[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Rules and Regulations]
[Pages 4351-4360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01721]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 36
[CC Docket No. 80-286, FCC No. 18-182]
Jurisdictional Separations and Referral to the Federal-State
Joint Board
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission amends its part 36
jurisdictional separations rules by extending for up to six years the
freeze of separations category relationships and allocation factors
that it originally adopted in 2001. As a result, the freeze will remain
in effect until the earlier of December 31, 2024, or the completion of
comprehensive reform of the part 36 jurisdictional separations rules.
The Commission also amends its part 36 jurisdictional separations rules
by providing rate-of-return carriers that elected to freeze their
separations category relationships in 2001 a one-time opportunity to
unfreeze and update those relationships so that they can categorize
their costs based on current circumstances.
DATES: These rules are effective February 15, 2019, except for the
amendment to 47 CFR 36.3(b) which is delayed. The Commission will
publish a document in the Federal Register announcing the effective
date.
ADDRESSES: Federal Communications Commission, 445 12th Street SW,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Marvin Sacks, Pricing Policy Division
of the Wireline Competition Bureau, at (202)-418-2017 or via email at
[email protected].
SUPPLEMENTARY INFORMATION: This is a final rule summary of the
Commission's Report and Order, released December 17, 2018. A full-text
version of this document can be obtained from the following internet
address: https://www.fcc.gov/document/fcc-extends-jurisdictional-separations-freeze-six-years.
Synopsis
I. Introduction
1. In 1970, when monopoly rate-of-return local exchange carriers
(LECs) provided telephone services primarily over circuit-switched,
voice networks, the Commission codified its jurisdictional separations
rules. Those rules required each LEC to divide its cost of providing
service between the interstate and intrastate jurisdictions in a manner
reflecting each jurisdiction's relative use of the LEC's network. In an
era when the Commission and its State counterparts set virtually all
telephone rates based on actual costs, the separations rules helped
ensure that each LEC had the opportunity to recover its expenses and
earn a reasonable return on its investments.
2. Today, phone companies deliver voice, data, and video services
that are increasingly being provided over internet Protocol-based
networks. New digital technologies blur the lines between interstate
and intrastate communications, making last century's jurisdictional
separations rules inadequate and outmoded vis-[agrave]-vis their
[[Page 4352]]
intended purpose. Moreover, the relevance of the cost-separation rules
has diminished, as the Commission has incrementally replaced burdensome
rate-of-return regulation with the efficiencies of incentive
regulation. Currently, only a small percentage of Americans receive
their telecommunications services from providers subject to rate-of-
return regulation and the cost separation rules. Nevertheless, the
Commission's separations rules continue to play an important role in
determining how rate-of-return carriers recover some of their costs.
3. In 1997, the Commission recognized the need to comprehensively
reform the separations rules and referred separations reform to the
Federal-State Joint Board on Jurisdictional Separations (Joint Board)
for a recommended decision. More than twenty years later, the Joint
Board has not reached agreement on comprehensive separations reform.
And so, starting in 2001, originally at the behest of the Joint Board,
the Commission has completed several rulemaking proceedings to freeze
the separations rules to stabilize and simplify the separations process
pending reform. Most recently, the Commission extended the freeze until
December 31, 2018.
4. Today, the Commission breaks this cycle. Because so little
progress has been made on comprehensive separations reform over the
past 20 years, the Commission extends the separations freeze for up to
six years so that it and the Joint Board can devote their resources to
substantive reform, rather than to extending artificial deadlines. And
because previous attempts at comprehensive reform have failed, the
Commission requests that the Joint Board approach the challenge
incrementally. The Commission asks that, in the short term, the Joint
Board focus on how best to amend the separations rules to recognize
that they impact only rate-of-return carriers and on whether any other
separations rules or recordkeeping requirements can be modified or
eliminated in light of that limited application. Coming to a decision
on these issues will reduce the Joint Board's work over the longer term
as it seeks to replace the existing jurisdictional separations process
with a simplified system for reasonably allocating costs between the
interstate and intrastate jurisdictions. The Commission begins this
incremental reform by allowing rate-of-return carriers that elected to
freeze their separations category relationships in 2001 to opt out of
that freeze.
II. Background
A. The Jurisdictional Separations Process
5. Jurisdictional separations is the third step in a four-step
regulatory process. First, a rate-of-return carrier records its costs
and revenues in various accounts using the Uniform System of Accounts
prescribed by the Commission's part 32 rules. Second, the carrier
divides the costs and revenues in these accounts between regulated and
nonregulated activities in accordance with the Commission's part 64
rules, a step that helps ensure that the costs of nonregulated
activities will not be recovered through regulated interstate rates.
Third, the carrier separates the regulated costs and revenues between
the interstate and intrastate jurisdictions using the Commission's part
36 jurisdictional separations rules. Finally, the carrier apportions
the interstate regulated costs among the interexchange services and the
rate elements that form the cost basis for its exchange access tariffs.
Carriers subject to rate-of-return regulation perform this
apportionment in accordance with the Commission's part 69 rules.
6. To comply with these rules, rate-of-return incumbent LECs
perform annual cost studies that include jurisdictional separations.
The jurisdictional separations analysis begins with the categorization
of the incumbent LEC's regulated costs and revenues, requiring the
incumbent LEC to assign the regulated costs and revenues recorded in
its part 32 accounts to various investment, expense, and revenue
categories. Part 36 (or separations) category relationships are
percentages of costs recorded in a part 32 account that are assigned to
separations categories corresponding to that account. The incumbent LEC
then allocates the costs or revenues in each category between the
interstate and intrastate jurisdictions. Amounts in categories that are
used exclusively for interstate or intrastate communications are
directly assigned to the appropriate jurisdiction. Amounts in
categories that support both interstate and intrastate services are
divided between the jurisdictions using allocation factors that reflect
relative use or a fixed percentage.
B. Attempts at Jurisdictional Separations Reform and the Separations
Freeze
7. In 1997, recognizing that ``changes in the law, technology, and
market structure of the telecommunications industry'' necessitated a
thorough reevaluation of the jurisdictional separations process, the
Commission initiated a proceeding to comprehensively reform the
separations rules. At the same time, pursuant to section 410(c) of the
Communications Act of 1934, as amended (the Communications Act), the
Commission referred the matter of jurisdictional separations reform to
the Joint Board for a recommended decision. Section 410(c) requires the
Commission to ``refer any proceeding regarding the jurisdictional
separation of common carrier property and expenses between interstate
and intrastate operations, which it initiates pursuant to a notice of
proposed rulemaking'' to a Joint Board. Section 410(c) further
specifies that after such a referral the Joint Board ``shall prepare a
recommended decision for prompt review and action by the Commission.''
