[Title 47 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 1998 Edition]
[From the U.S. Government Printing Office]


          47



          Telecommunication



[[Page i]]

          PARTS 40 TO 69

                         Revised as of October 1, 1998

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF OCTOBER 1, 1998
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1998



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 47:
          Chapter I--Federal Communications Commission 
          (Continued)                                                3
  Finding Aids:
      Material Approved for Incorporation by Reference........     459
      Table of CFR Titles and Chapters........................     461
      Alphabetical List of Agencies Appearing in the CFR......     479
      Table of OMB Control Numbers............................     489
      List of CFR Sections Affected...........................     499



[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  47 CFR 41.1 refers 
                       to title 47, part 41, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 1998), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 523-4534.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.

[[Page vii]]

    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408.

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
M-F, 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours 
a day. For payment by check, write to the Superintendent of Documents, 
Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO 
Customer Service call 202-512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Weekly Compilation 
of Presidential Documents and the Privacy Act Compilation are available 
in electronic format at www.access.gpo.gov/nara (``GPO Access''). For 
more information, contact Electronic Information Dissemination Services, 
U.S. Government Printing Office. Phone 202-512-1530, or 888-293-6498 
(toll-free). E-mail, gpoaccess@gpo.gov.
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.nara.gov/fedreg. The NARA 
site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

October 1, 1998.



[[Page ix]]



                               THIS TITLE

    Title 47--Telecommunication is composed of five volumes. The parts 
in these volumes are arranged in the following order: Parts 0-19, parts 
20-39, parts 40-69, parts 70-79, and part 80 to End, chapter I--Federal 
Communications Commission. The last volume, part 80 to End, also 
includes chapter II--Office of Science and Technology Policy and 
National Security Council, and chapter III--National Telecommunications 
and Information Administration, Department of Commerce. The contents of 
these volumes represent all current regulations codified under this 
title of the CFR as of October 1, 1998.

    Part 73 contains a numerical designation of FM broadcast channels 
(Sec. 73.201) and a table of FM allotments designated for use in 
communities in the United States, its territories, and possessions 
(Sec. 73.202). Part 73 also contains a numerical designation of 
television channels (Sec. 73.603) and a table of allotments which 
contain channels designated for the listed communities in the United 
States, its territories, and possessions (Sec. 73.606).

    The OMB control numbers for the Federal Communications Commission, 
appear in Sec. 0.408 of chapter I. For the convenience of the user 
Sec. 0.408 is reprinted in the Finding Aids section of the second 
through fifth volumes.

    A redesignation table appears in the Finding Aids section of the 
volume containing part 80 to End.

    For this volume Karen A. Thornton was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



                                 TITLE 47


                            TELECOMMUNICATION




                   (This book contains parts 40 to 69)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Federal Communications Commission (Continued)....          41

[[Page 3]]



        CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION--(CONTINUED)




  --------------------------------------------------------------------

           SUBCHAPTER B--COMMON CARRIER SERVICES--(CONTINUED)

Part                                                                Page
41              Telegraph and telephone franks..............           5
42              Preservation of records of communication 
                    common carriers.........................           6
43              Reports of communication common carriers and 
                    certain affiliates......................           8
51              Interconnection.............................          15
52              Numbering...................................          51
53              Special provisions concerning Bell operating 
                    companies...............................          70
54              Universal service...........................          75
59              Infrastructure sharing......................         110
61              Tariffs.....................................         112
62              Applications to hold interlocking 
                    directorates............................         152
63              Extension of lines and discontinuance, 
                    reduction, outage and impairment of 
                    service by common carriers; and grants 
                    of recognized private operating agency 
                    status..................................         154
64              Miscellaneous rules relating to common 
                    carriers................................         189
65              Interstate rate of return prescription 
                    procedures and methodologies............         241
68              Connection of terminal equipment to the 
                    telephone network.......................         250
69              Access charges..............................         406

Cross Reference:   

    Excise taxes on communications services and facilities: Internal 
Revenue, 26 CFR Part 49.

Supplemental Publications:   

  Annual Reports of the Federal Communications Commission to Congress.

  Federal Communications Commission Reports of Orders and Decisions.

  Communications Act of 1934 (with amendments and index thereto), Recap. 
Version, May 1989.

  Study Guide and Reference Material for Commercial Radio Operator 
Examinations, May 1979 edition.

[[Page 5]]



           SUBCHAPTER B--COMMON CARRIER SERVICES  (CONTINUED)


PART 41--TELEGRAPH AND TELEPHONE FRANKS--Table of Contents




                               Definitions

Sec.
41.1  Definition of terms as used in this part.

                      General Application of Rules

41.11  Services to which rules apply.
41.12  Persons to whom rules apply.
41.13  Carriers, services, and persons to which rules do not apply.

                     Limitation and Form of Issuance

41.21  Amount of free service permitted.
41.22  Name of person.

                       Administrative Regulations

41.31  Records to be maintained and reports to be filed.
41.32  Existing franks not conforming declared void.

    Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. 
Interpret or apply sec. 210, 48 Stat. 1073, as amended (47 U.S.C. 210).

    Source: 28 FR 13200, Dec. 5, 1963, unless otherwise noted.

                               Definitions



Sec. 41.1  Definition of terms as used in this part.

    As used in this part:
    (a) The term frank means any authority which authorizes free, or 
partially free, service.
    (b) The term families means the wives, husbands, minor children, and 
other dependents of the officers, employees, or agents permitted to 
receive and use franks, but no other person.
    (c) The terms officer, agent, and employee include furloughed, 
pensioned, and superannuated officers, agents, and employees.

                      General Application of Rules



Sec. 41.11  Services to which rules apply.

    Franks valid for interstate or foreign telegraph or telephone 
service may be issued or used and free service may be rendered only in 
accordance with the provisions in this part.



Sec. 41.12  Persons to whom rules apply.

    Full time officers, agents, and employees, and their families, of 
railroad companies, merchant ship companies, motor bus companies, air 
transport companies, telephone companies, telegraph companies, sleeping 
car companies, express companies, and pipeline companies (common 
carriers not subject to the Communications Act of 1934, as amended), 
may, at the discretion of carriers subject to the Act, receive at less 
than regularly established rates applicable to the service rendered.



Sec. 41.13  Carriers, services, and persons to which rules do not apply.

    The rules in this part shall not apply to:
    (a) Services rendered pursuant to lawful contracts for exchange of 
services under section 201(b) of the Act and which contracts are filed 
with the Commission, any free service rendered by a cable company 
pursuant to any obligation of its landing license, or any service 
rendered pursuant to any rule or order issued under the authority 
transferred by section 601 of the Act.
    (b) Except as provided in this part, services rendered in connection 
with situations involving the safety of life and property, including 
hydrographic reports, weather reports, reports regarding aids to 
navigation and medical assistance to injured or sick persons on ships 
and aircraft at sea, as provided in section 359(e) of the Act, or in 
furnishing of reports of positions of ships at sea to newspapers of 
general circulation, as provided in section 201(b) of the Act.
    (c) Free or concession service now or hereafter granted to officers, 
agents, or employees of common carriers subject to the Act, and to their 
families.
    (d) Service rendered pursuant to the provisions of Sec. 2.405 of 
this chapter.

[[Page 6]]

                     Limitation and Form of Issuance



Sec. 41.21  Amount of free service permitted.

    No franks shall be issued by any carrier authorizing free service to 
any person on which the published charges would, in the aggregate, 
exceed $50 in any 1 calendar year; nor shall any person use or attempt 
to use any frank in any calendar year for free service on which the 
charges at the duly published rates would, in the aggregate, exceed $50.



Sec. 41.22  Name of person.

    Each frank shall be issued by a duly authorized officer of the 
carrier granting the privilege and shall show the name of the person to 
whom it is issued; and it shall be valid only for service rendered that 
person.

                       Administrative Regulations



Sec. 41.31  Records to be maintained and reports to be filed.

    Common carriers subject to the Act shall maintain records and file 
reports as follows:
    (a) Each such carrier shall maintain its records in such manner as 
to reflect at all times the name and address of every person holding a 
telegraph or telephone frank and the office, employment or relationship 
held by each such person entitling him to a frank; and each such carrier 
shall keep such basic records as would enable it, if ordered by the 
Commission, to compile a statement for the last preceding calendar year 
prior to such order or for any other period during which it is required 
by other rules to retain such records, showing the above information 
together with the number of franked communications handled under each 
frank during such period and the aggregate charges in dollars which 
would have accrued to the carrier for all of the free service rendered 
under each frank during such period if charges for all such 
communications had been collected at the published tariff rates.
    (b) With respect to the communications referred to in Sec. 41.13 
every carrier subject to the Act shall maintain its records in such a 
manner as to show the number of each class of such communications 
handled free of charge: Provided, That with respect to personal 
telephone calls of officers, agents, or employees of common carriers 
subject to the Act made free of charge or at reduced rates from 
telephone company official stations it shall be sufficient, in lieu of 
such record maintenance, if the carrier be at all times prepared, upon 
appropriate request, to make studies which will show the number of each 
class of such communications handled free of charge or at reduced rates.
    (c) Each such carrier shall maintain its records in such a manner as 
to show the number of reports of positions of ships at sea furnished to 
newspapers of general circulation without charge, or at nominal charges, 
as authorized in section 201(b) of the Act.



Sec. 41.32  Existing franks not conforming declared void.

    All outstanding franks which do not conform to the rules in this 
part shall be void after August 11, 1939.



PART 42--PRESERVATION OF RECORDS OF COMMUNICATION COMMON CARRIERS--Table of Contents




                              Applicability

Sec.
42.01  Applicability.

                          General Instructions

42.1  Scope of the regulations in this part.
42.2  Designation of a supervisory official.
42.3  Protection and storage of records.
42.4  Index of records.
42.5  Preparation and preservation of reproductions of original records.
42.6  Retention of telephone toll records.
42.7  Retention of other records.

  Specific Instructions for Carriers Offering Detariffed Interexchange 
                                Services

42.11  Retention of information concerning detariffed interexchange 
          services.

    Authority: Sec. 4(i), 48 Stat. 1066, as amended, 47 U.S.C. 154(i). 
Interprets or applies secs. 219 and 220, 48 Stat. 1077-78, 47 U.S.C. 
219, 220.

    Source: 51 FR 32653, Sept. 15, 1986, unless otherwise noted.

[[Page 7]]

                              Applicability



Sec. 42.01  Applicability.

    This part prescribes the regulations governing the preservation of 
records of communication common carriers that are fully subject to the 
jurisdiction of the Commission.

                          General Instructions



Sec. 42.1  Scope of the regulations in this part.

    (a) The regulations in this part apply to all accounts, records, 
memoranda, documents, papers, and correspondence prepared by or on 
behalf of the carrier as well as those which come into its possession in 
connection with the acquisition of property, such as by purchase, 
consolidation, merger, etc.
    (b) The regulations in this part shall not be construed as requiring 
the preparation of accounts, records, or memoranda not required to be 
prepared by other regulations, such as the Uniform System of Accounts, 
except as provided hereinafter.
    (c) The regulations in this part shall not be construed as excusing 
compliance with any other lawful requirement for the preservation of 
records.



Sec. 42.2  Designation of a supervisory official.

    Each carrier subject to the regulations in this part shall designate 
one or more officials to supervise the preservation of its records.



Sec. 42.3  Protection and storage of records.

    The carrier shall protect records subject to the regulations in this 
part from damage from fires, and other hazards and, in the selection of 
storage spaces, safeguard the records from unnecessary exposure to 
deterioration.



Sec. 42.4  Index of records.

    Each carrier shall maintain at its operating company headquarters a 
master index of records. The master index shall identify the records 
retained, the related retention period, and the locations where the 
records are maintained. The master index shall be subject to review by 
Commission staff and the Commission shall reserve the right to add 
records, or lengthen retention periods upon finding that retention 
periods may be insufficient for its regulatory purposes. When any 
records are lost or destroyed before expiration of the retention period 
set forth in the master index, a certified statement shall be added to 
the master index, as soon as practicable, listing, as far as may be 
determined, the records lost or destroyed and describing the 
circumstances of the premature loss or destruction. At each office of 
the carrier where records are kept or stored, the carrier shall arrange, 
file, and currently index the records on site so that they may be 
readily identified and made available to representatives of the 
Commission.



Sec. 42.5  Preparation and preservation of reproductions of original records.

    (a) Each carrier may use a retention medium of its choice to 
preserve records in lieu of original records, provided that they observe 
the requirements of paragraphs (b) and (c) of this section.
    (b) A paper or microfilm record need not be created to satisfy the 
requirements of this part if the record is initially prepared in 
machine-readable medium such as punched cards, magnetic tapes, and 
disks. Each record kept in a machine-readable medium shall be 
accompanied by a statement clearly indicating the type of data included 
in the record and certifying that the information contained in it has 
been accurately duplicated. This statement shall be executed by a person 
duplicating the records. The records shall be indexed and retained in 
such a manner that they are easily accessible, and the carrier shall 
have the facilities available to locate, identify and reproduce the 
records in readable form without loss of clarity.
    (c) Records may be retained on microfilm provided they meet the 
requirements of the Federal Business Records Act (28 U.S.C. 1732).



Sec. 42.6  Retention of telephone toll records.

    Each carrier that offers or bills toll telephone service shall 
retain for a period of 18 months such records as are

[[Page 8]]

necessary to provide the following billing information about telephone 
toll calls: the name, address, and telephone number of the caller, 
telephone number called, date, time and length of the call. Each carrier 
shall retain this information for toll calls that it bills whether it is 
billing its own toll service customers for toll calls or billing 
customers for another carrier.

[51 FR 39536, Oct. 29, 1986]



Sec. 42.7  Retention of other records.

    Except as specified in Sec. 42.6, each carrier shall retain records 
identified in its master index of records for the period established 
therein. Records relevant to complaint proceedings not already contained 
in the index of records should be added to the index as soon as a 
complaint is filed and retained until final disposition of the 
complaint. Records a carrier is directed to retain as the result of a 
proceeding or inquiry by the Commission to the extent not already 
contained in the index will also be added to the index and retained 
until final disposition of the proceeding or inquiry.

  Specific Instructions for Carriers Offering Detariffed Interexchange 
                                Services



Sec. 42.11  Retention of information concerning detariffed interexchange services.

    (a) A nondominant interexchange carrier shall maintain, for 
submission to the Commission upon request, price and service information 
regarding all of the carrier's detariffed interstate, domestic, 
interexchange service offerings. The price and service information 
maintained for purposes of this subparagraph shall include documents 
supporting the rates, terms, and conditions of the carrier's detariffed 
interstate, domestic, interexchange offerings. The information 
maintained pursuant to this subsection shall be maintained in a manner 
that allows the carrier to produce such records within ten business 
days.
    (b) The price and service information maintained pursuant to this 
section shall be retained for a period of at least two years and six 
months following the date the carrier ceases to provide services 
pursuant to such rates, terms and conditions.

[61 FR 59366, Nov. 22, 1996, as amended at 62 FR 59604, Nov. 4, 1997]



PART 43--REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN AFFILIATES--Table of Contents




Sec.
43.01  Applicability.
43.21  Annual reports of carriers and certain affiliates.
43.41  [Reserved]
43.43  Reports of proposed changes in depreciation rates.
43.51  Contracts and concessions.
43.53  Reports regarding division of international toll communication 
          charges.
43.61  Reports of international telecommunications traffic.
43.72  [Reserved]
43.81  Reports of carriers owned by foreign telecommunications entities.
43.82  International circuit status reports.

    Authority: 47 U.S.C. 154; Telecommunications Act of 1996, Pub. L. 
104-104, secs. 402 (b)(2)(B), (c), 110 Stat. 56 (1996) as amended unless 
otherwise noted. 47 U.S.C. 211, 219, 220 as amended.

    Source: 28 FR 13214, Dec. 5, 1963, unless otherwise noted.



Sec. 43.01  Applicability.

    (a) The sections in this part include requirements which have been 
promulgated under authority of sections 211 and 219 of the 
Communications Act of 1934, as amended, with respect to the filing by 
communication common carriers and certain of their affiliates of 
periodic reports and certain other data, but do not include certain 
requirements relating to the filing of information with respect to 
specific services, accounting systems and other matters incorporated in 
other parts of this chapter.
    (b) Except as provided in paragraph (c) of this section, carriers 
becoming subject to the provisions of the several sections of this part 
for the first time, shall, within thirty (30) days of becoming subject, 
file the required data as set forth in the various sections of this 
part.
    (c) Carriers becoming subject to the provisions of Secs. 43.21 and 
43.43 for the

[[Page 9]]

first time, because their annual operating revenues equal or exceed the 
indexed revenue threshold for a given year, shall begin collecting data 
pursuant to such provisions in the calendar year following the 
publication of that indexed revenue threshold in the Federal Register. 
With respect to such initial filing of reports by any carrier, pursuant 
to the provisions of Sec. 43.21 (d), (e), (f), (g), (h), (i), (j), and 
(k), the carrier is to begin filing data for the calendar year following 
the publication of that indexed revenue threshold in the Federal 
Register by April 1 of the second calendar year following publication of 
that indexed revenue threshold in the Federal Register.

[28 FR 13214, Dec. 5, 1963, as amended at 62 FR 39778, July 24, 1997]



Sec. 43.21  Annual reports of carriers and certain affiliates.

    (a) Communication common carriers having annual operating revenues 
in excess of the indexed revenue threshold, as defined in Sec. 32.9000, 
and certain companies (as indicated in paragraph (b) of this section) 
directly or indirectly controlling such carriers shall file with the 
Commission annual reports or an annual letter as provided in this 
section. Except as provided in paragraph (b) of this section, each 
annual report required by this section shall be filed no later than 
April 1 of each year, covering the preceding calendar year. It shall be 
filed on the appropriate report form prescribed by the Commission (see 
Sec. 1.785 of this chapter) and shall contain full and specific answers 
to all questions propounded and information requested in the currently 
effective report forms. The number of copies to be filed shall be 
specified in the applicable report form. At least one copy of this 
report shall be signed on the signature page by the responsible 
accounting officer. A copy of each annual report shall be as retained in 
the principal office of the respondent and shall be filed in such manner 
to be readily available for reference and inspection.
    (b) Each company, not itself a communication common carrier, that 
directly or indirectly controls any communication common carrier that 
has annual operating revenues equal to or above the indexed revenue 
threshold, as defined in Sec. 32.9000, shall file annually with the 
Commission, not later than the date prescribed by the Securities and 
Exchange Commission for its purposes, two complete copies of any annual 
report Forms 10-K (or any superseding form) filed with that Commission.
    (c) Each miscellaneous common carrier (as defined by Sec. 21.2 of 
this chapter) with operating revenues for a calendar year in excess of 
the indexed revenue threshold, as defined in Sec. 32.9000, shall file 
with the Common Carrier Bureau Chief a letter showing its operating 
revenues for that year and the value of its total communications plant 
at the end of that year. This letter must be filed no later than April 1 
of the following year. Those miscellaneous common carriers with annual 
operating revenues that equal or surpass the indexed revenue threshold 
for the first time may file the letter up to one month after publication 
of the adjusted revenue threshold in the Federal Register, but in no 
event shall such carriers be required to file the letter prior to April 
1.
    (d) Each communications common carrier required by order to file a 
manual allocating its costs between regulated and nonregulated 
operations shall file, on or before April 1:
    (1) A three-year forecast of regulated and nonregulated use of 
network plant for the current calendar year and the two calendar years 
following, and investment pool projections and allocations for the 
current calendar year; and
    (2) A report of the actual use of network plant investment for the 
prior calendar year.
    (e) Each local exchange carrier with annual operating reveunes equal 
to or above the indexed revenue threshold shall file, no later than 
April 1 of each year, reports showing:
    (1) Its revenues, expenses and investment for all accounts 
established in part 32 of this chapter, on an operating company basis,
    (2) The same part 32 of this chapter, on a study area basis, with 
data for regulated and nonregulated operations for those accounts which 
are related to the carrier's revenue requirement, and

[[Page 10]]

    (3) The separations categories on a study area basis, with each 
category further divided into access elements and a nonaccess interstate 
category.
    (f) Each local exchange carrier with operating revenues for the 
preceding year that equal or exceed the indexed revenue threshold shall 
file, no later than April 1 of each year, a report showing for the 
previous calendar year its revenues, expenses, taxes, plant in service, 
other investment and depreciation reserves, and other such data as are 
required by the Commission, on computer media prescribed by the 
Commission. The total operating results shall be allocated between 
regulated and nonregulated operations, and the regulated data shall be 
further divided into the following categories: State and interstate, and 
the interstate will be further divided into common line, traffic 
sensitive access, special access, and nonaccess.
    (g) Each local exchange carrier for whom price cap regulation is 
mandatory and every local exchange carrier that elects to be covered by 
the price cap rules shall file, by April 1 of each year, a report 
designed to capture trends in service quality under price cap 
regulation. The report shall contain data relative to network measures 
of service quality, as defined by the Common Carrier Bureau, from the 
previous calendar year on a study area basis.
    (h) Each local exchange carrier for whom price regulation is 
mandatory shall file, by April 1 of each year, a report designed to 
capture trends in service quality under price cap regulation. The report 
shall contain data relative to customer measures of service quality, as 
defined by the Common Carrier Bureau, from the previous calendar year on 
a study area basis.
    (i) Each local exchange carrier for whom price regulation is 
mandatory shall file, by April 1 of each year, a report containing data 
from the previous calendar year on a study area basis that are designed 
to capture trends in telephone industry infrastructure development under 
price cap regulation.
    (j) Each local exchange carrier with annual operating revenues that 
equal or exceed the indexed revenue threshold shall file, no later than 
April 1 of each year, a report containing data from the previous 
calendar year on an operating company basis. Such report shall combine 
statistical data designed to monitor network growth, usage, and 
reliability.
    (k) Each designated interstate carrier with operating revenues for 
the preceding year that equal or exceed the indexed revenue threshold 
shall file, no later than April 1 of each year, a report showing for the 
previous calendar year its revenues, expenses, taxes, plant in service, 
other investments and depreciation reserves, and such other data as are 
required by the Commission, on computer media prescribed by the 
Commission. The total operating results shall be allocated between 
regulated and nonregulated operations, and the regulated data shall be 
further divided into the following categories: State and interstate, and 
the interstate will be further divided into common line, traffic 
sensitive access, special access, and nonaccess.

[28 FR 13214, Dec. 5, 1963, as amended at 49 FR 10122, Mar. 19, 1984; 50 
FR 41153, Oct. 9, 1985; 51 FR 37024, Oct. 17, 1986; 52 FR 35918, Sept. 
24, 1987; 58 FR 36143, July 6, 1993; 61 FR 50245, Sept. 25, 1996; 62 FR 
39778, July 24, 1997]



Sec. 43.41  [Reserved]



Sec. 43.43  Reports of proposed changes in depreciation rates.

    (a) Each communication common carrier with annual operating expenses 
that equal or exceed the indexed revenue threshold, as defined in 
Sec. 32.9000, and that has been found by this Commission to be a 
dominant carrier with respect to any communications service shall, 
before making any changes in the depreciation rates applicable to its 
operated plant, file with the Commission a report furnishing the data 
described in the subsequent paragraphs of this section, and also comply 
with the other requirements thereof.
    (b) Each such report shall contain the following:
    (1) A schedule showing for each class and subclass of plant (whether 
or not the depreciation rate is proposed to be changed) an appropriate 
designation therefor, the depreciation rate currently in effect, the 
proposed rate, and

[[Page 11]]

the service-life and net-salvage estimates underlying both the current 
and proposed depreciation rates;
    (2) An additional schedule showing for each class and subclass, as 
well as the totals for all depreciable plant, (i) the book cost of plant 
at the most recent date available, (ii) the estimated amount of 
depreciation accruals determined by applying the currently effective 
rate to the amount of such book cost, (iii) the estimated amount of 
depreciation accruals determined by applying the rate proposed to be 
used to the amount of such book cost, and (iv) the difference between 
the amounts determined in paragraphs (b)(2) (ii) and (iii) of this 
section;
    (3) A statement giving the reasons for the proposed change in each 
rate;
    (4) A statement describing the method or methods employed in the 
development of the service-life and salvage estimates underlying each 
proposed change in a depreciation rate; and
    (5) The date as of which the revised rates are proposed to be made 
effective in the accounts.
    (c) Except as specified in paragraphs (c)(1) and (c)(2) of this 
section, when the change in the depreciation rate proposed for any class 
or subclass of plant (other than one occasioned solely by a shift in the 
relative investment in the several subclasses of the class of plant) 
amounts to twenty percent (20%) or more of the rate currently applied 
thereto, or when the proposed change will produce an increase or 
decrease of one percent (1%) or more of the aggregate depreciation 
charges for all depreciable plant (based on the amounts determined in 
compliance with paragraph (b)(2) of this section) the carrier shall 
supplement the data required by paragraph (b) of this section with 
copies of the underlying studies, including calculations and charts, 
developed by the carrier to support service-life and net-salvage 
estimates. If a carrier must submit data of a repetitive nature to 
comply with this requirement, the carrier need only submit a fully 
illustrative portion thereof.
    (1) A Local Exchange Carrier regulated under price caps, pursuant to 
Secs. 61.41 through 61.49 of this chapter, is not required to submit the 
supplemental information described in paragraph (c) introductory text of 
this section for a specific account if: The carrier's currently 
prescribed depreciation rate for the specific account is derived from 
basic factors that fall within the basic factor ranges established for 
that same account; and the carrier's proposed depreciation rate for the 
specific account would also be derived from basic factors that fall 
within the basic factor ranges for the same account.
    (2) Interexchange carriers regulated under price caps, pursuant to 
Secs. 61.41 through 61.49 of this chapter, are exempted from submitting 
the supplemental information as described in paragraph (c) introductory 
text. They shall instead submit: Generation data, a summary of basic 
factors underlying proposed rates by account and a short narrative 
supporting those basic factors, including: Company plans of forecasted 
retirements and additions; and recent annual retirements, salvage and 
cost of removal.
    (d) Each report shall be filed in duplicate and the original shall 
be signed by the responsible official to whom correspondence related 
thereto should be addressed.
    (e) Unless otherwise directed or approved by the Commission, the 
following shall be observed: Proposed changes in depreciation rates 
shall be filed at least ninety (90) days prior to the last day of the 
month with respect to which the revised rates are first to be applied in 
the accounts (e.g., if the new rates are to be first applied in the 
depreciation accounts for September, they must be filed on or before 
July 1); and such rates may be made retroactive to a date not prior to 
the beginning of the year in which the filing is made: Provided, 
however, That in no event shall a carrier for which the Commission has 
prescribed depreciation rates make any changes in such rates unless the 
changes are prescribed by the Commission.
    (f) Any changes in depreciation rates that are made under the 
provisions of paragraph (e) of this section shall not be construed as 
having been approved

[[Page 12]]

by the Commission unless the carrier has been specifically so informed.

[28 FR 13214, Dec. 5, 1963, as amended at 30 FR 3223, Mar. 9, 1965; 53 
FR 49987, Dec. 13, 1988; 58 FR 58790, Nov. 4, 1993; 61 FR 50246, Sept. 
25, 1996; 62 FR 39779, July 24, 1997]



Sec. 43.51  Contracts and concessions.

    (a) Any communications common carrier that: is engaged in domestic 
communications and has not been classified as nondominant pursuant to 
Sec. 61.3 of this chapter or is engaged in foreign communications, and 
enters into a contract with another carrier, including an operating 
agreement with a communications entity in a foreign point for the 
provision of a common carrier service between the United States and that 
point; must file with the Commission, within thirty (30) days of 
execution, a copy of each contract, agreement, concession, license, 
authorization, operating agreement or other arrangement to which it is a 
party and amendments thereto with respect to the following:
    (1) The exchange of services;
    (2) Except as provided in paragraph (c) of this section, the 
interchange or routing of traffic and matters concerning rates, 
accounting rates, division of tolls, or the basis of settlement of 
traffic balances; and
    (3) The rights granted to the carrier by any foreign government for 
the landing, connection, installation, or operation of cables, land 
lines, radio stations, offices, or for otherwise engaging in 
communication operations.
    (b) If the agreement referred to in this section is made other than 
in writing, a certified statement covering all details thereof must be 
filed by at least one of the parties to the agreement. Each other party 
to the agreement which is also subject to these provisions may, in lieu 
of also filing a copy of the agreement, file a certified statement 
referencing the filed document. The Commission may, at any time and upon 
reasonable request, require any communication common carrier classified 
as nondominant, and therefore not subject to the provisions of this 
section, to submit the documents referenced in this section.
    (c) With respect to contracts coming within the scope of paragraph 
(a)(2) of this section between subject telephone carriers and connecting 
carriers, except those contracts related to communications with foreign 
or overseas points, such documents shall not be filed with the 
Commission; but each subject telephone carrier shall maintain a copy of 
such contracts to which it is a party in appropriate files at a central 
location upon its premises, copies of which shall be readily accessible 
to Commission staff and members of the public upon reasonable request 
therefor; and upon request by the Commission, a subject telephone 
carrier shall promptly forward individual contracts to the Commission.
    (d) Any U.S. carrier that interconnects an international private 
line to the U.S. public switched network, at its switch, including any 
switch in which the carrier obtains capacity either through lease or 
otherwise, shall file annually with the Chief of the International 
Bureau a certified statement containing the number and type (e.g., a 64-
kbps circuit) of private lines interconnected in such a manner. The 
certified statement shall specify the number and type of interconnected 
private lines on a country specific basis. The identity of the customer 
need not be reported, and the Commission will treat the country of 
origin information as confidential. Carriers need not file their 
contracts for such interconnections, unless they are specifically 
requested to do so. These reports shall be filed on a consolidated basis 
on February 1 (covering international private lines interconnected 
during the preceding January 1 to December 31 period) of each year. 
International private lines to countries for which the Commission has 
authorized the provision of switched basic services over private lines 
at any time during a particular reporting period are exempt from this 
requirement.
    (e) International settlements policy. (1) If a carrier files an 
operating agreement (whether in the form of a contract, concession, 
license, etc.) referred to in paragraph (a) of this section to begin 
providing switched voice, telex, telegraph, or packet-switched service 
between the United States and a foreign point and the terms and 
conditions of such agreement relating to the exchange of services, 
interchange or

[[Page 13]]

routing of traffic and matters concerning rates, accounting rates, 
division of tolls, the allocation of return traffic, or the basis of 
settlement of traffic balances, are not identical to the equivalent 
terms and conditions in the operating agreement of another carrier 
providing the same or similar service between the United States and the 
same foreign point, the carrier must also file with the International 
Bureau a notification letter or modification request, as appropriate, 
under Sec. 64.1001 of this chapter. No carrier providing switched voice, 
telex, telegraph, or packet-switched service between the United States 
and a foreign point shall bargain for or agree to accept more than its 
proportionate share of return traffic.
    (2) If a carrier files an amendment to the operating agreement 
referred to in paragraph (a) of this section under which it already 
provides switched voice, telex, telegraph, or packet-switched service 
between the United States and a foreign point, and other carriers 
provide the same or similar service to the same foreign point, and the 
amendment relates to the exchange of services, interchange or routing of 
traffic and matters concerning rates, accounting rates, division of 
tolls, the allocation of return traffic, or the basis of settlement of 
traffic balances, the carrier must also file with the International 
Bureau a notification letter or modification request, as appropriate, 
under Sec. 64.1001 of this chapter.

