low end adjustment revenues.
(3) Path A LECs with five or fewer study areas subject to incentive
regulation outside the pool. A Path A LEC with five or fewer study
areas that do not participate in the pool and are subject to incentive
regulation may apply at the end of a tariff period to the Commission
for a low end adjustment to its rates if the interstate access rate of
return for the prior year for its interstate tariff filing entity is
below the authorized level of 11.25% by more than 50 basis points
(i.e., the return is less than 10.75%). Such application must include a
cost study demonstrating that the study areas collectively earned less
than 10.25% for a given year. Upon approval of such adjustment, the
tariff filing entity will adjust its rates prospectively for twelve
months to permit its interstate tariff filing entity to realize an
interstate return of 10.25%. Except in special circumstances, this
adjustment would terminate at the end of the twelve-month period
following the year in which the tariff filing entity underearned. Any
claim for an adjustment in a subsequent year would have to be supported
by a new cost study. The accounting for this adjustment must provide
that such adjustment will not increase the LEC's earnings for the
period in which it is made. Any claim for a low end adjustment for a
year subsequent to that for which an adjustment already has been made
will exclude current low end adjustment revenues.
(4) More than five study areas subject to incentive regulation
outside the pool. A Path A LEC with more than five study areas that are
outside the pool and subject to incentive regulation may apply to the
Commission for a low end adjustment to its rates at the end of a tariff
period if the interstate rate of return for the prior year for its
interstate tariff filing entity is below the authorized level of 11.25%
by more than 100 basis points (i.e., the return is less than 10.25%).
Such application must include a cost study demonstrating that the study
areas collectively earned less than 10.25% for a given year. Upon such
a showing, the tariff filing entity will adjust its rates prospectively
for twelve months to bring its prior year's earnings up to 10.25%.
Except in special circumstances, this adjustment would terminate at the
end of the twelve-month period following the year in which the tariff
filing entity underearned. Any claim for an adjustment in a subsequent
year would have to be supported by a new cost study. The accounting for
this adjustment will provide that such adjustment will not increase the
LEC's earnings for the period in which it is made. Any claim for a low
end adjustment for a year subsequent to that for which an adjustment
already has been made will exclude current low end adjustment revenues.
(d) Adjustments for new regulatory requirements. When new state or
federal requirements as in Sec. 54.321(a)(2) of this chapter apply to
Path A LECs with study areas subject to Path A incentive regulation in
the pool, the Association is authorized to prospectively adjust the RPL
for these study areas within 90 days of the effective dates of such
requirements in order to permit recovery of the costs of complying with
them.
PART 64--[AMENDED]
Subpart R--Geographic Rate Averaging and Rate Integration
16. In Sec. 64.1801, paragraph (c) is added to read as follows:
Sec. 64.1801 Geographic rate averaging and rate integration.
* * * * *
(c) Providers of interstate interexchange telecommunications
services must offer customers in rural and high-cost areas of the
United States the same optional calling plans, including discount or
volume-based plans, that are available to their customers in urban
areas. Providers of interstate interexchange telecommunications
services in rural and high-cost areas of the United States are
prohibited from imposing minimum monthly charges on their residential
customers. Providers of interstate interexchange telecommunications
services in rural and high-cost areas of the United States must pass
through to long distance customers the savings that IXCs realize from
lower access rates charged by Path A LECs and Path B LECs.
PART 65--[AMENDED]
Subpart F--Maximum Allowable Rates of Return
Sec. 65.702 [Amended]
17. In Sec. 65.702, revise paragraph (b) by removing the phrase
``pool or pools'' and add in its place where ever it exists the word
``pools.''
PART 69--[AMENDED]
Subpart A--General
18. In Sec. 69.2, add the following definitions in alphabetical
order to read as follows:
Sec. 69.2 Definitions.
* * * * *
(WW) Non-price cap LEC. This term means the same as in Sec. 61.3 of
this chapter.
* * * * *
(XX) Path A incentive study area. This term means the same as in
Sec. 61.3 of this chapter.
(YY) Path A LEC. This term means the same as in Sec. 61.3 of this
chapter.
(ZZ) Path A transition period. This term means the same as in
Sec. 61.3 of this chapter.
* * * * *
19. In Sec. 69.3, paragraph (e)(9) is revised and paragraph (g) is
amended by removing the phrase ``Association pool'' and by adding the
phrase ``Association common line pool.''
Sec. 69.3 Filing of access service tariffs.