8. Since the Commission initiated this proceeding in 1997, the
Joint Board--comprised of both State and federal members--has been
attempting to develop recommendations for comprehensive reform. In
response to the Commission's initial referral, the State members of the
Joint Board filed a report identifying issues they believed should be
addressed. Over the years, the State members filed policy papers
setting out options for reform, the Commission or the Joint Board
sought comment, and the Joint Board held hearings and meetings to
consider the various proposals. In 2009, the Commission made a second
referral of comprehensive jurisdictional separations reform to the
Joint Board and asked that ``the Joint Board prepare a recommended
decision regarding whether, how, and when the Commission's
jurisdictional separations rules should be modified.'' In 2010, the
State members of the Joint Board submitted a limited interim proposal,
and the Joint Board sought comment on their behalf. Despite two
Commission referrals seeking a recommended decision on comprehensive
separations reform, the Joint Board has not advanced a recommended
decision on comprehensive reform to the Commission.
9. In the course of considering comprehensive reform, the Joint
Board did issue a recommendation, in 2000, that the Commission freeze
the part 36 category relationships and jurisdictional allocation
factors pending resolution of comprehensive reform. The Commission
sought comment on that Recommended Decision; and based on the record
before it, the Commission adopted the 2001 Separations Freeze Order.
The Commission concluded that a freeze would stabilize the separations
process pending reform by minimizing any impact of cost shifts on
separations
[[Page 4353]]
results due to circumstances--such as the growth of internet usage, new
technologies, and local competition--not contemplated by the rules. The
Commission also concluded that a freeze would simplify the separations
process by eliminating the need for many separations studies until
separations reform was implemented.
10. The Commission agreed with the Joint Board's Recommended
Decision to freeze all part 36 category relationships and allocation
factors for price cap carriers and to freeze all allocation factors for
rate-of-return carriers. The Commission also agreed with the Joint
Board that requiring rate-of-return carriers to freeze their category
relationships could potentially harm these carriers. The Commission
therefore provided rate-of-return carriers a one-time option to freeze
their category relationships, enabling each of these carriers to
determine whether such a freeze would be beneficial ``based on its own
circumstances and investment plans.'' Presently, rate-of-return
carriers in about 45 study areas operate under the category
relationships freeze.
11. In the 2001 Separations Freeze Order, the Commission specified
that the freeze would last for five years or until the Commission
completed comprehensive separations reform, whichever came first. The
Commission also concluded that, prior to the expiration of the five-
year period, the Commission would, in consultation with the Joint
Board, determine whether the freeze period should be extended. The
Commission specified that ``the determination of whether the freeze
should be extended at the end of the five-year period shall be based
upon whether, and to what extent, comprehensive reform of separations
has been undertaken by that time.''
12. Since then, the Commission has extended the separations freeze
seven times, for periods ranging from one year to three years, with the
most recent extension expiring on December 31, 2018. In advance of all
but one of the freeze extensions, the Commission sought comment on
extending the freeze, but it has not referred the specific issue of
freeze extensions to the Joint Board. In the 2009 Separations Freeze
Extension Order and Second Referral, the Commission asked the Joint
Board to consider whether the Commission should allow carriers to
unfreeze their separations category relationships and requested that
the Joint Board prepare a recommended decision on that matter. The
Joint Board has not made a recommendation on that request.
13. In repeatedly extending the freeze, the Commission has
explained that the freeze would stabilize and simplify the separations
process while the Joint Board and the Commission continued to work on
separations reform. In its most recent freeze extension order, the
Commission also explained that an extension until December 31, 2018,
would provide the Joint Board with sufficient time to consider what
effects the Commission's reforms to the high-cost universal service
program and intercarrier compensation should have on the separations
rules.
14. Earlier this year, the Commission issued a Further Notice of
Proposed Rulemaking (Further Notice), 83 FR 35582, July 27, 2018,
proposing to extend the jurisdictional separations freeze for 15 years
and inviting comment on that proposal. The Commission also sought
comment on whether a shorter freeze extension would be preferable and
on whether it should alter the scope of the referral to the Joint Board
regarding comprehensive separations reform. In so doing, the Commission
recognized that the issues before the Joint Board are extremely complex
and stated the Commission's preference not to move forward on
separations reform without a Joint Board recommendation on an approach
to such reform. The Commission also recognized that as a practical
matter it would have to choose between extending the separations freeze
and requiring changes to long-unchanged allocation factors and, for
some carriers, category relationships to take effect on January 1,
2019.
15. The Commission also proposed and sought comment on allowing
rate-of-return carriers that had elected to freeze their category
relationships in 2001 to opt out of that freeze. The Commission
explained that the category relationships freeze has lasted 17 years
instead of no more than five years as the Commission and the Joint
Board originally had contemplated. The Commission also explained that
since opting into the category relationships freeze many rate-of-return
carriers had invested in network upgrades or were considering doing so,
and that, as a result of the category relationships freeze, these
carriers may be unable to recover the costs of those investments from
ratepayers that benefit from the upgrades or from the Universal Service
Fund. Consequently, the Commission pointed out, these carriers may lack
incentives to improve service and deploy advanced technologies like
broadband for their customers.
C. Declining Applicability of Jurisdictional Separations Results
16. Over the course of the last decade, the jurisdictional
separations rules have become irrelevant to the carriers that provide
most Americans with telecommunications services. The separations rules
were never applicable to wireless carriers. In 2008, the Commission
granted price cap carriers forbearance from the separations rules; and
recently the Commission extended this forbearance to rate-of-return
carriers that receive fixed or model-based high-cost universal service
support (fixed support carriers) and that elect incentive regulation
for their business data services. As a result, by the middle of next
year, the separations rules will apply only to rate-of-return carriers
serving about 800 study areas.
17. Even for the carriers that remain subject to the separations
rules, separations results have only limited applicability because of
recent reforms by the Commission. As part of comprehensive reform and
modernization of the universal service and intercarrier compensation
systems, the Commission adopted rate caps (including a transition to
bill-and-keep for certain rate elements) for switched access services
for rate-of-return carriers, thereby severing the relationship between
costs and switched access rates. In addition, in 2016, the Commission
gave rate-of-return carriers the option of receiving high-cost
universal service support based on the Alternative Connect America Cost
Model (A-CAM). More than 200 carriers opted to receive A-CAM support,
which eliminated the need for those carriers to perform cost studies
that required jurisdictional separations to quantify the amount of
high-cost support for their common line offerings. Also as part of
universal service reform, the Commission established rules to provide
support for loop costs associated with broadband-only services offered
by rate-of-return carriers.