[51 FR 45890, Dec. 23, 1986, as amended at 56 FR 25371, June 4, 1991; 57 
FR 647, Jan. 8, 1992; 58 FR 48323, Sept. 15, 1993; 60 FR 52866, Oct. 11, 
1995; 61 FR 59200, Nov. 21, 1996; 62 FR 5541, Feb. 6, 1997; 62 FR 8633, 
Feb. 26, 1997; 62 FR 64751, Dec. 9, 1997]



Sec. 43.53  Reports regarding division of international toll communication charges.

    (a) Each communication common carrier engaged directly in the 
transmission or reception of telegraph communications between the 
continental United States and any foreign country (other than one to 
which the domestic word-count applies) shall file a report with the 
Commission within thirty (30) days of the date of any arrangement 
concerning the division of the total telegraph charges on such 
communications other than transiting. A carrier first becoming subject 
to the provisions of this section must, within thirty (30) days 
thereafter, file with the Commission a report covering any such existing 
arrangements.
    (b) In the event that any change is made which affects data 
previously filed, a revised page incorporating such change or changes 
must be filed with the Commission not later than thirty (30) days from 
the date the change is made, provided, however, that any change in the 
amount of foreign participation in charges for outbound communications 
or in the respondent's participation in charges for inbound 
communications must be filed not later than thirty (30) days from the 
date the change is agreed upon.
    (c) A single copy of each such report must be filed in a format that 
contains a clear, concise and definite statement of the arrangements.

[51 FR 45891, Dec. 23, 1986, as amended at 52 FR 8453, Mar. 18, 1987]



Sec. 43.61  Reports of international telecommunications traffic.

    (a) Each common carrier engaged in providing international 
telecommunications service between the area comprising the continental 
United States, Alaska, Hawaii, and off-shore U.S. points and any country 
or point outside that area shall file a report with the Commission not 
later than July 31 of each year for service actually provided in the 
preceding calendar year.
    (1) The information contained in the reports shall include actual 
traffic and revenue data for each and every service provided by a common 
carrier, divided among service billed in the United States, service 
billed outside the United States, and service transiting the United 
States. In addition, it shall include the number of minutes of outbound 
and inbound traffic settled pursuant to each alternative arrangement 
entered into pursuant to Sec. 64.1002 of this chapter.
    (2) Each common carrier shall submit a revised report by October 31 
identifying and correcting any inaccuracies included in the annual 
report exceeding five percent of the reported figure.

[[Page 14]]

    (3) The information required under this section shall be furnished 
in conformance with the instructions and reporting requirements prepared 
under the direction of the Chief, Common Carrier Bureau, prepared and 
published as a manual, in consultation and coordination with the Chief, 
International Bureau.
    (b) Quarterly Traffic Reports. (1) Each common carrier engaged in 
providing international telecommunicaitons service between the area 
comprising the continental United States, Alaska, Hawaii, and off-shore 
U.S. points and any country or point outside that area shall file with 
the Commission, in addition to the report required by paragraph (a) of 
this section, actual traffic and revenue data for each calendar quarter 
in which the carrier's quarterly minutes exceed the corresponding 
minutes for all carriers by one or more of the following tests:
    (i) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed in the 
United States are greater than 1.0 percent of the total of such minutes 
of international traffic for all U.S. carriers published in the 
Commission's most recent Sec. 43.61 annual report of international 
telecommunications traffic;
    (ii) The carrier's aggragate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed outside 
the United States are greater than 1.0 percent of the total of such 
minutes of international traffic for all U.S. carriers published in the 
Commission's most recent Sec. 43.61 annual report of international 
telecommunications traffic;
    (iii) The carrier's aggregate minutes of facilities-based or 
facilities switched telephone traffic for service billed in the United 
States for any foreign country are greater than 2.5 percent of the total 
of such minutes of international traffic for that country for all U.S. 
carriers published in the Commission's most recent Sec. 43.61 annual 
report of international telecommunications traffic; or
    (iv) The carrier's aggregate minutes of facilities-based or 
facilities resale switched telephone traffic for service billed outside 
the United States for any foreign country are greater than 2.5 percent 
of the total of such minutes of international traffic for that country 
for all U.S. carriers published in the Commission's most recent 
Sec. 43.61 annual report of international telecommunications traffic.
    (2) Except as provided in this paragraph, the quarterly reports 
required by paragraph (b)(1) of this section shall be filed in the same 
format as, and in conformance with, the filing procedures for the annual 
reports required by paragraph (a) of this section.
    (i) Carriers filing quarterly reports shall include in those reports 
only their provision of switched, facilities-based telephone service and 
switched, facilities resale telephone service.
    (ii) The quarterly reports required by paragraph (b)(1) of this 
section shall be filed with the Commission no later than April 30 for 
the prior January through March quarter; no later than July 31 for the 
prior April through June quarter; no later than October 31 for the prior 
July through September quarter; and no later than January 31 for the 
prior October through December period.
    (c) Each common carrier engaged in the resale of international 
switched services that has an affiliation with a foreign carrier that 
has sufficient market power on the foreign end of an international route 
to affect competition adversely in the U.S. market and that collects 
settlement payments from U.S. carriers shall file a quarterly version of 
the report required in paragraph (a) of this section for its switched 
resale services on the dominant route within 90 days from the end of 
each calendar quarter. For purposes of this paragraph, ``affiliation'' 
is defined in Sec. 63.18(h)(1)(i) of this chapter and ``foreign 
carrier'' is defined in Sec. 63.18(h)(1)(ii) of this chapter.

[57 FR 8580, Mar. 11, 1992, as amended at 60 FR 5333, Jan. 27, 1995; 62 
FR 5541, Feb. 6, 1997; 62 FR 45761, Aug. 29, 1997; 62 FR 64752, Dec. 9, 
1997]

[[Page 15]]



Sec. 43.72  [Reserved]



Sec. 43.81  Reports of carriers owned by foreign telecommunications entities.

    (a) The following carriers are required to file with the Commission 
an annual revenue and traffic report in triplicate with respect to all 
common carrier telecommunications services they offer within the United 
States.
    (1) Cable and Wireless Communications, Inc.;
    (2) FTCC Communications Inc.; and
    (3) Consortium Communications International, Inc.
    (b) The Chief, International Bureau has the authority to require 
that no more than six additional communications carriers owned by 
foreign telecommunications entities that are classified as dominant for 
the provision of international telecommunications services originating 
or terminating in the United States file Sec. 43.81 reports.
    (c) The report should be captioned--Sec. 43.81 report and should 
provide the following:
    (1) Revenues, number of messages and number of minutes for message 
telephone service traffic originated and/or terminated by the filing 
carrier;
    (2) Revenues, number of messages, and number of minutes for telex 
traffic originated and/or terminated by the filing carrier;
    (3) Revenues, number of messages, and number of minutes for 
telegraph traffic originated and/or terminated by the filing carrier;
    (4) Revenues, number of messages, and number of minutes for any 
other basic switched services (specified by service) originated and/or 
terminated by the filing carrier; and
    (5) Number of leases and revenues from private line services 
provided by the filing carrier.
    (d) Section 43.81 Reports for:
    (1) The calendar year 1988 must be filed on or before August 1, 
1989;
    (2) The calendar year 1989 must be filed on or before August 1, 
1990; and
    (3) The calendar year 1990 must be filed on or before August 1, 
1991.
    (e) These reports shall apply to nine or fewer persons and therefore 
are not subject to the review of the Office of Management and Budget 
under the Paperwork Reduction Act.

[54 FR 2130, Jan. 19, 1989, as amended at 60 FR 5333, Jan. 27, 1995]



Sec. 43.82  International circuit status reports.

    (a) Each facilities-based common carrier engaged in providing 
international telecommunications service between the area comprising the 
continental United States, Alaska, Hawaii, and off-shore U.S. points and 
any country or point outside that area shall file a circuit status 
report with the Chief, International Bureau, not later than March 31 
each year showing the status of its circuits used to provide 
international services as of December 31 of the preceding calendar year.
    (b) The information contained in the reports shall include the total 
number of activated and the total number of idle circuits by the 
categories of submarine cable, satellite and terrestrial facilities to 
geographic points outside the United States for the services designated 
by the Chief, International Bureau.
    (c) The information required under this section shall be furnished 
in conformance with instructions and reporting requirements prepared 
under the direction of the Chief, International Bureau, prepared and 
published as a manual.
    (d) Authority is hereby delegated to the Chief, International Bureau 
to prepare instructions and reporting requirements for the filing of the 
annual international circuit status reports.

[60 FR 51368, Oct. 2, 1995]



PART 51--INTERCONNECTION--Table of Contents




                     Subpart A--General Information

Sec.
51.1  Basis and purpose.
51.3  Applicability to negotiated agreements.
51.5  Terms and definitions.

                 Subpart B--Telecommunications Carriers

51.100  General duty.

[[Page 16]]

          Subpart C--Obligations of All Local Exchange Carriers

51.201  Resale.
51.203  Number portability.
51.205  Dialing parity: General.
51.207  Local dialing parity.
51.209  Toll dialing parity.
51.211  Toll dialing parity implementation schedule.
51.213  Toll dialing parity implementation plans.
51.215  Dialing parity: Cost recovery.
51.217  Nondiscriminatory access: Telephone numbers, operator services, 
          directory assistance services, and directory listings.
51.219  Access to rights of way.
51.221  Reciprocal compensation.
51.223  Application of additional requirements.

 Subpart D--Additional Obligations of Incumbent Local Exchange Carriers

51.301  Duty to negotiate.
51.303  Preexisting agreements.
51.305  Interconnection.
51.307  Duty to provide access on an unbundled basis to network 
          elements.
51.309  Use of unbundled network elements.
51.311  Nondiscriminatory access to unbundled network elements.
51.313  Just, reasonable and nondiscriminatory terms and conditions for 
          the provision of unbundled network elements.
51.315  Combination of unbundled network elements.
51.317  Standards for identifying network elements to be made available.
51.319  Specific unbundling requirements.
51.321  Methods of obtaining interconnection and access to unbundled 
          elements under section 251 of the Act.
51.323  Standards for physical collocation and virtual collocation.
51.325  Notice of network changes: Public notice requirement.
51.327  Notice of network changes: Content of notice.
51.329  Notice of network changes: Methods for providing notice.
51.331  Notice of network changes: Timing of notice.
51.333  Notice of network changes: Short term notice.
51.335  Notice of network changes: Confidential or proprietary 
          information.

Subpart E--Exemptions, Suspensions, and Modifications of Requirements of 
                         Section 251 of the Act

51.401  State authority.
51.403  Carriers eligible for suspension or modification under section 
          251(f)(2) of the Act.
51.405  Burden of proof.

                     Subpart F--Pricing of Elements

51.501  Scope.
51.503  General pricing standard.
51.505  Forward-looking economic cost.
51.507  General rate structure standard.
51.509  Rate structure standards for specific elements.
51.511  Forward-looking economic cost per unit.
51.513  Proxies for forward-looking economic cost.
51.515  Application of access charges.

                            Subpart G--Resale

51.601  Scope of resale rules.
51.603  Resale obligation of all local exchange carriers.
51.605  Additional obligations of incumbent local exchange carriers.
51.607  Wholesale pricing standard.
51.609  Determination of avoided retail costs.
51.611  Interim wholesale rates.
51.613  Restrictions on resale.
51.615  Withdrawal of services.
51.617  Assessment of end user common line charge on resellers.

  Subpart H--Reciprocal Compensation for Transport and Termination of 
                    Local Telecommunications Traffic

51.701  Scope of transport and termination pricing rules.
51.703  Reciprocal compensation obligation of LECs.
51.705  Incumbent LECs' rates for transport and termination.
51.707  Default proxies for incumbent LECs' transport and termination 
          rates.
51.709  Rate structure for transport and termination.
51.711  Symmetrical reciprocal compensation.
51.713  Bill-and-keep arrangements for reciprocal compensation.
51.715  Interim transport and termination pricing.
51.717  Renegotiation of existing non-reciprocal arrangements.

   Subpart I--Procedures for Implementation of Section 252 of the Act

51.801  Commission action upon a state commission's failure to act to 
          carry out its responsibility under section 252 of the Act.
51.803  Procedures for Commission notification of a state commission's 
          failure to act.
51.805  The Commission's authority over proceedings and matters.
51.807  Arbitration and mediation of agreements by the Commission 
          pursuant to section 252(e)(5) of the Act.

[[Page 17]]

51.809  Availability of provisions of agreements to other 
          telecommunications carriers under section 252(i) of the Act.

    Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54, 
271, 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. Secs. 151-55, 157, 
201-05, 207-09, 218, 225-27, 251-54, 271, 332, unless otherwise noted.

    Source: 61 FR 45619, Aug. 29, 1996, unless otherwise noted.



                     Subpart A--General Information



Sec. 51.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended.
    (b) Purpose. The purpose of these rules is to implement sections 251 
and 252 of the Communications Act of 1934, as amended, 47 U.S.C. 251 and 
252.



Sec. 51.3  Applicability to negotiated agreements.

    To the extent provided in section 252(e)(2)(A) of the Act, a state 
commission shall have authority to approve an interconnection agreement 
adopted by negotiation even if the terms of the agreement do not comply 
with the requirements of this part.



Sec. 51.5  Terms and definitions.

    Terms used in this part have the following meanings:
    Act. The Communications Act of 1934, as amended.
    Advanced intelligent network. Advanced intelligent network is a 
telecommunications network architecture in which call processing, call 
routing, and network management are provided by means of centralized 
databases located at points in an incumbent local exchange carrier's 
network.
    Arbitration, final offer. Final offer arbitration is a procedure 
under which each party submits a final offer concerning the issues 
subject to arbitration, and the arbitrator selects, without 
modification, one of the final offers by the parties to the arbitration 
or portions of both such offers. ``Entire package final offer 
arbitration,'' is a procedure under which the arbitrator must select, 
without modification, the entire proposal submitted by one of the 
parties to the arbitration. ``Issue-by-issue final offer arbitration,'' 
is a procedure under which the arbitrator must select, without 
modification, on an issue-by-issue basis, one of the proposals submitted 
by the parties to the arbitration.
    Billing. Billing involves the provision of appropriate usage data by 
one telecommunications carrier to another to facilitate customer billing 
with attendant acknowledgements and status reports. It also involves the 
exchange of information between telecommunications carriers to process 
claims and adjustments.
    Commercial Mobile Radio Service (CMRS). CMRS has the same meaning as 
that term is defined in Sec. 20.3 of this chapter.
    Commission. Commission refers to the Federal Communications 
Commission.
    Dialing parity. The term dialing parity means that a person that is 
not an affiliate of a local exchange carrier is able to provide 
telecommunications services in such a manner that customers have the 
ability to route automatically, without the use of any access code, 
their telecommunications to the telecommunications service provider of 
the customer's designation from among 2 or more telecommunications 
service providers (including such local exchange carrier).
    Directory assistance service. Directory assistance service includes, 
but is not limited to, making available to customers, upon request, 
information contained in directory listings.
    Directory listings. Directory listings are any information:
    (1) Identifying the listed names of subscribers of a 
telecommunications carrier and such subscriber's telephone numbers, 
addresses, or primary advertising classifications (as such 
classifications are assigned at the time of the establishment of such 
service), or any combination of such listed names, numbers, addresses or 
classifications; and
    (2) That the telecommunications carrier or an affiliate has 
published, caused to be published, or accepted for publication in any 
directory format.
    Downstream database. A downstream database is a database owned and 
operated by an individual carrier for the purpose of providing number 
portability in conjunction with other functions and services.

[[Page 18]]

    Equipment necessary for interconnection or access to unbundled 
network elements. For purposes of section 251(c)(2) of the Act, the 
equipment used to interconnect with an incumbent local exchange 
carrier's network for the transmission and routing of telephone exchange 
service, exchange access service, or both. For the purposes of section 
251(c)(3) of the Act, the equipment used to gain access to an incumbent 
local exchange carrier's unbundled network elements for the provision of 
a telecommunications service.
    Incumbent Local Exchange Carrier (Incumbent LEC). With respect to an 
area, the local exchange carrier that:
    (1) On February 8, 1996, provided telephone exchange service in such 
area; and
    (2)(i) On February 8, 1996, was deemed to be a member of the 
exchange carrier association pursuant to Sec. 69.601(b) of this chapter; 
or
    (ii) Is a person or entity that, on or after February 8, 1996, 
became a successor or assign of a member described in paragraph (2)(i) 
of this section.
    Information services. The term information services means the 
offering of a capability for generating, acquiring, storing, 
transforming, processing, retrieving, utilizing, or making available 
information via telecommunications, and includes electronic publishing, 
but does not include any use of any such capability for the management, 
control, or operation of a telecommunications system or the management 
of a telecommunications service.
    Interconnection. Interconnection is the linking of two networks for 
the mutual exchange of traffic. This term does not include the transport 
and termination of traffic.
    Local Access and Transport Area (LATA). A Local Access and Transport 
Area is a contiguous geographic area--
    (1) Established before February 8, 1996 by a Bell operating company 
such that no exchange area includes points within more than 1 
metropolitan statistical area, consolidated metropolitan statistical 
area, or State, except as expressly permitted under the AT&T Consent 
Decree; or
    (2) Established or modified by a Bell operating company after 
February 8, 1996 and approved by the Commission.
    Local Exchange Carrier (LEC). A LEC is any person that is engaged in 
the provision of telephone exchange service or exchange access. Such 
term does not include a person insofar as such person is engaged in the 
provision of a commercial mobile service under section 332(c) of the 
Act, except to the extent that the Commission finds that such service 
should be included in the definition of the such term.
    Maintenance and repair. Maintenance and repair involves the exchange 
of information between telecommunications carriers where one initiates a 
request for maintenance or repair of existing products and services or 
unbundled network elements or combination thereof from the other with 
attendant acknowledgements and status reports.
    Meet point. A meet point is a point of interconnection between two 
networks, designated by two telecommunications carriers, at which one 
carrier's responsibility for service begins and the other carrier's 
responsibility ends.
    Meet point interconnection arrangement. A meet point interconnection 
arrangement is an arrangement by which each telecommunications carrier 
builds and maintains its network to a meet point.
    Network element. A network element is a facility or equipment used 
in the provision of a telecommunications service. Such term also 
includes, but is not limited to, features, functions, and capabilities 
that are provided by means of such facility or equipment, including but 
not limited to, subscriber numbers, databases, signaling systems, and 
information sufficient for billing and collection or used in the 
transmission, routing, or other provision of a telecommunications 
service.
    Operator services. Operator services are any automatic or live 
assistance to a consumer to arrange for billing or completion of a 
telephone call. Such services include, but are not limited to, busy line 
verification, emergency interrupt, and operator-assisted directory 
assistance services.
    Physical collocation. Physical collocation is an offering by an 
incumbent LEC that enables a requesting telecommunications carrier to:

[[Page 19]]

    (1) Place its own equipment to be used for interconnection or access 
to unbundled network elements within or upon an incumbent LEC's 
premises;
    (2) Use such equipment to interconnect with an incumbent LEC's 
network facilities for the transmission and routing of telephone 
exchange service, exchange access service, or both, or to gain access to 
an incumbent LEC's unbundled network elements for the provision of a 
telecommunications service;
    (3) Enter those premises, subject to reasonable terms and 
conditions, to install, maintain, and repair equipment necessary for 
interconnection or access to unbundled elements; and
    (4) Obtain reasonable amounts of space in an incumbent LEC's 
premises, as provided in this part, for the equipment necessary for 
interconnection or access to unbundled elements, allocated on a first-
come, first-served basis.
    Premises. Premises refers to an incumbent LEC's central offices and 
serving wire centers, as well as all buildings or similar structures 
owned or leased by an incumbent LEC that house its network facilities, 
and all structures that house incumbent LEC facilities on public rights-
of-way, including but not limited to vaults containing loop 
concentrators or similar structures.
    Pre-ordering and ordering. Pre-ordering and ordering includes the 
exchange of information between telecommunications carriers about 
current or proposed customer products and services or unbundled network 
elements or some combination thereof.
    Provisioning. Provisioning involves the exchange of information 
between telecommunications carriers where one executes a request for a 
set of products and services or unbundled network elements or 
combination thereof from the other with attendant acknowledgements and 
status reports.
    Rural telephone company. A rural telephone company is a LEC 
operating entity to the extent that such entity:
    (1) Provides common carrier service to any local exchange carrier 
study area that does not include either:
    (i) Any incorporated place of 10,000 inhabitants or more, or any 
part thereof, based on the most recently available population statistics 
of the Bureau of the Census; or
    (ii) Any territory, incorporated or unincorporated, included in an 
urbanized area, as defined by the Bureau of the Census as of August 10, 
1993;
    (2) Provides telephone exchange service, including exchange access, 
to fewer than 50,000 access lines;
    (3) Provides telephone exchange service to any local exchange 
carrier study area with fewer than 100,000 access lines; or
    (4) Has less than 15 percent of its access lines in communities of 
more than 50,000 on February 8, 1996.
    Service control point. A service control point is a computer 
database in the public switched network which contains information and 
call processing instructions needed to process and complete a telephone 
call.
    Service creation environment. A service creation environment is a 
computer containing generic call processing software that can be 
programmed to create new advanced intelligent network call processing 
services.
    Service provider. A service provider is a provider of 
telecommunications services or a provider of information services.
    Signal transfer point. A signal transfer point is a packet switch 
that acts as a routing hub for a signaling network and transfers 
messages between various points in and among signaling networks.
    State. The term state includes the District of Columbia and the 
Territories and possessions.
    State commission. A state commission means the commission, board, or 
official (by whatever name designated) which under the laws of any State 
has regulatory jurisdiction with respect to intrastate operations of 
carriers. As referenced in this part, this term may include the 
Commission if it assumes the responsibility of the state commission, 
pursuant to section 252(e)(5) of the Act. This term shall also include 
any person or persons to whom the state commission has delegated its 
authority under section 251 and 252 of the Act.
    State proceeding. A state proceeding is any administrative 
proceeding in which a state commission may approve

[[Page 20]]

or prescribe rates, terms, and conditions including, but not limited to, 
compulsory arbitration pursuant to section 252(b) of the Act, review of 
a Bell operating company statement of generally available terms pursuant 
to section 252(f) of the Act, and a proceeding to determine whether to 
approve or reject an agreement adopted by arbitration pursuant to 
section 252(e) of the Act.
    Technically feasible. Interconnection, access to unbundled network 
elements, collocation, and other methods of achieving interconnection or 
access to unbundled network elements at a point in the network shall be 
deemed technically feasible absent technical or operational concerns 
that prevent the fulfillment of a request by a telecommunications 
carrier for such interconnection, access, or methods. A determination of 
technical feasibility does not include consideration of economic, 
accounting, billing, space, or site concerns, except that space and site 
concerns may be considered in circumstances where there is no 
possibility of expanding the space available. The fact that an incumbent 
LEC must modify its facilities or equipment to respond to such request 
does not determine whether satisfying such request is technically 
feasible. An incumbent LEC that claims that it cannot satisfy such 
request because of adverse network reliability impacts must prove to the 
state commission by clear and convincing evidence that such 
interconnection, access, or methods would result in specific and 
significant adverse network reliability impacts.
    Telecommunications carrier. A telecommunications carrier is any 
provider of telecommunications services, except that such term does not 
include aggregators of telecommunications services (as defined in 
section 226 of the Act). A telecommunications carrier shall be treated 
as a common carrier under the Act only to the extent that it is engaged 
in providing telecommunications services, except that the Commission 
shall determine whether the provision of fixed and mobile satellite 
service shall be treated as common carriage. This definition includes 
CMRS providers, interexchange carriers (IXCs) and, to the extent they 
are acting as telecommunications carriers, companies that provide both 
telecommunications and information services. Private Mobile Radio 
Service providers are telecommunications carriers to the extent they 
provide domestic or international telecommunications for a fee directly 
to the public.
    Telecommunications service. The term telecommunications service 
refers to the offering of telecommunications for a fee directly to the 
public, or to such classes of users as to be effectively available 
directly to the public, regardless of the facilities used.
    Telephone exchange service. A telephone exchange service is:
    (1) A service within a telephone exchange, or within a connected 
system of telephone exchanges within the same exchange area operated to 
furnish to subscribers intercommunicating service of the character 
ordinarily furnished by a single exchange, and which is covered by the 
exchange service charge, or
    (2) A comparable service provided through a system of switches, 
transmission equipment, or other facilities (or combination thereof) by 
which a subscriber can originate and terminate a telecommunications 
service.
    Telephone toll service. The term telephone toll service refers to 
telephone service between stations in different exchange areas for which 
there is made a separate charge not included in contracts with 
subscribers for exchange service.
    Unreasonable dialing delay. For the same type of calls, dialing 
delay is ``unreasonable'' when the dialing delay experienced by the 
customer of a competing provider is greater than that experienced by a 
customer of the LEC providing dialing parity, or nondiscriminatory 
access to operator services or directory assistance.
    Virtual collocation. Virtual collocation is an offering by an 
incumbent LEC that enables a requesting telecommunications carrier to:
    (1) Designate or specify equipment to be used for interconnection or 
access to unbundled network elements to be located within or upon an 
incumbent LEC's premises, and dedicated to such telecommunications 
carrier's use;

[[Page 21]]

    (2) Use such equipment to interconnect with an incumbent LEC's 
network facilities for the transmission and routing of telephone 
exchange service, exchange access service, or both, or for access to an 
incumbent LEC's unbundled network elements for the provision of a 
telecommunications service; and
    (3) Electronically monitor and control its communications channels 
terminating in such equipment.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47348, Sept. 6, 1996]



                 Subpart B--Telecommunications Carriers



Sec. 51.100  General duty.

    (a) Each telecommunications carrier has the duty:
    (1) To interconnect directly or indirectly with the facilities and 
equipment of other telecommunications carriers; and
    (2) To not install network features, functions, or capabilities that 
do not comply with the guidelines and standards as provided in the 
Commission's rules or section 255 or 256 of the Act.
    (b) A telecommunication carrier that has interconnected or gained 
access under sections 251(a)(1), 251(c)(2), or 251(c)(3) of the Act, may 
offer information services through the same arrangement, so long as it 
is offering telecommunications services through the same arrangement as 
well.



          Subpart C--Obligations of All Local Exchange Carriers



Sec. 51.201  Resale.

    The rules governing resale of services by an incumbent LEC are set 
forth in subpart G of this part.



Sec. 51.203  Number portability.

    The rules governing number portability are set forth in part 52, 
subpart C of this chapter.



Sec. 51.205  Dialing parity: General.

    A local exchange carrier (LEC) shall provide local and toll dialing 
parity to competing providers of telephone exchange service or telephone 
toll service, with no unreasonable dialing delays. Dialing parity shall 
be provided for all originating telecommunications services that require 
dialing to route a call.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.207  Local dialing parity.

    A LEC shall permit telephone exchange service customers within a 
local calling area to dial the same number of digits to make a local 
telephone call notwithstanding the identity of the customer's or the 
called party's telecommunications service provider.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.209  Toll dialing parity.

    (a) A LEC shall implement throughout each state in which it offers 
telephone exchange service intraLATA and interLATA toll dialing parity 
based on LATA boundaries. When a single LATA covers more than one state, 
the LEC shall use the implementation procedures that each state has 
approved for the LEC within that state's borders.
    (b) A LEC shall implement toll dialing parity through a 
presubscription process that permits a customer to select a carrier to 
which all designated calls on a customer's line will be routed 
automatically. LECs shall allow a customer to presubscribe, at a 
minimum, to one telecommunications carrier for all interLATA toll calls 
and to presubscribe to the same or to another telecommunications carrier 
for all intraLATA toll calls.
    (c) A LEC may not assign automatically a customer's intraLATA toll 
traffic to itself, to its subsidiaries or affiliates, to the customer's 
presubscribed interLATA or interstate toll carrier, or to any other 
carrier, except when, in a state that already has implemented 
intrastate, intraLATA toll dialing parity, the subscriber has selected 
the same presubscribed carrier for both intraLATA and interLATA toll 
calls.
    (d) Notwithstanding the requirements of paragraphs (a) and (b) of 
this section, states may require that toll dialing parity be based on 
state boundaries if it deems that the provision of intrastate and 
interstate toll dialing

[[Page 22]]

parity is procompetitive and otherwise in the public interest.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.211  Toll dialing parity implementation schedule.

    (a) A LEC that does not begin providing in-region, interLATA or in-
region, interstate toll services in a state before February 8, 1999, 
must implement intraLATA and interLATA toll dialing parity throughout 
that state on February 8, 1999 or an earlier date as the state may 
determine, consistent with section 271(e)(2)(B) of the Communications 
Act of 1934, as amended, to be in the public interest.
    (b) A Bell Operating Company (BOC) that provides in-region, 
interLATA toll services in a state before February 8, 1999 shall provide 
intraLATA toll dialing parity throughout that state coincident with its 
provision of in-region, interLATA toll services.
    (c) A LEC that is not a BOC that begins providing in-region, 
interLATA or in-region, interstate toll services in a state before 
August 8, 1997, shall implement intraLATA and interLATA toll dialing 
parity throughout that state by August 8, 1997. If the LEC is unable to 
comply with the August 8, 1997 implementation deadline, the LEC must 
notify the Commission's Common Carrier Bureau by May 8, 1997. In the 
notification, the LEC must state its justification for noncompliance and 
must set forth the date by which it proposes to implement intraLATA and 
interLATA toll dialing parity.
    (d) A LEC that is not a BOC that begins providing in-region, 
interLATA or in-region, interstate toll services in a state on or after 
August 8, 1997, but before February 8, 1999 shall implement intraLATA 
and interLATA toll dialing parity throughout that state no later than 
the date on which it begins providing in-region, interLATA or in-region, 
interstate toll services.
    (e) Notwithstanding the requirements of paragraphs (a) through (d) 
of this section, a LEC shall implement toll dialing parity under a state 
order as described below:
    (1) If the state issued a dialing parity order by December 19, 1995 
requiring a BOC to implement toll dialing parity in advance of the dates 
established by these rules, the BOC must implement toll dialing parity 
in accordance with the implementation dates established by the state 
order.
    (2) If the state issued a dialing parity order by August 8, 1996 
requiring a LEC that is not a BOC to implement toll dialing parity in 
advance of the dates established by these rules, the LEC must implement 
toll dialing parity in accordance with the implementation dates 
established by the state order.
    (f) For LECs that are not Bell Operating Companies, the term in-
region, interLATA toll service, as used in this section and Sec. 51.213, 
includes the provision of toll services outside of the LEC's study area.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.213  Toll dialing parity implementation plans.

