[Federal Register Volume 77, Number 157 (Tuesday, August 14, 2012)]
[Rules and Regulations]
[Pages 48448-48453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19810]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC 
Docket Nos. 01-92, 96-45; WT Docket No. 10-208; DA 12-870]


Connect America Fund; A National Broadband Plan for Our Future; 
Establishing Just and Reasonable Rates for Local Exchange Carriers; 
High-Cost Universal Service Support

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
revises and clarifies certain provisions of its rules relating to the 
transition of intrastate switched access rates and the operation of the 
transitional recovery mechanism that were adopted in the USF/ICC 
Transformation Order. The Commission also grants a number of limited 
waivers of the Commission's rules to address administrative concerns 
and rule inconsistencies.

DATES: Effective September 13, 2012.

FOR FURTHER INFORMATION CONTACT: Belinda Nixon, Wireline Competition 
Bureau, (202) 418-1520.

SUPPLEMENTARY INFORMATION: This is a summary of the Wireline 
Competition Bureau's Order in WC Docket Nos. 10-90, 07-135, 05-337, 03-
109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-45; WT Docket No. 
10-208; DA 12-870, released on June 5, 2012. The full text of this 
document is available for public inspection during regular business 
hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW., 
Washington, DC 20554, and at the following Internet address: http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0425/FCC-12-47A1.pdf. The complete text may be purchased from the Commission's 
duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals 
II, 445 12th Street SW., Room CY-B402, Washington, DC 20554, (202) 488-
5300, facsimile (202) 488-5563, or via email at fcc@bcpiweb.com.

I. Introduction

    1. In the USF/ICC Transformation Order, the Commission delegated to 
the Wireline Competition Bureau (Bureau) the authority to revise and 
clarify rules as necessary to ensure that the reforms adopted in the 
USF/ICC Transformation Order are properly reflected in the rules. In 
this Order, the Bureau acts pursuant to this delegated authority to 
revise and

[[Page 48449]]

clarify certain rules, and acts pursuant to authority delegated to the 
Bureau in Sec. Sec.  0.91, 0.201(d), and 0.291 of the Commission's 
rules to clarify certain rules. Below, the Bureau clarifies several 
intercarrier compensation issues relating to the transition of 
intrastate switched access rates and operation of the transitional 
recovery mechanism adopted in the USF/ICC Transformation Order. The 
Bureau also grants limited waivers of the Commission's rules to address 
administrative concerns and rule inconsistencies.

II. Discussion

    2. In the USF/ICC Transformation Order, the Commission adopted a 
uniform national bill-and-keep framework as the ultimate intercarrier 
compensation end state for all telecommunications traffic exchanged 
with a local exchange carrier (LEC), and established a gradual, 
measured transition that focused initially on reducing certain 
terminating switched access rates. The initial steps of the transition 
cap the vast majority of switched access rates and require carriers to, 
among other things, reduce certain intrastate switched access rates to 
interstate levels pursuant to the methodology contained in the rules. 
The Commission also adopted a transitional recovery mechanism to 
mitigate the effect of reduced intercarrier revenues on carriers and to 
facilitate continued investment in broadband infrastructure, while 
providing greater certainty and predictability going forward than the 
status quo ante. As part of the transitional recovery mechanism, the 
Commission defined, as ``Eligible Recovery,'' the amount of 
intercarrier compensation revenue reductions that incumbent LECs would 
be eligible to recover.
    3. In this Order, the Bureau clarifies that the required reductions 
to intrastate switched access rates may be made to the rate level for 
any intrastate switched access rate so long as the lowered rates 
produce a reduction in revenues equal to the total reduction required 
in 2012. In addition, the Bureau clarifies that non-commercial mobile 
radio service (CMRS) reciprocal compensation traffic exchanged pursuant 
to a bill-and-keep arrangement should not be included in demand for the 
purpose of intercarrier compensation rate transition calculations. 
Finally, we grant a number of limited rule waivers, including a limited 
waiver of Sec.  54.712 of our rules, to allow incumbent LECs to charge 
the second quarter 2012 universal service contribution factor until 
July 3, 2012.