18. As a result of these reforms, the Commission currently uses
separations results only for carriers subject to rate-of-return
regulation and only for the following limited purposes of calculating:
(a) Business data services rates; (b) the charge assessed on
residential and business lines, known as a subscriber line charge,
allowing carriers to recover part of the costs of providing access to
the telecommunications network; (c) the rate for Consumer Broadband-
Only Loop service; and (d) the interstate common line and Consumer
Broadband-Only Loop support for non-fixed
[[Page 4354]]
support carriers. The administrator of the universal service support
program, the Universal Service Administrative Company also uses
separations categorization results for calculating high-cost loop
support for certain non-fixed support carriers, but without applying
jurisdictional allocations. States also use separations results to
determine the amount of intrastate universal service support and to
calculate regulatory fees, and some states perform rate-of-return
ratemaking using intrastate costs.
III. Discussion
19. Based on the record in this proceeding, and cognizant of the
impacts, both on rate-of-return carriers subject to the separations
freeze and on the Commission, of the seven separations freeze
extensions over the last 17 years, the Commission now extends for up to
six years the freeze on part 36 category relationships and
jurisdictional cost allocation factors that the Commission adopted in
the 2001 Separations Freeze Order. This extension will begin on January
1, 2019, and will continue until the earlier of December 31, 2024, or
the completion of comprehensive reform of the part 36 jurisdictional
separations rules. The Commission also provides carriers that opted to
freeze their separations category relationships in 2001 a one-time
opportunity to unfreeze and update those relationships so that they can
categorize their costs based on current circumstances.
A. Further Extending the Separations Freeze
20. The Commission finds, consistent with the recommendation of the
State members of the Joint Board and the overwhelming consensus among
the commenters, that an extension of the separations freeze beyond its
December 31, 2018, expiration date will serve the public interest. As
the Commission recognized in the Further Notice, this impending
deadline compels the Commission to make a choice between extending the
freeze further or allowing long-unused separations rules to take effect
on January 1, 2019. The Commission finds that not extending the freeze
would impose significant burdens on rate-of-return carriers that would
far exceed the benefits, if any, of requiring those carriers to comply
with rules that they have not implemented since 2001.
21. In particular, the Commission agrees with those commenters that
argue that rate-of-return carriers, particularly smaller rural
carriers, would find it extremely difficult, if not impossible, to
perform all of the studies needed for full compliance. The Commission
has previously found that allowing the existing freeze to lapse and
frozen separations rules to be reinstated would impose undue
instability and administrative burdens on affected carriers. The record
in this proceeding confirms that is still the case.
22. First, the Commission agrees with commenters that developing
``traffic factors'' to jurisdictionally separate costs assigned to
voice-related services is ``an arcane science'' and that, after 17
years of not performing traffic factor studies, carriers would be
required to incur substantial training and other costs to reestablish
the expertise necessary to perform them. This expense would hit
smaller, rural carriers with limited resources the hardest. The
Commission cannot justify imposing such a burden on small carriers
particularly given that the impact of such traffic factors is
continuing to diminish as investment in voice services decreases due to
growing deployment of broadband services.
23. Moreover, as NTCA explains, even if full compliance were
possible, ``these smaller providers would be forced to return to a
regulatory environment that last operated in full nearly two decades
ago.'' The Commission cannot justify the costs of such compliance,
given the outdated nature of the rules with which these small providers
would have to comply. Furthermore, as the Commission previously
explained, reinstating these largely outmoded rules in full measure
could produce negative consequences by causing significant disruptions
in carriers' regulated rates, cost recovery, and other operating
conditions.
24. The Commission therefore rejects the Irregulators' argument
that it should not extend the freeze. The Irregulators express concern
that the freeze has led ``to improper decision-making at various
levels,'' with, for example, State governments basing policy on
obsolete numbers that over-allocate costs to the intrastate
jurisdiction. Yet, they fail to explain how ending the freeze would
alleviate any such misallocation. Instead, the Irregulators propose two
options for completely revamping the jurisdictional separations
process. While those proposals may be useful to the Joint Board's
consideration of comprehensive separations reform, they are beyond the
scope of the question before the Commission today of whether to extend
the separations freeze beyond December 31, 2018.
25. The Commission also finds that another short-term freeze
extension will not provide the Joint Board, the Commission, and
interested stakeholders sufficient time to complete comprehensive
separations reform. Indeed, several commenters support a fifteen-year
freeze. By contrast, NARUC and the Colorado PUC both advocate for a
freeze of no more than two years. In considering how long to extend the
freeze, the Commission agrees with the State members of the Joint Board
that an extension of up to six years is appropriate. A freeze of up to
six years balances the competing considerations--the difficulty of
comprehensive separations reform and the need to focus on that reform
rather than on repeated freeze extensions--better than a longer or
shorter extension period.
26. The difficulty of comprehensively reforming the separations
rules cannot be overstated. The current rules focus on allocating
between the interstate and intrastate jurisdictions the costs of
circuit-switched voice services provided over primarily copper
networks. Those rules have largely been in place since 1969, with some
revisions in 1987, and minor revisions earlier this year to harmonize
the part 36 rules with changes the Commission made to the part 32
rules. Since the freeze was first put in place, many rate-of-return
carriers have converted much of their networks to packet-based
technologies that provide telecommunications, information, and video
services over fiber facilities. Comprehensive reform, as previously
envisioned by the Commission, would entail rewriting the separations
rules in a manner that recognizes these technological changes and is
consistent with changes to the high-cost universal service program and
intercarrier compensation systems. As the Commission's track record of
repeated extensions demonstrates, such reform is not a short-term
project.
27. Accordingly, the Commission rejects NARUC's argument that it
should extend the freeze ``on an interim basis for no more than two
years to engage timely and substantively [with the Joint Board] on
separations issues.'' Given the Commission's past experience with
short-term separations freezes and stalled attempts at separations
reform, the Commission finds that a two-year extension would almost
certainly do nothing more than continue the cycle of repeated short-
term freeze extensions that has diverted industry, State, and
Commission resources away from substantive reform, forcing a break in
whatever momentum toward meaningful separations reform the Commission
and the Joint Board achieve, long before that reform is complete. The
Commission believes
[[Page 4355]]
instead that an extension of up to six years makes separations reform
more likely because it will halt that cycle and provide sufficient time
for the Joint Board to focus on short-term and long-term steps toward
comprehensive reform.