    (a) A LEC must file a plan for providing intraLATA toll dialing 
parity throughout each state in which it offers telephone exchange 
service. A LEC cannot offer intraLATA toll dialing parity within a state 
until the implementation plan has been approved by the appropriate state 
commission or the Commission.
    (b) A LEC's implementation plan must include:
    (1) A proposal that explains how the LEC will offer intraLATA toll 
dialing parity for each exchange that the LEC operates in the state, in 
accordance with the provisions of this section, and a proposed time 
schedule for implementation; and
    (2) A proposal for timely notification of its subscribers and the 
methods it proposes to use to enable subscribers to affirmatively select 
an intraLATA toll service provider.
    (3) A LEC that is not a BOC also shall identify the LATA with which 
it will associate for the purposes of providing intraLATA and interLATA 
toll dialing parity under this subpart.
    (c) A LEC must file its implementation plan with the state 
commission for each state in which the LEC provides telephone exchange 
service, except that if a LEC determines that a state commission has 
elected not to review the plan or will not complete its review in 
sufficient time for the LEC to

[[Page 23]]

meet the toll dialing parity implementation deadlines in Sec. 51.211, 
the LEC must file its plan with the Commission:
    (1) No later than 180 days before the date on which the LEC will 
begin providing toll dialing parity in the state, or no later than 180 
days before February 8, 1999, whichever occurs first; or
    (2) For LECs that begin providing in-region, interLATA or in-region, 
interstate toll service (see Sec. 51.211(f)) before August 8, 1997, no 
later than December 5, 1996.
    (d) The Commission will release a public notice of any LEC 
implementation plan that is filed with the Commission under paragraph 
(c) of this section.
    (1) The LEC's plan will be deemed approved on the fifteenth day 
following release of the Commission's public notice unless, no later 
than the fourteenth day following the release of the Commission's public 
notice; either
    (i) The Common Carrier Bureau notifies the LEC that its plan will 
not be deemed approved on the fifteenth day; or
    (ii) An opposition to the plan is filed with the Commission and 
served on the LEC that filed the plan. Such an opposition must state 
specific reasons why the LEC's plan does not serve the public interest.
    (2) If one or more oppositions are filed, the LEC that filed the 
plan will have seven additional days (i.e., until no later than the 
twenty-first day following the release of the Commission's public 
notice) within which to file a reply to the opposition(s) and serve it 
on all parties that filed an opposition. The response shall:
    (i) Include information responsive to the allegations and concerns 
identified by the opposing party; and
    (ii) Identify possible revisions to the plan that will address the 
opposing party's concerns.
    (3) If a LEC's plan is opposed under paragraph (d)(1)(ii) of this 
section, the Common Carrier Bureau will act on the plan within ninety 
days of the date on which the Commission released its public notice. In 
the event the Bureau fails to act within ninety days, the plan will not 
go into effect pending Bureau action. If the plan is not opposed, but it 
did not go into effect on the fifteenth day following the release of the 
Commission's public notice (see paragraph (d)(1)(i) of this section), 
and the Common Carrier Bureau fails to act on the plan within ninety 
days of the date on which the Commission released its public notice, the 
plan will be deemed approved without further Commission action on the 
ninety-first day after the date on which the Commission released its 
public notice of the plan's filing.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.215  Dialing parity: Cost recovery.

    (a) A LEC may recover the incremental costs necessary for the 
implementation of toll dialing parity. The LEC must recover such costs 
from all providers of telephone exchange service and telephone toll 
service in the area served by the LEC, including that LEC. The LEC shall 
use a cost recovery mechanism established by the state.
    (b) Any cost recovery mechanism for the provision of toll dialing 
parity pursuant to this section that a state adopts must not:
    (1) Give one service provider an appreciable cost advantage over 
another service provider, when competing for a specific subscriber 
(i.e., the recovery mechanism may not have a disparate effect on the 
incremental costs of competing service providers seeking to serve the 
same customer); or
    (2) Have a disparate effect on the ability of competing service 
providers to earn a normal return on their investment.

[61 FR 47350, Sept. 6, 1996]



Sec. 51.217  Nondiscriminatory access: Telephone numbers, operator services, directory assistance services, and directory listings.

    (a) Definitions. As used in this section, the following definitions 
apply:
    (1) Competing provider. A ``competing provider'' is a provider of 
telephone exchange or telephone toll services that seeks 
nondiscriminatory access from a local exchange carrier (LEC) in that 
LEC's service area.
    (2) Nondiscriminatory access. ``Nondiscriminatory access'' refers to 
access to telephone numbers, operator services, directory assistance and 
directory

[[Page 24]]

listings that is at least equal to the access that the providing local 
exchange carrier (LEC) itself receives. Nondiscriminatory access 
includes, but is not limited to:
    (i) Nondiscrimination between and among carriers in the rates, 
terms, and conditions of the access provided; and
    (ii) The ability of the competing provider to obtain access that is 
at least equal in quality to that of the providing LEC.
    (3) Providing local exchange carrier (LEC). A ``providing local 
exchange carrier'' is a local exchange carrier (LEC) that is required to 
permit nondiscriminatory access to a competing provider.
    (b) General rule. A local exchange carrier (LEC) that provides 
operator services, directory assistance services or directory listings 
to its customers, or provides telephone numbers, shall permit competing 
providers of telephone exchange service or telephone toll service to 
have nondiscriminatory access to that service or feature, with no 
unreasonable dialing delays.
    (c) Specific requirements. A LEC subject to paragraph (b) of this 
section must also comply with the following requirements:
    (1) Telephone numbers. A LEC shall permit competing providers to 
have access to telephone numbers that is identical to the access that 
the LEC provides to itself.
    (2) Operator services. A LEC must permit telephone service customers 
to connect to the operator services offered by that customer's chosen 
local service provider by dialing ``0,'' or ``0'' plus the desired 
telephone number, regardless of the identity of the customer's local 
telephone service provider.
    (3) Directory assistance services and directory listings--(i) Access 
to directory assistance. A LEC shall permit competing providers to have 
access to its directory assistance services so that any customer of a 
competing provider can obtain directory listings, except as provided in 
paragraph (c)(3)(iii) of this section, on a nondiscriminatory basis, 
notwithstanding the identity of the customer's local service provider, 
or the identity of the provider for the customer whose listing is 
requested.
    (ii) Access to directory listings. A LEC shall provide directory 
listings to competing providers in readily accessible magnetic tape or 
electronic formats in a timely fashion upon request. A LEC also must 
permit competing providers to have access to and read the information in 
the LEC's directory assistance databases.
    (iii) Unlisted numbers. A LEC shall not provide access to unlisted 
telephone numbers, or other information that its customer has asked the 
LEC not to make available. The LEC shall ensure that access is permitted 
only to the same directory information that is available to its own 
directory assistance customers.
    (iv) Adjuncts to services. Operator services and directory 
assistance services must be made available to competing providers in 
their entirety, including access to any adjunct features (e.g., rating 
tables or customer information databases) necessary to allow competing 
providers full use of these services.
    (d) Branding of operator services and directory assistance services. 
The refusal of a providing local exchange carrier (LEC) to comply with 
the reasonable request of a competing provider that the providing LEC 
rebrand its operator services and directory assistance, or remove its 
brand from such services, creates a presumption that the providing LEC 
is unlawfully restricting access to its operator services and directory 
assistance. The providing LEC can rebut this presumption by 
demonstrating that it lacks the capability to comply with the competing 
provider's request.
    (e) Disputes--(1) Disputes involving nondiscriminatory access. In 
disputes involving nondiscriminatory access to operator services, 
directory assistance services, or directory listings, a providing LEC 
shall bear the burden of demonstrating with specificity:
    (i) That it is permitting nondiscriminatory access, and
    (ii) That any disparity in access is not caused by factors within 
its control. ``Factors within its control'' include, but are not limited 
to, physical facilities, staffing, the ordering of supplies or 
equipment, and maintenance.
    (2) Disputes involving unreasonable dialing delay. In disputes 
between providing local exchange carriers (LECs) and

[[Page 25]]

competing providers involving unreasonable dialing delay in the 
provision of access to operator services and directory assistance, the 
burden of proof is on the providing LEC to demonstrate with specificity 
that it is processing the calls of the competing provider's customers on 
terms equal to that of similar calls from the providing LEC's own 
customers.

[61 FR 47350, Sept. 6, 1996]



Sec. 51.219  Access to rights of way.

    The rules governing access to rights of way are set forth in part 1, 
subpart J of this chapter.



Sec. 51.221  Reciprocal compensation.

    The rules governing reciprocal compensation are set forth in subpart 
H of this part.



Sec. 51.223  Application of additional requirements.

    (a) A state may not impose the obligations set forth in section 
251(c) of the Act on a LEC that is not classified as an incumbent LEC as 
defined in section 251(h)(1) of the Act, unless the Commission issues an 
order declaring that such LECs or classes or categories of LECs should 
be treated as incumbent LECs.
    (b) A state commission, or any other interested party, may request 
that the Commission issue an order declaring that a particular LEC be 
treated as an incumbent LEC, or that a class or category of LECs be 
treated as incumbent LECs, pursuant to section 251(h)(2) of the Act.



 Subpart D--Additional Obligations of Incumbent Local Exchange Carriers



Sec. 51.301  Duty to negotiate.

    (a) An incumbent LEC shall negotiate in good faith the terms and 
conditions of agreements to fulfill the duties established by sections 
251 (b) and (c) of the Act.
    (b) A requesting telecommunications carrier shall negotiate in good 
faith the terms and conditions of agreements described in paragraph (a) 
of this section.
    (c) If proven to the Commission, an appropriate state commission, or 
a court of competent jurisdiction, the following actions or practices, 
among others, violate the duty to negotiate in good faith:
    (1) Demanding that another party sign a nondisclosure agreement that 
precludes such party from providing information requested by the 
Commission, or a state commission, or in support of a request for 
arbitration under section 252(b)(2)(B) of the Act;
    (2) Demanding that a requesting telecommunications carrier attest 
that an agreement complies with all provisions of the Act, federal 
regulations, or state law;
    (3) Refusing to include in an arbitrated or negotiated agreement a 
provision that permits the agreement to be amended in the future to take 
into account changes in Commission or state rules;
    (4) Conditioning negotiation on a requesting telecommunications 
carrier first obtaining state certifications;
    (5) Intentionally misleading or coercing another party into reaching 
an agreement that it would not otherwise have made;
    (6) Intentionally obstructing or delaying negotiations or 
resolutions of disputes;
    (7) Refusing throughout the negotiation process to designate a 
representative with authority to make binding representations, if such 
refusal significantly delays resolution of issues; and
    (8) Refusing to provide information necessary to reach agreement. 
Such refusal includes, but is not limited to:
    (i) Refusal by an incumbent LEC to furnish information about its 
network that a requesting telecommunications carrier reasonably requires 
to identify the network elements that it needs in order to serve a 
particular customer; and
    (ii) Refusal by a requesting telecommunications carrier to furnish 
cost data that would be relevant to setting rates if the parties were in 
arbitration.



Sec. 51.303  Preexisting agreements.

    (a) All interconnection agreements between an incumbent LEC and a 
telecommunications carrier, including those negotiated before February 
8, 1996, shall be submitted by the parties to the appropriate state 
commission

[[Page 26]]

for approval pursuant to section 252(e) of the Act.
    (b) Interconnection agreements negotiated before February 8, 1996, 
between Class A carriers, as defined by Sec. 32.11(a)(1) of this 
chapter, shall be filed by the parties with the appropriate state 
commission no later than June 30, 1997, or such earlier date as the 
state commission may require.
    (c) If a state commission approves a preexisting agreement, it shall 
be made available to other parties in accordance with section 252(i) of 
the Act and Sec. 51.809 of this part. A state commission may reject a 
preexisting agreement on the grounds that it is inconsistent with the 
public interest, or for other reasons set forth in section 252(e)(2)(A) 
of the Act.



Sec. 51.305  Interconnection.

    (a) An incumbent LEC shall provide, for the facilities and equipment 
of any requesting telecommunications carrier, interconnection with the 
incumbent LEC's network:
    (1) For the transmission and routing of telephone exchange traffic, 
exchange access traffic, or both;
    (2) At any technically feasible point within the incumbent LEC's 
network including, at a minimum:
    (i) The line-side of a local switch;
    (ii) The trunk-side of a local switch;
    (iii) The trunk interconnection points for a tandem switch;
    (iv) Central office cross-connect points;
    (v) Out-of-band signaling transfer points necessary to exchange 
traffic at these points and access call-related databases; and
    (vi) The points of access to unbundled network elements as described 
in Sec. 51.319;
    (3) That is at a level of quality that is equal to that which the 
incumbent LEC provides itself, a subsidiary, an affiliate, or any other 
party, except as provided in paragraph (4) of this section. At a 
minimum, this requires an incumbent LEC to design interconnection 
facilities to meet the same technical criteria and service standards 
that are used within the incumbent LEC's network. This obligation is not 
limited to a consideration of service quality as perceived by end users, 
and includes, but is not limited to, service quality as perceived by the 
requesting telecommunications carrier;
    (4) That, if so requested by a telecommunications carrier and to the 
extent technically feasible, is superior in quality to that provided by 
the incumbent LEC to itself or to any subsidiary, affiliate, or any 
other party to which the incumbent LEC provides interconnection. Nothing 
in this section prohibits an incumbent LEC from providing 
interconnection that is lesser in quality at the sole request of the 
requesting telecommunications carrier; and
    (5) On terms and conditions that are just, reasonable, and 
nondiscriminatory in accordance with the terms and conditions of any 
agreement, the requirements of sections 251 and 252 of the Act, and the 
Commission's rules including, but not limited to, offering such terms 
and conditions equally to all requesting telecommunications carriers, 
and offering such terms and conditions that are no less favorable than 
the terms and conditions upon which the incumbent LEC provides such 
interconnection to itself. This includes, but is not limited to, the 
time within which the incumbent LEC provides such interconnection.
    (b) A carrier that requests interconnection solely for the purpose 
of originating or terminating its interexchange traffic on an incumbent 
LEC's network and not for the purpose of providing to others telephone 
exchange service, exchange access service, or both, is not entitled to 
receive interconnection pursuant to section 251(c)(2) of the Act.
    (c) Previous successful interconnection at a particular point in a 
network, using particular facilities, constitutes substantial evidence 
that interconnection is technically feasible at that point, or at 
substantially similar points, in networks employing substantially 
similar facilities. Adherence to the same interface or protocol 
standards shall constitute evidence of the substantial similarity of 
network facilities.
    (d) Previous successful interconnection at a particular point in a 
network at a particular level of quality constitutes substantial 
evidence that

[[Page 27]]

interconnection is technically feasible at that point, or at 
substantially similar points, at that level of quality.
    (e) An incumbent LEC that denies a request for interconnection at a 
particular point must prove to the state commission that interconnection 
at that point is not technically feasible.
    (f) If technically feasible, an incumbent LEC shall provide two-way 
trunking upon request.
    (g) An incumbent LEC shall provide to a requesting 
telecommunications carrier technical information about the incumbent 
LEC's network facilities sufficient to allow the requesting carrier to 
achieve interconnection consistent with the requirements of this 
section.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47351, Sept. 6, 1996]



Sec. 51.307  Duty to provide access on an unbundled basis to network elements.

    (a) An incumbent LEC shall provide, to a requesting 
telecommunications carrier for the provision of a telecommunications 
service, nondiscriminatory access to network elements on an unbundled 
basis at any technically feasible point on terms and conditions that are 
just, reasonable, and nondiscriminatory in accordance with the terms and 
conditions of any agreement, the requirements of sections 251 and 252 of 
the Act, and the Commission's rules.
    (b) The duty to provide access to unbundled network elements 
pursuant to section 251(c)(3) of the Act includes a duty to provide a 
connection to an unbundled network element independent of any duty to 
provide interconnection pursuant to this part and section 251(c)(2) of 
the Act.
    (c) An incumbent LEC shall provide a requesting telecommunications 
carrier access to an unbundled network element, along with all of the 
unbundled network element's features, functions, and capabilities, in a 
manner that allows the requesting telecommunications carrier to provide 
any telecommunications service that can be offered by means of that 
network element.
    (d) An incumbent LEC shall provide a requesting telecommunications 
carrier access to the facility or functionality of a requested network 
element separate from access to the facility or functionality of other 
network elements, for a separate charge.
    (e) An incumbent LEC shall provide to a requesting 
telecommunications carrier technical information about the incumbent 
LEC's network facilities sufficient to allow the requesting carrier to 
achieve access to unbundled network elements consistent with the 
requirements of this section.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47351, Sept. 6, 1996]



Sec. 51.309  Use of unbundled network elements.

    (a) An incumbent LEC shall not impose limitations, restrictions, or 
requirements on requests for, or the use of, unbundled network elements 
that would impair the ability of a requesting telecommunications carrier 
to offer a telecommunications service in the manner the requesting 
telecommunications carrier intends.
    (b) A telecommunications carrier purchasing access to an unbundled 
network element may use such network element to provide exchange access 
services to itself in order to provide interexchange services to 
subscribers.
    (c) A telecommunications carrier purchasing access to an unbundled 
network facility is entitled to exclusive use of that facility for a 
period of time, or when purchasing access to a feature, function, or 
capability of a facility, a telecommunications carrier is entitled to 
use of that feature, function, or capability for a period of time. A 
telecommunications carrier's purchase of access to an unbundled network 
element does not relieve the incumbent LEC of the duty to maintain, 
repair, or replace the unbundled network element.



Sec. 51.311  Nondiscriminatory access to unbundled network elements.

    (a) The quality of an unbundled network element, as well as the 
quality of the access to the unbundled network element, that an 
incumbent LEC provides to a requesting telecommunications carrier shall 
be the same for all

[[Page 28]]

telecommunications carriers requesting access to that network element, 
except as provided in paragraph (c) of this section.
    (b) Except as provided in paragraph (c) of this section, to the 
extent technically feasible, the quality of an unbundled network 
element, as well as the quality of the access to such unbundled network 
element, that an incumbent LEC provides to a requesting 
telecommunications carrier shall be at least equal in quality to that 
which the incumbent LEC provides to itself. If an incumbent LEC fails to 
meet this requirement, the incumbent LEC must prove to the state 
commission that it is not technically feasible to provide the requested 
unbundled network element, or to provide access to the requested 
unbundled network element, at a level of quality that is equal to that 
which the incumbent LEC provides to itself.
    (c) To the extent technically feasible, the quality of an unbundled 
network element, as well as the quality of the access to such unbundled 
network element, that an incumbent LEC provides to a requesting 
telecommunications carrier shall, upon request, be superior in quality 
to that which the incumbent LEC provides to itself. If an incumbent LEC 
fails to meet this requirement, the incumbent LEC must prove to the 
state commission that it is not technically feasible to provide the 
requested unbundled network element or access to such unbundled network 
element at the requested level of quality that is superior to that which 
the incumbent LEC provides to itself. Nothing in this section prohibits 
an incumbent LEC from providing interconnection that is lesser in 
quality at the sole request of the requesting telecommunications 
carrier.
    (d) Previous successful access to an unbundled element at a 
particular point in a network, using particular facilities, is 
substantial evidence that access is technically feasible at that point, 
or at substantially similar points, in networks employing substantially 
similar facilities. Adherence to the same interface or protocol 
standards shall constitute evidence of the substantial similarity of 
network facilities.
    (e) Previous successful provision of access to an unbundled element 
at a particular point in a network at a particular level of quality is 
substantial evidence that access is technically feasible at that point, 
or at substantially similar points, at that level of quality.



Sec. 51.313  Just, reasonable and nondiscriminatory terms and conditions for the provision of unbundled network elements.

    (a) The terms and conditions pursuant to which an incumbent LEC 
provides access to unbundled network elements shall be offered equally 
to all requesting telecommunications carriers.
    (b) Where applicable, the terms and conditions pursuant to which an 
incumbent LEC offers to provide access to unbundled network elements, 
including but not limited to, the time within which the incumbent LEC 
provisions such access to unbundled network elements, shall, at a 
minimum, be no less favorable to the requesting carrier than the terms 
and conditions under which the incumbent LEC provides such elements to 
itself.
    (c) An incumbent LEC must provide a carrier purchasing access to 
unbundled network elements with the pre-ordering, ordering, 
provisioning, maintenance and repair, and billing functions of the 
incumbent LEC's operations support systems.



Sec. 51.315  Combination of unbundled network elements.

    (a) An incumbent LEC shall provide unbundled network elements in a 
manner that allows requesting telecommunications carriers to combine 
such network elements in order to provide a telecommunications service.
    (b) Except upon request, an incumbent LEC shall not separate 
requested network elements that the incumbent LEC currently combines.
    (c) Upon request, an incumbent LEC shall perform the functions 
necessary to combine unbundled network elements in any manner, even if 
those elements are not ordinarily combined in the incumbent LEC's 
network, provided that such combination is:
    (1) Technically feasible; and
    (2) Would not impair the ability of other carriers to obtain access 
to

[[Page 29]]

unbundled network elements or to interconnect with the incumbent LEC's 
network.
    (d) Upon request, an incumbent LEC shall perform the functions 
necessary to combine unbundled network elements with elements possessed 
by the requesting telecommunications carrier in any technically feasible 
manner.
    (e) An incumbent LEC that denies a request to combine elements 
pursuant to paragraph (c)(1) or paragraph (d) of this section must prove 
to the state commission that the requested combination is not 
technically feasible.
    (f) An incumbent LEC that denies a request to combine elements 
pursuant to paragraph (c)(2) of this section must prove to the state 
commission that the requested combination would impair the ability of 
other carriers to obtain access to unbundled network elements or to 
interconnect with the incumbent LEC's network.



Sec. 51.317  Standards for identifying network elements to be made available.

    (a) In determining what network elements should be made available 
for purposes of section 251(c)(3) of the Act beyond those identified in 
Sec. 51.319, a state commission shall first determine whether it is 
technically feasible for the incumbent LEC to provide access to a 
network element on an unbundled basis.
    (b) If the state commission determines that it is technically 
feasible for the incumbent LEC to provide access to the network element 
on an unbundled basis, the state commission may decline to require 
unbundling of the network element only if:
    (1) The state commission concludes that:
    (i) The network element is proprietary, or contains proprietary 
information that will be revealed if the network element is provided on 
an unbundled basis; and
    (ii) A requesting telecommunications carrier could offer the same 
proposed telecommunications service through the use of other, 
nonproprietary unbundled network elements within the incumbent LEC's 
network; or
    (2) The state commission concludes that the failure of the incumbent 
LEC to provide access to the network element would not decrease the 
quality of, and would not increase the financial or administrative cost 
of, the telecommunications service a requesting telecommunications 
carrier seeks to offer, compared with providing that service over other 
unbundled network elements in the incumbent LEC's network.



Sec. 51.319  Specific unbundling requirements.

    An incumbent LEC shall provide nondiscriminatory access in 
accordance with Sec. 51.311 and section 251(c)(3) of the Act to the 
following network elements on an unbundled basis to any requesting 
telecommunications carrier for the provision of a telecommunications 
service:
    (a) Local Loop. The local loop network element is defined as a 
transmission facility between a distribution frame (or its equivalent) 
in an incumbent LEC central office and an end user customer premises.
    (b) Network Interface Device. (1) The network interface device 
network element is defined as a cross-connect device used to connect 
loop facilities to inside wiring.
    (2) An incumbent LEC shall permit a requesting telecommunications 
carrier to connect its own local loops to the inside wiring of premises 
through the incumbent LEC's network interface device. The requesting 
telecommunications carrier shall establish this connection through an 
adjoining network interface device deployed by such telecommunications 
carrier.
    (c) Switching Capability--(1) Local Switching Capability. (i) The 
local switching capability network element is defined as:
    (A) Line-side facilities, which include, but are not limited to, the 
connection between a loop termination at a main distribution frame and a 
switch line card;
    (B) Trunk-side facilities, which include, but are not limited to, 
the connection between trunk termination at a trunk-side cross-connect 
panel and a switch trunk card; and
    (C) All features, functions, and capabilities of the switch, which 
include, but are not limited to:

[[Page 30]]

    (1) The basic switching function of connecting lines to lines, lines 
to trunks, trunks to lines, and trunks to trunks, as well as the same 
basic capabilities made available to the incumbent LEC's customers, such 
as a telephone number, white page listing, and dial tone; and
    (2) All other features that the switch is capable of providing, 
including but not limited to custom calling, custom local area signaling 
service features, and Centrex, as well as any technically feasible 
customized routing functions provided by the switch.
    (ii) An incumbent LEC shall transfer a customer's local service to a 
competing carrier within a time period no greater than the interval 
within which the incumbent LEC currently transfers end users between 
interexchange carriers, if such transfer requires only a change in the 
incumbent LEC's software;
    (2) Tandem Switching Capability. The tandem switching capability 
network element is defined as:
    (i) Trunk-connect facilities, including but not limited to the 
connection between trunk termination at a cross-connect panel and a 
switch trunk card;
    (ii) The basic switching function of connecting trunks to trunks; 
and
    (iii) The functions that are centralized in tandem switches (as 
distinguished from separate end-office switches), including but not 
limited to call recording, the routing of calls to operator services, 
and signaling conversion features.
    (d)(1) Interoffice transmission facilities include:
    (i) Dedicated transport, defined as incumbent LEC transmission 
facilities dedicated to a particular customer or carrier that provide 
telecommunications between wire centers owned by incumbent LECs or 
requesting telecommunications carriers, or between switches owned by 
incumbent LECs or requesting telecommunications carriers;
    (ii) Shared transport, defined as transmission facilities shared by 
more than one carrier, including the incumbent LEC, between end office 
switches, between end office switches and tandem switches, and between 
tandem switches, in the incumbent LEC network;
    (2) The incumbent LEC shall:
    (i) Provide a requesting telecommunications carrier exclusive use of 
interoffice transmission facilities dedicated to a particular customer 
or carrier, or use of the features, functions, and capabilities of 
interoffice transmission facilities shared by more than one customer or 
carrier;
    (ii) Provide all technically feasible transmission facilities, 
features, functions, and capabilities that the requesting 
telecommunications carrier could use to provide telecommunications 
services;
    (iii) Permit, to the extent technically feasible, a requesting 
telecommunications carrier to connect such interoffice facilities to 
equipment designated by the requesting telecommunications carrier, 
including, but not limited to, the requesting telecommunications 
carrier's collocated facilities; and
    (iv) Permit, to the extent technically feasible, a requesting 
telecommunications carrier to obtain the functionality provided by the 
incumbent LEC's digital cross-connect systems in the same manner that 
the incumbent LEC provides such functionality to interexchange carriers.
    (e) Signaling Networks and Call-Related Databases--(1) Signaling 
Networks. (i) Signaling networks include, but are not limited to, 
signaling links and signaling transfer points.
    (ii) When a requesting telecommunications carrier purchases 
unbundled switching capability from an incumbent LEC, the incumbent LEC 
shall provide access to its signaling network from that switch in the 
same manner in which it obtains such access itself.
    (iii) An incumbent LEC shall provide a requesting telecommunications 
carrier with its own switching facilities access to the incumbent LEC's 
signaling network for each of the requesting telecommunications 
carrier's switches. This connection shall be made in the same manner as 
an incumbent LEC connects one of its own switches to a signal transfer 
point.
    (iv) An incumbent LEC is not required to unbundle those signaling

[[Page 31]]

links that connect service control points to switching transfer points 
or to permit a requesting telecommunications carrier to link its own 
signal transfer points directly to the incumbent LEC's switch or call-
related databases;
    (2) Call-Related Databases. (i) Call-related databases are defined 
as databases, other than operations support systems, that are used in 
signaling networks for billing and collection or the transmission, 
routing, or other provision of a telecommunications service.
    (ii) For purposes of switch query and database response through a 
signaling network, an incumbent LEC shall provide access to its call-
related databases, including, but not limited to, the Line Information 
Database, Toll Free Calling database, downstream number portability 
databases, and Advanced Intelligent Network databases, by means of 
physical access at the signaling transfer point linked to the unbundled 
database.
    (iii) An incumbent LEC shall allow a requesting telecommunications 
carrier that has purchased an incumbent LEC's local switching capability 
to use the incumbent LEC's service control point element in the same 
manner, and via the same signaling links, as the incumbent LEC itself.
    (iv) An incumbent LEC shall allow a requesting telecommunications 
carrier that has deployed its own switch, and has linked that switch to 
an incumbent LEC's signaling system, to gain access to the incumbent 
LEC's service control point in a manner that allows the requesting 
carrier to provide any call-related, database-supported services to 
customers served by the requesting telecommunications carrier's switch.
    (v) A state commission shall consider whether mechanisms mediating 
access to an incumbent LEC's Advanced Intelligent Network service 
control points are necessary, and if so, whether they will adequately 
safeguard against intentional or unintentional misuse of the incumbent 
LEC's Advanced Intelligent Network facilities.
    (vi) An incumbent LEC shall provide a requesting telecommunications 
carrier with access to call-related databases in a manner that complies 
with section 222 of the Act;
    (3) Service Management Systems. (i) A service management system is 
defined as a computer database or system not part of the public switched 
network that, among other things:
    (A) Interconnects to the service control point and sends to that 
service control point the information and call processing instructions 
needed for a network switch to process and complete a telephone call; 
and
    (B) Provides telecommunications carriers with the capability of 
entering and storing data regarding the processing and completing of a 
telephone call.
    (ii) An incumbent LEC shall provide a requesting telecommunications 
carrier with the information necessary to enter correctly, or format for 
entry, the information relevant for input into the particular incumbent 
LEC service management system.
    (iii) An incumbent LEC shall provide a requesting telecommunications 
carrier the same access to design, create, test, and deploy Advanced 
Intelligent Network-based services at the service management system, 
through a service creation environment, that the incumbent LEC provides 
to itself.
    (iv) A state commission shall consider whether mechanisms mediating 
access to Advanced Intelligent Network service management systems and 
service creation environments are necessary, and if so, whether they 
will adequately safeguard against intentional or unintentional misuse of 
the incumbent LEC's Advanced Intelligent Network facilities.
    (v) An incumbent LEC shall provide a requesting telecommunications 
carrier access to service management systems in a manner that complies 
with section 222 of the Act.
    (f) Operations Support Systems Functions. (1) Operations support 
systems functions consist of pre-ordering, ordering, provisioning, 
maintenance and repair, and billing functions supported by an incumbent 
LEC's databases and information.
    (2) An incumbent LEC that does not currently comply with this 
requirement shall do so as expeditiously as possible, but, in any event, 
no later than January 1, 1997.

[[Page 32]]

    (g) Operator Services and Directory Assistance. An incumbent LEC 
shall provide access to operator service and directory assistance 
facilities where technically feasible.

[61 FR 45619, Aug. 29, 1996, as amended at 62 FR 45587, Aug. 28, 1997]



Sec. 51.321  Methods of obtaining interconnection and access to unbundled elements under section 251 of the Act.