A. Transition Implementation

1. Rate Structure Issues
    4. In the USF/ICC Transformation Order, the Commission noted that 
in many states, intrastate switched access rates are significantly 
higher than interstate switched access rates; in others, intrastate 
switched access and interstate switched access rates are at parity; and 
in still other states, intrastate access rates are below interstate 
levels. The Commission noted that this rate disparity ``created 
incentives for arbitrage and pervasive competitive distortions within 
the industry.'' The Commission, therefore, adopted transition 
mechanisms for incumbent LECs and competitive LECs that require 
carriers to reduce intrastate switched access rates in 2012 if 
intrastate rates are higher than interstate rates. Specifically, in 
making the comparison, the Commission did not focus on specific rates, 
but compared certain intrastate revenues resulting from switched demand 
for Fiscal Year 2011 to the same demand priced at corresponding 
interstate rates for the same period. If the intrastate revenues are 
higher, then the carrier is required to make a reduction in its 
intrastate switched access rates in 2012.
    5. Under the methodology adopted in the transition rules, the 
reduction in a carrier's intrastate rates on July 1, 2012, is equal to 
one-half of the difference between the compared revenue levels. On July 
1, 2013, the specified intrastate switched access rates move to parity 
with interstate switched access rate levels employing the carrier's 
interstate rate structure. This movement to interstate rates and rate 
structure was designed to reduce the potential for arbitrage between 
interstate and intrastate rates and deliver the benefits of a uniform 
intercarrier compensation system. The Commission also prohibited 
carriers from raising any intrastate rates that are lower than their 
functionally equivalent interstate rates in making this transition.
    6. Carriers and state commissions have posed a number of questions 
concerning the implementation of this transition. For instance, some of 
a carrier's intrastate switched access rate element rates in a state 
may be below the carrier's functionally equivalent interstate switched 
access rate element rates. Other of the carrier's intrastate switched 
access rate element rates in the state could, simultaneously, be above 
the functionally equivalent interstate switched access rate element 
rates. In other cases, a carrier's overall intrastate switched access 
rate structure may be dissimilar to its interstate switched access rate 
structure. This situation may require a carrier desiring to move to the 
interstate rate structure in 2012 to establish new rate elements, which 
on its face, could be viewed to violate the prohibition on intrastate 
switched access rate increases in 2012.
    7. We conclude that some clarification of the rules governing the 
transition from intrastate switched access rates and rate structures to 
interstate switched access rates and rate structures is warranted to 
assist carriers in making their 2012 intrastate switched access tariff 
filings and to provide guidance to state commissions who are 
responsible for reviewing these filings. As noted above, the 
determination of whether intrastate switched access rates must be 
reduced in 2012 was based on an aggregate measurement, not on the basis 
of comparing one tariffed rate to another tariffed rate. Accordingly, 
prohibiting increases to specific intrastate switched access rate 
element rates is inconsistent with a transition plan based on moving 
aggregate revenue levels to interstate levels using interstate switched 
access rates and rate structure. If a carrier has an intrastate rate 
for a particular rate element that is below the rate for its 
functionally equivalent interstate rate element, it cannot comply with 
both the prohibition on increasing rates and the requirement to 
transition to interstate rates using the interstate switched access 
rate structure. Therefore, we clarify that, for carriers required to 
make reductions to intrastate switched access rates in 2012 under the 
intercarrier compensation transition, achievement of unified rate 
levels and rate structure overrides the prohibition on rate element 
increases included in the adopted transition rules.
    8. The rules set forth two approaches for implementing the initial 
reductions to specified intrastate switched access rates. First, a LEC 
may elect to establish rates for Transitional Intrastate Access Service 
using its intrastate access rate structure. Alternatively, it may elect 
to apply its interstate access rates and rate structures, and for one 
year assess a transitional per-minute charge on Transitional Intrastate 
Access Service end office switching minutes. These approaches remain 
valid, but should not be read as the only approaches that can be used 
to transition intrastate switched access rates to interstate switched 
access rates. In considering alternative rate and rate structure 
approaches to reducing intrastate switched access rates, the 
overarching principle is compliance with the requirement that a carrier 
reduce its overall intrastate switched access rates by the amount 
calculated in Sec.  51.907(b)(2) (for price cap carriers) or

[[Page 48450]]