28. The Commission also declines to extend the freeze indefinitely,
as USTelecom urges. USTelecom argues that the separations rules ``have
become increasing[ly] irrelevant and unnecessary'' and that the
Commission should therefore focus on substantive intercarrier
compensation and universal service reforms, rather than on separations
reform. Although the Commission agrees that the separations rules are
irrelevant to price cap carriers, they remain applicable to, and impose
substantial obligations on, rate-of-return carriers serving about 800
study areas. The Commission therefore believes that there is value to
continuing to work towards reform of those rules.
B. Allowing a One-Time Category Relationships Unfreeze
29. In the Rate-of-Return Business Data Services Order, the
Commission allowed carriers subject to the category relationships
freeze that receive model-based and other forms of fixed high-cost
support and elect incentive regulation for business data services to
opt out of that freeze and update their category relationships. In this
proceeding, the Commission grants all other rate-of-return carriers
operating under the category-relationships freeze the opportunity to
opt out of it and update their category relationships--enabling those
carriers to better recover network upgrade costs from ratepayers that
benefit from those upgrades and to take greater advantage of universal
service programs that incent broadband deployment.
30. Category Relationships Unfreeze. The rate-of-return carriers
that elected to freeze their category relationships in 2001 did so
based, in part, on the Commission's representation that the freeze
would last no more than five years. Those carriers did not and could
not have anticipated that the category relationships freeze would be in
place for more than 17 years. Yet, the Commission's current rules
prohibit carriers that elected the freeze from withdrawing from it. The
result is that some, if not all, carriers with frozen category
relationships are unable to recover their business data services costs
from business data services customers or from NECA traffic sensitive
pool settlements.
31. Rate-of-return carriers that chose to freeze their category
relationships in 2001 assign costs within part 32 accounts to
categories using their separations category relationships from 2000.
Consequently, these companies are still categorizing their costs based
on the technologies and services that were in place in 2000, instead of
being able to adjust the amounts assigned to separations categories to
reflect current network costs and services. This circumstance, in turn,
distorts revenue requirements and resulting rates. Allowing carriers to
unfreeze and update their category relationships will enable them to
more closely align their business data services and Consumer Broadband-
Only Loop service rates with the underlying costs of these services. It
also will encourage those carriers to expand and upgrade their
networks, thus enhancing their capability to provide these services.
32. The Commission also agrees with commenters that allowing
affected carriers to opt out of the freeze will enable these carriers
to take better advantage of universal service programs that promote
broadband growth. As commenters point out, the category relationships
freeze undermines incentives for certain carriers to move toward
broadband-only services. Endeavor, for example, explains that, without
an opportunity to unfreeze and re-categorize investment levels, the
ability of carriers to qualify for support of broadband-capable network
loops through the Connect America Fund--Broadband Loop Service (CAF-
BLS) program is significantly reduced. Unfreezing category
relationships will allow a carrier to assign broadband-only loop costs
to the consumer broadband-only revenue requirement and also receive
CAF-BLS support based on these costs, as carriers seek to meet consumer
demand for broadband-only lines.
33. In addition, consistent with the Commission's finding in the
Rate-of-Return Business Data Services Order and the consensus of
commenters in this proceeding including the State Members of the
Federal-State Joint Board, the Commission concludes that affected
carriers should be given the flexibility to choose whether to unfreeze
their category relationships. Were the Commission instead to require
all affected carriers to unfreeze and update their category
relationships, the burden on some affected carriers could outweigh any
potential benefits. As the Commission has recognized, the size, cost
structures, and investment patterns of rate-of-return carriers vary
widely. Certain rate-of-return carriers' cost structures may not have
changed significantly enough since the freeze began to warrant the
administrative costs that these carriers would incur in updating their
category relationships, costs that would be borne by their customers
and the high-cost universal service support program. Other carriers may
find that updating their category relationships would disrupt business
plans made based on a continuation of the category relationships freeze
since it has been in effect for such a long period. Allowing affected
carriers the flexibility to choose whether to unfreeze their category
relationships properly recognizes that some carriers will embrace the
opportunity to more accurately categorize their investments, while
others would find updating their category relationships to be unduly
costly or disruptive.
34. Consistent with Commission precedent, the Commission adopts
July 1, 2019, as the effective date for opting out of the freeze. The
Commission finds it important to implement the unfreeze option
``efficiently and swiftly'' while at the same time giving carriers
enough time to prepare. Commenters generally agree that July 1, 2019,
is a reasonable effective date. The Commission requires that carriers
currently in the NECA traffic-sensitive pool notify NECA by March 1,
2019, of their decision to opt out of the category relationships
freeze. This deadline provides the same advance notice that carriers
exiting the NECA pool must give NECA under Sec. 69.3 of the
Commission's rules. The Commission also requires carriers that file
their own tariffs to provide the Wireline Competition Bureau with
notice of their intent to opt out of the category relationships freeze
by May 1, 2019.
35. The Commission finds there is insufficient basis in the record
to modify any other aspects of the separations freeze. The Commission
sought detailed input on several other possible modifications to the
freeze, including whether carriers that unfreeze their category
relationships should be permitted to refreeze them and whether carriers
that did not freeze their category relationships in 2001 should be
permitted to freeze them. In addition, carriers now apportion their
categorized costs using jurisdictional allocation factors for the year
2000, and the Commission sought input on whether it should allow or
require carriers to reset these factors using current data. The record
provides insufficient information, however, about the impact of
allowing such a reset of jurisdictional allocation factors or about how
best to implement such a reset. Moreover, requiring all rate-of-return
carriers to reset their jurisdictional allocation
[[Page 4356]]
factors would impose substantial burdens on small rural carriers. And
requiring or allowing all rate-of-return carriers to reset their
jurisdictional allocation factors would impose a substantial burden on
NECA and the Commission in reviewing such changes. Some commenters
support other modifications to the separations freeze, such as giving
carriers the opportunity to unfreeze and then refreeze their category
relationships. The Commission agrees with NECA, however, that allowing
companies to unfreeze and then refreeze their category relationships
would risk gamesmanship, a risk that the Commission cannot adequately
address on the current record. Indeed, the record lacks sufficient
information to accurately assess the benefits and drawbacks of making
changes to the separations freeze, other than to the category
relationships freeze.