    (a) Except as provided in paragraph (e) of this section, an 
incumbent LEC shall provide, on terms and conditions that are just, 
reasonable, and nondiscriminatory in accordance with the requirements of 
this part, any technically feasible method of obtaining interconnection 
or access to unbundled network elements at a particular point upon a 
request by a telecommunications carrier.
    (b) Technically feasible methods of obtaining interconnection or 
access to unbundled network elements include, but are not limited to:
    (1) Physical collocation and virtual collocation at the premises of 
an incumbent LEC; and
    (2) Meet point interconnection arrangements.
    (c) A previously successful method of obtaining interconnection or 
access to unbundled network elements at a particular premises or point 
on an incumbent LEC's network is substantial evidence that such method 
is technically feasible in the case of substantially similar network 
premises or points.
    (d) An incumbent LEC that denies a request for a particular method 
of obtaining interconnection or access to unbundled network elements on 
the incumbent LEC's network must prove to the state commission that the 
requested method of obtaining interconnection or access to unbundled 
network elements at that point is not technically feasible.
    (e) An incumbent LEC shall not be required to provide for physical 
collocation of equipment necessary for interconnection or access to 
unbundled network elements at the incumbent LEC's premises if it 
demonstrates to the state commission that physical collocation is not 
practical for technical reasons or because of space limitations. In such 
cases, the incumbent LEC shall be required to provide virtual 
collocation, except at points where the incumbent LEC proves to the 
state commission that virtual collocation is not technically feasible. 
If virtual collocation is not technically feasible, the incumbent LEC 
shall provide other methods of interconnection and access to unbundled 
network elements to the extent technically feasible.
    (f) An incumbent LEC shall submit to the state commission detailed 
floor plans or diagrams of any premises where the incumbent LEC claims 
that physical collocation is not practical because of space limitations.
    (g) An incumbent LEC that is classified as a Class A company under 
Sec. 32.11 of this chapter and that is not a National Exchange Carrier 
Association interstate tariff participant as provided in part 69, 
subpart G, shall continue to provide expanded interconnection service 
pursuant to interstate tariff in accordance with Secs. 64.1401, 64.1402, 
69.121 of this chapter, and the Commission's other requirements.



Sec. 51.323  Standards for physical collocation and virtual collocation.

    (a) An incumbent LEC shall provide physical collocation and virtual 
collocation to requesting telecommunications carriers.
    (b) An incumbent LEC shall permit the collocation of any type of 
equipment used for interconnection or access to unbundled network 
elements. Whenever an incumbent LEC objects to collocation of equipment 
by a requesting telecommunications carrier for purposes within the scope 
of section 251(c)(6) of the Act, the incumbent LEC shall prove to the 
state commission that the equipment will not be actually used by the 
telecommunications carrier for the purpose of obtaining interconnection 
or access to unbundled network elements. Equipment used for 
interconnection and access to unbundled network elements includes, but 
is not limited to:
    (1) Transmission equipment including, but not limited to, optical 
terminating equipment and multiplexers; and
    (2) Equipment being collocated to terminate basic transmission 
facilities

[[Page 33]]

pursuant to Secs. 64.1401 and 64.1402 of this chapter as of August 1, 
1996.
    (c) Nothing in this section requires an incumbent LEC to permit 
collocation of switching equipment or equipment used to provide enhanced 
services.
    (d) When an incumbent LEC provides physical collocation, virtual 
collocation, or both, the incumbent LEC shall:
    (1) Provide an interconnection point or points, physically 
accessible by both the incumbent LEC and the collocating 
telecommunications carrier, at which the fiber optic cable carrying an 
interconnector's circuits can enter the incumbent LEC's premises, 
provided that the incumbent LEC shall designate interconnection points 
as close as reasonably possible to its premises;
    (2) Provide at least two such interconnection points at each 
incumbent LEC premises at which there are at least two entry points for 
the incumbent LEC's cable facilities, and at which space is available 
for new facilities in at least two of those entry points;
    (3) Permit interconnection of copper or coaxial cable if such 
interconnection is first approved by the state commission; and
    (4) Permit physical collocation of microwave transmission facilities 
except where such collocation is not practical for technical reasons or 
because of space limitations, in which case virtual collocation of such 
facilities is required where technically feasible.
    (e) When providing virtual collocation, an incumbent LEC shall, at a 
minimum, install, maintain, and repair collocated equipment identified 
in paragraph (b) of this section within the same time periods and with 
failure rates that are no greater than those that apply to the 
performance of similar functions for comparable equipment of the 
incumbent LEC itself.
    (f) An incumbent LEC shall allocate space for the collocation of the 
equipment identified in paragraph (b) of this section in accordance with 
the following requirements:
    (1) An incumbent LEC shall make space available within or on its 
premises to requesting telecommunications carriers on a first-come, 
first-served basis, provided, however, that the incumbent LEC shall not 
be required to lease or construct additional space to provide for 
physical collocation when existing space has been exhausted;
    (2) To the extent possible, an incumbent LEC shall make contiguous 
space available to requesting telecommunications carriers that seek to 
expand their existing collocation space;
    (3) When planning renovations of existing facilities or constructing 
or leasing new facilities, an incumbent LEC shall take into account 
projected demand for collocation of equipment;
    (4) An incumbent LEC may retain a limited amount of floor space for 
its own specific future uses, provided, however, that the incumbent LEC 
may not reserve space for future use on terms more favorable than those 
that apply to other telecommunications carriers seeking to reserve 
collocation space for their own future use;
    (5) An incumbent LEC shall relinquish any space held for future use 
before denying a request for virtual collocation on the grounds of space 
limitations, unless the incumbent LEC proves to the state commission 
that virtual collocation at that point is not technically feasible; and
    (6) An incumbent LEC may impose reasonable restrictions on the 
warehousing of unused space by collocating telecommunications carriers, 
provided, however, that the incumbent LEC shall not set maximum space 
limitations applicable to such carriers unless the incumbent LEC proves 
to the state commission that space constraints make such restrictions 
necessary.
    (g) An incumbent LEC shall permit collocating telecommunications 
carriers to collocate equipment and connect such equipment to unbundled 
network transmission elements obtained from the incumbent LEC, and shall 
not require such telecommunications carriers to bring their own 
transmission facilities to the incumbent LEC's premises in which they 
seek to collocate equipment.
    (h) An incumbent LEC shall permit a collocating telecommunications 
carrier to interconnect its network with

[[Page 34]]

that of another collocating telecommunications carrier at the incumbent 
LEC's premises and to connect its collocated equipment to the collocated 
equipment of another telecommunications carrier within the same premises 
provided that the collocated equipment is also used for interconnection 
with the incumbent LEC or for access to the incumbent LEC's unbundled 
network elements.
    (1) An incumbent LEC shall provide the connection between the 
equipment in the collocated spaces of two or more telecommunications 
carriers, unless the incumbent LEC permits one or more of the 
collocating parties to provide this connection for themselves; and
    (2) An incumbent LEC is not required to permit collocating 
telecommunications carriers to place their own connecting transmission 
facilities within the incumbent LEC's premises outside of the actual 
physical collocation space.
    (i) An incumbent LEC may require reasonable security arrangements to 
separate a collocating telecommunications carrier's space from the 
incumbent LEC's facilities.
    (j) An incumbent LEC shall permit a collocating telecommunications 
carrier to subcontract the construction of physical collocation 
arrangements with contractors approved by the incumbent LEC, provided, 
however, that the incumbent LEC shall not unreasonably withhold approval 
of contractors. Approval by an incumbent LEC shall be based on the same 
criteria it uses in approving contractors for its own purposes.



Sec. 51.325  Notice of network changes: Public notice requirement.

    (a) An incumbent local exchange carrier (``LEC'') must provide 
public notice regarding any network change that:
    (1) Will affect a competing service provider's performance or 
ability to provide service; or
    (2) Will affect the incumbent LEC's interoperability with other 
service providers.
    (b) For purposes of this section, interoperability means the ability 
of two or more facilities, or networks, to be connected, to exchange 
information, and to use the information that has been exchanged.
    (c) Until public notice has been given in accordance with 
Secs. 51.325 through 51.335, an incumbent LEC may not disclose to 
separate affiliates, separated affiliates, or unaffiliated entities 
(including actual or potential competing service providers or 
competitors), information about planned network changes that are subject 
to this section.
    (d) For the purposes of Secs. 51.325 through 51.335, the term 
services means telecommunications services or information services.

[61 FR 47351, Sept. 6, 1996]



Sec. 51.327  Notice of network changes: Content of notice.

    (a) Public notice of planned network changes must, at a minimum, 
include:
    (1) The carrier's name and address;
    (2) The name and telephone number of a contact person who can supply 
additional information regarding the planned changes;
    (3) The implementation date of the planned changes;
    (4) The location(s) at which the changes will occur;
    (5) A description of the type of changes planned (Information 
provided to satisfy this requirement must include, as applicable, but is 
not limited to, references to technical specifications, protocols, and 
standards regarding transmission, signaling, routing, and facility 
assignment as well as references to technical standards that would be 
applicable to any new technologies or equipment, or that may otherwise 
affect interconnection); and
    (6) A description of the reasonably foreseeable impact of the 
planned changes.
    (b) The incumbent LEC also shall follow, as necessary, procedures 
relating to confidential or proprietary information contained in 
Sec. 51.335.

[61 FR 47351, Sept. 6, 1996]



Sec. 51.329  Notice of network changes: Methods for providing notice.

    (a) In providing the required notice to the public of network 
changes, an

[[Page 35]]

incumbent LEC may use one of the following methods:
    (1) Filing a public notice with the Commission; or
    (2) Providing public notice through industry fora, industry 
publications, or the carrier's publicly accessible Internet site. If an 
incumbent LEC uses any of the methods specified in paragraph (a)(2) of 
this section, it also must file a certification with the Commission that 
includes:
    (i) A statement that identifies the proposed changes;
    (ii) A statement that public notice has been given in compliance 
with Secs. 51.325 through 51.335; and
    (iii) A statement identifying the location of the change information 
and describing how this information can be obtained.
    (b) Until the planned change is implemented, an incumbent LEC must 
keep the notice available for public inspection, and amend the notice to 
keep the information complete, accurate and up-to-date.
    (c) Specific filing requirements. Commission filings under this 
section must be made as follows:
    (1) The public notice or certification must be labeled with one of 
the following titles, as appropriate: ``Public Notice of Network Change 
Under Rule 51.329(a),'' ``Certification of Public Notice of Network 
Change Under Rule 51.329(a),'' ``Short Term Public Notice Under Rule 
51.333(a),'' or ``Certification of Short Term Public Notice Under Rule 
51.333(a).''
    (2) Two paper copies of the incumbent LEC's public notice or 
certification, required under paragraph (a) of this section, must be 
sent to ``Secretary, Federal Communications Commission, Washington, DC 
20554.'' The date on which this filing is received by the Secretary is 
considered the official filing date.
    (3) In addition, one paper copy and one diskette copy must be sent 
to the ``Chief, Network Services Division, Common Carrier Bureau, 
Federal Communications Commission, Washington, DC 20554.'' The diskette 
copy must be on a standard 3\1/2\ inch diskette, formatted in IBM-
compatible format to be readable by high-density floppy drives operating 
under MS DOS 5.X or later compatible versions, and shall be in a word-
processing format designated, from time-to-time, in public notices 
released by the Network Services Division. The diskette must be 
submitted in ``read only'' mode, and must be clearly labeled with the 
carrier's name, the filing date, and an identification of the diskette's 
contents.

[61 FR 47351, Sept. 6, 1996]



Sec. 51.331  Notice of network changes: Timing of notice.

    (a) An incumbent LEC shall give public notice of planned changes at 
the make/buy point, as defined in paragraph (b) of this section, but at 
least 12 months before implementation, except as provided below:
    (1) If the changes can be implemented within twelve months of the 
make/buy point, public notice must be given at the make/buy point, but 
at least six months before implementation.
    (2) If the changes can be implemented within six months of the make/
buy point, public notice may be given pursuant to the short term notice 
procedures provided in Sec. 51.333.
    (b) For purposes of this section, the make/buy point is the time at 
which an incumbent LEC decides to make for itself, or to procure from 
another entity, any product the design of which affects or relies on a 
new or changed network interface. If an incumbent LEC's planned changes 
do not require it to make or to procure a product, then the make/buy 
point is the point at which the incumbent LEC makes a definite decision 
to implement a network change.
    (1) For purposes of this section, a product is any hardware or 
software for use in an incumbent LEC's network or in conjunction with 
its facilities that, when installed, could affect the compatibility of 
an interconnected service provider's network, facilities or services 
with an incumbent LEC's existing telephone network, facilities or 
services, or with any of an incumbent carrier's services or 
capabilities.
    (2) For purposes of this section a definite decision is reached when 
an incumbent LEC determines that the change is warranted, establishes a 
timetable for anticipated implementation, and

[[Page 36]]

takes any action toward implementation of the change within its network.

[61 FR 47352, Sept. 6, 1996]



Sec. 51.333  Notice of network changes: Short term notice.

    (a) Certificate of service. If an incumbent LEC wishes to provide 
less than six months notice of planned network changes, the public 
notice or certification that it files with the Commission must include a 
certificate of service in addition to the information required by 
Sec. 51.327(a) or Sec. 51.329(a)(2), as applicable. The certificate of 
service shall include:
    (1) A statement that, at least five business days in advance of its 
filing with the Commission, the incumbent LEC served a copy of its 
public notice upon each telephone exchange service provider that 
directly interconnects with the incumbent LEC's network; and
    (2) The name and address of each such telephone exchange service 
provider upon which the notice was served.
    (b) Implementation date. The Commission will release a public notice 
of such short term notice filings. Short term notices shall be deemed 
final on the tenth business day after the release of the Commission's 
public notice, unless an objection is filed, pursuant to paragraph (c) 
of this section.
    (c) Objection procedures. An objection to an incumbent LEC's short 
term notice may be filed by an information service provider or 
telecommunication service provider that directly interconnects with the 
incumbent LEC's network. Such objections must be filed with the 
Commission, and served on the incumbent LEC, no later than the ninth 
business day following the release of the Commission's public notice. 
All objections to an incumbent LEC's short term notice must:
    (1) State specific reasons why the objector cannot accommodate the 
incumbent LEC's changes by the date stated in the incumbent LEC's public 
notice and must indicate any specific technical information or other 
assistance required that would enable the objector to accommodate those 
changes;
    (2) List steps the objector is taking to accommodate the incumbent 
LEC's changes on an expedited basis;
    (3) State the earliest possible date (not to exceed six months from 
the date the incumbent LEC gave its original public notice under this 
section) by which the objector anticipates that it can accommodate the 
incumbent LEC's changes, assuming it receives the technical information 
or other assistance requested under paragraph (c)(1) of this section;
    (4) Provide any other information relevant to the objection; and
    (5) Provide the following affidavit, executed by the objector's 
president, chief executive officer, or other corporate officer or 
official, who has appropriate authority to bind the corporation, and 
knowledge of the details of the objector's inability to adjust its 
network on a timely basis:

    ``I, (name and title), under oath and subject to penalty for 
perjury, certify that I have read this objection, that the statements 
contained in it are true, that there is good ground to support the 
objection, and that it is not interposed for purposes of delay. I have 
appropriate authority to make this certification on behalf of (objector) 
and I agree to provide any information the Commission may request to 
allow the Commission to evaluate the truthfulness and validity of the 
statements contained in this objection.''

    (d) Response to objections. If an objection is filed, an incumbent 
LEC shall have until no later than the fourteenth business day following 
the release of the Commission's public notice to file with the 
Commission a response to the objection and to serve the response on all 
parties that filed objections. An incumbent LEC's response must:
    (1) Provide information responsive to the allegations and concerns 
identified by the objectors;
    (2) State whether the implementation date(s) proposed by the 
objector(s) are acceptable;
    (3) Indicate any specific technical assistance that the incumbent 
LEC is willing to give to the objectors; and
    (4) Provide any other relevant information.
    (e) Resolution. If an objection is filed pursuant to paragraph (c) 
of this section, then the Chief, Network Services Division, Common 
Carrier Bureau, will

[[Page 37]]

issue an order determining a reasonable public notice period, provided 
however, that if an incumbent LEC does not file a response within the 
time period allotted, or if the incumbent LEC's response accepts the 
latest implementation date stated by an objector, then the incumbent 
LEC's public notice shall be deemed amended to specify the 
implementation date requested by the objector, without further 
Commission action. An incumbent LEC must amend its public notice to 
reflect any change in the applicable implementation date pursuant to 
Sec. 51.329(b).

[61 FR 47352, Sept. 6, 1996]



Sec. 51.335  Notice of network changes: Confidential or proprietary information.

    (a) If an incumbent LEC claims that information otherwise required 
to be disclosed is confidential or proprietary, the incumbent LEC's 
public notice must include, in addition to the information identified in 
Sec. 51.327(a), a statement that the incumbent LEC will make further 
information available to those signing a nondisclosure agreement.
    (b) Tolling the public notice period. Upon receipt by an incumbent 
LEC of a competing service provider's request for disclosure of 
confidential or proprietary information, the applicable public notice 
period will be tolled until the parties agree on the terms of a 
nondisclosure agreement. An incumbent LEC receiving such a request must 
amend its public notice as follows:
    (1) On the date it receives a request from a competing service 
provider for disclosure of confidential or proprietary information, to 
state that the notice period is tolled; and
    (2) On the date the nondisclosure agreement is finalized, to specify 
a new implementation date.

[61 FR 47352, Sept. 6, 1996]



Subpart E--Exemptions, Suspensions, and Modifications of Requirements of 
                         Section 251 of the Act



Sec. 51.401  State authority.

    A state commission shall determine whether a telephone company is 
entitled, pursuant to section 251(f) of the Act, to exemption from, or 
suspension or modification of, the requirements of section 251 of the 
Act. Such determinations shall be made on a case-by-case basis.



Sec. 51.403  Carriers eligible for suspension or modification under section 251(f)(2) of the Act.

    A LEC is not eligible for a suspension or modification of the 
requirements of section 251(b) or section 251(c) of the Act pursuant to 
section 251(f)(2) of the Act if such LEC, at the holding company level, 
has two percent or more of the subscriber lines installed in the 
aggregate nationwide.



Sec. 51.405  Burden of proof.

    (a) Upon receipt of a bona fide request for interconnection, 
services, or access to unbundled network elements, a rural telephone 
company must prove to the state commission that the rural telephone 
company should be entitled, pursuant to section 251(f)(1) of the Act, to 
continued exemption from the requirements of section 251(c) of the Act.
    (b) A LEC with fewer than two percent of the nation's subscriber 
lines installed in the aggregate nationwide must prove to the state 
commission, pursuant to section 251(f)(2) of the Act, that it is 
entitled to a suspension or modification of the application of a 
requirement or requirements of section 251(b) or 251(c) of the Act.
    (c) In order to justify continued exemption under section 251(f)(1) 
of the Act once a bona fide request has been made, an incumbent LEC must 
offer evidence that the application of the requirements of section 
251(c) of the Act

[[Page 38]]

would be likely to cause undue economic burden beyond the economic 
burden that is typically associated with efficient competitive entry.
    (d) In order to justify a suspension or modification under section 
251(f)(2) of the Act, a LEC must offer evidence that the application of 
section 251(b) or section 251(c) of the Act would be likely to cause 
undue economic burden beyond the economic burden that is typically 
associated with efficient competitive entry.



                     Subpart F--Pricing of Elements



Sec. 51.501  Scope.

    (a) The rules in this subpart apply to the pricing of network 
elements, interconnection, and methods of obtaining access to unbundled 
elements, including physical collocation and virtual collocation.
    (b) As used in this subpart, the term ``element'' includes network 
elements, interconnection, and methods of obtaining interconnection and 
access to unbundled elements.



Sec. 51.503  General pricing standard.

    (a) An incumbent LEC shall offer elements to requesting 
telecommunications carriers at rates, terms, and conditions that are 
just, reasonable, and nondiscriminatory.
    (b) An incumbent LEC's rates for each element it offers shall comply 
with the rate structure rules set forth in Secs. 51.507 and 51.509, and 
shall be established, at the election of the state commission--
    (1) Pursuant to the forward-looking economic cost-based pricing 
methodology set forth in Secs. 51.505 and 51.511; or
    (2) Consistent with the proxy ceilings and ranges set forth in 
Sec. 51.513.
    (c) The rates that an incumbent LEC assesses for elements shall not 
vary on the basis of the class of customers served by the requesting 
carrier, or on the type of services that the requesting carrier 
purchasing such elements uses them to provide.



Sec. 51.505  Forward-looking economic cost.

    (a) In general. The forward-looking economic cost of an element 
equals the sum of:
    (1) The total element long-run incremental cost of the element, as 
described in paragraph (b); and
    (2) A reasonable allocation of forward-looking common costs, as 
described in paragraph (c).
    (b) Total element long-run incremental cost. The total element long-
run incremental cost of an element is the forward-looking cost over the 
long run of the total quantity of the facilities and functions that are 
directly attributable to, or reasonably identifiable as incremental to, 
such element, calculated taking as a given the incumbent LEC's provision 
of other elements.
    (1) Efficient network configuration. The total element long-run 
incremental cost of an element should be measured based on the use of 
the most efficient telecommunications technology currently available and 
the lowest cost network configuration, given the existing location of 
the incumbent LEC's wire centers.
    (2) Forward-looking cost of capital. The forward-looking cost of 
capital shall be used in calculating the total element long-run 
incremental cost of an element.
    (3) Depreciation rates. The depreciation rates used in calculating 
forward-looking economic costs of elements shall be economic 
depreciation rates.
    (c) Reasonable allocation of forward-looking common costs--(1) 
Forward-looking common costs. Forward-looking common costs are economic 
costs efficiently incurred in providing a group of elements or services 
(which may include all elements or services provided by the incumbent 
LEC) that cannot be attributed directly to individual elements or 
services.
    (2) Reasonable allocation. (i) The sum of a reasonable allocation of 
forward-looking common costs and the total element long-run incremental 
cost of an element shall not exceed the stand-alone costs associated 
with the element. In this context, stand-alone costs are the total 
forward-looking costs, including corporate costs, that would be incurred 
to produce a given element if that element were provided by an efficient 
firm that produced nothing but the given element.

[[Page 39]]

    (ii) The sum of the allocation of forward-looking common costs for 
all elements and services shall equal the total forward-looking common 
costs, exclusive of retail costs, attributable to operating the 
incumbent LEC's total network, so as to provide all the elements and 
services offered.
    (d) Factors that may not be considered. The following factors shall 
not be considered in a calculation of the forward-looking economic cost 
of an element:
    (1) Embedded costs. Embedded costs are the costs that the incumbent 
LEC incurred in the past and that are recorded in the incumbent LEC's 
books of accounts;
    (2) Retail costs. Retail costs include the costs of marketing, 
billing, collection, and other costs associated with offering retail 
telecommunications services to subscribers who are not 
telecommunications carriers, described in Sec. 51.609;
    (3) Opportunity costs. Opportunity costs include the revenues that 
the incumbent LEC would have received for the sale of telecommunications 
services, in the absence of competition from telecommunications carriers 
that purchase elements; and
    (4) Revenues to subsidize other services. Revenues to subsidize 
other services include revenues associated with elements or 
telecommunications service offerings other than the element for which a 
rate is being established.
    (e) Cost study requirements. An incumbent LEC must prove to the 
state commission that the rates for each element it offers do not exceed 
the forward-looking economic cost per unit of providing the element, 
using a cost study that complies with the methodology set forth in this 
section and Sec. 51.511.
    (1) A state commission may set a rate outside the proxy ranges or 
above the proxy ceilings described in Sec. 51.513 only if that 
commission has given full and fair effect to the economic cost based 
pricing methodology described in this section and Sec. 51.511 in a state 
proceeding that meets the requirements of paragraph (e)(2) of this 
section.
    (2) Any state proceeding conducted pursuant to this section shall 
provide notice and an opportunity for comment to affected parties and 
shall result in the creation of a written factual record that is 
sufficient for purposes of review. The record of any state proceeding in 
which a state commission considers a cost study for purposes of 
establishing rates under this section shall include any such cost study.



Sec. 51.507  General rate structure standard.

    (a) Element rates shall be structured consistently with the manner 
in which the costs of providing the elements are incurred.
    (b) The costs of dedicated facilities shall be recovered through 
flat-rated charges.
    (c) The costs of shared facilities shall be recovered in a manner 
that efficiently apportions costs among users. Costs of shared 
facilities may be apportioned either through usage-sensitive charges or 
capacity-based flat-rated charges, if the state commission finds that 
such rates reasonably reflect the costs imposed by the various users.
    (d) Recurring costs shall be recovered through recurring charges, 
unless an incumbent LEC proves to a state commission that such recurring 
costs are de minimis. Recurring costs shall be considered de minimis 
when the costs of administering the recurring charge would be excessive 
in relation to the amount of the recurring costs.
    (e) State commissions may, where reasonable, require incumbent LECs 
to recover nonrecurring costs through recurring charges over a 
reasonable period of time. Nonrecurring charges shall be allocated 
efficiently among requesting telecommunications carriers, and shall not 
permit an incumbent LEC to recover more than the total forward-looking 
economic cost of providing the applicable element.
    (f) State commissions shall establish different rates for elements 
in at least three defined geographic areas within the state to reflect 
geographic cost differences.
    (1) To establish geographically-deaveraged rates, state commissions 
may use existing density-related zone pricing plans described in 
Sec. 69.123 of this chapter, or other such cost-related zone plans 
established pursuant to state law.
    (2) In states not using such existing plans, state commissions must 
create a

[[Page 40]]

minimum of three cost-related rate zones.



Sec. 51.509  Rate structure standards for specific elements.

    In addition to the general rules set forth in Sec. 51.507, rates for 
specific elements shall comply with the following rate structure rules.
    (a) Local loops. Loop costs shall be recovered through flat-rated 
charges.
    (b) Local switching. Local switching costs shall be recovered 
through a combination of a flat-rated charge for line ports and one or 
more flat-rated or per-minute usage charges for the switching matrix and 
for trunk ports.
    (c) Dedicated transmission links. Dedicated transmission link costs 
shall be recovered through flat-rated charges.
    (d) Shared transmission facilities between tandem switches and end 
offices. The costs of shared transmission facilities between tandem 
switches and end offices may be recovered through usage-sensitive 
charges, or in another manner consistent with the manner that the 
incumbent LEC incurs those costs.
    (e) Tandem switching. Tandem switching costs may be recovered 
through usage-sensitive charges, or in another manner consistent with 
the manner that the incumbent LEC incurs those costs.
    (f) Signaling and call-related database services. Signaling and 
call-related database service costs shall be usage-sensitive, based on 
either the number of queries or the number of messages, with the 
exception of the dedicated circuits known as signaling links, the cost 
of which shall be recovered through flat-rated charges.
    (g) Collocation. Collocation costs shall be recovered consistent 
with the rate structure policies established in the Expanded 
Interconnection proceeding, CC Docket No. 91-141.



Sec. 51.511  Forward-looking economic cost per unit.

    (a) The forward-looking economic cost per unit of an element equals 
the forward-looking economic cost of the element, as defined in 
Sec. 51.505, divided by a reasonable projection of the sum of the total 
number of units of the element that the incumbent LEC is likely to 
provide to requesting telecommunications carriers and the total number 
of units of the element that the incumbent LEC is likely to use in 
offering its own services, during a reasonable measuring period.
    (b)(1) With respect to elements that an incumbent LEC offers on a 
flat-rate basis, the number of units is defined as the discrete number 
of elements (e.g., local loops or local switch ports) that the incumbent 
LEC uses or provides.
    (2) With respect to elements that an incumbent LEC offers on a 
usage-sensitive basis, the number of units is defined as the unit of 
measurement of the usage (e.g., minutes of use or call-related database 
queries) of the element.



Sec. 51.513  Proxies for forward-looking economic cost.

    (a) A state commission may determine that the cost information 
available to it with respect to one or more elements does not support 
the adoption of a rate or rates that are consistent with the 
requirements set forth in Secs. 51.505 and 51.511. In that event, the 
state commission may establish a rate for an element that is consistent 
with the proxies specified in this section, provided that:
    (1) Any rate established through use of such proxies shall be 
superseded once the state commission has completed review of a cost 
study that complies with the forward-looking economic cost based pricing 
methodology described in Secs. 51.505 and 51.511, and has concluded that 
such study is a reasonable basis for establishing element rates; and
    (2) The state commission sets forth in writing a reasonable basis 
for its selection of a particular rate for the element.
    (b) The constraints on proxy-based rates described in this section 
apply on a geographically averaged basis. For purposes of determining 
whether geographically deaveraged rates for elements comply with the 
provisions of this section, a geographically averaged proxy-based rate 
shall be computed based on the weighted average of the actual, 
geographically deaveraged rates that apply in separate geographic areas 
in a state.

[[Page 41]]

    (c) Proxies for specific elements--(1) Local loops. For each state 
listed below, the proxy-based monthly rate for unbundled local loops, on 
a statewide weighted average basis, shall be no greater than the figures 
listed in the table below. (The Commission has not established a default 
proxy ceiling for loop rates in Alaska.)

                                  Table
------------------------------------------------------------------------
                                                                  Proxy
                             State                               ceiling
------------------------------------------------------------------------
Alabama.......................................................    $17.25
Arizona.......................................................     12.85
Arkansas......................................................     21.18
California....................................................     11.10
Colorado......................................................     14.97
Connecticut...................................................     13.23
Delaware......................................................     13.24
District of Columbia..........................................     10.81
Florida.......................................................     13.68
Georgia.......................................................     16.09
Hawaii........................................................     15.27
Idaho.........................................................     20.16
Illinois......................................................     13.12
Indiana.......................................................     13.29
Iowa..........................................................     15.94
Kansas........................................................     19.85
Kentucky......................................................     16.70
Louisiana.....................................................     16.98
Maine.........................................................     18.69
Maryland......................................................     13.36
Massachusetts.................................................      9.83
Michigan......................................................     15.27
Minnesota.....................................................     14.81
Mississippi...................................................     21.97
Missouri......................................................     18.32
Montana.......................................................     25.18
Nebraska......................................................     18.05
Nevada........................................................     18.95
New Hampshire.................................................     16.00
New Jersey....................................................     12.47
New Mexico....................................................     18.66
New York......................................................     11.75
North Carolina................................................     16.71
North Dakota..................................................     25.36
Ohio..........................................................     15.73
Oklahoma......................................................     17.63
Oregon........................................................     15.44
Pennsylvania..................................................     12.30
Puerto Rico...................................................     12.47
Rhode Island..................................................     11.48
South Carolina................................................     17.07
South Dakota..................................................     25.33
Tennessee.....................................................     17.41
Texas.........................................................     15.49
Utah..........................................................     15.12
Vermont.......................................................     20.13
Virginia......................................................     14.13
Washington....................................................     13.37
West Virginia.................................................     19.25
Wisconsin.....................................................     15.94
Wyoming.......................................................     25.11
------------------------------------------------------------------------

    (2) Local switching. (i) The blended proxy-based rate for the usage-
sensitive component of the unbundled local switching element, including 
the switching matrix, the functionalities used to provide vertical 
features, and the trunk ports, shall be no greater than 0.4 cents 
($0.004) per minute, and no less than 0.2 cents ($0.002) per minute, 
except that, where a state commission has, before August 8, 1996, 
established a rate less than or equal to 0.5 cents ($0.005) per minute, 
that rate may be retained pending completion of a forward-looking 
economic cost study. If a flat-rated charge is established for these 
components, it shall be converted to a per-minute rate by dividing the 
projected average minutes of use per flat-rated subelement, for purposes 
of assessing compliance with this proxy. A weighted average of such 
flat-rate or usage-sensitive charges shall be used in appropriate 
circumstances, such as when peak and off-peak charges are used.
    (ii) The blended proxy-based rate for the line port component of the 
local switching element shall be no less than $1.10, and no more than 
$2.00, per line port per month for ports used in the delivery of basic 
residential and business exchange services.
    (3) Dedicated transmission links. The proxy-based rates for 
dedicated transmission links shall be no greater than the incumbent 
LEC's tariffed interstate charges for comparable entrance facilities or 
direct-trunked transport offerings, as described in Secs. 69.110 and 
69.112 of this chapter.
    (4) Shared transmission facilities between tandem switches and end 
offices. The proxy-based rates for shared transmission facilities 
between tandem switches and end offices shall be no greater than the 
weighted per-minute equivalent of DS1 and DS3 interoffice dedicated 
transmission link rates that reflects the relative number of DS1 and DS3 
circuits used in the tandem to end office links (or a surrogate based on 
the proportion of copper and fiber facilities in the interoffice 
network), calculated using a loading factor of 9,000 minutes per month 
per voice-grade circuit, as described in Sec. 69.112 of this chapter.
    (5) Tandem switching. The proxy-based rate for tandem switching 
shall be no greater than 0.15 cents ($0.0015) per minute of use.
    (6) Collocation. To the extent that the incumbent LEC offers a 
comparable

[[Page 42]]

form of collocation in its interstate expanded interconnection tariffs, 
as described in Secs. 64.1401 and 69.121 of this chapter, the proxy-
based rates for collocation shall be no greater than the effective rates 
for equivalent services in the interstate expanded interconnection 
tariff. To the extent that the incumbent LEC does not offer a comparable 
form of collocation in its interstate expanded interconnection tariffs, 
a state commission may, in its discretion, establish a proxy-based rate, 
provided that the state commission sets forth in writing a reasonable 
basis for concluding that its rate would approximate the result of a 
forward-looking economic cost study, as described in Sec. 51.505.
    (7) Signaling, call-related database, and other elements. To the 
extent that the incumbent LEC has established rates for offerings 
comparable to other elements in its interstate access tariffs, and has 
provided cost support for those rates pursuant to Sec. 61.49(h) of this 
chapter, the proxy-based rates for those elements shall be no greater 
than the effective rates for equivalent services in the interstate 
access tariffs. In other cases, the proxy-based rate shall be no greater 
than a rate based on direct costs plus a reasonable allocation of 
overhead loadings, pursuant to Sec. 61.49(h) of this chapter.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 52709, Oct. 8, 1996]



Sec. 51.515  Application of access charges.