51.909(b)(2) (for rate-of-return carriers) of the Commission's rules. 
Thus, we now clarify that a carrier required to make intrastate rate 
reductions in 2012 may increase individual intrastate switched access 
rate element levels to levels above comparable interstate rate element 
levels in 2012 without violating the prohibition on raising intrastate 
switched access rates as long as the overall reduction principle is 
satisfied. For example, a carrier could adopt the interstate rate 
structure for its intrastate switched access and price out each rate 
element so that the intrastate revenues will reflect the reductions 
required in 2012. A carrier could also partially adopt the interstate 
rate structure in the first year and move to the interstate rate 
structure completely in 2013. Furthermore, we clarify that, for 
carriers required to make intrastate switched access rate reductions in 
2012, any intrastate switched access rate element that is below the 
functionally equivalent interstate switched access rate must be 
increased to the interstate level no later than July 1, 2013 to be 
consistent with the use of aggregate revenue relations reflected in our 
transition rules. Such increase will not be considered to violate the 
prohibition on raising intrastate switched access rates. Accordingly, 
we revise Sec. Sec.  51.907, 51.909, and 51.911 of the Commission's 
rules to reflect these clarifications. An incumbent LEC shall reflect 
any increased revenues from increased intrastate rates made in light of 
this clarification in calculating its Eligible Recovery under Sec.  
51.915(d) or 51.917(d) of the Commission's rules, as appropriate.
    9. Moreover, several carriers and state commissions have inquired 
as to whether the transition rules require a proportionate reduction to 
each intrastate access rate element or whether the reduction may be 
targeted to a subset of rate element rates. Consistent with the above 
clarification, the required reductions to intrastate switched access 
rates may be made to any intrastate switched access rate as long as the 
lowered rates produce a reduction in revenues equal to the reduction 
required in 2012.

B. Recovery Implementation Issues

    10. In the USF/ICC Transformation Order, the Commission adopted 
rules establishing procedures for calculating Eligible Recovery for 
non-CMRS traffic subject to reciprocal compensation. Within these 
rules, the Commission established, as an option, a process for using a 
composite rate procedure to calculate required reductions in non-CMRS 
reciprocal compensation during the intercarrier compensation rate 
transition. Under this process, a price cap carrier may establish a 
``composite reciprocal compensation rate for its Fiscal Year 2011 
reciprocal compensation receipts and its Fiscal Year 2011 reciprocal 
compensation payments by dividing its Fiscal Year 2011 reciprocal 
compensation receipts and payments by their respective Fiscal Year 2011 
demand * * *.'' AT&T sought clarification that Fiscal Year 2011 non-
CMRS reciprocal compensation demand used to calculate the reduction in 
net reciprocal compensation revenues should exclude demand that is 
already exchanged pursuant to a bill-and-keep arrangement.
    11. We clarify that demand associated with non-CMRS reciprocal 
compensation traffic exchanged pursuant to a bill-and-keep arrangement 
should not be used in the recovery calculation. Non-CMRS reciprocal 
compensation arrangements and the associated demand for traffic 
exchanged pursuant to a bill-and-keep arrangement are not part of this 
transition process. Under the composite rate approach, non-CMRS 
reciprocal compensation rate reductions are required when the target 
rate is below the composite rate. If the composite reflected bill-and-
keep demand, the resulting lower composite rate would take longer to 
fall below the target transition rate to trigger a reduction in rates. 
Because this traffic is not part of the transition and would skew the 
average lower, including such demand is inappropriate and contrary to 
the intent of the USF/ICC Transformation Order. This would delay the 
benefits of reduced, uniform intercarrier compensation rates. We 
accordingly amend section 51.915 of the Commission's rules to reflect 
this clarification, as set forth in the Appendix.