36. Implementation of the Unfreeze. The Commission adopts the
suggestion that carriers that file their own tariffs and unfreeze their
category relationships be required to update their part 36 category
relationships in new cost studies on which their interstate tariffed
rates, other than switched access rates, will be based going forward,
beginning with the 2019 annual filing. Rate-of-return carriers subject
to Sec. Sec. 61.38 and 61.39 of the Commission's rules shall explain
the impact of the unfreeze and describe these studies in the
``Description & Justification'' sections of their filings. Carriers
subject to Sec. 61.38 shall include the results of these studies in
their tariff review plans. Carriers subject to Sec. 61.39 are not
required to submit the supporting data at the time of filing, but the
Commission and interested parties may request the data. NECA carriers
that elect to unfreeze their category relationships must reflect these
unfrozen relationships in the cost studies on which their pool
settlements are based beginning with the last six months of studies for
calendar year 2019.
37. The Commission concludes, consistent with the view of nearly
all commenters addressing the issue, that it should take steps to
prevent double-recovery of costs. Unfreezing separations category
relationships could result in a carrier's recovery of the same costs
through higher business data services rates and unchanged switched
access recovery. Updated category relationships will change the costs
assigned to common line, to interstate switched access, and to business
data services. The USF/ICC Transformation Order capped all interstate
switched access rates at 2011 levels, subject to specified reductions
over time. The Commission does not with this action make changes to the
carefully-balanced transition to bill-and-keep set forth in that Order.
Unless cost reductions to interstate switched access are reflected in a
carrier's revised base period revenue, however, a carrier will over-
recover costs through its capped interstate switched access rates.
38. To prevent this over-recovery, the Commission follows the
approach it took in the Rate-of-Return Business Data Services Order.
There, the Commission adopted a method similar to the approach the
Bureau followed in waiving the category relationships freeze in the
Eastex Waiver Order, which commenters generally agree is a reasonable
approach to prevent double-recovery. Thus, a carrier subject to Sec.
61.38 or Sec. 61.39 of the Commission's rules must calculate the
difference between the interstate switched access costs in two cost
studies--one based on unfrozen category relationships that is the basis
for its tariff-year 2019-2020 rates and a second study that is the same
except that it is based on frozen category relationships. Each carrier
must then adjust its base period revenue by an amount equal to the
interstate switched access cost difference between the two cost studies
before applying the annual 5% reduction to the base period revenue, as
required by the USF/ICC Transformation Order.
39. A carrier that participates in the NECA interstate switched
access tariff must report to NECA the interstate switched access cost
difference between the two calendar year 2018 studies and its base
period revenue as revised to reflect the cost difference. These
procedures protect both carriers and customers from any unintended
consequences of unfreezing category relationships. Finally, the
Commission requires NECA to reflect these base period revenue changes
in its settlement procedures.
40. The Commission finds that these measures provide a reasonable
and not unduly burdensome method for preventing double-recovery of
costs when a carrier chooses to unfreeze its category relationships.
Each carrier will need to perform detailed calculations to implement
its choice to update category relationships. Because the Commission has
an obligation to protect ratepayers against the harms of double-
recovery, the Commission rejects ITTA's assertion that the procedure
carriers are required to follow to prevent double-recovery is too
burdensome, particularly since ITTA poses no alternative.
C. Declining To Alter the Scope of the Referral
41. The Commission declines to alter the scope of the referral to
the Joint Board, and instead asks the Joint Board to adopt an
incremental approach to separations reform by focusing first on
cleaning up the existing separations rules and then on long-term steps
toward comprehensive reform of the remaining rules. As previously
articulated by the Commission, those issues include whether the
separations rules are still needed, whether specific separations
categories should be consolidated or disaggregated, and how certain
types of costs should be allocated between the jurisdictions. Although
the Commission has never retreated from its goal of comprehensive
separations reform, over the years it has asked the Joint Board to
focus on certain specific issues within that broad area. Most recently,
the Commission referred to the Joint Board the harmonization of the
Commission's part 32 jurisdictional separations rules with previous
amendments to its part 32 accounting rules and asked the Joint Board to
issue a recommended decision on that matter. The Joint Board issued its
Recommended Decision eight months after receiving that referral; and,
after seeking public comment on the Joint Board's recommendations, the
Commission amended its separations rules consistent with those
recommendations.
42. Therefore, rather than narrowing the scope of the separations
reform referral, the Commission believes that the best course is to ask
the Joint Board to focus on certain discrete issues in the short term.
First, should the Commission amend the separations rules to recognize
that price cap carriers and rate-of-return carriers that have adopted
the new incentive regulation framework for their business data services
offerings are not subject to them--an action that would recognize the
Commission's forbearance from application of the separations rules to
these carriers? Second, given that the separations rules apply only to
certain rate-of-return carriers and only for certain purposes, are
there rules or recordkeeping requirements that the Commission should
modify or eliminate in light of the freeze extension of up to six
years? In highlighting these issues, the Commission hopes to draw on
the Commission's recent experience with the Joint Board in amending the
part 36 separations rules to harmonize them with changes in the part 32
accounting rules.
[[Page 4357]]
43. Longer term, the Commission continues to seek the Joint Board's
recommendations on how the Commission might replace the existing
jurisdictional separations process with a simplified system for
reasonably allocating costs between the interstate and intrastate
jurisdictions. The Commission agrees with NARUC that the existing
separations rules, which presume circuit-switched, primarily voice
networks, require updating to reflect today's network configurations
and mix of broadband, video, and voice services. The Commission also
shares NARUC's and the Irregulators' concern that those rules
necessarily misallocate network costs. The Commission knows that any
changes to the separations rules will need to be harmonized with the
Commission's reforms to the universal service, intercarrier
compensation, and business data services rules. Indeed, the Commission
extends the separations freeze for up to six years to free resources to
address these and other long-term separations problems. The Commission
looks forward to working with the Joint Board in a more directed
manner, addressing these important issues step-by-step. By addressing
the separations procedures in a concerted fashion--through substantive
reforms of the universal service, intercarrier compensation, and
business data services rules on one hand, and focused revisions of
specific areas in the separations rules on the other--the Commission
hopes to resolve the complex separations issues that have proven so
challenging well before the end of the maximum six-year extension
period.