    (a) Neither the interstate access charges described in part 69 of 
this chapter nor comparable intrastate access charges shall be assessed 
by an incumbent LEC on purchasers of elements that offer telephone 
exchange or exchange access services.
    (b) Notwithstanding Secs. 51.505, 51.511, and 51.513(d)(2) and 
paragraph (a) of this section, an incumbent LEC may assess upon 
telecommunications carriers that purchase unbundled local switching 
elements, as described in Sec. 51.319(c)(1), for interstate minutes of 
use traversing such unbundled local switching elements, the carrier 
common line charge described in Sec. 69.105 of this chapter, and a 
charge equal to 75% of the interconnection charge described in 
Sec. 69.124 of this chapter, only until the earliest of the following, 
and not thereafter:
    (1) June 30, 1997;
    (2) The later of the effective date of a final Commission decision 
in CC Docket No. 96-45, Federal-State Joint Board on Universal Service, 
or the effective date of a final Commission decision in a proceeding to 
consider reform of the interstate access charges described in part 69; 
or
    (3) With respect to a Bell operating company only, the date on which 
that company is authorized to offer in-region interLATA service in a 
state pursuant to section 271 of the Act. The end date for Bell 
operating companies that are authorized to offer interLATA service shall 
apply only to the recovery of access charges in those states in which 
the Bell operating company is authorized to offer such service.
    (c) Notwithstanding Secs. 51.505, 51.511, and 51.513(d)(2) and 
paragraph (a) of this section, an incumbent LEC may assess upon 
telecommunications carriers that purchase unbundled local switching 
elements, as described in Sec. 51.319(c)(1), for intrastate toll minutes 
of use traversing such unbundled local switching elements, intrastate 
access charges comparable to those listed in paragraph (b) and any 
explicit intrastate universal service mechanism based on access charges, 
only until the earliest of the following, and not thereafter:
    (1) June 30, 1997;
    (2) The effective date of a state commission decision that an 
incumbent LEC may not assess such charges; or
    (3) With respect to a Bell operating company only, the date on which 
that company is authorized to offer in-region interLATA service in the 
state pursuant to section 271 of the Act. The end date for Bell 
operating companies that are authorized to offer interLATA service shall 
apply only to the recovery of access charges in those states in which 
the Bell operating company is authorized to offer such service.
    (d) Interstate access charges described in part 69 shall not be 
assessed by incumbent LECs on each element

[[Page 43]]

purchased by requesting carriers providing both telephone exchange and 
exchange access services to such requesting carriers' end users.

[61 FR 45619, Aug. 29, 1996, as amended at 62 FR 45587, Aug. 28, 1997]



                            Subpart G--Resale



Sec. 51.601  Scope of resale rules.

    The provisions of this subpart govern the terms and conditions under 
which LECs offer telecommunications services to requesting 
telecommunications carriers for resale.



Sec. 51.603  Resale obligation of all local exchange carriers.

    (a) A LEC shall make its telecommunications services available for 
resale to requesting telecommunications carriers on terms and conditions 
that are reasonable and non-discriminatory.
    (b) A LEC must provide services to requesting telecommunications 
carriers for resale that are equal in quality, subject to the same 
conditions, and provided within the same provisioning time intervals 
that the LEC provides these services to others, including end users.



Sec. 51.605  Additional obligations of incumbent local exchange carriers.

    (a) An incumbent LEC shall offer to any requesting 
telecommunications carrier any telecommunications service that the 
incumbent LEC offers on a retail basis to subscribers that are not 
telecommunications carriers for resale at wholesale rates that are, at 
the election of the state commission--
    (1) Consistent with the avoided cost methodology described in 
Secs. 51.607 and 51.609; or
    (2) Interim wholesale rates, pursuant to Sec. 51.611.
    (b) Except as provided in Sec. 51.613, an incumbent LEC shall not 
impose restrictions on the resale by a requesting carrier of 
telecommunications services offered by the incumbent LEC.



Sec. 51.607  Wholesale pricing standard.

    (a) The wholesale rate that an incumbent LEC may charge for a 
telecommunications service provided for resale to other 
telecommunications carriers shall equal the incumbent LEC's existing 
retail rate for the telecommunications service, less avoided retail 
costs, as described in Sec. 51.609.
    (b) For purposes of this subpart, exchange access services, as 
defined in section 3 of the Act, shall not be considered to be 
telecommunications services that incumbent LECs must make available for 
resale at wholesale rates to requesting telecommunications carriers.



Sec. 51.609  Determination of avoided retail costs.

    (a) Except as provided in Sec. 51.611, the amount of avoided retail 
costs shall be determined on the basis of a cost study that complies 
with the requirements of this section.
    (b) Avoided retail costs shall be those costs that reasonably can be 
avoided when an incumbent LEC provides a telecommunications service for 
resale at wholesale rates to a requesting carrier.
    (c) For incumbent LECs that are designated as Class A companies 
under Sec. 32.11 of this chapter, except as provided in paragraph (d) of 
this section, avoided retail costs shall:
    (1) Include, as direct costs, the costs recorded in USOA accounts 
6611 (product management), 6612 (sales), 6613 (product advertising), 
6621 (call completion services), 6622 (number services), and 6623 
(customer services) (Secs. 32.6611, 32.6612, 32.6613, 32.6621, 32.6622, 
and 32.6623 of this chapter);
    (2) Include, as indirect costs, a portion of the costs recorded in 
USOA accounts 6121-6124 (general support expenses), 6711, 6712, 6721-
6728 (corporate operations expenses), and 5301 (telecommunications 
uncollectibles) (Secs. 32.6121-32.6124, 32.6711, 32.6712, 32.6721-
32.6728, and 32.5301 of this chapter); and
    (3) Not include plant-specific expenses and plant non-specific 
expenses, other than general support expenses (Secs. 32.6110-32.6116, 
32.6210-32.6565 of this chapter).
    (d) Costs included in accounts 6611-6613 and 6621-6623 described in 
paragraph (c) of this section (Secs. 32.6611-32.6613 and 32.6621-32.6623 
of this chapter) may be included in wholesale rates

[[Page 44]]

only to the extent that the incumbent LEC proves to a state commission 
that specific costs in these accounts will be incurred and are not 
avoidable with respect to services sold at wholesale, or that specific 
costs in these accounts are not included in the retail prices of resold 
services. Costs included in accounts 6110-6116 and 6210-6565 described 
in paragraph (c) of this section (Secs. 32.6110-32.6116, 32.6210-32.6565 
of this chapter) may be treated as avoided retail costs, and excluded 
from wholesale rates, only to the extent that a party proves to a state 
commission that specific costs in these accounts can reasonably be 
avoided when an incumbent LEC provides a telecommunications service for 
resale to a requesting carrier.
    (e) For incumbent LECs that are designated as Class B companies 
under Sec. 32.11 of this chapter and that record information in summary 
accounts instead of specific USOA accounts, the entire relevant summary 
accounts may be used in lieu of the specific USOA accounts listed in 
paragraphs (c) and (d) of this section.



Sec. 51.611  Interim wholesale rates.

    (a) If a state commission cannot, based on the information available 
to it, establish a wholesale rate using the methodology prescribed in 
Sec. 51.609, then the state commission may elect to establish an interim 
wholesale rate as described in paragraph (b) of this section.
    (b) The state commission may establish interim wholesale rates that 
are at least 17 percent, and no more than 25 percent, below the 
incumbent LEC's existing retail rates, and shall articulate the basis 
for selecting a particular discount rate. The same discount percentage 
rate shall be used to establish interim wholesale rates for each 
telecommunications service.
    (c) A state commission that establishes interim wholesale rates 
shall, within a reasonable period of time thereafter, establish 
wholesale rates on the basis of an avoided retail cost study that 
complies with Sec. 51.609.



Sec. 51.613  Restrictions on resale.

    (a) Notwithstanding Sec. 51.605(b), the following types of 
restrictions on resale may be imposed:
    (1) Cross-class selling. A state commission may permit an incumbent 
LEC to prohibit a requesting telecommunications carrier that purchases 
at wholesale rates for resale, telecommunications services that the 
incumbent LEC makes available only to residential customers or to a 
limited class of residential customers, from offering such services to 
classes of customers that are not eligible to subscribe to such services 
from the incumbent LEC.
    (2) Short term promotions. An incumbent LEC shall apply the 
wholesale discount to the ordinary rate for a retail service rather than 
a special promotional rate only if:
    (i) Such promotions involve rates that will be in effect for no more 
than 90 days; and
    (ii) The incumbent LEC does not use such promotional offerings to 
evade the wholesale rate obligation, for example by making available a 
sequential series of 90-day promotional rates.
    (b) With respect to any restrictions on resale not permitted under 
paragraph (a), an incumbent LEC may impose a restriction only if it 
proves to the state commission that the restriction is reasonable and 
nondiscriminatory.
    (c) Branding. Where operator, call completion, or directory 
assistance service is part of the service or service package an 
incumbent LEC offers for resale, failure by an incumbent LEC to comply 
with reseller unbranding or rebranding requests shall constitute a 
restriction on resale.
    (1) An incumbent LEC may impose such a restriction only if it proves 
to the state commission that the restriction is reasonable and 
nondiscriminatory, such as by proving to a state commission that the 
incumbent LEC lacks the capability to comply with unbranding or 
rebranding requests.
    (2) For purposes of this subpart, unbranding or rebranding shall 
mean that operator, call completion, or directory assistance services 
are offered in such a manner that an incumbent LEC's brand name or other 
identifying information is not identified to subscribers, or that such 
services are offered in such a manner that identifies to subscribers the 
requesting carrier's

[[Page 45]]

brand name or other identifying information.



Sec. 51.615  Withdrawal of services.

    When an incumbent LEC makes a telecommunications service available 
only to a limited group of customers that have purchased such a service 
in the past, the incumbent LEC must also make such a service available 
at wholesale rates to requesting carriers to offer on a resale basis to 
the same limited group of customers that have purchased such a service 
in the past.



Sec. 51.617  Assessment of end user common line charge on resellers.

    (a) Notwithstanding the provision in Sec. 69.104(a) of this chapter 
that the end user common line charge be assessed upon end users, an 
incumbent LEC shall assess this charge, and the charge for changing the 
designated primary interexchange carrier, upon requesting carriers that 
purchase telephone exchange service for resale. The specific end user 
common line charge to be assessed will depend upon the identity of the 
end user served by the requesting carrier.
    (b) When an incumbent LEC provides telephone exchange service to a 
requesting carrier at wholesale rates for resale, the incumbent LEC 
shall continue to assess the interstate access charges provided in part 
69 of this chapter, other than the end user common line charge, upon 
interexchange carriers that use the incumbent LEC's facilities to 
provide interstate or international telecommunications services to the 
interexchange carriers' subscribers.



  Subpart H--Reciprocal Compensation for Transport and Termination of 
                    Local Telecommunications Traffic



Sec. 51.701  Scope of transport and termination pricing rules.

    (a) The provisions of this subpart apply to reciprocal compensation 
for transport and termination of local telecommunications traffic 
between LECs and other telecommunications carriers.
    (b) Local telecommunications traffic. For purposes of this subpart, 
local telecommunications traffic means:
    (1) Telecommunications traffic between a LEC and a 
telecommunications carrier other than a CMRS provider that originates 
and terminates within a local service area established by the state 
commission; or
    (2) Telecommunications traffic between a LEC and a CMRS provider 
that, at the beginning of the call, originates and terminates within the 
same Major Trading Area, as defined in Sec. 24.202(a) of this chapter.
    (c) Transport. For purposes of this subpart, transport is the 
transmission and any necessary tandem switching of local 
telecommunications traffic subject to section 251(b)(5) of the Act from 
the interconnection point between the two carriers to the terminating 
carrier's end office switch that directly serves the called party, or 
equivalent facility provided by a carrier other than an incumbent LEC.
    (d) Termination. For purposes of this subpart, termination is the 
switching of local telecommunications traffic at the terminating 
carrier's end office switch, or equivalent facility, and delivery of 
such traffic to the called party's premises.
    (e) Reciprocal compensation. For purposes of this subpart, a 
reciprocal compensation arrangement between two carriers is one in which 
each of the two carriers receives compensation from the other carrier 
for the transport and termination on each carrier's network facilities 
of local telecommunications traffic that originates on the network 
facilities of the other carrier.



Sec. 51.703  Reciprocal compensation obligation of LECs.

    (a) Each LEC shall establish reciprocal compensation arrangements 
for transport and termination of local telecommunications traffic with 
any requesting telecommunications carrier.
    (b) A LEC may not assess charges on any other telecommunications 
carrier for local telecommunications traffic that originates on the 
LEC's network.

[[Page 46]]



Sec. 51.705  Incumbent LECs' rates for transport and termination.

    (a) An incumbent LEC's rates for transport and termination of local 
telecommunications traffic shall be established, at the election of the 
state commission, on the basis of:
    (1) The forward-looking economic costs of such offerings, using a 
cost study pursuant to Secs. 51.505 and 51.511;
    (2) Default proxies, as provided in Sec. 51.707; or
    (3) A bill-and-keep arrangement, as provided in Sec. 51.713.
    (b) In cases where both carriers in a reciprocal compensation 
arrangement are incumbent LECs, state commissions shall establish the 
rates of the smaller carrier on the basis of the larger carrier's 
forward-looking costs, pursuant to Sec. 51.711.



Sec. 51.707  Default proxies for incumbent LECs' transport and termination rates.

    (a) A state commission may determine that the cost information 
available to it with respect to transport and termination of local 
telecommunications traffic does not support the adoption of a rate or 
rates for an incumbent LEC that are consistent with the requirements of 
Secs. 51.505 and 51.511. In that event, the state commission may 
establish rates for transport and termination of local 
telecommunications traffic, or for specific components included therein, 
that are consistent with the proxies specified in this section, provided 
that:
    (1) Any rate established through use of such proxies is superseded 
once that state commission establishes rates for transport and 
termination pursuant to Secs. 51.705(a)(1) or 51.705(a)(3); and
    (2) The state commission sets forth in writing a reasonable basis 
for its selection of a particular proxy for transport and termination of 
local telecommunications traffic, or for specific components included 
within transport and termination.
    (b) If a state commission establishes rates for transport and 
termination of local telecommunications traffic on the basis of default 
proxies, such rates must meet the following requirements:
    (1) Termination. The incumbent LEC's rates for the termination of 
local telecommunications traffic shall be no greater than 0.4 cents 
($0.004) per minute, and no less than 0.2 cents ($0.002) per minute, 
except that, if a state commission has, before August 8, 1996, 
established a rate less than or equal to 0.5 cents ($0.005) per minute 
for such calls, that rate may be retained pending completion of a 
forward-looking economic cost study.
    (2) Transport. The incumbent LEC's rates for the transport of local 
telecommunications traffic, under this section, shall comply with the 
proxies described in Sec. 51.513(c) (3), (4), and (5) of this part that 
apply to the analogous unbundled network elements used in transporting a 
call to the end office that serves the called party.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 52709, Oct. 8, 1996]



Sec. 51.709  Rate structure for transport and termination.

    (a) In state proceedings, a state commission shall establish rates 
for the transport and termination of local telecommunications traffic 
that are structured consistently with the manner that carriers incur 
those costs, and consistently with the principles in Secs. 51.507 and 
51.509.
    (b) The rate of a carrier providing transmission facilities 
dedicated to the transmission of traffic between two carriers' networks 
shall recover only the costs of the proportion of that trunk capacity 
used by an interconnecting carrier to send traffic that will terminate 
on the providing carrier's network. Such proportions may be measured 
during peak periods.



Sec. 51.711  Symmetrical reciprocal compensation.

    (a) Rates for transport and termination of local telecommunications 
traffic shall be symmetrical, except as provided in paragraphs (b) and 
(c) of this section.
    (1) For purposes of this subpart, symmetrical rates are rates that a 
carrier other than an incumbent LEC assesses upon an incumbent LEC for 
transport and termination of local telecommunications traffic equal to 
those that the incumbent LEC assesses upon the other carrier for the 
same services.

[[Page 47]]

    (2) In cases where both parties are incumbent LECs, or neither party 
is an incumbent LEC, a state commission shall establish the symmetrical 
rates for transport and termination based on the larger carrier's 
forward-looking costs.
    (3) Where the switch of a carrier other than an incumbent LEC serves 
a geographic area comparable to the area served by the incumbent LEC's 
tandem switch, the appropriate rate for the carrier other than an 
incumbent LEC is the incumbent LEC's tandem interconnection rate.
    (b) A state commission may establish asymmetrical rates for 
transport and termination of local telecommunications traffic only if 
the carrier other than the incumbent LEC (or the smaller of two 
incumbent LECs) proves to the state commission on the basis of a cost 
study using the forward-looking economic cost based pricing methodology 
described in Secs. 51.505 and 51.511, that the forward-looking costs for 
a network efficiently configured and operated by the carrier other than 
the incumbent LEC (or the smaller of two incumbent LECs), exceed the 
costs incurred by the incumbent LEC (or the larger incumbent LEC), and, 
consequently, that such that a higher rate is justified.
    (c) Pending further proceedings before the Commission, a state 
commission shall establish the rates that licensees in the Paging and 
Radiotelephone Service (defined in part 22, subpart E of this chapter), 
Narrowband Personal Communications Services (defined in part 24, subpart 
D of this chapter), and Paging Operations in the Private Land Mobile 
Radio Services (defined in part 90, subpart P of this chapter) may 
assess upon other carriers for the transport and termination of local 
telecommunications traffic based on the forward-looking costs that such 
licensees incur in providing such services, pursuant to Secs. 51.505 and 
51.511. Such licensees' rates shall not be set based on the default 
proxies described in Sec. 51.707.



Sec. 51.713  Bill-and-keep arrangements for reciprocal compensation.

    (a) For purposes of this subpart, bill-and-keep arrangements are 
those in which neither of the two interconnecting carriers charges the 
other for the termination of local telecommunications traffic that 
originates on the other carrier's network.
    (b) A state commission may impose bill-and-keep arrangements if the 
state commission determines that the amount of local telecommunications 
traffic from one network to the other is roughly balanced with the 
amount of local telecommunications traffic flowing in the opposite 
direction, and is expected to remain so, and no showing has been made 
pursuant to Sec. 51.711(b).
    (c) Nothing in this section precludes a state commission from 
presuming that the amount of local telecommunications traffic from one 
network to the other is roughly balanced with the amount of local 
telecommunications traffic flowing in the opposite direction and is 
expected to remain so, unless a party rebuts such a presumption.



Sec. 51.715  Interim transport and termination pricing.

    (a) Upon request from a telecommunications carrier without an 
existing interconnection arrangement with an incumbent LEC, the 
incumbent LEC shall provide transport and termination of local 
telecommunications traffic immediately under an interim arrangement, 
pending resolution of negotiation or arbitration regarding transport and 
termination rates and approval of such rates by a state commission under 
sections 251 and 252 of the Act.
    (1) This requirement shall not apply when the requesting carrier has 
an existing interconnection arrangement that provides for the transport 
and termination of local telecommunications traffic by the incumbent 
LEC.
    (2) A telecommunications carrier may take advantage of such an 
interim arrangement only after it has requested negotiation with the 
incumbent LEC pursuant to Sec. 51.301.
    (b) Upon receipt of a request as described in paragraph (a) of this 
section, an incumbent LEC must, without unreasonable delay, establish an 
interim arrangement for transport and termination of local 
telecommunications traffic at symmetrical rates.

[[Page 48]]

    (1) In a state in which the state commission has established 
transport and termination rates based on forward-looking economic cost 
studies, an incumbent LEC shall use these state-determined rates as 
interim transport and termination rates.
    (2) In a state in which the state commission has established 
transport and termination rates consistent with the default price ranges 
and ceilings described in Sec. 51.707, an incumbent LEC shall use these 
state-determined rates as interim rates.
    (3) In a state in which the state commission has neither established 
transport and termination rates based on forward-looking economic cost 
studies nor established transport and termination rates consistent with 
the default price ranges described in Sec. 51.707, an incumbent LEC 
shall set interim transport and termination rates at the default 
ceilings for end-office switching (0.4 cents per minute of use), tandem 
switching (0.15 cents per minute of use), and transport (as described in 
Sec. 51.707(b)(2)).
    (c) An interim arrangement shall cease to be in effect when one of 
the following occurs with respect to rates for transport and termination 
of local telecommunications traffic subject to the interim arrangement:
    (1) A voluntary agreement has been negotiated and approved by a 
state commission;
    (2) An agreement has been arbitrated and approved by a state 
commission; or
    (3) The period for requesting arbitration has passed with no such 
request.
    (d) If the rates for transport and termination of local 
telecommunications traffic in an interim arrangement differ from the 
rates established by a state commission pursuant to Sec. 51.705, the 
state commission shall require carriers to make adjustments to past 
compensation. Such adjustments to past compensation shall allow each 
carrier to receive the level of compensation it would have received had 
the rates in the interim arrangement equalled the rates later 
established by the state commission pursuant to Sec. 51.705.



Sec. 51.717  Renegotiation of existing non-reciprocal arrangements.

    (a) Any CMRS provider that operates under an arrangement with an 
incumbent LEC that was established before August 8, 1996 and that 
provides for non-reciprocal compensation for transport and termination 
of local telecommunications traffic is entitled to renegotiate these 
arrangements with no termination liability or other contract penalties.
    (b) From the date that a CMRS provider makes a request under 
paragraph (a) of this section until a new agreement has been either 
arbitrated or negotiated and has been approved by a state commission, 
the CMRS provider shall be entitled to assess upon the incumbent LEC the 
same rates for the transport and termination of local telecommunications 
traffic that the incumbent LEC assesses upon the CMRS provider pursuant 
to the pre-existing arrangement.



   Subpart I--Procedures for Implementation of Section 252 of the Act



Sec. 51.801  Commission action upon a state commission's failure to act to carry out its responsibility under section 252 of the Act.

    (a) If a state commission fails to act to carry out its 
responsibility under section 252 of the Act in any proceeding or other 
matter under section 252 of the Act, the Commission shall issue an order 
preempting the state commission's jurisdiction of that proceeding or 
matter within 90 days after being notified (or taking notice) of such 
failure, and shall assume the responsibility of the state commission 
under section 252 of the Act with respect to the proceeding or matter 
and shall act for the state commission.
    (b) For purposes of this part, a state commission fails to act if 
the state commission fails to respond, within a reasonable time, to a 
request for mediation, as provided for in section 252(a)(2) of the Act, 
or for a request for arbitration, as provided for in section 252(b) of 
the Act, or fails to complete an arbitration within the time limits

[[Page 49]]

established in section 252(b)(4)(C) of the Act.
    (c) A state shall not be deemed to have failed to act for purposes 
of section 252(e)(5) of the Act if an agreement is deemed approved under 
section 252(e)(4) of the Act.



Sec. 51.803  Procedures for Commission notification of a state commission's failure to act.

    (a) Any party seeking preemption of a state commission's 
jurisdiction, based on the state commission's failure to act, shall 
notify the Commission in accordance with following procedures:
    (1) Such party shall file with the Secretary of the Commission a 
petition, supported by an affidavit, that states with specificity the 
basis for the petition and any information that supports the claim that 
the state has failed to act, including, but not limited to, the 
applicable provisions of the Act and the factual circumstances 
supporting a finding that the state commission has failed to act;
    (2) Such party shall ensure that the state commission and the other 
parties to the proceeding or matter for which preemption is sought are 
served with the petition required in paragraph (a)(1) of this section on 
the same date that the petitioning party serves the petition on the 
Commission; and
    (3) Within fifteen days from the date of service of the petition 
required in paragraph (a)(1) of this section, the applicable state 
commission and parties to the proceeding may file with the Commission a 
response to the petition.
    (b) The party seeking preemption must prove that the state has 
failed to act to carry out its responsibilities under section 252 of the 
Act.
    (c) The Commission, pursuant to section 252(e)(5) of the Act, may 
take notice upon its own motion that a state commission has failed to 
act. In such a case, the Commission shall issue a public notice that the 
Commission has taken notice of a state commission's failure to act. The 
applicable state commission and the parties to a proceeding or matter in 
which the Commission has taken notice of the state commission's failure 
to act may file, within fifteen days of the issuance of the public 
notice, comments on whether the Commission is required to assume the 
responsibility of the state commission under section 252 of the Act with 
respect to the proceeding or matter.
    (d) The Commission shall issue an order determining whether it is 
required to preempt the state commission's jurisdiction of a proceeding 
or matter within 90 days after being notified under paragraph (a) of 
this section or taking notice under paragraph (c) of this section of a 
state commission's failure to carry out its responsibilities under 
section 252 of the Act.



Sec. 51.805  The Commission's authority over proceedings and matters.

    (a) If the Commission assumes responsibility for a proceeding or 
matter pursuant to section 252(e)(5) of the Act, the Commission shall 
retain jurisdiction over such proceeding or matter. At a minimum, the 
Commission shall approve or reject any interconnection agreement adopted 
by negotiation, mediation or arbitration for which the Commission, 
pursuant to section 252(e)(5) of the Act, has assumed the state's 
commission's responsibilities.
    (b) Agreements reached pursuant to mediation or arbitration by the 
Commission pursuant to section 252(e)(5) of the Act are not required to 
be submitted to the state commission for approval or rejection.



Sec. 51.807  Arbitration and mediation of agreements by the Commission pursuant to section 252(e)(5) of the Act.

    (a) The rules established in this section shall apply only to 
instances in which the Commission assumes jurisdiction under section 
252(e)(5) of the Act.
    (b) When the Commission assumes responsibility for a proceeding or 
matter pursuant to section 252(e)(5) of the Act, it shall not be bound 
by state laws and standards that would have applied to the state 
commission in such proceeding or matter.
    (c) In resolving, by arbitration under section 252(b) of the Act, 
any open issues and in imposing conditions upon the parties to the 
agreement, the Commission shall:
    (1) Ensure that such resolution and conditions meet the requirements 
of

[[Page 50]]

section 251 of the Act, including the rules prescribed by the Commission 
pursuant to that section;
    (2) Establish any rates for interconnection, services, or network 
elements according to section 252(d) of the Act, including the rules 
prescribed by the Commission pursuant to that section; and
    (3) Provide a schedule for implementation of the terms and 
conditions by the parties to the agreement.
    (d) An arbitrator, acting pursuant to the Commission's authority 
under section 252(e)(5) of the Act, shall use final offer arbitration, 
except as otherwise provided in this section:
    (1) At the discretion of the arbitrator, final offer arbitration may 
take the form of either entire package final offer arbitration or issue-
by-issue final offer arbitration.
    (2) Negotiations among the parties may continue, with or without the 
assistance of the arbitrator, after final arbitration offers are 
submitted. Parties may submit subsequent final offers following such 
negotiations.
    (3) To provide an opportunity for final post-offer negotiations, the 
arbitrator will not issue a decision for at least fifteen days after 
submission to the arbitrator of the final offers by the parties.
    (e) Final offers submitted by the parties to the arbitrator shall be 
consistent with section 251 of the Act, including the rules prescribed 
by the Commission pursuant to that section.
    (f) Each final offer shall:
    (1) Meet the requirements of section 251, including the rules 
prescribed by the Commission pursuant to that section;
    (2) Establish rates for interconnection, services, or access to 
unbundled network elements according to section 252(d) of the Act, 
including the rules prescribed by the Commission pursuant to that 
section; and
    (3) Provide a schedule for implementation of the terms and 
conditions by the parties to the agreement. If a final offer submitted 
by one or more parties fails to comply with the requirements of this 
section, the arbitrator has discretion to take steps designed to result 
in an arbitrated agreement that satisfies the requirements of section 
252(c) of the Act, including requiring parties to submit new final 
offers within a time frame specified by the arbitrator, or adopting a 
result not submitted by any party that is consistent with the 
requirements of section 252(c) of the Act, and the rules prescribed by 
the Commission pursuant to that section.
    (g) Participation in the arbitration proceeding will be limited to 
the requesting telecommunications carrier and the incumbent LEC, except 
that the Commission will consider requests by third parties to file 
written pleadings.
    (h) Absent mutual consent of the parties to change any terms and 
conditions adopted by the arbitrator, the decision of the arbitrator 
shall be binding on the parties.



Sec. 51.809  Availability of provisions of agreements to other telecommunications carriers under section 252(i) of the Act.

    (a) An incumbent LEC shall make available without unreasonable delay 
to any requesting telecommunications carrier any individual 
interconnection, service, or network element arrangement contained in 
any agreement to which it is a party that is approved by a state 
commission pursuant to section 252 of the Act, upon the same rates, 
terms, and conditions as those provided in the agreement. An incumbent 
LEC may not limit the availability of any individual interconnection, 
service, or network element only to those requesting carriers serving a 
comparable class of subscribers or providing the same service (i.e., 
local, access, or interexchange) as the original party to the agreement.
    (b) The obligations of paragraph (a) of this section shall not apply 
where the incumbent LEC proves to the state commission that:
    (1) The costs of providing a particular interconnection, service, or 
element to the requesting telecommunications carrier are greater than 
the costs of providing it to the telecommunications carrier that 
originally negotiated the agreement, or
    (2) The provision of a particular interconnection, service, or 
element to the requesting carrier is not technically feasible.