C. Implementation Issues

1. Waiver of USF Contribution Date Rule
    12. In the 2012 Annual Access Tariff Filing Procedures Order, the 
Bureau established an effective date of July 3, 2012, for the 2012 
annual access charge tariff filing for incumbent LECs. The Commission 
moved the annual access charge tariff effective date from July 1, 2012 
to July 3, 2012 because, pursuant to Section 204(a)(3) of the Act, 
carriers filing their tariff revisions on 15 days' notice would have 
been filing their tariffs over a weekend. Accordingly, the Bureau 
waived Sec.  69.3 of the Commission's rules and established July 3, 
2012 as the effective date for the 2012 annual access charge tariff 
filing.
    13. Carriers may recover the costs of universal service fund (USF) 
contributions by passing through an explicit charge to customers. As 
part of the annual access charge tariff filing, carriers include the 
universal service charge contribution factor for the third quarter, 
which begins on July 1, 2012. Section 54.712 of the Commission's rules 
states that ``[i]f a contributor chooses to recover its federal 
universal service contribution costs through a line item on a 
customer's bill the amount of the federal universal service line-item 
charge may not exceed the interstate telecommunications portion of that 
customer's bill times the relevant contribution factor.''
    14. We recognize that moving the annual access charge tariff filing 
to July 3, 2012 creates administrative difficulties with respect to 
inclusion of the universal service charge contribution factor. 
Requiring carriers to have a different rate for the two first days of 
July would be administratively burdensome for carriers and complicated 
for the Commission to manage. Accordingly, for incumbent LECs and 
competitive LECs filing an annual access charge tariff filing in 2012, 
we grant a limited waiver of Sec.  54.712 of the Commission's rules, to 
allow such carriers to charge the universal service contribution factor 
for the second quarter 2012, until July 3, 2012, at which time carriers 
must begin charging the third quarter 2012 factor, with respect to end 
user charges that are part of the annual access filing.
    15. In addition, if a carrier chooses to apply and pass through 
charges associated with the third quarter 2012 universal service 
contribution factor on July 1, 2012, we grant a limited waiver of Sec.  
61.59 of the Commission's rules, to allow carriers to modify material 
in their tariff that has not been effective for 30 days, in order to 
file their annual access charge tariff filing on July 3, 2012.
2. Changing the Effective Date to July 3, 2012
    16. As explained above, in the 2012 Annual Access Tariff Filing 
Procedures Order, the Bureau moved the annual access charge tariff 
effective date from July 1, 2012 to July 3, 2012. Because of that 
modification to the effective date, the Commission granted a limited 
waiver of Sec. Sec.  69.3(a), 51.705, 51.907, and 51.909 of its rules 
to the extent that those rules would otherwise require rates to be 
effective as of July 1, 2012. Pursuant to that waiver language, state 
commissions have informally inquired

[[Page 48451]]

whether the Bureau intended to change the effective date to July 3, 
2012, for the intrastate filings that must be made in accordance with 
Sec. Sec.  51.705(c), 51.907(b), and 51.909(b) of the Commission's 
rules. State commissions have also inquired whether the Bureau intended 
to move to July 3, 2012, the date that competitive LECs must reduce 
intrastate reciprocal compensation rates in accordance with Sec.  
51.911(b) of the Commission's rules.
    17. With regard to incumbent LECs, we clarify that the 2012 Annual 
Access Tariff Filing Procedures Order granted a limited waiver of the 
July 1, 2012 date for intrastate filings made pursuant to Sec. Sec.  
51.705(c), 51.907(b), and 51.909(b) of the Commission's rules. In 2012, 
the only step incumbent LECs are required to take pursuant to those 
rules is to reduce intrastate access and non-access reciprocal 
compensation rates. To further clarify, the waiver the Bureau granted 
permits, but does not require states to move their effective dates for 
intrastate filings from July 1, 2012 to July 3, 2012. However, for 
administrative efficiency, we encourage states to move to July 3, 2012 
as many effective dates for rate changes as possible.
    18. With regard to competitive LECs, the Bureau's 2012 Annual 
Access Tariff Filing Procedures Order did not grant a waiver of section 
51.911(b) of its rules, which requires competitive LECs to reduce 
intrastate reciprocal compensation rates. However, for purposes of 
fairness in the treatment of competitive LECs and incumbent LECs, we 
conclude that good cause exists to grant a limited waiver of Sec.  
51.911(b) of the Commission's rules to allow such rates to become 
effective on July 3, 2012 instead of July 1, 2012. As we noted above, 
although the waiver does not require states to move their intrastate 
effective dates, the Bureau encourages states to move effective dates 
for rate changes to July 3, 2012.
3. Waiver of Inconsistent Rules
    19. In this Order we make revisions to part 51 of the Commission's 
rules as described above to facilitate implementation of Step 1 of the 
intercarrier compensation rate transition. We intend for the revisions 
contained in this Order to apply to 2012 annual access charge tariff 
filings, which must be effective by July 3, 2012. Because the rule 
revisions adopted herein cannot be published in the Federal Register 
and made effective before the required effective date, we find that 
good cause exists to waive applicable sections of part 51 to the extent 
necessary to allow LECs to make annual access tariff filings in 
accordance with the rule revisions adopted herein.