D. Consistency With the Communications Act
44. The Commission rejects NARUC's assertion that because it did
not refer or receive a recommended decision from the Joint Board on the
specific proposal to extend the freeze for 15 years, and because it did
not receive a recommended decision from the Joint Board on allowing
carriers subject to the category relationships freeze the opportunity
to update their category relationships, the Commission is violating
section 410(c) of the Communications Act. In so arguing, NARUC ignores
the fact that the Commission has twice referred comprehensive
separations reform to the Joint Board. The Joint Board clearly
understood that these referrals encompassed a separations freeze;
otherwise it would have sought an additional referral before
recommending the initial freeze. Moreover in 2009, the Commission
referred the specific question of whether to allow carriers subject to
the category relationships freeze the opportunity to unfreeze those
relationships. The Joint Board has never come to a recommended decision
on the latter referral, and the only Recommended Decision the Joint
Board has issued addressing any part of either comprehensive reform
referral was the decision the Joint Board issued in 2000 recommending a
separations freeze. Following the Joint Board recommendation, the
Commission adopted the separations freeze and recognized that it might
need to extend the freeze if comprehensive reform were not completed
before the freeze expired.
45. Because the Commission has not completed comprehensive reform,
consistent with the Commission's 2001 Separations Freeze Order, the
Commission has extended the separations freeze seven times without an
additional referral to, or receiving an additional recommended decision
from, the Joint Board. The first time the Commission extended the
freeze it explicitly found that the extension was within the scope of
the Joint Board's previous recommendation. NARUC's assertion that the
Commission found in 2001 that it would be required to receive a
specific recommendation from the Joint Board on each extension of the
separations freeze is plainly wrong. The Commission committed to
consulting with the Joint Board on extensions of the initial five-year
freeze; it did not commit to referring freeze extensions to the Joint
Board. For their part, State members of the Joint Board have repeatedly
submitted letters supporting the freeze extensions; and, as part of
this proceeding, the current State members recommend that the
Commission extend the separations freeze for up to six years and allow
carriers a one-time opportunity to unfreeze their category
relationships.
46. In its comments, NARUC attempts to distinguish the proposed 15-
year freeze from earlier, shorter freeze extensions by arguing that a
freeze of up to 15 years is the ``policy equivalent'' of a permanent
freeze. The Commission's decision to extend the freeze for only six
years should alleviate NARUC's concern. Moreover, the Commission's
decision to extend the freeze for up to six years is consistent with
the recommendation of the State members of the Joint Board and informed
by the record of this proceeding and by the Joint Board's failure to
reach a recommendation on comprehensive reform for the last 21 years.
Furthermore, the freeze the Commission adopts today is not permanent;
it will expire on a date certain absent further action by the
Commission.
47. Regarding the Commission's 2001 pledge to ``consult[] with the
Joint Board'' to ``determine whether the freeze period shall be
extended,'' the notice and comment and ex parte periods for the Further
Notice provided ample opportunity for the Joint Board, including its
State members, to voice their opinions on the extension. The State
members of the Joint Board have taken the opportunity to engage in
extensive discussions with all the other Joint Board members. These
discussions meet any obligation the Commission may have under section
410(c) to afford the State members of the Joint Board an opportunity to
participate in the Commission's deliberations on this Report and Order.
48. Moreover, given the lack of action by the Joint Board on the
Commission's two referrals of comprehensive reform and separate
referral of an unfreeze of the category relationships and the
recommendations of the State Joint Board members, the Commission's
actions today are necessary and appropriate. Section 410(c) directs
that, after a referral, the Joint Board ``shall prepare a recommended
decision for prompt review and action by the Commission.'' Nothing in
section 410(c) obligates the Commission to wait indefinitely for a
recommended decision before acting. The Commission concludes that the
only reasonable interpretation of the statutory language allows the
Commission to act unilaterally where, as here, issues have been pending
before the Joint Board for many years without a recommended decision.
Any contrary interpretation would allow the Joint Board to indefinitely
delay Commission action. Congress could not have intended that result
while requiring that the Commission act promptly once the Joint Board
issues a recommended decision.
49. Reducing the length of the freeze extension should also
alleviate NARUC's concern that extending the freeze for up to 15 years
would result in unjust and unreasonable rates because of the frozen
allocation of the underlying costs to the interstate and intrastate
jurisdictions. A freeze extension of up to six years will free up
resources to address whether the separations rules produce reasonable
results within the meaning of section 201(b) of the Communications Act
and determine the proper methodology if the rules need to be revised.
This is no easy undertaking, given the need to ensure that any changes
to the separations rules are consistent with the Commission's high-cost
universal service and
[[Page 4358]]
intercarrier compensation rules. Although the Commission agrees with
NARUC on the need for separations reform, it finds that extending the
freeze for up to six years will accelerate that reform. Accordingly,
the Commission finds that a freeze extension of up to six years, in
combination with a one-time option to unfreeze category relationships,
will increase the Commission's and the Joint Board's ability to ensure
just and reasonable rates.
IV. Procedural Matters
50. Paperwork Reduction Act Analysis. This document contains new or
modified information collection requirements subject to the Paperwork
Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to
the Office of Management and Budget (OMB) for review under section
3507(d) of the PRA. OMB, the general public, and other Federal agencies
will be invited to comment on the new or modified information
collection requirements contained in this proceeding. In addition, the
Commission notes that pursuant to the Small Business Paperwork Relief
Act of 2002, the Commission sought specific comment on how it might
further reduce the information collection burden for small business
concerns with fewer than 25 employees. The Commission describes impacts
that might affect small businesses, which includes most businesses with
fewer than 25 employees, in the Final Regulatory Flexibility Analysis
below.
51. Congressional Review Act. The Commission will send a copy of
this Report and Order to Congress and the Government Accountability
Office pursuant to the Congressional Review Act, see 5 U.S.C.
801(a)(1)(A).
52. Final Regulatory Flexibility Act Analysis. The Regulatory
Flexibility Act of 1980 requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, the Commission has prepared a Final Regulatory
Flexibility Analysis (FRFA) concerning the possible impact of the rule
changes contained in the Report and Order on small entities. The FRFA
is set forth in part V, below.
53. Effective Date. The Commission finds good cause to make the
extension of the separations freeze effective immediately upon
publication of a summary of the Report and Order in the Federal
Register. The current freeze expired on December 31, 2018. To avoid
unnecessary disruption to carriers subject to the separations rules,
the Commission preserves the status quo by making the extension of the
freeze effective upon publication.
V. Final Regulatory Flexibility Analysis
54. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this Final Regulatory
Flexibility Analysis (FRFA) on the possible significant economic impact
on small entities by the Report and Order. An Initial Regulatory
Flexibility Analysis (IRFA) was incorporated into the Further Notice of
Proposed Rulemaking. The Commission sought written public comment on
the proposals in this rulemaking proceeding, including comment on the
IRFA. The Commission did not receive comments on the IRFA.