[[Page 51]]

    (c) Individual interconnection, service, or network element 
arrangements shall remain available for use by telecommunications 
carriers pursuant to this section for a reasonable period of time after 
the approved agreement is available for public inspection under section 
252(f) of the Act.



PART 52--NUMBERING--Table of Contents




                     Subpart A--Scope and Authority

Sec.
52.1  Basis and purpose.
52.3  General.
52.5  Definitions.

                        Subpart B--Administration

52.7  Definitions.
52.9  General requirements.
52.11  North American Numbering Council.
52.12  North American Numbering Plan Administrator and B&C Agent.
52.13  North American Numbering Plan Administrator.
52.15  Central office code administration.
52.16  Billing and Collection Agent.
52.17  Costs of number administration.
52.19  Area code relief.

                      Subpart C--Number Portability

52.21  Definitions.
52.23  Deployment of long-term database methods for number portability 
          by LECs.
52.25  Database architecture and administration.
52.26  NANC Recommendations on Local Number Portability Administration.
52.27  Deployment of transitional measures for number portability.
52.29  Cost recovery for transitional measures for number portability.
52.31  Deployment of long-term database methods for number portability 
          by CMRS providers.
52.32  Allocation of the shared costs of long-term number portability.
52.33  Recovery of carrier-specific costs directly related to providing 
          long-term number portability.
52.34-52.99  [Reserved]

                      Subpart D--Toll Free Numbers

52.101  General definitions.
52.103  Lag times.
52.105  Warehousing.
52.107  Hoarding.
52.109  Permanent cap on number reservations.

Appendix to Part 52--Deployment Schedule for Long-Term Database Methods 
          for Local Number Portability

    Authority: Sec. 1, 2, 4, 5, 48 Stat. 1066, as amended; 47 U.S.C. 
Sec. 151, 152, 154, 155 unless otherwise noted. Interpret or apply secs. 
3, 4, 201-05, 207-09, 218, 225-7, 251-2, 271 and 332, 48 Stat. 1070, as 
amended, 1077; 47 U.S.C. 153, 154, 201-05, 207-09, 218, 225-7, 251-2, 
271 and 332 unless otherwise noted.

    Source: 61 FR 38637, July 25, 1996, unless otherwise noted.



                     Subpart A--Scope and Authority

    Source: 61 FR 47353, Sept. 6, 1996, unless otherwise noted.



Sec. 52.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended, 47 U.S.C. 151 et. seq.
    (b) Purpose. The purpose of these rules is to establish, for the 
United States, requirements and conditions for the administration and 
use of telecommunications numbers for provision of telecommunications 
services.



Sec. 52.3  General.

    The Commission shall have exclusive authority over those portions of 
the North American Numbering Plan (NANP) that pertain to the United 
States. The Commission may delegate to the States or other entities any 
portion of such jurisdiction.



Sec. 52.5  Definitions.

    As used in this part:
    (a) Incumbent local exchange carrier. With respect to an area, an 
``incumbent local exchange carrier'' is a local exchange carrier that:
    (1) On February 8, 1996, provided telephone exchange service in such 
area; and
    (2)(i) On February 8, 1996, was deemed to be a member of the 
exchange carrier association pursuant to Sec. 69.601(b) of this chapter 
(47 CFR 69.601(b)); or
    (ii) Is a person or entity that, on or after February 8, 1996, 
became a successor or assign of a member described in paragraph 
(a)(2)(i) of this section.
    (b) North American Numbering Council (NANC). The ``North American 
Numbering Council'' is an advisory committee created under the Federal 
Advisory Committee Act, 5 U.S.C., App (1988), to advise the Commission 
and to make recommendations, reached through

[[Page 52]]

consensus, that foster efficient and impartial number administration.
    (c) North American Numbering Plan (NANP). The ``North American 
Numbering Plan'' is the basic numbering scheme for the 
telecommunications networks located in Anguilla, Antigua, Bahamas, 
Barbados, Bermuda, British Virgin Islands, Canada, Cayman Islands, 
Dominica, Dominican Republic, Grenada, Jamaica, Montserrat, St. Kitts & 
Nevis, St. Lucia, St. Vincent, Turks & Caicos Islands, Trinidad & 
Tobago, and the United States (including Puerto Rico, the U.S. Virgin 
Islands, Guam and the Commonwealth of the Northern Mariana Islands).
    (d) State. The term ``state'' includes the District of Columbia and 
the Territories and possessions.
    (e) State commission. The term ``state commission'' means the 
commission, board, or official (by whatever name designated) which under 
the laws of any state has regulatory jurisdiction with respect to 
intrastate operations of carriers.
    (f) Telecommunications. ``Telecommunications'' means the 
transmission, between or among points specified by the user, of 
information of the user's choosing, without change in the form or 
content of the information as sent and received.
    (g) Telecommunications carrier. A ``telecommunications carrier'' is 
any provider of telecommunications services, except that such term does 
not include aggregators of telecommunications services (as defined in 47 
U.S.C. 226(a)(2)).
    (h) Telecommunications service. The term ``telecommunications 
service'' refers to the offering of telecommunications for a fee 
directly to the public, or to such classes of users as to be effectively 
available directly to the public, regardless of the facilities used.



                        Subpart B--Administration

    Source: 61 FR 47353, Sept. 6, 1996, unless otherwise noted.



Sec. 52.7  Definitions.

    As used in this subpart:
    (a) Area code or numbering plan area (NPA). The term ``area code or 
numbering plan area'' refers to the first three digits (NXX) of a ten-
digit telephone number in the form NXX-NXX-XXXX, where N represents any 
one of the numbers 2 through 9 and X represents any one of the numbers 0 
through 9.
    (b) Area code relief. The term ``area code relief'' refers to the 
process by which central office codes are made available when there are 
few or no unassigned central office codes remaining in an existing area 
code and a new area code is introduced. Area code relief includes 
planning for area code ``jeopardy,'' which is a situation where central 
office codes may become exhausted before an area code relief plan can be 
implemented.
    (c) Central office (CO) code. The term ``central office code'' 
refers to the second three digits (NXX) of a ten-digit telephone number 
in the form NXX-NXX-XXXX, where N represents any one of the numbers 2 
through 9 and X represents any one of the numbers 0 through 9.
    (d) Central office (CO) code administrator. The term ``central 
office code administrator'' refers to the entity or entities responsible 
for managing central office codes in each area code.
    (e) North American Numbering Plan Administrator (NANPA). The term 
``North American Numbering Plan Administrator'' refers to the entity or 
entities responsible for managing the NANP.
    (f) Billing and Collection Agent. The term ``Billing & Collection 
Agent'' (``B&C Agent'') refers to the entity responsible for the 
collection of funds to support numbering administration for 
telecommunications services from the United States telecommunications 
industry and NANP member countries.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55180, Oct. 23, 1997]



Sec. 52.9  General requirements.

    (a) To ensure that telecommunications numbers are made available on 
an equitable basis, the administration of telecommunications numbers 
shall, in addition to the specific requirements set forth in this 
subpart:

[[Page 53]]

    (1) Facilitate entry into the telecommunications marketplace by 
making telecommunications numbering resources available on an efficient, 
timely basis to telecommunications carriers;
    (2) Not unduly favor or disfavor any particular telecommunications 
industry segment or group of telecommunications consumers; and
    (3) Not unduly favor one telecommunications technology over another.
    (b) If the Commission delegates any telecommunications numbering 
administration functions to any State or other entity pursuant to 47 
U.S.C. 251(e)(1), such State or entity shall perform these functions in 
a manner consistent with this part.



Sec. 52.11  North American Numbering Council.

    The duties of the North American Numbering Council (NANC), may 
include, but are not limited to:
    (a) Advising the Commission on policy matters relating to the 
administration of the NANP in the United States;
    (b) Making recommendations, reached through consensus, that foster 
efficient and impartial number administration;
    (c) Initially resolving disputes, through consensus, that foster 
efficient and impartial number administration in the United States by 
adopting and utilizing dispute resolution procedures that provide 
disputants, regulators, and the public notice of the matters at issue, a 
reasonable opportunity to make oral and written presentations, a 
reasoned recommended solution, and a written report summarizing the 
recommendation and the reasons therefore;
    (d) Recommending to the Commission an appropriate entity to serve as 
the NANPA;
    (e) Recommending to the Commission an appropriate mechanism for 
recovering the costs of NANP administration in the United States, 
consistent with Sec. 52.17;
    (f) Carrying out the duties described in Sec. 52.25; and
    (g) Carrying out this part as directed by the Commission;
    (h) Monitoring the performance of the NANPA and the B&C Agent on at 
least an annual basis; and
    (i) Implementing, at the direction of the Commission, any action 
necessary to correct identified problems with the performance of the 
NANPA and the B&C Agent, as deemed necessary.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55180, Oct. 23, 1997]



Sec. 52.12  North American Numbering Plan Administrator and B&C Agent.

    The North American Numbering Plan Administrator (``NANPA'') and the 
associated ``B&C Agent'' will conduct their respective operations in 
accordance with this section. The NANPA and the B&C Agent will conduct 
their respective operations with oversight from the Federal 
Communications Commission (the ``Commission'') and with recommendations 
from the North American Numbering Council (``NANC'').
    (a)(1) Neutrality. The NANPA and the B&C Agent shall be non-
governmental entities that are impartial and not aligned with any 
particular telecommunication industry segment. Accordingly, while 
conducting their respective operations under this section, the NANPA and 
B&C Agent shall ensure that they comply with the following neutrality 
criteria:
    (i) The NANPA and B&C Agent may not be an affiliate of any 
telecommunications service provider(s) as defined in the 
Telecommunications Act of 1996. ``Affiliate'' is a person who controls, 
is controlled by, or is under the direct or indirect common control with 
another person. A person shall be deemed to control another if such 
person possesses, directly or indirectly--
    (A) An equity interest by stock, partnership (general or limited) 
interest, joint venture participation, or member interest in the other 
person ten (10%) percent or more of the total outstanding equity 
interests in the other person, or
    (B) The power to vote ten (10%) percent or more of the securities 
(by stock, partnership (general or limited) interest, joint venture 
participation, or member interest) having ordinary voting power for the 
election of directors,

[[Page 54]]

general partner, or management of such other person, or
    (C) The power to direct or cause the direction of the management and 
policies of such other person, whether through the ownership of or right 
to vote voting rights attributable to the stock, partnership (general or 
limited) interest, joint venture participation, or member interest) of 
such other person, by contract (including but not limited to stockholder 
agreement, partnership (general or limited) agreement, joint venture 
agreement, or operating agreement), or otherwise;
    (ii) The NANPA and B&C Agent, and any affiliate thereof, may not 
issue a majority of its debt to, nor may it derive a majority of its 
revenues from, any telecommunications service provider. ``Majority'' 
shall mean greater than 50 percent, and ``debt'' shall mean stocks, 
bonds, securities, notes, loans or any other instrument of indebtedness; 
and
    (iii) Notwithstanding the neutrality criteria set forth in 
paragraphs (a)(1) (i) and (ii) of this section, the NANPA and B&C Agent 
may be determined to be or not to be subject to undue influence by 
parties with a vested interest in the outcome of numbering 
administration and activities. NANC may conduct an evaluation to 
determine whether the NANPA and B&C Agent meet the undue influence 
criterion.
    (2) Any subcontractor that performs--
    (i) NANP administration and central office code administration, or
    (ii) Billing and Collection functions, for the NANPA or for the B&C 
Agent must also meet the neutrality criteria described in paragraph 
(a)(1).
    (b) Term of administration. The NANPA shall provide numbering 
administration, including central office code administration, for the 
United States portion of the North American Numbering Plan (``NANP'') 
for an initial period of five (5) years. At any time prior to the 
termination of the initial or subsequent term of administration, such 
term may be renewed for up to five (5) years with the approval of the 
Commission and the agreement of the NANPA. The B&C Agent shall provide 
billing and collection functions for an initial period of five (5) 
years. At any time prior to the termination of the initial or subsequent 
term of administration, such term may be renewed for up to five (5) 
years with the approval of the Commission and the agreement of the B&C 
Agent.
    (c) Changes to regulations, rules, guidelines or directives. In the 
event that regulatory authorities or industry groups (including, for 
example, the Industry Numbering Committee--INC, or its successor) issue 
rules, requirements, guidelines or policy directives which may affect 
the functions performed by the NANPA and the B&C Agent, the NANPA and 
the B&C Agent shall, within 10 business days from the date of official 
notice of such rules, requirements, guidelines or policy directives, 
assess the impact on its operations and advise the Commission of any 
changes required. NANPA and the B&C Agent shall provide written 
explanation why such changes are required. To the extent the Commission 
deems such changes are necessary, the Commission will recommend to the 
NANP member countries appropriate cost recovery adjustments, if 
necessary.
    (d) Performance review process. NANPA and the B&C Agent shall 
develop and implement an internal, documented performance monitoring 
mechanism and shall provide such performance review on request of the 
Commission on at least an annual basis. The annual assessment process 
will not preclude telecommunications industry participants from 
identifying performance problems to the NANPA, the B&C Agent and the 
NANC as they occur, and from seeking expeditious resolution. If 
performance problems are identified by a telecommunications industry 
participant, the NANC, B&C Agent or NANPA shall investigate and report 
within 10 business days of notice to the participant of corrective 
action, if any, taken or to be taken. The NANPA, B&C Agent or NANC (as 
appropriate) shall be permitted reasonable time to take corrective 
action, including the necessity of obtaining the required consent of the 
Commission.
    (e) Termination. If the Commission determines at any time that the 
NANPA or the B&C Agent fails to comply with the neutrality criteria set 
forth in paragraph (a) of this section or

[[Page 55]]

substantially or materially defaults in the performance of its 
obligations, the Commission shall advise immediately the NANPA or the 
B&C Agent of said failure or default, request immediate corrective 
action, and permit the NANPA or B&C Agent reasonable time to correct 
such failure or default. If the NANPA or B&C Agent is unwilling or 
unable to take corrective action, the Commission may, in a manner 
consistent with the requirements of the Administrative Procedure Act and 
the Communications Act of 1934, as amended, take any action that it 
deems appropriate, including termination of the NANPA's or B&C Agent's 
term of administration.
    (f) Required and optional enterprise services. Enterprise Services, 
which are services beyond those described in Sec. 52.13 that may be 
provided by the new NANPA for specified fees, may be offered with prior 
approval of the Commission.
    (1) Required Enterprise Services. At the request of a code holder, 
the NANPA shall, in accordance with industry standards and for 
reasonable fees, enter certain routing and rating information, into the 
industry-approved database(s) for dissemination of such information. 
This task shall include reviewing the information and assisting in its 
preparation.
    (2) Optional Enterprise Services. The NANPA may, subject to prior 
approval and for reasonable fees, offer ``Optional Enterprise Services'' 
which are any services not described elsewhere in this section.
    (3) Annual report. NANPA shall identify and record all direct costs 
associated with providing Enterprise Services separately from the costs 
associated with the non-enterprise NANPA functions. The NANPA shall 
submit an annual report to the NANC summarizing the revenues and costs 
for providing each Enterprise Service. NANPA shall be audited by an 
independent auditor after the first year of operations and every two 
years thereafter, and submit the report to the Commission for 
appropriate review and action.

[63 FR 55180, Oct. 23, 1997]



Sec. 52.13  North American Numbering Plan Administrator.

    (a) The North American Numbering Plan Administrator (NANPA) shall be 
an independent and impartial non-government entity.
    (b) The NANPA shall administer the numbering resources identified in 
paragraph (d) of this section. It shall assign and administer NANP 
resources in an efficient, effective, fair, unbiased, and non-
discriminatory manner consistent with industry-developed guidelines and 
Commission regulations. It shall support the industry's efforts to 
accommodate current and future numbering needs. It shall perform 
additional functions, including but not limited to:
    (1) Ensuring the efficient and effective administration and 
assignment of numbering resources by performing day-to-day number 
resource assignment and administrative activities;
    (2) Planning for the long-term need for NANP resources to ensure the 
continued viability of the NANP by implementing a plan for number 
resource administration that uses effective forecasting and management 
skills in order to make the industry aware of the availability of 
numbering resources and to meet the current and future needs of the 
industry;
    (3) Complying with guidelines of the North American Industry 
Numbering Committee (INC) or its successor, related industry 
documentation, Commission regulations and orders, and the guidelines of 
other appropriate policy-making authorities, all of which may be 
modified by industry fora or other appropriate authority;
    (4) Providing management supervision for all of the services it 
provides, including responsibility for achieving performance measures 
established by the NANC and the INC in industry guidelines;
    (5) Participating in the NANC annual performance review as described 
in Secs. 52.11 and 52.12;
    (6) Establishing and maintaining relationships with current 
governmental and regulatory bodies, and their successors, including the 
United States Federal Communications Commission, Industry Canada, the 
Canadian Radio-television and Telecommunications Commission, and other 
United States,

[[Page 56]]

Canadian, and Caribbean numbering authorities and regulatory agencies, 
and addressing policy directives from these bodies;
    (7) Cooperating with and actively participating in numbering 
standards bodies and industry fora, such as INC and, upon request, the 
Canadian Steering Committee on Numbering (CSCN);
    (8) Representing the NANP to national and international numbering 
bodies;
    (9) Developing and maintaining communications channels with other 
countries who also participate in the NANP to ensure that numbering 
needs of all countries served by the NANP are met;
    (10) Attending United States Study Group A meetings and maintaining 
a working knowledge of Study Group 2 International Telecommunications 
Union activities on behalf of the United States telecommunications 
industry;
    (11) Reviewing requests for all numbering resources to implement new 
applications and services and making assignments in accordance with 
industry-developed resource planning and assignment guidelines;
    (12) Referring requests for particular numbering resources to the 
appropriate industry body where guidelines do not exist for those 
resources;
    (13) Participating in industry activities to determine whether, when 
new telecommunications services requiring numbers are proposed, NANP 
numbers are appropriate and what level of resource is required (e.g. 
line numbers, central office codes, NPA codes);
    (14) Maintaining necessary administrative staff to handle the legal, 
financial, technical, staffing, industry, and regulatory issues relevant 
to the management of all numbering resources, as well as maintaining the 
necessary equipment, facilities, and proper billing arrangements 
associated with day-to-day management of all numbering resources;
    (15) Managing the NANP in accordance with published guidelines 
adopted in conjunction with the industry and the appropriate NANP member 
countries' governing agencies, and referring issues to the appropriate 
industry body for resolution when they have not been addressed by the 
industry;
    (16) Responding to requests from the industry and from regulators 
for information about the NANP and its administration, as the primary 
repository for numbering information in the industry;
    (17) Providing upon request information regarding how to obtain 
current documents related to NANP administration;
    (18) Providing assistance to users of numbering resources and 
suggesting numbering administration options, when possible, that will 
optimize number resource utilization;
    (19) Coordinating its numbering resource activities with the 
Canadian Number Administrator and other NANP member countries' 
administrators to ensure efficient and effective management of NANP 
numbering resources; and
    (20) Determining the final allocation methodology for sharing costs 
between NANP countries.
    (c) In performing the functions outlined in paragraph (b) of this 
section, the NANPA shall:
    (1) Ensure that the interests of all NANP member countries are 
considered;
    (2) Assess fairly requests for assignments of NANP numbering 
resources and ensure the assignment of numbering resources to 
appropriate service providers;
    (3) Develop, operate and maintain the computer hardware, software 
(database) and mechanized systems required to perform the NANPA and 
central office (CO) Code Administration functions;
    (4) Manage projects such as Numbering Plan Area (NPA) relief (area 
code relief) planning and the Central Office Code Utilization Survey 
(COCUS);
    (5) Facilitate NPA relief planning meetings;
    (6) Participate in appropriate industry activities;
    (7) Manage proprietary data and competitively sensitive information 
and maintain the confidentiality thereof;
    (8) Act as an information resource for the industry concerning all 
aspects of numbering (i.e., knowledge and experience in numbering 
resource issues, International Telecommunications Union (ITU) 
Recommendation E.164,

[[Page 57]]

the North American Numbering Plan (NANP), NANP Administration, INC, NANP 
area country regulatory issues affecting numbering, number resource 
assignment guidelines, central office code administration, relief 
planning, international numbering issues, etc.); and
    (9) Ensure that any action taken with respect to number 
administration is consistent with this part.
    (d) The NANPA and, to the extent applicable, the B&C Agent, shall 
administer numbering resources in an efficient and non-discriminatory 
manner, in accordance with Commission rules and regulations and the 
guidelines developed by the INC and other industry groups pertaining to 
administration and assignment of numbering resources, including, but not 
limited to:
    (1) Numbering Plan Area (NPA) codes,
    (2) Central Office codes for the 809 area,
    (3) International Inbound NPA 456 NXX codes,
    (4) (NPA) 500 NXX codes,
    (5) (NPA) 900 NXX codes,
    (6) N11 Service codes,
    (7) 855-XXXX line numbers,
    (8) 555-XXXX line numbers,
    (9) Carrier Identification Codes,
    (10) Vertical Service Codes,
    (11) ANI Information Integer (II) Digit Pairs,
    (12) Non Dialable Toll Points, and
    (13) New numbering resources as may be defined.
    (e) Relationships with other NANP member countries' administrators 
and authorities. The NANPA shall address policy directives from other 
NANP member countries' governmental and regulatory authorities and 
coordinate its activities with other NANP member countries' 
administrators, if any, to ensure efficient and effective management of 
NANP resources.
    (f) Transition plan. The NANPA shall implement a transition plan, 
subject to Commission approval, leading to its assumption of NANPA 
functions within 90 days of the effective date of a Commission order 
announcing the selection of the NANPA.
    (g) Transfer of intellectual property. The new NANPA must make 
available any and all intellectual property and associated hardware 
resulting from its activities as numbering administrator including, but 
not limited to, systems and the data contained therein, software, 
interface specifications and supporting documentation and make such 
property available to whomever NANC directs free of charge. The new 
NANPA must specify any intellectual property it proposes to exclude from 
the provisions of this paragraph based on the existence of such property 
prior to its selection as NANPA.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55181, Oct. 23, 1997]



Sec. 52.15  Central office code administration.

    (a) Central Office Code Administration shall be performed by the 
NANPA, or another entity or entities, as designated by the Commission.
    (b) Duties of the entity or entities performing central office code 
administration may include, but are not limited to:
    (1) Processing central office code assignment applications and 
assigning such codes in a manner that is consistent with this part;
    (2) Accessing and maintaining central office code assignment 
databases;
    (3) Contributing to the CO Code Use Survey (COCUS), an annual survey 
that describes the present and projected use of CO codes for each NPA in 
the NANP;
    (4) Monitoring the use of central office codes within each area code 
and forecasting the date by which all central office codes within that 
area code will be assigned; and
    (5) Planning for and initiating area code relief, consistent with 
Sec. 52.19.
    (c) Any telecommunications carrier performing central office code 
administration:
    (1) Shall not charge fees for the assignment or use of central 
office codes to other telecommunications carriers, including paging and 
CMRS providers, unless the telecommunications carrier assigning the 
central office code charges one uniform fee for all carriers, including 
itself and its affiliates; and
    (2) Shall, consistent with this subpart, apply identical standards 
and procedures for processing all central office

[[Page 58]]

code assignment requests, and for assigning such codes, regardless of 
the identity of the telecommunications carrier making the request.
    (d) Central Office (CO) Code Administration functional requirements. 
The NANPA shall manage the United States CO code numbering resource, 
including CO code request processing, NPA code relief and jeopardy 
planning, and industry notification functions. The NANPA shall perform 
its CO Code Administration functions in accordance with the published 
industry numbering resource administration guidelines and Commission 
orders and regulations at 47 CFR chapter I. Subject to the approval of 
the Commission, the NANPA shall develop a transition plan to transfer CO 
code assignment from the current administrators to itself and shall 
submit this plan to the Commission within 90 days of the effective date 
of a Commission order announcing the selection of the NANPA. The NANPA 
shall complete the transfer of CO code assignment functions from 
existing administrators to itself no more than 18 months after the NANPA 
has assumed all of said administrators' current NANPA function.
    (e) The new NANPA shall perform the numbering administration 
functions currently performed by Bellcore, and the CO code 
administration functions currently performed by the eleven CO code 
administrators, at the price agreed to at the time of its selection. The 
new NANPA may request from NANC, with subsequent approval by the 
Commission, an adjustment in this price if the actual number of CO Code 
assignments made per year, the number of NPAs requiring relief per year 
or the number of NPA relief meetings per NPA exceeds 120% of the NANPA's 
stated assumptions for the tasks at the time of its selection.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55182, Oct. 23, 1997]



52.16  Billing and Collection Agent.

    The B&C Agent shall:
    (a) Calculate, assess, bill and collect payments for numbering 
administration functions and distribute funds to NANPA on a monthly 
basis;
    (b) Design a standard Reporting Worksheet to collect information for 
assessment calculations from carriers and distribute it to carriers and 
other NANP nations; this worksheet must be submitted to the Commission 
for its review and approved by OMB prior to its use by the B&C Agent.
    (c) Keep confidential all data obtained from carriers and not 
disclose such data in company-specific form unless authorized by the 
Commission. The B&C Agent shall use such data only for calculating, 
collecting and verifying payments;
    (d) Develop procedures to monitor industry compliance with reporting 
requirements and propose specific procedures to address reporting 
failures and late payments;
    (e) File annual reports with the appropriate regulatory authorities 
of the NANP member countries as requested; and
    (f) Obtain an audit from an independent auditor after the first year 
of operations and annually thereafter, which shall evaluate the validity 
of calculated payments. The B&C Agent shall submit the audit report to 
the Commission for appropriate review and action.

[62 FR 55183, Oct. 23, 1997]



Sec. 52.17  Costs of number administration.

    All telecommunications carriers in the United States shall 
contribute on a competitively neutral basis to meet the costs of 
establishing numbering administration.
    (a) For each telecommunications carrier, such contributions shall be 
based on the gross revenues from the provision of its telecommunications 
services.
    (b) The contributions in paragraph (a) of this section shall be 
based on each contributor's gross revenues from its provision of 
telecommunications services reduced by all payments for 
telecommunications services and facilities that have been paid to other 
telecommunications carriers.



Sec. 52.19  Area code relief.

    (a) State commissions may resolve matters involving the introduction 
of new area codes within their states. Such matters may include, but are 
not limited to: Directing whether area code

[[Page 59]]

relief will take the form of a geographic split, an overlay area code, 
or a boundary realignment; establishing new area code boundaries; 
establishing necessary dates for the implementation of area code relief 
plans; and directing public education and notification efforts regarding 
area code changes.
    (b) State commissions may perform any or all functions related to 
initiation and development of area code relief plans, so long as they 
act consistently with the guidelines enumerated in this part, and 
subject to paragraph (b)(2) of this section. For the purposes of this 
paragraph, initiation and development of area code relief planning 
encompasses all functions related to the implementation of new area 
codes that were performed by central office code administrators prior to 
February 8, 1996. Such functions may include: declaring that the area 
code relief planning process should begin; convening and conducting 
meetings to which the telecommunications industry and the public are 
invited on area code relief for a particular area code; and developing 
the details of a proposed area code relief plan or plans.
    (1) The entity or entities designated by the Commission to serve as 
central office code administrator(s) shall initiate and develop area 
code relief plans for each area code in each state that has not notified 
such entity or entities, pursuant to paragraph (b)(2) of this section, 
that the state will handle such functions.
    (2) Pursuant to paragraph (b)(1) of this section, a state commission 
must notify the entity or entities designated by the Commission to serve 
as central office code administrator(s) for its state that such state 
commission intends to perform matters related to initiation and 
development of area code relief planning efforts in its state. 
Notification shall be written and shall include a description of the 
specific functions the state commission intends to perform. Where the 
NANP Administrator serves as the central office code administrator, such 
notification must be made within 120 days of the selection of the NANP 
Administrator.
    (c) New area codes may be introduced through the use of:
    (1) A geographic area code split, which occurs when the geographic 
area served by an area code in which there are few or no central office 
codes left for assignment is split into two or more geographic parts;
    (2) An area code boundary realignment, which occurs when the 
boundary lines between two adjacent area codes are shifted to allow the 
transfer of some central office codes from an area code for which 
central office codes remain unassigned to an area code for which few or 
no central office codes are left for assignment; or
    (3) An area code overlay, which occurs when a new area code is 
introduced to serve the same geographic area as an existing area code, 
subject to the following conditions:
    (i) No area code overlay may be implemented unless all central 
office codes in the new overlay area code are assigned to those entities 
requesting assignment on a first-come, first-serve basis, regardless of 
the identity of, technology used by, or type of service provided by that 
entity. No group of telecommunications carriers shall be excluded from 
assignment of central office codes in the existing area code, or be 
assigned such codes only from the overlay area code, based solely on 
that group's provision of a specific type of telecommunications service 
or use of a particular technology;
    (ii) No area code overlay may be implemented unless there exists, at 
the time of implementation, mandatory ten-digit dialing for every 
telephone call within and between all area codes in the geographic area 
covered by the overlay area code; and
    (iii) No area code overlay may be implemented unless every 
telecommunications carrier, including CMRS providers, authorized to 
provide telephone exchange service, exchange access, or paging service 
in that NPA 90 days before introduction of the new overlay area code, is 
assigned during that 90 day period at least one central office code in 
the existing area code.



                      Subpart C--Number Portability

    Source: 61 FR 38637, July 25, 1996, unless otherwise noted. 
Redesignated at 61 FR 47353, Sept. 6, 1996.

[[Page 60]]



Sec. 52.21  Definitions.