III. Procedural Matters

A. Paperwork Reduction Act

    20. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. Therefore, it does not contain any new or 
modified information collection burden for small business concerns with 
fewer than 25 employees, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

B. Final Regulatory Flexibility Act Certification

    21. The Regulatory Flexibility Act of 1980, as amended (RFA), 
requires that a regulatory flexibility analysis be prepared for 
rulemaking proceedings, unless the agency certifies that ``the rule 
will not have a significant economic impact on a substantial number of 
small entities.'' The RFA generally defines ``small entity'' as having 
the same meaning as the terms ``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. A small business 
concern is one which (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA).
    22. This Order clarifies, but does not otherwise modify, the USF/
ICC Transformation Order. These clarifications do not create any 
burdens, benefits, or requirements that were not addressed by the Final 
Regulatory Flexibility Analysis attached to USF/ICC Transformation 
Order. Therefore, we certify that the requirements of this Order will 
not have a significant economic impact on a substantial number of small 
entities. The Commission will send a copy of the Order including a copy 
of this final certification in a report to Congress pursuant to the 
Small Business Regulatory Enforcement Fairness Act of 1996; see 5 
U.S.C. 801(a)(1)(A). In addition, the Order and this certification will 
be sent to the Chief Counsel for Advocacy of the Small Business 
Administration, and will be published in the Federal Register. See 5 
U.S.C. 605(b).

C. Congressional Review Act

    23. The Commission will send a copy of this Order to Congress and 
the Government Accountability Office pursuant to the Congressional 
Review Act.

IV. Ordering Clauses

    24. Accordingly, it is ordered, pursuant to the authority contained 
in sections 1, 2, 4(i), 201-203, 220, 251, 252, 303(r), 332, and 403 of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
201-203, 220, 251, 252, 303(r), 332, 403, and pursuant to sections 
0.91, 0.201(d), 0.291, 1.3, and 1.427 of the Commission's rules, 47 CFR 
0.91, 0.201(d), 0.291, 1.3, 1.427 and pursuant to the delegation of 
authority in paragraph 1404 of 26 FCC Rcd 17663 (2011) that this Order 
is adopted, effective thirty (30) days after publication of the text or 
summary thereof in the Federal Register.
    25. It is further ordered that part 51 of the Commission's rules, 
47 CFR 51.907, 51.909, 51.911, 51.915, and 51.917, are amended as set 
forth and such rule amendments shall be effective 30 days after the 
date of publication of the rule amendments in the Federal Register.
    26. It is further ordered that pursuant to section 1.3 of the 
Commission's rules, 47 CFR 1.3, and pursuant to authority delegated in 
0.91 and 0.291 of the Commission's rules, 47 CFR 0.91, 0.291, 54.712, 
and 61.59 of the Commission's rules, 47 CFR 54.712, and 61.59(a) are 
waived effective upon release of this Order for the limited purposes 
specified in this Order.
    27. It is further ordered that, pursuant to section 1.3 of the 
Commission's rules, 47 CFR 1.3, and pursuant to authority delegated in 
0.91 and 0.291 of the Commission's rules, 47 CFR 0.91, 0.291, Parts 
51.907, 51.909, 51.911, 51.915, and 51.917 of the Commission's rules, 
47 CFR 51.907, 51.909, 51.911, 51.915, and 51.917, are waived effective 
upon release of this Order for the limited purpose specified in 
paragraph 19, supra.
    28. It is further ordered that the Commission shall send a copy of 
this Order to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

List of Subjects in 47 CFR Part 51

    Communications common carriers, Reporting and record keeping 
requirements, Telecommunications, Telephone.


[[Page 48452]]


Federal Communications Commission.
Nicholas G. Alexander,
Acting Chief, Pricing Policy Division.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 51 to read as follows:

PART 51-INTERCONNECTION

0
1. The authority citation for part 51 continues to read as follows:

    Authority:  Sections 1-5, 7, 201-05, 207-09, 218, 220, 225-27, 
251-54, 256, 271, 303(r), and 332, of the Communications Act of 
1934, as amended, and section 706 of the Telecommunication Act of 
1996, as amended; 47 U.S.C. 151-55, 157, 201-05, 207-09, 218, 220, 
225-227, 251-254, 256, 271, 303(r), 332, 1302, 47 U.S.C. 157 note, 
unless otherwise noted.