* * * * *
(e) * * *
* * * * *
(9) At the start of the Path A transition period defined in
Sec. 61.3 of this chapter, non-price cap LECs that elect to file their
own tariffs outside the Association pool for one or more of their study
areas effective July 1, 2001, shall notify the Association no later
than March 1, 2001 that such study areas will no longer participate in
Association tariffs. After the start of the Path A transition period,
non-price cap LECs that elect to file their own tariffs outside the
Association
[[Page 7735]]
pool for one or more of their study areas effective July 1, 2002 or
thereafter, shall notify the Association no later than March 1 prior to
the annual tariff filing that such study areas will no longer
participate in Association tariffs. During the Path A transition
period, a non-price cap LEC within the Association pool may elect to
participate in the pool's common line tariff only or the common line
and traffic sensitive tariffs. After the Path A transition period ends,
non-price cap LECs may elect for their study areas to participate in
the Association pool's common line and traffic sensitive tariffs. The
exercise of such options shall be effective July 1 of each year
beginning in 2001, and such LECs must notify the Association of their
decision regarding such options according to the schedule established
earlier in this paragraph (e)(9). Path A LECs have the option to file
special access tariffs outside the pool.
* * * * *
Subpart B--Computation of Charges
20. In Sec. 69.101, revise the paragraph to read as follows:
Sec. 69.101 General.
Except as provided in Sec. 69.1 and subpart C of this part, charges
for each access element shall be computed and assessed as provided in
this subpart. For general rules governing the calculation of charges
for Path A LECs and Path B LECs, see Secs. 69.130 through 69.136.
21. Section 69.104 is revised to read as follows:
Sec. 69.104 End user common line charge for non-price cap LECs and
Path A incentive study areas.
(a) This section is applicable only to non-price cap LECs. A charge
that is expressed in dollars and cents per line per month shall be
assessed upon end users that subscribe to local exchange telephone
service or Centrex service to the extent they do not pay carrier common
line charges. A charge that is expressed in dollars and cents per line
per month shall be assessed upon providers of public telephones. Such
charge shall be assessed for each line between the premises of an end
user, or public telephone location, and a Class 5 office that is or may
be used for local exchange service transmissions.
(b) Beginning July 1, 2001, the maximum end user common line
charges for all residential and single-line business lines shall be no
higher than the maximum amounts for end user common line charges of
price cap carriers stated in Sec. 69.152 (d)(1)(ii)(A) through
(d)(1)(ii)(D) (the ``stated amounts''), so long as those amounts are
reasonably comparable to the end user common line charges that price
cap LECs actually charge pursuant to Sec. 69.152. Assuming such
comparability, the end user common line charge for residential and
single business lines will change to $5.00 per month on July 1, 2001,
and annually change consistent with the stated amounts thereafter.
There is no separate end user carrier common line charge for non-
primary residence lines. End user common line charges for multi-line
business lines and for each subscriber line associated with a public
telephone will change from $6.00 per line to $9.20 per line in equal
increments over the period from July 1, 2001 to July 1, 2003. End user
common line charges for Centrex lines may be assessed based on a per-
line charge that is 1/9 of the multi-line business end user common line
charge. However, if a Centrex customer has fewer than nine lines, the
monthly end user charge for those lines shall be the end user common
line charge for one multi-line business.
(c) The End User Common Line charge for each residential local
exchange service subscriber line shall be the same as such charge for
each single-line business local exchange service subscriber line.
(d) A line shall be deemed to be a residential subscriber line if
the subscriber pays a rate for such line that is described as a
residential rate in the local exchange service tariff. Effective July
1, 2001, for purposes of this section, ``residential subscriber line''
includes residential lines that a non-price cap LEC provides to a
competitive LEC that resells the line and on which access charges may
be assessed.
(e) A line shall be deemed to be a single-line business subscriber
line if the subscriber pays a rate that is not described as a
residential rate in the local exchange service tariff and does not
obtain more than one such line from a particular telephone company.
(f) No charge shall be assessed for any WATS access line.
(g) A non-price cap LEC shall assess no more than one End User
Common Line charge as calculated under the applicable method under this
section for Basic Rate Interface integrated services digital network
(ISDN) service. No more than five End User Common Line charges shall be
assessed as calculated under this section for Primary Rate Interface
ISDN service.
(h) In the event that a non-price cap LEC charges less than the
maximum End User Common Line charge for any subscriber lines, it may
not recover the difference between the amount collected and the maximum
from carrier common line charges or RAS as defined in Sec. 54.319 of
this chapter.
(i) End User Common Line Charge De-Averaging. Beginning on July 1,
2001, non-price cap LECs may geographically de-average End User Common
Line charges into up to three geographic zones per wire center, so long
as no multi-line business End User Common Line charge is set lower than
the lowest residential End User Common Line charge. Such LECs must file
their End User Common Line Charges for each zone, together with a
geographic description and map of each such zone, with the Commission.