    As used in this subpart:
    (a) The term broadband PCS has the same meaning as that term is 
defined in Sec. 24.5 of this chapter.
    (b) The term cellular service has the same meaning as that term is 
defined in Sec. 22.99 of this chapter.
    (c) The term covered SMR means either 800 MHz and 900 MHz SMR 
licensees that hold geographic area licenses or incumbent wide area SMR 
licensees that offer real-time, two-way switched voice service that is 
interconnected with the public switched network, either on a stand-alone 
basis or packaged with other telecommunications services. This term does 
not include local SMR licensees offering mainly dispatch services to 
specialized customers in a non-cellular system configuration, licensees 
offering only data, one-way, or stored voice services on an 
interconnected basis, or any SMR provider that is not interconnected to 
the public switched network.
    (d) The term database method means a number portability method that 
utilizes one or more external databases for providing called party 
routing information.
    (e) The term downstream database means a database owned and operated 
by an individual carrier for the purpose of providing number portability 
in conjunction with other functions and services.
    (f) The term incumbent wide area SMR licensee has the same meaning 
as that term is defined in Sec. 20.3 of this chapter.
    (g) The term local exchange carrier means any person that is engaged 
in the provision of telephone exchange service or exchange access. For 
purposes of this subpart, such term does not include a person insofar as 
such person is engaged in the provision of a commercial mobile service 
under 47 U.S.C. 332(c).
    (h) The term local number portability administrator (LNPA) means an 
independent, non-governmental entity, not aligned with any particular 
telecommunications industry segment, whose duties are determined by the 
NANC.
    (i) The term location portability means the ability of users of 
telecommunications services to retain existing telecommunications 
numbers without impairment of quality, reliability, or convenience when 
moving from one physical location to another.
    (j) The term long-term database method means a database method that 
complies with the performance criteria set forth in Sec. 52.3(a).
    (k) The term number portability means the ability of users of 
telecommunications services to retain, at the same location, existing 
telecommunications numbers without impairment of quality, reliability, 
or convenience when switching from one telecommunications carrier to 
another.
    (l) The term regional database means an SMS database or an SMS/SCP 
pair that contains information necessary for carriers to provide number 
portability in a region as determined by the NANC.
    (m) The term service control point (SCP) means a database in the 
public switched network which contains information and call processing 
instructions needed to process and complete a telephone call. The 
network switches access an SCP to obtain such information. Typically, 
the information contained in an SCP is obtained from the SMS.
    (n) The term service management system (SMS) means a database or 
computer system not part of the public switched network that, among 
other things:
    (1) Interconnects to an SCP and sends to that SCP the information 
and call processing instructions needed for a network switch to process 
and complete a telephone call; and
    (2) Provides telecommunications carriers with the capability of 
entering and storing data regarding the processing and completing of a 
telephone call.
    (o) The term service portability means the ability of users of 
telecommunications services to retain existing telecommunications 
numbers without impairment of quality, reliability, or convenience when 
switching from one telecommunications service to another, without 
switching from one telecommunications carrier to another.
    (p) The term service provider portability means the ability of users 
of telecommunications services to retain,

[[Page 61]]

at the same location, existing telecommunications numbers without 
impairment of quality, reliability, or convenience when switching from 
one telecommunications carrier to another.
    (q) The term transitional measure means a method such as Remote Call 
Forwarding (RCF), Flexible Direct Inward Dialing (DID), or other 
comparable and technically feasible arrangement that allows one local 
exchange carrier to transfer telephone numbers from its network to the 
network of another telecommunications carrier, but does not comply with 
the performance criteria set forth in Sec. 52.3(a).

[61 FR 38637, July 25, 1996. Redesignated at 61 FR 47353, Sept. 6, 1996, 
as amended at 61 FR 47355, Sept. 6, 1996]



Sec. 52.23  Deployment of long-term database methods for number portability by LECs.

    (a) Subject to paragraphs (b) and (c) of this section, all local 
exchange carriers (LECs) must provide number portability in compliance 
with the following performance criteria:
    (1) Supports network services, features, and capabilities existing 
at the time number portability is implemented, including but not limited 
to emergency services, CLASS features, operator and directory assistance 
services, and intercept capabilities;
    (2) Efficiently uses numbering resources;
    (3) Does not require end users to change their telecommunications 
numbers;
    (4) Does not result in unreasonable degradation in service quality 
or network reliability when implemented;
    (5) Does not result in any degradation in service quality or network 
reliability when customers switch carriers;
    (6) Does not result in a carrier having a proprietary interest;
    (7) Is able to migrate to location and service portability; and
    (8) Has no significant adverse impact outside the areas where number 
portability is deployed.
    (b)(1) All LECs must provide a long-term database method for number 
portability in the 100 largest Metropolitan Statistical Areas (MSAs) by 
December 31, 1998, in accordance with the deployment schedule set forth 
in the Appendix to this part, in switches for which another carrier has 
made a specific request for the provision of number portability, subject 
to paragraph (b)(2) of this section.
    (2) Any procedure to identify and request switches for deployment of 
number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) Carriers must submit requests for deployment at least nine 
months before the deployment deadline for the MSA;
    (iii) A LEC must make available upon request to any interested 
parties a list of its switches for which number portability has been 
requested and a list of its switches for which number portability has 
not been requested; and
    (iv) After the deadline for deployment of number portability in an 
MSA in the 100 largest MSAs, according to the deployment schedule set 
forth in the appendix to this part, a LEC must deploy number portability 
in that MSA in additional switches upon request within the following 
time frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;
    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability (``Capable Switches Requiring Hardware''), within 180 days; 
and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
    (c) Beginning January 1, 1999, all LECs must make a long-term 
database method for number portability available within six months after 
a specific request by another telecommunications carrier in areas in 
which that telecommunications carrier is operating or plans to operate.

[[Page 62]]

    (d) The Chief, Common Carrier Bureau, may waive or stay any of the 
dates in the implementation schedule, as the Chief determines is 
necessary to ensure the efficient development of number portability, for 
a period not to exceed 9 months (i.e., no later than September 30, 
1999).
    (e) In the event a LEC is unable to meet the Commission's deadlines 
for implementing a long-term database method for number portability, it 
may file with the Commission at least 60 days in advance of the deadline 
a petition to extend the time by which implementation in its network 
will be completed. A LEC seeking such relief must demonstrate through 
substantial, credible evidence the basis for its contention that it is 
unable to comply with the deployment schedule set forth in the appendix 
to this part 52. Such requests must set forth:
    (1) The facts that demonstrate why the carrier is unable to meet the 
Commission's deployment schedule;
    (2) A detailed explanation of the activities that the carrier has 
undertaken to meet the implementation schedule prior to requesting an 
extension of time;
    (3) An identification of the particular switches for which the 
extension is requested;
    (4) The time within which the carrier will complete deployment in 
the affected switches; and
    (5) A proposed schedule with milestones for meeting the deployment 
date.
    (f) The Chief, Common Carrier Bureau, shall monitor the progress of 
local exchange carriers implementing number portability, and may direct 
such carriers to take any actions necessary to ensure compliance with 
the deployment schedule set forth in the appendix to this part 52.
    (g) Carriers that are members of the Illinois Local Number 
Portability Workshop must conduct a field test of any technically 
feasible long-term database method for number portability in the 
Chicago, Illinois, area. The carriers participating in the test must 
jointly file with the Common Carrier Bureau a report of their findings 
within 30 days following completion of the test. The Chief, Common 
Carrier Bureau, shall monitor developments during the field test, and 
may adjust the field test completion deadline as necessary.

[61 FR 38637, July 25, 1996, as amended at 62 FR 18294, Apr. 15, 1997]

    Effective Date Note:  At 62 FR 18294, Apr. 15, 1997, Sec. 52.23 was 
amended by removing paragraph (a)(9) and revising paragraphs (a)(4) 
through (a)(8) and paragraphs (b) and (g). These amendements contain 
information collection and recordkeeping requirements and will not 
become effective until approval has been given by the Office of 
Management and Budget.



Sec. 52.25  Database architecture and administration.

    (a) The North American Numbering Council (NANC) shall direct 
establishment of a nationwide system of regional SMS databases for the 
provision of long-term database methods for number portability.
    (b) All telecommunications carriers shall have equal and open access 
to the regional databases.
    (c) The NANC shall select a local number portability 
administrator(s) (LNPA(s)) to administer the regional databases within 
seven months of the initial meeting of the NANC.
    (d) The NANC shall determine whether one or multiple 
administrator(s) should be selected, whether the LNPA(s) can be the same 
entity selected to be the North American Numbering Plan Administrator, 
how the LNPA(s) should be selected, the specific duties of the LNPA(s), 
the geographic coverage of the regional databases, the technical 
interoperability and operational standards, the user interface between 
telecommunications carriers and the LNPA(s), the network interface 
between the SMS and the downstream databases, and the technical 
specifications for the regional databases.
    (e) Once the NANC has selected the LNPA(s) and determined the 
locations of the regional databases, it must report its decisions to the 
Commission.
    (f) The information contained in the regional databases shall be 
limited to the information necessary to route telephone calls to the 
appropriate telecommunications carriers. The NANC

[[Page 63]]

shall determine what specific information is necessary.
    (g) Any state may opt out of its designated regional database and 
implement a state-specific database. A state must notify the Common 
Carrier Bureau and NANC that it plans to implement a state-specific 
database within 60 days from the release date of the Public Notice 
issued by the Chief, Common Carrier Bureau, identifying the 
administrator selected by the NANC and the proposed locations of the 
regional databases. Carriers may challenge a state's decision to opt out 
of the regional database system by filing a petition with the 
Commission.
    (h) Individual state databases must meet the national requirements 
and operational standards recommended by the NANC and adopted by the 
Commission. In addition, such state databases must be technically 
compatible with the regional system of databases and must not interfere 
with the scheduled implementation of the regional databases.
    (i) Individual carriers may download information necessary to 
provide number portability from the regional databases into their own 
downstream databases. Individual carriers may mix information needed to 
provide other services or functions with the information downloaded from 
the regional databases at their own downstream databases. Carriers may 
not withhold any information necessary to provide number portability 
from the regional databases on the grounds that such data has been 
combined with other information in its downstream database.



Sec. 52.26  NANC Recommendations on Local Number Portability Administration.

    (a) Local number portability administration shall comply with the 
recommendations of the North American Numbering Council (NANC) as set 
forth in the report to the Commission prepared by the NANC's Local 
Number Portability Administration Selection Working Group, dated April 
25, 1997 (Working Group Report) and its appendices, which are 
incorporated by reference pursuant to 5 U.S.C. 552(a) and 1 CFR part 51. 
Except that: Section 7.10 of Appendix D of the Working Group Report is 
not incorporated herein.
    (b) In addition to the requirements set forth in the Working Group 
Report, the following requirements are established:
    (1) If a telecommunictions carrier transmits a telephone call to a 
local exchange carrier's switch that contains any ported numbers, and 
the telecommunications carrier has failed to perform a database query to 
determine if the telephone number has been ported to another local 
exchange carrier, the local exchange carrier may block the unqueried 
call only if performing the database query is likely to impair network 
reliability;
    (2) The regional limited liability companies (LLCs), already 
established by telecommunications carriers in each of the original Bell 
Operating Company regions, shall manage and oversee the local number 
portability administrators, subject to review by the NANC, but only on 
an interim basis, until the conclusion of a rulemaking to examine the 
issue of local number portability administrator oversight and management 
and the question of whether the LLCs should continue to act in this 
capacity; and
    (3) The NANC shall provide ongoing oversight of number portability 
administration, including oversight of the regional LLCs, subject to 
Commission review. Parties shall attempt to resolve issues regarding 
number portability deployment among themselves and, if necessary, under 
the auspices of the NANC. If any party objects to the NANC's proposed 
resolution, the NANC shall issue a written report summarizing the 
positions of the parties and the basis for the recommendation adopted by 
the NANC. The NANC Chair shall submit its proposed resolution of the 
dispuited issue to the Chief of the Common Carrier Bureau as a 
recommendation for Commission review. The Chief of the Common Carrier 
Bureau will place the NANC's proposed resolution on public notice. 
Recommendations adopted by the NANC and forwarded to the Bureau may be 
implemented by the parties pending review of the recommendation. Within 
90 days of the conclusion of the comment cycle, the Chief of the Common 
Carrier Bureau

[[Page 64]]

may issue an order adopting, modifying, or rejecting the recommendation. 
If the Chief does not act within 90 days of the conclusion of the 
comment cycle, the recommendation will be deemed to have been adopted by 
the Bureau.
    (c) The Director of the Federal Register approves this incorporation 
by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
Copies of the Working Group Report and its appendices can be obtained 
from the Commission's contract copier, International Transcription 
Service, Inc., 1231 20th St., N.W., Washington, D.C. 20036, and can be 
inspected during normal business hours at the following locations; 1919 
M Street, N.W., Room 239 (FCC Reference Center), Washington, D.C. 20554 
or at the Office of the Federal Register, 800 North Capitol Street, 
N.W., Suite 700, Washington, D.C. The Working Group Report and its 
appendices are also available in the Internet at http://www.fcc.gov/ccb/
Nanc/.

[62 FR 48786, Sept. 17, 1997]



Sec. 52.27  Deployment of transitional measures for number portability.

    All LECs shall provide transitional measures, which may consist of 
Remote Call Forwarding (RCF), Flexible Direct Inward Dialing (DID), or 
any other comparable and technically feasible method, as soon as 
reasonably possible upon receipt of a specific request from another 
telecommunications carrier, until such time as the LEC implements a 
long-term database method for number portability in that area.



Sec. 52.29  Cost recovery for transitional measures for number portability.

    Any cost recovery mechanism for the provision of number portability 
pursuant to Sec. 52.7(a), that is adopted by a state commission must 
not:
    (a) Give one telecommunications carrier an appreciable, incremental 
cost advantage over another telecommunications carrier, when competing 
for a specific subscriber (i.e., the recovery mechanism may not have a 
disparate effect on the incremental costs of competing carriers seeking 
to serve the same customer); or
    (b) Have a disparate effect on the ability of competing 
telecommunications carriers to earn a normal return on their investment.



Sec. 52.31  Deployment of long-term database methods for number portability by CMRS providers.

    (a) By June 30, 1999, all cellular, broadband PCS, and covered SMR 
providers must provide a long-term database method for number 
portability, in the MSAs identified in the appendix to this part in 
compliance with the performance criteria set forth in Sec. 52.23(a), in 
switches for which another carrier has made a specific request for the 
provision of number portability, subject to paragraph (a)(1) of this 
section.
    (1) Any procedure to identify and request switches for deployment of 
number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) For the MSAs identified in the appendix to this part, carriers 
must submit requests for deployment by September 30, 1998;
    (iii) A cellular, broadband PCS, or covered SMR provider must make 
available upon request to any interested parties a list of its switches 
for which number portability has been requested and a list of its 
switches for which number portability has not been requested;
    (iv) After June 30, 1999, a cellular, broadband PCS, or covered SMR 
provider must deploy additional switches serving the MSAs identified in 
the Appendix to this part upon request within the following time frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;
    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability

[[Page 65]]

(``Capable Switches Requiring Hardware''), within 180 days; and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
    (v) Carriers must be able to request deployment in any wireless 
switch that serves any area within that MSA, even if the wireless switch 
is outside that MSA, or outside any of the MSAs identified in the 
Appendix to this part.
    (2) By June 30, 1999, all cellular, broadband PCS, and covered SMR 
providers must be able to support roaming nationwide.
    (b) By December 31, 1998, all cellular, broadband PCS, and covered 
SMR providers must have the capability to obtain routing information, 
either by querying the appropriate database themselves or by making 
arrangements with other carriers that are capable of performing database 
queries, so that they can deliver calls from their networks to any party 
that has retained its number after switching from one telecommunications 
carrier to another.
    (c) The Chief, Wireless Telecommunications Bureau, may waive or stay 
any of the dates in the implementation schedule, as the Chief determines 
is necessary to ensure the efficient development of number portability, 
for a period not to exceed 9 months (i.e., no later than September 30, 
1999, for the deadline in paragraph (b) of this section, and no later 
than March 31, 2000, for the deadline in paragraph (a) of this section).
    (d) In the event a carrier subject to paragraphs (a) and (b) of this 
section is unable to meet the Commission's deadlines for implementing a 
long-term number portability method, it may file with the Commission at 
least 60 days in advance of the deadline a petition to extend the time 
by which implementation in its network will be completed. A carrier 
seeking such relief must demonstrate through substantial, credible 
evidence the basis for its contention that it is unable to comply with 
paragraphs (a) and (b) of this section. Such requests must set forth:
    (1) The facts that demonstrate why the carrier is unable to meet our 
deployment schedule;
    (2) A detailed explanation of the activities that the carrier has 
undertaken to meet the implementation schedule prior to requesting an 
extension of time;
    (3) An identification of the particular switches for which the 
extension is requested;
    (4) The time within which the carrier will complete deployment in 
the affected switches; and
    (5) A proposed schedule with milestones for meeting the deployment 
date.
    (e) The Chief, Wireless Telecommunications Bureau, may establish 
reporting requirements in order to monitor the progress of cellular, 
broadband PCS, and covered SMR providers implementing number 
portability, and may direct such carriers to take any actions necessary 
to ensure compliance with this deployment schedule.

[61 FR 38637, July 25, 1996, as amended at 62 FR 18295, Apr. 15, 1997]

    Effective Date Note:  At 62 FR 18295, Apr. 15, 1997, Sec. 52.31 was 
amended by revising paragraph (a). This amendment contains information 
collection requirements and will not become effective until approval has 
been given by the Office of Management and Budget.



Sec. 52.32  Allocation of the shared costs of long-term number portability

    (a) The local number portability administrator, as defined in 
Sec. 52.21(h), of each regional database, as defined in Sec. 52.21(1), 
shall recover the shared costs of long-term number portability 
attributable to that regional database from all telecommunications 
carriers providing telecommunications service in areas that regional 
database serves. Pursuant to its duties under Sec. 52.26, the local 
number portability administrator shall collect sufficient revenues to 
fund the operation of the regional database by:
    (1) Assessing a $100 yearly contribution on each telecommunications 
carrier identified in paragraph (a) introductory text that has no 
intrastate, interstate, or international end-user telecommunications 
revenue derived from providing telecommunications service in the areas 
that regional database serves, and

[[Page 66]]

    (2) Assessing on each of the other telecommunications carriers 
providing telecommunications service in areas that regional database 
serves, a charge that recovers the remaining shared costs of long-term 
number portability attributable to that regional database in proportion 
to the ratio of:
    (i) The sum of the intrastate, interstate, and international end-
user telecommunications revenues that such telecommunications carrier 
derives from providing telecommunications service in the areas that 
regional database serves, ii) to the sum of the intrastate, interstate, 
and international end-user telecommunications revenues that all 
telecommunications carriers derive from providing telecommunications 
service in the areas that regional database serves.
    (b) The local number portability administrator for a particular 
regional database may require the telecommunications carriers providing 
telecommunications service in the areas served by the regional database 
to provide once a year that data necessary to calculate, pursuant to 
paragraph (a)(1) or (a)(2) of this section, those carriers' portions of 
the shared costs of long-term number portability attributable to that 
regional database. All such telecommunications carriers shall comply 
with any such requests.
    (c) Once a telecommunications carrier has been allocated, pursuant 
to paragraph (a)(1) or (a)(2) of this section, its portion of the shared 
costs of long-term number portability attributable to a regional 
database, the carrier shall treat that portion as a carrier-specific 
cost directly related to providing number portability.

[63 FR 35160, June 29, 1998]

    Effective Date Note:  At 63 FR 35160, June 29, 1998, Sec. 52.32 was 
added. Paragraph (b) of this section contains information collection 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. 52.33  Recovery of carrier-specific costs directly related to providing long-term number portability.

    (a) Incumbent local exchange carriers may recover their carrier-
specific costs directly related to providing long-term number 
portability by establishing in tariffs filed with the Federal 
Communications Commission a monthly number-portability charge, as 
specified in paragraph (a)(1), and a number portability query-service 
charge, as specified in paragraph (a)(2).
    (1) The monthly number-portability charge may take effect no earlier 
than February 1, 1999, on a date the incumbent local exchange carrier 
selects, and may end no later than five years after that date.
    (i) An incumbent local exchange carrier may assess each end user it 
serves in the 100 largest metropolitan statistical areas, and each end 
user it serves from a number-portability-capable switch outside the 100 
largest metropolitan statistical areas, one monthly number-portability 
charge per line except that:
    (A) One PBX trunk shall receive nine monthly number-portability 
charges.
    (B) One PRI ISDN line shall receive five monthly number-portability 
charges.
    (C) Lifeline Assistance Program customers shall not receive the 
monthly number-portability charge.
    (ii) An incumbent local exchange carrier may assess on carriers that 
purchase the incumbent local exchange carrier's switching ports as 
unbundled network elements under section 251 of the Communications Act, 
and resellers of the incumbent local exchange carrier's local service, 
the same charges as described in paragraph (a)(1)(A) of this section, as 
if the incumbent local exchange carrier were serving those carriers' end 
users.
    (iii) An incumbent local exchange carrier may not assess a monthly 
number-portability charge for local loops carriers purchase as unbundled 
network elements under section 251.
    (iv) The incumbent local exchange carrier shall levelize the monthly 
number-portability charge over five years by setting a rate for the 
charge at which the present value of the revenue recovered by the charge 
does not exceed the present value of the cost being recovered, using a 
discount rate equal to the rate of return on investment which the 
Commission has prescribed for interstate access services pursuant to 
Part 65 of the Commission's Rules.

[[Page 67]]

    (2) The number portability query-service charge may recover only 
carrier-specific costs directly related to providing long-term number 
portability that the incumbent local exchange carrier incurs to provide 
long-term number portability query service to carriers on a prearranged 
and default basis.
    (b) All telecommunications carriers other than incumbent local 
exchange carriers may recover their number portability costs in any 
manner consistent with applicable state and federal laws and 
regulations.

[63 FR 35161, June 29, 1998]

    Effective Date Note:  At 63 FR 35161, June 29, 1998, Sec. 52.33 was 
added. Paragraph (a)(1) contains information collection requirements and 
will not become effective until approval has been given by the Office of 
Management and Budget.



Secs. 52.34-52.99  [Reserved]



                      Subpart D--Toll Free Numbers

    Source:  62 FR 20127, Apr. 25, 1997, unless otherwise noted.



Sec. 52.101  General definitions.

    As used in this part:
    (a) Number Administration and Service Center (``NASC''). The entity 
that provides user support for the Service Management System database 
and administers the Service Management System database on a day-to-day 
basis.
    (b) Responsible Organization (``RespOrg''). The entity chosen by a 
toll free subscriber to manage and administer the appropriate records in 
the toll free Service Management System for the toll free subscriber.
    (c) Service Control Points. The regional databases in the toll free 
network.
    (d) Service Management System Database (``SMS Database''). The 
administrative database system for toll free numbers. The Service 
Management System is a computer system that enables Responsible 
Organizations to enter and amend the data about toll free numbers within 
their control. The Service Management System shares this information 
with the Service Control Points. The entire system is the SMS database.
    (e) Toll Free Subscriber. The entity that requests a Responsible 
Organization to reserve a toll free number from the SMS database.
    (f) Toll Free Number. A telephone number for which the toll charges 
for completed calls are paid by the toll free subscriber. The toll free 
subscriber's specific geographic location has no bearing on what toll 
free number it can obtain from the SMS database.



Sec. 52.103  Lag times.

    (a) Definitions. As used in this section, the following definitions 
apply:
    (1) Assigned Status. A toll free number record that has specific 
subscriber routing information entered by the Responsible Organization 
in the Service Management System database and is pending activation in 
the Service Control Points.
    (2) Disconnect Status. The toll free number has been discontinued 
and an exchange carrier intercept recording is being provided.
    (3) Lag Time. The interval between a toll free number's reservation 
in the Service Management System database and its conversion to working 
status, as well as the period of time between disconnection or 
cancellation of a toll free number and the point at which that toll free 
number may be reassigned to another toll free subscriber.
    (4) Reserved Status. The toll free number has been reserved from the 
Service Management System database by a Responsible Organization for a 
toll free subscriber.
    (5) Seasonal Numbers. Toll free numbers held by toll free 
subscribers who do not have a year-round need for a toll free number.
    (6) Spare Status. The toll free number is available for assignment 
by a Responsible Organization.
    (7) Suspend Status. The toll free service has been temporarily 
disconnected and is scheduled to be reactivated.
    (8) Unavailable Status. The toll free number is not available for 
assignment due to an unusual condition.
    (9) Working Status. The toll free number is loaded in the Service 
Control Points and is being utilized to complete toll free service 
calls.
    (b) Reserved Status. Toll free numbers may remain in reserved status 
for up

[[Page 68]]

to 45 days. There shall be no extension of the reservation period after 
expiration of the initial 45-day interval.
    (c) Assigned Status. Toll free numbers may remain in assigned status 
until changed to working status or for a maximum of 6 months, whichever 
occurs first. Toll free numbers that, because of special circumstances, 
require that they be designated for a particular subscriber far in 
advance of their actual usage shall not be placed in assigned status, 
but instead shall be placed in unavailable status.
    (d) Disconnect Status. Toll free numbers may remain in disconnect 
status for up to 4 months. No requests for extension of the 4-month 
disconnect interval shall be granted. All toll free numbers in 
disconnect status must go directly into the spare category upon 
expiration of the 4-month disconnect interval. Responsible Organizations 
shall not retrieve a toll free number from disconnect status and return 
that number directly to working status at the expiration of the 4-month 
disconnect interval.
    (e) Suspend Status. Toll free numbers may remain in suspend status 
until changed to working status or for a maximum of 8 months, whichever 
occurs first. Only numbers involved in billing disputes shall be 
eligible for suspend status.
    (f) Unavailable Status. (1) Written requests to make a specific toll 
free number unavailable must be submitted to DSMI by the Responsible 
Organization managing the records of the toll free number. The request 
shall include the appropriate documentation of the reason for the 
request. DSMI is the only entity that can assign this status to or 
remove this status from a number. Responsible Organizations that have a 
toll free subscriber with special circumstances requiring that a toll 
free number be designated for that particular subscriber far in advance 
of its actual usage may request that DSMI place such a number in 
unavailable status.
    (2) Seasonal numbers shall be placed in unavailable status. The 
Responsible Organization for a toll free subscriber who does not have a 
year round need for a toll free number shall follow the procedures 
outlined in Sec. 52.103(f)(1) of these rules if it wants DSMI to place a 
particular toll free number in unavailable status.



Sec. 52.105  Warehousing.

    (a) As used in this section, warehousing is the practice whereby 
Responsible Organizations, either directly or indirectly through an 
affiliate, reserve toll free numbers from the Service Management System 
database without having an actual toll free subscriber for whom those 
numbers are being reserved.
    (b) Responsible Organizations shall not warehouse toll free numbers. 
There shall be a rebuttable presumption that a Responsible Organization 
is warehousing toll free numbers if:
    (1) The Responsible Organization does not have an identified toll 
free subscriber agreeing to be billed for service associated with each 
toll free number reserved from the Service Management System database; 
or
    (2) The Responsible Organization does not have an identified toll 
free subscriber agreeing to be billed for service associated with a toll 
free number before switching that toll free number from reserved or 
assigned to working status.
    (c) Responsible Organizations shall not maintain a toll free number 
in reserved status if there is not a prospective toll free subscriber 
requesting that toll free number.
    (d) A Responsible Organization's act of reserving a number from the 
Service Management System database shall serve as that Responsible 
Organization's certification that there is an identified toll free 
subscriber agreeing to be billed for service associated with the toll 
free number.
    (e) Tariff Provision. The following provision shall be included in 
the Service Management System tariff and in the local exchange carriers' 
toll free database access tariffs:

    [T]he Federal Communications Commission (``FCC'') has concluded that 
warehousing, which the FCC defines as Responsible Organizations, either 
directly or indirectly through an affiliate, reserving toll free numbers 
from the SMS database without having an identified toll free subscriber 
from

[[Page 69]]

whom those numbers are being reserved, is an unreasonable practice under 
Sec. 201(b) of the Communications Act and is inconsistent with the 
Commission's obligation under Sec. 251(e) of the Communications Act to 
ensure that numbers are made available on an equitable basis; and if a 
Responsible Organization does not have an identified toll free 
subscriber agreeing to be billed for service associated with each toll 
free number reserved from the database, or if a Responsible Organization 
does not have an identified, billed toll free subscriber before 
switching a number from reserved or assigned to working status, then 
there is a rebuttable presumption that the Responsible Organization is 
warehousing numbers. Responsible Organizations that warehouse numbers 
will be subject to penalties.



Sec. 52.107  Hoarding.

    (a) As used in this section, hoarding is the acquisition by a toll 
free subscriber from a Responsible Organization of more toll free 
numbers than the toll free subscriber intends to use for the provision 
of toll free service. The definition of hoarding also includes number 
brokering, which is the selling of a toll free number by a private 
entity for a fee.
    (1) Toll free subscribers shall not hoard toll free numbers.
    (2) No person or entity shall acquire a toll free number for the 
purpose of selling the toll free number to another entity or to a person 
for a fee.
    (3) Routing multiple toll free numbers to a single toll free 
subscriber will create a rebuttable presumption that the toll free 
subscriber is hoarding or brokering toll free numbers.
    (b) Tariff Provision. The following provision shall be included in 
the Service Management System tariff and in the local exchange carriers' 
toll free database access tariffs:

    [T]he Federal Communications Commission (``FCC'') has concluded that 
hoarding, defined as the acquisition of more toll free numbers than one 
intends to use for the provision of toll free service, as well as the 
sale of a toll free number by a private entity for a fee, is contrary to 
the public interest in the conservation of the scarce toll free number 
resource and contrary to the FCC's responsibility to promote the orderly 
use and allocation of toll free numbers.



Sec. 52.109  Permanent cap on number reservations.

    (a) A Responsible Organization may have in reserve status, at any 
one time, either 2000 toll free numbers or 7.5 percent of that 
Responsible Organization's numbers in working status, whichever is 
greater.
    (b) A Responsible Organization shall never reserve more than 3 
percent of the quantity of toll free numbers in spare status as of the 
previous Sunday at 12:01 a.m. Eastern Time.
    (c) The Common Carrier Bureau shall modify the quantity of numbers a 
Responsible Organization may have in reserve status or the percentage of 
numbers in the spare poll that a Responsible Organization may reserve 
when exigent circumstances make such action necessary. The Common 
Carrier Bureau shall establish, modify, and monitor toll free number 
conservation plans when exigent circumstances necessitate such action.