0
2. In Sec.  51.907 revise paragraphs (b)(2)(v) and (vi), add paragraph 
(b)(3), revise paragraph (c)(1), remove and reserve paragraph (c)(3), 
and add paragraph (c)(4), to read as follows:


Sec.  51.907  Transition of price cap carrier access charges.

* * * * *
    (b) * * *
    (2) * * *
    (v) A Price Cap Carrier may elect to apply its interstate access 
rate structure and interstate rates to Transitional Intrastate Access 
Service. In addition to applicable interstate access rates, the carrier 
may, between July 1, 2012 and July 1, 2013, assess a transitional per-
minute charge on Transitional Intrastate Access Service end office 
switching minutes (previously billed as intrastate access). The 
transitional per-minute charge shall be no greater than the Step 1 
Access Revenue Reduction divided by Fiscal Year 2011 Transitional 
Intrastate Access Service end office switching minutes. Carriers 
electing to establish rates for Transitional Intrastate Access Service 
in this manner shall notify the appropriate state regulatory authority 
of their election in the filing required by paragraph (b)(1) of this 
section.
    (vi) Except as provided in paragraph (b)(3) of this section, 
nothing in this section obligates or allows a Price Cap Carrier that 
has intrastate rates lower than its functionally equivalent interstate 
rates to make any intrastate tariff filing or intrastate tariff 
revisions to increase such rates.
    (3) If a Price Cap Carrier must make an intrastate switched access 
rate reduction pursuant to paragraph (b)(2) of this section, and that 
Price Cap Carrier has an intrastate rate for a rate element that is 
below the comparable interstate rate for that element, the Price Cap 
Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
no later than July 1, 2013;
    (ii) Include any increases made pursuant to paragraph (b)(3)(i) of 
this section in the calculation of its eligible recovery for 2012.
    (c) * * *
    (1) Transitional Intrastate Access Service rates shall be no higher 
than the Price Cap Carrier's interstate access rates. Once the Price 
Cap Carrier's Transitional Intrastate Access Service rates are equal to 
its functionally equivalent interstate access rates, they shall be 
subject to the same rate structure and all subsequent rate and rate 
structure modifications. Except as provided in paragraph (c)(4) of this 
section, nothing in this section obligates or allows a Price Cap 
Carrier that has intrastate rates lower than its functionally 
equivalent interstate rates to make any intrastate tariff filing or 
intrastate tariff revisions to increase such rates.
* * * * *
    (4) If a Price Cap Carrier made an intrastate switched access rate 
reduction in 2012 pursuant to paragraph (b)(2) of this section, and 
that Price Cap Carrier has an intrastate rate for a rate element that 
is below the comparable interstate rate for that element, the Price Cap 
Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
on July 1, 2013; and
    (ii) Include any increases made pursuant to paragraph (b)(4)(i) of 
this section in the calculation of its eligible recovery for 2013.
* * * * *
0
3. In Sec.  51.909 revise paragraphs (a)(3), (b)(2)(v), and (b)(3), add 
paragraph (b)(4), and revise paragraph (c), to read as follows:


Sec.  51.909  Transition of rate-of-return carrier access charges.