A. Need for, and Objectives of, the Order
55. The Commission's part 36 jurisdictional separations rules
originated more than 30 years ago when the Commission and its State
counterparts used costs to set rates, and the rules were designed to
help prevent local exchange carriers (LECs) from recovering the same
costs from both the interstate and intrastate jurisdictions. In 1997,
the Commission initiated a proceeding to comprehensively reform those
rules in light of the statutory, technological, and marketplace changes
that had affected the telecommunications industry. In 2001, the
Commission, pursuant to a recommendation by the Federal-State Joint
Board on Jurisdictional Separations (Joint Board), froze the part 36
separations rules for a five-year period beginning July 1, 2001, or
until the Commission completed comprehensive separations reform,
whichever came first. The Commission has extended the freeze seven
times, with the most recent extension expiring on December 31, 2018.
The deadline compelled the Commission to make a choice between
extending the freeze further or allowing long-unused separations rules
to take effect on January 1, 2019.
56. The Commission finds that not extending the freeze would impose
significant burdens on rate-of-return carriers that would far exceed
the benefits, if any, of requiring those carriers to comply with rules
that they have not implemented since 2001. Accordingly, the Report and
Order extends for up to six years the freeze of part 36 category
relationships and jurisdictional cost allocation factors that the
Commission adopted in the 2001 Separations Freeze Order and
subsequently extended until December 31, 2018. This additional
extension will begin upon publication of the Order in the Federal
Register, and will continue until the earlier of December 31, 2024, or
the completion of comprehensive reform of the part 36 jurisdictional
separations rules.
57. Also, in the 2001 Separations Freeze Order, the Commission
granted rate-of-return carriers a one-time option to freeze their
category relationships. Carriers that chose to freeze their category
relationships in 2001 assign costs within part 32 accounts to
categories using their separations category relationships from 2000.
Consequently, these companies are still separating their costs based on
the technologies and services that were in place in 2000, instead of
being able to adjust the amounts assigned to separations categories to
reflect the current network costs and services.
58. In the Rate-of-Return Business Data Services Order, the
Commission allowed carriers subject to the category relationships
freeze that receive model-based and other forms of fixed high-cost
support and elect incentive regulation for business data services to
opt out of that freeze and update their category relationships. In this
Report and Order, the Commission grants all other rate-of-return
carriers operating under that freeze the opportunity to opt out of it--
enabling carriers to better recover network upgrade costs from
ratepayers that benefit from those upgrades and to take greater
advantage of universal service programs that incent broadband
deployment.
B. Summary of Significant Issues Raised by Comments in Response to the
IRFA
59. There were no comments that specifically addressed the proposed
rules and policies presented in the IRFA that was part of the Further
Notice.
C. Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
60. Pursuant to the Small Business Jobs Act of 2010, which amended
the RFA, the Commission is required to respond to any comments filed by
the Chief Counsel of the Small Business Administration (SBA), and to
provide a detailed statement of any change made to the proposed rules
as a result of those comments. The Chief Counsel did not file any
comments in response to the proposed rules in this proceeding.
[[Page 4359]]
D. Description and Estimate of the Number of Small Entities to Which
Rules May Apply
61. 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
the term ``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 SBA.
Nationwide, there are a total of approximately 27.9 million small
businesses, according to the SBA.
62. Incumbent Local Exchange Carriers. The rules adopted in this
Report and Order affect the tariffed rates for interstate regulated
services for incumbent LECs. Neither the Commission nor the SBA has
developed a small business size standard specifically for providers of
incumbent local exchange services. The closest applicable size standard
under the SBA rules is for Wired Telecommunications Carriers. Under the
SBA definition, a carrier is small if it has 1,500 or fewer employees.
According to the FCC's Telephone Trends Report data, 1,307 incumbent
LECs reported that they were engaged in the provision of local exchange
services. Of these 1,307 carriers, an estimated 1,006 have 1,500 or
fewer employees and 301 have more than 1,500 employees. Consequently,
the Commission estimates that most incumbent LECs are small entities
that may be affected by the rules and policies adopted in this
proceeding.
63. The Commission has included small incumbent LECs in this RFA
analysis. As noted above, 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 LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. Because the Commission's
proposals concerning the part 36 rules will affect all incumbent LECs,
some entities employing 1,500 or fewer employees may be affected by the
rule changes adopted in the Report and Order. The Commission has
therefore included small incumbent LECs in this RFA analysis, although
the Commission emphasizes that this RFA action has no effect on the
Commission's analyses and determinations in other, non-RFA contexts.
E. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
64. None. Carriers are not required to unfreeze their category
relationships. Even if they choose to do so, affected carriers may
adjust their category relationships in cost studies that generally are
conducted prior to filing tariffed rates.
F. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
65. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include (among others) the following four alternatives: (1)
The establishment of differing compliance and 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 part thereof, for small
entities.
66. The jurisdictional freeze has eliminated the need for all
incumbent LECs, including incumbent LECs with 1,500 employees or fewer,
to complete certain annual separations studies that otherwise would be
required by the Commission's rules. Thus, an extension of this freeze
avoids increasing the administrative burden of regulatory compliance
for rate-of-return incumbent LECs, including small incumbent LECs.
67. Presently, rate-of-return carriers in a limited number of study
areas operate under the category relationships freeze. When the
Commission granted rate-of-return carriers the opportunity to elect the
category relationships freeze, it specified the freeze would be an
interim, ``transitional measure'' lasting no more than five years. But,
the freeze has now lasted 17 years, and carriers that elected it are
prohibited from withdrawing from that election. In the Report and
Order, the Commission grants affected carriers the opportunity to
voluntarily opt out of this freeze, rather than requiring carriers to
do so. The Commission recognizes that the size, cost structures, and
investment patterns of these carriers vary widely, and therefore
enables an individual carrier to decide for itself whether the economic
benefits of unfreezing its category relationships outweigh any costs.
The Commission therefore certifies that this Report and Order will not
have a significant economic impact on a substantial number of small
entities.
G. Federal Rules That May Duplicate, Overlap, or Conflict With the
Final Rules
68. None.
H. Report to Congress
69. The Commission will send a copy of the Report and Order,
including the FRFA, to Congress and the Government Accountability
Office pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996. In addition, the Commission will send a copy of the Report
and Order, including the FRFA, to the Chief Counsel for Advocacy of the
Small Business Administration.