If such LECs participate in the pool, the Association will impute
revenues from End User Common Line Charges as if they had been set at
the maximum amount.
22. In Sec. 69.114 paragraphs (a) through (d) are redesignated as
paragraphs (b) through (e) and a new paragraph (a) is added to read as
follows:
Sec. 69.114 Special access services.
(a) The Association will tariff special access services for Path A
and Path B study areas participating in the pool. Path A LECs may also
elect to tariff their special access services outside the Association
pool. Pricing flexibility for individual rates, such as term and volume
discounts, will be available. The Association will have the flexibility
to develop other price structures that would align study area prices
and costs more closely.
* * * * *
23. Add Secs. 69.130, 69.132, 69.134 and 69.136 to subpart B to
read as follows:
Sec. 69.130 Composite access rate.
(a) Association access tariffs for non-price cap LECs or access
tariffs filed directly with the Commission by such entities shall
include all applicable per-minute switched access rate elements in this
subpart B.
(b) The Association shall calculate a Composite Access Rate
(``CAR'') for the Association pool that is the weighted aggregate of
the per-minute switched access rates of the Path A LECs' study areas
that participate in the pool at any time. During the Path A transition
period, as defined in Sec. 61.3 of this chapter, NECA will adjust the
CAR annually according to the following schedule: As of July 1, 2001,
the CAR will equal 2.2 cents per minute. As of July 1, 2002, the CAR
will equal 1.8 cents per minute. As of July 1, 2003, and thereafter,
the CAR will equal 1.6 cents per minute.
[[Page 7736]]
Sec. 69.132 New access services for non-price cap LECs and Path A
incentive study areas.
New access services of non-price cap LECs shall be introduced at
prevailing market rates. Such services either shall be administered by
the Association on behalf of LECs that are pool participants or
introduced outside the pool by non-price cap LECs that do not
participate in the pool.
Sec. 69.134 Rates for certain access elements of Path A LECs.
Notwithstanding other sections of this subpart B:
(a) For Path A LECs that participate in the Association pool, the
Association may set charges for the access rate elements included in
the CAR to recover the revenue requirement that remains after revenues
are received from the end user common line charges, carrier common line
charges, long term support (LTS), local switching support (LSS), and
rate averaging support (RAS) of such LECs. The Association shall set
charges for such rate elements in a flexible manner to develop price
structures that would align such charges and costs more closely.
(b) Path A LECs with study areas participating in the pool's
switched traffic sensitive tariff but not in the special access tariff
must provide the special access rates of those study areas to the
Association by March 1 prior to the annual filing to support
Association calculation of pool transport rates.
Sec. 69.136 Rates for certain access elements of Path B LECs.
For Path B LECs, the Association will calculate a total revenue
requirement for average schedule and cost companies. The end user
common line charges of Path B LECs will be the same as those for Path A
LECs. Association calculations of rates for the access elements of Path
B LECs will follow Secs. 69.104 through 69.129 in effect as of July 1,
2000, recognizing the explicit support flows from Long Term Support and
local switching support.
Subpart G--Exchange Carrier Association
24. Add a new paragraph (c) to Sec. 69.603 to read as follows:
Sec. 69.603 Association functions.
* * * * *
(c) As of July 1, 2001, the Association shall convert its pooling
system to a single pool for Path A LECs and Path B LECs, as defined in
Sec. 61.3 of this chapter. The authorized rate of return for the pool
shall be that in effect as of July 1, 2000. The Association is
authorized to evaluate the operation of the pool during the Path A
transition period, as defined in Sec. 61.3 of this chapter, and, as of
the end of that period, is authorized to replace the single pool with
two or more pools, including but not limited to separate pools for Path
A LECs and Path B LECs, upon 60 days prior notice to the Commission.
* * * * *
25. In Sec. 69.605, paragraphs (a) and (e) are revised to read as
follows:
Sec. 69.605 Reporting and distribution of pool access revenues.
(a) Access revenues and cost data shall be reported by participants
in association tariffs to the association for computation of monthly
pool revenues distributions in accordance with this subpart.
Notwithstanding the foregoing, Path A LECs with Path A incentive study
areas as defined in Sec. 61.3 are not required to report cost data to
the Association for those study areas.
* * * * *
(e) The Association may update average schedule formulas for
changes in costs or demands over the five-year period using changes in
relative cost data of similarly-sized study areas that settle on a cost
basis. The Association also may make structural modifications to the
design of the average schedule formulas, to reflect changes in the mix
of service offerings, changes in network design, or changes in
operating practices.
[FR Doc. 01-2126 Filed 1-24-01; 8:45 am]
BILLING CODE 6712-01-U