    (a) * * *
    (3) Except as provided in paragraph (b)(4) of this section, nothing 
in this section obligates or allows a Rate-of-Return Carrier that has 
intrastate rates lower than its functionally equivalent interstate 
rates to make any intrastate tariff filing or intrastate tariff 
revisions raising such rates.
    (b) * * *
    (2) * * *
    (v) A Rate-of-Return Carrier may elect to apply its interstate 
access rate structure and interstate rates to Transitional Intrastate 
Access Service. In addition to applicable interstate access rates, the 
carrier may, between July 1, 2012 and July 1, 2013, assess a 
transitional per-minute charge on Transitional Intrastate Access 
Service end office switching minutes (previously billed as intrastate 
access). The transitional per-minute charge shall be no greater than 
the Step 1 Access Revenue Reduction divided by Fiscal Year 2011 
Transitional Intrastate Access Service end office switching minutes. 
Carriers electing to establish rates for Transitional Intrastate Access 
Service in this manner shall notify the appropriate state regulatory 
authority of their election in the filing required by Sec.  
51.907(b)(1).
    (3) Except as provided in paragraph (b)(4) of this section, nothing 
in this section obligates or allows a Rate-of-Return carrier that has 
intrastate rates lower than its functionally equivalent interstate 
rates to make any intrastate tariff filing or intrastate tariff 
revisions raising such rates.
    (4) If a Rate-of-Return Carrier must make an intrastate switched 
access rate reduction pursuant to paragraph (b)(2) of this section, and 
that Rate-of-Return Carrier has an intrastate rate for a rate element 
that is below the comparable interstate rate for that element, the 
Rate-of-Return Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
no later than July 1, 2013;
    (ii) Include any increases made pursuant to paragraph (b)(4)(i) of 
this section in the calculation of its eligible recovery for 2012.
    (c) Step 2. Beginning July 1, 2013, notwithstanding any other 
provision of the Commission's rules:
    (1) Transitional Intrastate Access Service rates shall be no higher 
than the Rate-of-Return Carrier's interstate Terminating End Office 
Access Service and Terminating Tandem-Switched Transport Access Service 
rates and subject to the same rate structure and all subsequent rate 
and rate structure modifications. Except as provided in paragraph 
(c)(2) of this section, nothing in this section obligates or allows a 
Rate-of-Return Carrier that has intrastate rates lower than its 
functionally equivalent interstate rates to make any intrastate tariff 
filing or intrastate tariff revisions to increase such rates.
    (2) If a Rate-of-Return Carrier made an intrastate switched access 
rate reduction in 2012 pursuant to paragraph (b)(2) of this section, 
and that Rate-of-Return Carrier has an intrastate rate for a rate

[[Page 48453]]

element that is below the comparable interstate rate for that element, 
the Rate-of-Return Carrier shall:
    (i) Increase any intrastate rate element that is below the 
comparable interstate rate to the interstate rate by July 1, 2013; and
    (ii) Include any increases made pursuant to paragraph (c)(2)(i) of 
this section in the calculation of its eligible recovery for 2013.
* * * * *

0
4. In Sec.  51.911 revise paragraphs (b) introductory text and (b)(6), 
and add paragraph (b)(7) to read as follows:


Sec.  51.911  Access reciprocal compensation rates for competitive 
LECs.

* * * * *
    (b) Except as provided in paragraph (b)(7) of this section, 
beginning July 3, 2012, notwithstanding any other provision of the 
Commission's rules, each Competitive LEC that has tariffs on file with 
state regulatory authorities shall file intrastate access tariff 
provisions, in accordance with Sec.  51.505(b)(2), that set forth the 
rates applicable to Transitional Intrastate Access Service in each 
state in which it provides Transitional Intrastate Access Service. Each 
Competitive Local Exchange Carrier shall establish the rates for 
Transitional Intrastate Access Service using the following methodology.
* * * * *
    (6) Except as provided in paragraph (b)(7) of this section, nothing 
in this section obligates or allows a Competitive LEC that has 
intrastate rates lower than its functionally equivalent interstate 
rates to make any intrastate tariff filing or intrastate tariff 
revisions raising such rates.
    (7) If a Competitive LEC must make an intrastate switched access 
rate reduction pursuant to paragraph (b) of this section, and that 
Competitive LEC has an intrastate rate for a rate element that is below 
the comparable interstate rate for that element, the Competitive LEC 
may increase the rate for any intrastate rate element that is below the 
comparable interstate rate for that element to the interstate rate no 
later than July 1, 2013;
* * * * *
    5. In Sec.  51.915 revise paragraphs (d)(1)(i)(C)(2)(i), 
(d)(1)(ii)(C)(2)(i), (d)(1)(iii)(E)(2)(i), (d)(1)(iv)(E)(2)(i), 
(d)(1)(v)(E)(2)(i), (d)(1)(vi)(F)(2)(i), and (d)(1)(vii)(G)(2)(i), to 
read as follows:


Sec.  51.915  Recovery mechanism for price cap carriers.

* * * * *
    (d) * * *
    (1) * * *
    (i) * * *
    (C) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (ii) * * *
    (C) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (iii) * * *
    (E) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (iv) * * *
    (E) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (v) * * *
    (E) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (vi) * * *
    (F) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
* * * * *
    (vii) * * *
    (G) * * *
    (2) * * *
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;

* * * * *

[FR Doc. 2012-19810 Filed 8-13-12; 8:45 am]
BILLING CODE P