VI. Ordering Clauses
70. Accordingly, it is ordered that, pursuant to the authority
contained in sections 1, 4(i) and (j), 201, 205, 220, 221(c), 254,
303(r), 403, and 410 of the Communications Act of 1934, as amended, 47
U.S.C. 151, 154(i) and (j), 201, 205, 220, 221(c), 254, 303(r), 403,
410, this Report and Order is adopted.
71. It is further ordered that, pursuant to the authority contained
in sections 1, 4(i) and (j), 201, 205, 220, 221(c), 254, 303(r), 403,
and 410 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i) and (j), 201, 205, 220, 221(c), 254, 303(r), 403, 410, and part
36 of the Commission's rules, 47 CFR part 36, is amended as set forth
in the Final Rules below.
72. It is further ordered that, pursuant to the authority contained
in sections 1, 4(i) and (j), 201, 205, 220, 221(c), 254, 303(r), 403,
and 410 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i) and (j), 201, 205, 220, 221(c), 254, 303(r), 403, 410, except as
otherwise provided in this Report and Order, the amendments to 47 CFR
part 36 set forth in the Final Rules below shall be effective on the
date of publication of a summary of the Report and Order in the Federal
Register.
73. It is further ordered that the amendments to 47 CFR 36.3(b)
specified below in the Final Rules, which may contain new or modified
information collection requirements that require approval by the OMB
under the Paperwork Reduction Act, will become effective after OMB
review, on the effective date specified in a document
[[Page 4360]]
that the Commission will publish in the Federal Register announcing
such effective date.
74. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of the Report and Order, including the Final Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
75. It is further ordered that the Commission shall send a copy of
the Report and Order to Congress and the Government Accountability
Office pursuant to the Congressional Review Act.
List of Subjects in 47 CFR Part 36
Communications common carriers, Jurisdictional separations
procedures, Reporting and recordkeeping requirements, Standard
procedures for separating telecommunications property costs, revenues,
expenses, taxes and reserves for telecommunications companies,
Telephone.
Federal Communications Commission.
Katura Jackson,
Federal Register Liaison, Office of the Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 36 as follows:
PART 36--JURISDICTIONAL SEPARATIONS PROCEDURES; STANDARD PROCEDURES
FOR SEPARATING TELECOMMUNICATIONS PROPERTY COSTS, REVENUES,
EXPENSES, TAXES AND RESERVES FOR TELECOMMUNICATIONS COMPANIES
0
1. The authority citation for part 36 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 154(i) and (j), 201, 205, 220,
221(c), 254, 303(r), 403, 410, and 1302 unless otherwise noted.
0
2. Revise Sec. 36.3(b) to read as follows:
Sec. 36.3 Freezing of jurisdictional separations category
relationships and/or allocation factors.
* * * * *
(b) Effective July 1, 2001, through December 31, 2024, local
exchange carriers subject to price cap regulation, pursuant to Sec.
61.41 of this chapter, shall assign costs from the accounts under part
32 of this chapter (part 32 account(s)) to the separations categories/
sub-categories, as specified herein, based on the percentage
relationships of the categorized/sub-categorized costs to their
associated part 32 accounts for the twelve-month period ending December
31, 2000. If a part 32 account for separations purposes is categorized
into more than one category, the percentage relationship among the
categories shall be utilized as well. Local exchange carriers that
invest in types of telecommunications plant during the period July 1,
2001, through December 31, 2024, for which it had no separations
category investment for the twelve-month period ending December 31,
2000, shall assign such investment to separations categories in
accordance with the separations procedures in effect as of December 31,
2000. Local exchange carriers not subject to price cap regulation,
pursuant to Sec. 61.41 of this chapter, may elect to be subject to the
provisions of this paragraph (b). Such election must be made prior to
July 1, 2001. Any local exchange carrier that is subject to Sec.
69.3(e) of this chapter and that elected to be subject to this
paragraph (b) may withdraw from that election by notifying the
Commission by May 1, 2019, of its intent to withdraw from that
election, and that withdrawal will be effective as of July 1, 2019. Any
local exchange carrier that participates in an Association tariff,
pursuant to Sec. Sec. 69.601 through 69.610 of this chapter, and that
elected to be subject to this paragraph (b) may withdraw from that
election by notifying the Association by March 1, 2019, of such intent.
Subject to these two exceptions, local exchange carriers that
previously elected to become subject to this paragraph (b) shall not be
eligible to withdraw from such regulation for the duration of the
freeze.
* * * * *
Sec. 36.126 [Amended]
0
3. Amend Sec. 36.126(b)(5) by removing the date ``June 30, 2014'' and
adding in its place ``December 31, 2024.''
Sec. Sec. 36.3, 36.123, 36.124, 36.125, 36.126, 36.141, 36.142,
36.152, 36.154, 36.155, 36.156, 36.157, 36.191, 36.212, 36.214, 36.372,
36.374, 36.375, 36.377, 36.378, 36.379, 36.380, 36.381,
36.382 [Amended]
0
4. In addition to the amendments set forth above, in 47 CFR part 36,
remove the date ``December 31, 2018'' and add in its place everywhere
it appears the date ``December 31, 2024'' in the following places:
0
a. Section 36.3(a), (c), (d) introductory text, and (e);
0
b. Section 36.123(a)(5) and (6);
0
c. Section 36.124(c) and (d);
0
d. Section 36.125(h) and (i);
0
e. Section 36.126(b)(6), (c)(4), (e)(4), and (f)(2);
0
f. Section 36.141(c);
0
g. Section 36.142(c);
0
h. Section 36.152(d);
0
i. Section 36.154(g);
0
j. Section 36.155(b);
0
k. Section 36.156(c);
0
l. Section 36.157(b);
0
m. Section 36.191(d);
0
n. Section 36.212(c);
0
o. Section 36.214(a);
0
p. Section 36.372;
0
q. Section 36.374(b) and (d);
0
r. Section 36.375(b)(4) and (5);
0
s. Section 36.377(a) introductory text, (a)(1)(ix), (a)(2)(vii),
(a)(3)(vii), (a)(4)(vii), (a)(5)(vii), and (a)(6)(vii);
0
t. Section 36.378(b)(1);
0
u. Section 36.379(b)(1) and (2);
0
v. Section 36.380(d) and (e);
0
w. Section 36.381(c) and (d); and
0
x. Section 36.382(a).
[FR Doc. 2019-01721 Filed 2-14-19; 8:45 am]
BILLING CODE 6712-01-P