Appendix to Part 52--Deployment Schedule for Long-Term Database Methods 
                      for Local Number Portability

    Implementation must be completed by the carriers in the relevant 
MSAs during the periods specified below:

                        Phase I--10/1/97-3/31/98
 
Chicago, IL...................................................         3
Philadelphia, PA..............................................         4
Atlanta, GA...................................................         8
New York, NY..................................................         2
Los Angeles, CA...............................................         1
Houston, TX...................................................         7
Minneapolis, MN...............................................        12
 
                        Phase II--1/1/98-5/15/98
 
Detroit, MI...................................................         6
Cleveland, OH.................................................        20
Washington, DC................................................         5
Baltimore, MD.................................................        18
Miami, FL.....................................................        24
Fort Lauderdale, FL...........................................        39
Orlando, FL...................................................        40
Cincinnati, OH................................................        30
Tampa, FL.....................................................        23
Boston, MA....................................................         9
Riverside, CA.................................................        10

[[Page 70]]

 
San Diego, CA.................................................        14
Dallas, TX....................................................        11
St. Louis, MO.................................................        16
Phoenix, AZ...................................................        17
Seattle, WA...................................................        22
 
                        Phase III--4/1/98-6/30/98
 
Indianapolis, IN..............................................        34
Milwaukee, WI.................................................        35
Columbus, OH..................................................        38
Pittsburgh, PA................................................        19
Newark, NJ....................................................        25
Norfolk, VA...................................................        32
New Orleans, LA...............................................        41
Charlotte, NC.................................................        43
Greensboro, NC................................................        48
Nashville, TN.................................................        51
Las Vegas, NV.................................................        50
Nassau, NY....................................................        13
Buffalo, NY...................................................        44
Orange Co, CA.................................................        15
Oakland, CA...................................................        21
San Francisco, CA.............................................        29
Rochester, NY.................................................        49
Kansas City, KS...............................................        28
Fort Worth, TX................................................        33
Hartford, CT..................................................        46
Denver, CO....................................................        26
Portland, OR..................................................        27
 
                        Phase IV--7/1/98-9/30/98
 
Grand Rapids, MI..............................................        56
Dayton, OH....................................................        61
Akron, OH.....................................................        73
Gary, IN......................................................        80
Bergen, NJ....................................................        42
Middlesex, NJ.................................................        52
Monmouth, NJ..................................................        54
Richmond, VA..................................................        63
Memphis, TN...................................................        53
Louisville, KY................................................        57
Jacksonville, FL..............................................        58
Raleigh, NC...................................................        59
West Palm Beach, FL...........................................        62
Greenville, SC................................................        66
Honolulu, HI..................................................        65
Providence, RI................................................        47
Albany, NY....................................................        64
San Jose, CA..................................................        31
Sacramento, CA................................................        36
Fresno, CA....................................................        68
San Antonio, TX...............................................        37
Oklahoma City, OK.............................................        55
Austin, TX....................................................        60
Salt Lake City, UT............................................        45
Tucson, AZ....................................................        71
 
                        Phase V--10/1/98-12/31/98
 
Toledo, OH....................................................        81
Youngstown, OH................................................        85
Ann Arbor, MI.................................................        95
Fort Wayne, IN................................................       100
Scranton, PA..................................................        78
Allentown, PA.................................................        82
Harrisburg, PA................................................        83
Jersey City, NJ...............................................        88
Wilmington, DE................................................        89
Birmingham, AL................................................        67
Knoxville, KY.................................................        79
Baton Rouge, LA...............................................        87
Charleston, SC................................................        92
Sarasota, FL..................................................        93
Mobile, AL....................................................        96
Columbia, SC..................................................        98
Tulsa, OK.....................................................        70
Syracuse, NY..................................................        69
Springfield, MA...............................................        86
Ventura, CA...................................................        72
Bakersfield, CA...............................................        84
Stockton, CA..................................................        94
Vallejo, CA...................................................        99
El Paso, TX...................................................        74
Little Rock, AR...............................................        90
Wichita, KS...................................................        97
New Haven, CT.................................................        91
Omaha, NE.....................................................        75
Albuquerque, NM...............................................        76
Tacoma, WA....................................................        77
 


[62 FR 18295, Apr. 15, 1997]

    Effective Date Note:  At 62 FR 18295, Apr. 15, 1997, the appendix to 
part 52 was revised. This appendix contains information collection and 
recordkeeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.



PART 53--SPECIAL PROVISIONS CONCERNING BELL OPERATING COMPANIES--Table of Contents




                     Subpart A--General Information

Sec.
53.1  Basis and purpose.
53.3  Terms and definitions.

     Subpart B--Bell Operating Company Entry into InterLATA Services

53.101  Joint marketing of local and long distance services by interLATA 
          carriers.

                Subpart C--Separate Affiliate; Safeguards

53.201  Services for which a section 272 affiliate is required.
53.203  Structural and transactional requirements.
53.205  Fulfillment of certain requests. [Reserved]
53.207  Successor or assign.

[[Page 71]]

53.209  Biennial audit.
53.211  Audit planning.
53.213  Audit analysis and evaluation.

          Subpart D--Manufacturing by Bell Operating Companies

53.301  [Reserved]

      Subpart E--Electronic Publishing by Bell Operating Companies

53.401  [Reserved]

                  Subpart F--Alarm Monitoring Services

53.501   [Reserved]

    Authority: Sections 1-5, 7, 201-05, 218, 251, 253, 271-75, 48 Stat. 
1070, as amended, 1077; 47 U.S.C. 151-55, 157, 201-05, 218, 251, 253, 
271-75, unless otherwise noted.

    Source:  62 FR 2967, Jan. 21, 1997, unless otherwise noted.



                     Subpart A--General Information



Sec. 53.1  Basis and purpose.

    (a) Basis. The rules in this part are issued pursuant to the 
Communications Act of 1934, as amended.
    (b) Purpose. The purpose of the rules in this part is to implement 
sections 271 and 272 of the Communications Act of 1934, as amended, 47 
U.S.C. 271 and 272.



Sec. 53.3  Terms and definitions.

    Terms used in this part have the following meanings:
     Act. The Act means the Communications Act of 1934, as amended.
    Affiliate. An affiliate is a person that (directly or indirectly) 
owns or controls, is owned or controlled by, or is under common 
ownership or control with, another person. For purposes of this part, 
the term ``own'' means to own an equity interest (or the equivalent 
thereof) of more than 10 percent.
    AT&T Consent Decree. The AT&T Consent Decree is the order entered 
August 24, 1982, in the antitrust action styled United States v. Western 
Electric, Civil Action No. 82-0192, in the United States District Court 
for the District of Columbia, and any judgment or order with respect to 
such action entered on or after August 24, 1982.
    Bell Operating Company (BOC). The term Bell operating company
    (1) Means any of the following companies: Bell Telephone Company of 
Nevada, Illinois Bell Telephone Company, Indiana Bell Telephone Company, 
Incorporated, Michigan Bell Telephone Company, New England Telephone and 
Telegraph Company, New Jersey Bell Telephone Company, New York Telephone 
Company, U S West Communications Company, South Central Bell Telephone 
Company, Southern Bell Telephone and Telegraph Company, Southwestern 
Bell Telephone Company, The Bell Telephone Company of Pennsylvania, The 
Chesapeake and Potomac Telephone Company, The Chesapeake and Potomac 
Telephone Company of Maryland, The Chesapeake and Potomac Telephone 
Company of Virginia, The Chesapeake and Potomac Telephone Company of 
West Virginia, The Diamond State Telephone Company, The Ohio Bell 
Telephone Company, The Pacific Telephone and Telegraph Company, or 
Wisconsin Telephone Company; and
    (2) Includes any successor or assign of any such company that 
provides wireline telephone exchange service; but
    (3) Does not include an affiliate of any such company, other than an 
affiliate described in paragraphs (1) or (2) of this definition.
    In-Region InterLATA service. In-region interLATA service is 
interLATA service that originates in any of a BOC's in-region states, 
which are the states in which the BOC or any of its affiliates was 
authorized to provide wireline telephone exchange service pursuant to 
the reorganization plan approved under the AT&T Consent Decree, as in 
effect on February 7, 1996. For the purposes of this part, 800 service, 
private line service, or equivalent services that terminate in a BOC's 
in-region state and allow the called party to determine the interLATA 
carrier are considered to be in-region interLATA service.
    InterLATA Information Service. An interLATA information service is 
an information service that incorporates as a necessary, bundled element 
an interLATA telecommunications transmission component, provided to the 
customer for a single charge.

[[Page 72]]

    InterLATA Service. An interLATA service is a service that involves 
telecommunications between a point located in a LATA and a point located 
outside such area. The term ``interLATA service'' includes both 
interLATA telecommunications services and interLATA information 
services.
    Local Access and Transport Area (LATA). A LATA is a contiguous 
geographic area:
    (1) Established before February 8, 1996 by a BOC such that no 
exchange area includes points within more than one metropolitan 
statistical area, consolidated metropolitan statistical area, or state, 
except as expressly permitted under the AT&T Consent Decree; or
    (2) Established or modified by a BOC after February 8, 1996 and 
approved by the Commission.
    Local Exchange Carrier (LEC). A LEC is any person that is engaged in 
the provision of telephone exchange service or exchange access. Such 
term does not include a person insofar as such person is engaged in the 
provision of commercial mobile service under section 332(c) of the Act, 
except to the extent that the Commission finds that such service should 
be included in the definition of such term.
    Out-of-Region InterLATA service. Out-of-region interLATA service is 
interLATA service that originates outside a BOC's in-region states.
    Section 272 affiliate. A section 272 affiliate is a BOC affiliate 
that complies with the separate affiliate requirements of section 272(b) 
of the Act and the regulations contained in this part.



     Subpart B--Bell Operating Company Entry Into InterLATA Services



Sec. 53.101  Joint marketing of local and long distance services by interLATA carriers.

    (a) Until a BOC is authorized pursuant to section 271(d) of the Act 
to provide interLATA services in an in-region State, or until February 
8, 1999, whichever is earlier, a telecommunications carrier that serves 
greater than 5 percent of the Nation's presubscribed access lines may 
not jointly market in such State telephone exchange service obtained 
from such company pursuant to section 251(c)(4) of the Act with 
interLATA services offered by that telecommunications carrier.
    (b) For purposes of applying section 271(e) of the Act, 
telecommunications carriers described in paragraph (a) of this section 
may not:
    (1) Market interLATA services and BOC resold local exchange services 
through a ``single transaction.'' For purposes of this section, we 
define a ``single transaction'' to include the use of the same sales 
agent to market both products to the same customer during a single 
communication;
    (2) Offer interLATA services and BOC resold local exchange services 
as a bundled package under an integrated pricing schedule.
    (c) If a telecommunications carrier described in paragraph (a) of 
this section advertises the availability of interLATA services and local 
exchange services purchased from a BOC for resale in a single 
advertisement, such telecommunications carrier shall not mislead the 
public by stating or implying that such carrier may offer bundled 
packages of interLATA service and BOC local exchange service purchased 
for resale, or that it can provide both services through a single 
transaction.



                Subpart C--Separate Affiliate; Safeguards



Sec. 53.201  Services for which a section 272 affiliate is required.

    For the purposes of applying section 272(a)(2) of the Act:
    (a) Previously authorized activities. When providing previously 
authorized activities described in section 271(f) of the Act, a BOC 
shall comply with the following:
    (1) A BOC shall provide previously authorized interLATA information 
services and manufacturing activities through a section 272 affiliate no 
later than February 8, 1997.
    (2) A BOC shall provide previously authorized interLATA 
telecommunications services in accordance with the terms and conditions 
of the orders entered by the United States District Court for the 
District of Columbia pursuant to section VII or VIII(C) of the

[[Page 73]]

AT&T Consent Decree that authorized such services.
    (b) InterLATA information services. A BOC shall provide an interLATA 
information service through a section 272 affiliate when it provides the 
interLATA telecommunications transmission component of the service 
either over its own facilities, or by reselling the interLATA 
telecommunications services of an interexchange provider.
    (c) Out-of-region interLATA information services. A BOC shall 
provide out-of-region interLATA information services through a section 
272 affiliate.



Sec. 53.203  Structural and transactional requirements.

    (a) Operational independence. (1) A section 272 affiliate and the 
BOC of which it is an affiliate shall not jointly own transmission and 
switching facilities or the land and buildings where those facilities 
are located.
    (2) A section 272 affiliate shall not perform any operating, 
installation, or maintenance functions associated with facilities owned 
by the BOC of which it is an affiliate.
    (3) A BOC or BOC affiliate, other than the section 272 affiliate 
itself, shall not perform any operating, installation, or maintenance 
functions associated with facilities that the BOC's section 272 
affiliate owns or leases from a provider other than the BOC.
    (b) Separate books, records, and accounts. A section 272 affiliate 
shall maintain books, records, and accounts, which shall be separate 
from the books, records, and accounts maintained by the BOC of which it 
is an affiliate.
    (c) Separate officers, directors, and employees. A section 272 
affiliate shall have separate officers, directors, and employees from 
the BOC of which it is an affiliate.
    (d) Credit arrangements. A section 272 affiliate shall not obtain 
credit under any arrangement that would permit a creditor, upon default, 
to have recourse to the assets of the BOC of which it is an affiliate.
    (e) Arm's-length transactions. A section 272 affiliate shall conduct 
all transactions with the BOC of which it is an affiliate on an arm's 
length basis, pursuant to the accounting rules described in Sec. 32.27 
of this chapter, with any such transactions reduced to writing and 
available for public inspection.

    Effective Date Note:  At 62 FR 2967, Jan. 21, 1997, Sec. 53.203 was 
added. Paragraphs (b) and (e) of this section contain information 
collection requirements and will not become effective until approval is 
given by the Office of Management and Budget.



Sec. 53.205  Fulfillment of certain requests. [Reserved]



Sec. 53.207  Successor or assign.

    If a BOC transfers to an affiliated entity ownership of any network 
elements that must be provided on an unbundled basis pursuant to section 
251(c)(3) of the Act, such entity will be deemed to be an ``assign'' of 
the BOC under section 3(4) of the Act with respect to such transferred 
network elements. A BOC affiliate shall not be deemed a ``successor or 
assign'' of a BOC solely because it obtains network elements from the 
BOC pursuant to section 251(c)(3) of the Act.

[62 FR 2967, Jan. 21, 1997; 63 FR 34604, June 25, 1998]



Sec. 53.209  Biennial audit.

    (a) A Bell operating company required to operate a separate 
affiliate under section 272 of the Act shall obtain and pay for a 
Federal/State joint audit every two years conducted by an independent 
auditor to determine whether the Bell operating company has complied 
with the rules promulgated under section 272 and particularly the audit 
requirements listed in paragraph (b) of this section.
    (b) The independent audit shall determine:
    (1) Whether the separate affiliate required under section 272 of the 
Act has:
    (i) Operated independently of the Bell operating company;
    (ii) Maintained books, records, and accounts in the manner 
prescribed by the Commission that are separate from the books, records 
and accounts maintained by the Bell operating company;
    (iii) Officers, directors and employees that are separate from those 
of the Bell operating company;

[[Page 74]]

    (iv) Not obtained credit under any arrangement that would permit a 
creditor, upon default, to have recourse to the assets of the Bell 
operating company; and
    (v) Conducted all transactions with the Bell operating company on an 
arm's length basis with the transactions reduced to writing and 
available for public inspection.
    (2) Whether or not the Bell operating company has:
    (i) Discriminated between the separate affiliate and any other 
entity in the provision or procurement of goods, services, facilities, 
and information, or the establishment of standards;
    (ii) Accounted for all transactions with the separate affiliate in 
accordance with the accounting principles and rules approved by the 
Commission.
    (3) Whether or not the Bell operating company and an affiliate 
subject to section 251(c) of the Act:
    (i) Have fulfilled requests from unaffiliated entities for telephone 
exchange service and exchange access within a period no longer than the 
period in which it provides such telephone exchange service and exchange 
access to itself or its affiliates;
    (ii) Have made available facilities, services, or information 
concerning its provision of exchange access to other providers of 
interLATA services on the same terms and conditions as it has to its 
affiliate required under section 272 that operates in the same market;
    (iii) Have charged its separate affiliate under section 272, or 
imputed to itself (if using the access for its provision of its own 
services), an amount for access to its telephone exchange service and 
exchange access that is no less than the amount charged to any 
unaffiliated interexchange carriers for such service; and
    (iv) Have provided any interLATA or intraLATA facilities or services 
to its interLATA affiliate and made available such services or 
facilities to all carriers at the same rates and on the same terms and 
conditions, and allocated the associated costs appropriately.
    (c) An independent audit shall be performed on the first full year 
of operations of the separate affiliate required under section 272 of 
the Act, and biennially thereafter.
    (d) The Chief, Common Carrier Bureau, shall work with the regulatory 
agencies in the states having jurisdiction over the Bell operating 
company's local telephone services, to attempt to form a Federal/State 
joint audit team with the responsibility for overseeing the planning of 
the audit as specified in Sec. 53.211 and the analysis and evaluation of 
the audit as specified in Sec. 53.213. The Federal/State joint audit 
team may direct the independent auditor to take any actions necessary to 
ensure compliance with the audit requirements listed in paragraph (b) of 
this section. If the state regulatory agencies having jurisdiction 
choose not to participate in the Federal/State joint audit team, the 
Chief, Common Carrier Bureau, shall establish an FCC audit team to 
oversee and direct the independent auditor to take any actions necessary 
to ensure compliance with the audit requirements in paragraph (b) of 
this section.

[62 FR 2926, Jan. 21, 1997]



Sec. 53.211  Audit planning.

    (a) Before selecting a independent auditor, the Bell operating 
company shall submit preliminary audit requirements, including the 
proposed scope of the audit and the extent of compliance and substantive 
testing, to the Federal/State joint audit team organized pursuant to 
Sec. 53.209(d);
    (b) The Federal/State joint audit team shall review the preliminary 
audit requirements to determine whether it is adequate to meet the audit 
requirements in Sec. 53.209 (b). The Federal/State joint audit shall 
have 30 days to review the audit requirements and determine any 
modifications that shall be incorporated into the final audit 
requirements.
    (c) After the audit requirements have been approved by the Federal/
State joint audit team, the Bell operating company shall engage within 
30 days an independent auditor to conduct the biennial audit. In making 
its selection, the Bell operating company shall not engage any 
independent auditor who has been instrumental during the past two years 
in designing any of the accounting or reporting systems under review in 
the biennial audit.

[[Page 75]]

    (d) The independent auditor selected by the Bell operating company 
to conduct the audit shall develop a detailed audit program based on the 
final audit requirements and submit it to the Federal/State joint audit 
team. The Federal/State joint audit team shall have 30 days to review 
the audit program and determine any modifications that shall be 
incorporated into the final audit program.
    (e) During the course of the biennial audit, the independent 
auditor, among other things, shall:
    (1) Inform the Federal/State joint audit team of any revisions to 
the final audit program or to the scope of the audit.
    (2) Notify the Federal/State joint audit team of any meetings with 
the Bell operating company or its separate affiliate in which audit 
findings are discussed.
    (3) Submit to the Chief, Common Carrier Bureau, any accounting or 
rule interpretations necessary to complete the audit.

[62 FR 2926, Jan. 21, 1997]



Sec. 53.213  Audit analysis and evaluation.

    (a) Within 60 dates after the end of the audit period, but prior to 
discussing the audit findings with the Bell operating company or the 
separate affiliate, the independent auditor shall submit a draft of the 
audit report to the Federal/State joint audit team.
    (1) The Federal/State joint audit team shall have 45 days to review 
the audit findings and audit workpapers, and offer its recommendations 
concerning the conduct of the audit or the audit findings to the 
independent auditor. Exceptions of the Federal/State joint audit team to 
the finding and conclusions of the independent auditor that remain 
unresolved shall be included in the final audit report.
    (2) Within 15 days after receiving the Federal/State joint audit 
team's recommendations and making appropriate revisions to the audit 
report, the independent auditor shall submit the audit report to the 
Bell operating company for its response to the audit findings and send a 
copy to the Federal/State joint audit team. The independent auditor may 
request additional time to perform additional audit work as recommended 
by the Federal/State joint audit team.
    (b) Within 30 days after receiving the audit report, the Bell 
operating company will respond to the audit findings and send a copy of 
its response to the Federal/State joint audit team. The Bell operating 
company's response shall be included as part of the final audit report 
along with any reply that the independent auditor wishes to make to the 
response.
    (c) Within 10 days after receiving the response of the Bell 
operating company, the independent auditor shall make available for 
public inspection the final audit report by filing it with the 
Commission and the state regulatory agencies participating on the joint 
audit team.
    (d) Interested parties may file comments with the Commission within 
60 days after the audit report is made available for public inspection.

[62 FR 2927, Jan. 21, 1997]



          Subpart D--Manufacturing by Bell Operating Companies



Sec. 53.301  [Reserved]



      Subpart E--Electronic Publishing by Bell Operating Companies



Sec. 53.401  [Reserved]



                  Subpart F--Alarm Monitoring Services



Sec. 53.501  [Reserved]



PART 54--UNIVERSAL SERVICE--Table of Contents




                     Subpart A--General Information

Sec.
54.1  Basis and purpose.
54.5  Terms and definitions.
54.7  Intended use of federal universal service support.

               Subpart B--Services Designated for Support

54.101  Supported services for rural, insular and high cost areas.

[[Page 76]]

       Subpart C--Carriers Eligible for Universal Service Support

54.201  Definition of eligible telecommunications carriers, generally.
54.203  Designation of eligible telecommunications carriers for unserved 
          areas.
54.205  Relinquishment of universal service.
54.207  Service areas.

        Subpart D--Universal Service Support for High Cost Areas

54.301  Local switching support.
54.303  Long term support.
54.305  Sale or transfer of exchanges.
54.307  Support to a competitive eligible telecommunications carrier.

      Subpart E--Universal Service Support for Low Income Consumers

54.400  Terms and definitions.
54.401  Lifeline defined.
54.403  Lifeline support amount.
54.405  Carrier obligation to offer Lifeline.
54.407  Reimbursement for offering Lifeline.
54.409  Consumer qualification for Lifeline.
54.411  Link Up program defined.
54.413  Reimbursement for revenue forgone in offering a Link Up program.
54.415  Consumer qualification for Link Up.
54.417  Transition to the new Lifeline and Link Up programs.

     Subpart F--Universal Service Support for Schools and Libraries

54.500  Terms and definitions.
54.501  Eligibility for services provided by telecommunications 
          carriers.
54.502  Supported telecommunications services.
54.503  Other supported special services.
54.504  Requests for services.
54.505  Discounts.
54.506  Internal connections.
54.507  Cap.
54.509  Adjustments to the discount matrix.
54.511  Ordering services.
54.513  Resale.
54.515  Distributing support.
54.516  Auditing.
54.517  Services provided by non-telecommunications carriers.
54.518  Support for wide area networks.
54.519  State telecommunications networks.

     Subpart G--Universal Service Support for Health Care Providers

54.601  Eligibility.
54.603  Competitive bid requirements.
54.604  Existing contracts.
54.605  Determining the urban rate.
54.607  Determining the rural rate.
54.609  Calculating support.
54.611  Distributing support.
54.613  Limitations on supported services for rural health care 
          providers.
54.615  Obtaining services.
54.617  Resale.
54.619  Audit program.
54.621  Access to advanced telecommunications and information services.
54.623  Cap.
54.625  Support for services beyond the maximum supported distance for 
          rural health care providers.

                        Subpart H--Administration

54.701  Administrator of universal service support mechanisms.
54.703  Contributions.
54.705  De minimis exemption.
54.707  Audit controls.
54.709  Computations of required contributions to universal service 
          support mechanisms.
54.711  Contributor reporting requirements.
54.713  Contributors' failure to report or to contribute.
54.715  Administrator's functions.

    Authority:  47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless 
otherwise noted.

    Source:  62 FR 32948, June 17, 1997, unless otherwise noted.



                     Subpart A--General Information



Sec. 54.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended.
    (b) Purpose. The purpose of these rules is to implement section 254 
of the Communications Act of 1934, as amended, 47 USC 254.



Sec. 54.5  Terms and definitions.

    Terms used in this part have the following meanings:
    Act. The term ``Act'' refers to the Communications Act of 1934, as 
amended.
    Administrator. The term ``Administrator'' shall refer to the 
National Exchange Carrier Association, Inc., until the date that an 
independent subsidiary of the National Exchange Carrier Association, 
Inc. is incorporated and has commenced the administration of the 
universal service support mechanisms. On that date and until the 
permanent Administrator has commenced the permanent administration of 
the universal service support mechanisms, the term ``Administrator'' 
shall refer

[[Page 77]]

to the independent subsidiary established by the National Exchange 
Carrier Association, Inc. for the purpose of temporarily administering 
the portions of the universal service support mechanisms described in 
Sec. 69.616. On the date that the entity selected to permanently 
administer the universal service support mechanisms commences operations 
and thereafter, the term ``Administrator'' shall refer to such entity.
    Competitive eligible telecommunications carrier. A ``competitive 
eligible telecommunications carrier'' is a carrier that meets the 
definition of an ``eligible telecommunications carrier'' below and does 
not meet the definition of an ``incumbent local exchange carrier'' in 
Sec. 51.5 of this chapter.
    Contributor. The term ``contributor'' shall refer to an entity 
required to contribute to the universal service support mechanisms 
pursuant to Sec. 54.703.
    Eligible telecommunications carrier. ``Eligible telecommunications 
carrier'' means a carrier designated as such by a state commission 
pursuant to Sec. 54.201.
    High Cost and Low Income Committee. The term ``High Cost and Low 
Income Committee'' shall refer to a committee of the Board of Directors 
of the Administrator's independent subsidiary that will have the power 
to bind the independent subsidiary's Board of Directors on issues 
relating to the administration of the high cost and low-income support 
mechanisms, as described in Sec. 69.615.
    Incumbent local exchange carrier. ``Incumbent local exchange 
carrier'' or ``ILEC'' has the same meaning as that term is defined in 
Sec. 51.5 of this chapter.
    Information service. ``Information service'' is the offering of a 
capability for generating, acquiring, storing, transforming, processing, 
retrieving, utilizing, or making available information via 
telecommunications, and includes electronic publishing, but does not 
include any use of any such capability for the management, control, or 
operation of a telecommunications system or the management of a 
telecommunications service.
    Internet access. ``Internet access'' includes the following 
elements:
    (1) The transmission of information as common carriage;
    (2) The transmission of information as part of a gateway to an 
information service, when that transmission does not involve the 
generation or alteration of the content of information, but may include 
data transmission, address translation, protocol conversion, billing 
management, introductory information content, and navigational systems 
that enable users to access information services, and that do not affect 
the presentation of such information to users; and
    (3) Electronic mail services (e-mail).
    Interstate telecommunication. ``Interstate telecommunication'' is a 
communication or transmission:
    (1) From any State, Territory, or possession of the United States 
(other than the Canal zone), or the District of Columbia, to any other 
State, Territory, or possession of the United States (other than the 
Canal Zone), or the District of Columbia,
    (2) From or to the United States to or from the Canal Zone, insofar 
as such communication or transmission takes place within the United 
States, or
    (3) Between points within the United States but through a foreign 
country.
    Interstate transmission. ``Interstate transmission'' is the same as 
interstate telecommunication.
    Intrastate telecommunication. ``Intrastate telecommunication'' is a 
communication or transmission from within any State, Territory, or 
possession of the United States, or the District of Columbia to a 
location within that same State, Territory, or possession of the United 
States, or the District of Columbia.
    Intrastate transmission. ``Intrastate transmission'' is the same as 
intrastate telecommunication.
    LAN. ``LAN'' is a local area network, which is a set of high-speed 
links connecting devices, generally computers, on a single shared 
medium, usually on the user's premises.
    Rural area. A ``rural area'' is a nonmetropolitan county or county 
equivalent, as defined in the Office of Management and Budget's (OMB) 
Revised Standards for Defining Metropolitan Areas in the 1990s and 
identifiable from the most recent Metropolitan Statistical Area (MSA) 
list released by OMB, or any contiguous non-urban Census

[[Page 78]]

Tract or Block Numbered Area within an MSA-listed metropolitan county 
identified in the most recent Goldsmith Modification published by the 
Office of Rural Health Policy of the U.S. Department of Health and Human 
Services.
    Rural Health Care Corporation. The term ``Rural Health Care 
Corporation'' shall refer to the corporation created pursuant to 
Sec. 69.617 that shall administer specified portions of the universal 
services support mechnisms as described in Sec. 69.618.
    Rural telephone company. ``Rural telephone company'' has the same 
meaning as that term is defined in Sec. 51.5 of this chapter.
    Schools and Libraries Corporation. The term ``Schools and Libraries 
Corporation'' shall refer to the corporation created pursuant to 
Sec. 69.617 that shall administer specified portions of the universal 
services support mechanisms, as described in Sec. 69.619.
    State commission. The term ``state commission'' means the 
commission, board or official (by whatever name designated) that, under 
the laws of any state, has regulatory jurisdiction with respect to 
intrastate operations of carriers.
    Technically feasible. ``Technically feasible'' means capable of 
accomplishment as evidenced by prior success under similar 
circumstances. For example, preexisting access at a particular point 
evidences the technical feasibility of access at substantially similar 
points. A determination of technical feasibility does not consider 
economic, accounting, billing, space or site except that space and site 
may be considered if there is no possibility of expanding available 
space.
    Telecommunications. ``Telecommunications'' is the transmission, 
between or among points specified by the user, of information of the 
user's choosing, without change in the form or content of the 
information as sent and received.
    Telecommunications carrier. A ``telecommunications carrier'' is any 
provider of telecommunications services, except that such term does not 
include aggregators of telecommunications services as defined in section 
226 of the Act. A telecommunications carrier shall be treated as a 
common carrier under the Act only to the extent that it is engaged in 
providing telecommunications services, except that the Commission shall 
determine whether the provision of fixed and mobile satellite service 
shall be treated as common carriage. This definition includes cellular 
mobile radio service (CMRS) providers, interexchange carriers (IXCs) 
and, to the extent they are acting as telecommunications carriers, 
companies that provide both telecommunications and information services. 
Private mobile radio service (PMRS) providers are telecommunications 
carriers to the extent they provide domestic or international 
telecommunications for a fee directly to the public.
    Telecommunications channel. ``Telecommunications channel'' means a 
telephone line, or, in the case of wireless communications, a 
transmittal line or cell site.
    Telecommunications service. ``Telecommunications service'' is the 
offering of telecommunications for a fee directly to the public, or to 
such classes of users as to be effectively available directly to the 
public, regardless of the facilities used.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41303, Aug. 1, 1997]



Sec. 54.7  Intended use of federal universal service support.

    A carrier that receives federal universal service support shall use 
that support only for the provision, maintenance, and upgrading of 
facilities and services for which the support is intended.



               Subpart B--Services Designated for Support



Sec. 54.101  Supported services for rural, insular and high cost areas.

    (a) Services designated for support. The following services or 
functionalities shall be supported by federal universal service support 
mechanisms:
    (1) Voice grade access to the public switched network. ``Voice grade 
access'' is defined as a functionality that enables a user of 
telecommunications services to transmit voice communications, including 
signalling the network

[[Page 79]]

that the caller wishes to place a call, and to receive voice 
communications, including receiving a signal indicating there is an 
incoming call. For the purposes of this part, bandwidth for voice grade 
access should be, at a minimum, 300 to 3,000 Hertz;
    (2) Local usage. ``Local usage'' means an amount of minutes of use 
of exchange service, prescribed by the Commission, provided free of 
charge to end users;
    (3) Dual tone multi-frequency signaling or its functional 
equivalent. ``Dual tone multi-frequency'' (DTMF) is a method of 
signaling that facilitates the transportation of signaling through the 
network, shortening call set-up time;
    (4) Single-party service or its functional equivalent. ``Single-
party service'' is telecommunications service that permits users to have 
exclusive use of a wireline subscriber loop or access line for each call 
placed, or, in the case of wireless telecommunications carriers, which 
use spectrum shared among users to provide service, a dedicated message 
path for the length of a user's particular transmission;
    (5) Access to emergency services. ``Access to emergency services'' 
includes access to services, such as 911 and enhanced 911, provided by 
local governments or other public safety organizations. 911 is defined 
as a service that permits a telecommunications user, by dialing the 
three-digit code ``911,'' to call emergency services through a Public 
Service Access Point (PSAP) operated by the local government. ``Enhanced 
911'' is defined as 911 service that includes the ability to provide 
automatic numbering information (ANI), which enables the PSAP to call 
back if the call is disconnected, and automatic location information 
(ALI), which permits emergency service providers to identify the 
geographic location of the calling party. ``Access to emergency 
services'' includes access to 911 and enhanced 911 services to the 
extent the local government in an eligible carrier's service area has 
implemented 911 or enhanced 911 systems;
    (6) Access to operator services. ``Access to operator services'' is 
defined as access to any automatic or live assistance to a consumer to 
arrange for billing or completion, or both, of a telephone call;
    (7) Access to interexchange service. ``Access to interexchange 
service'' is defined as the use of the loop, as well as that portion of 
the switch that is paid for by the end user, or the functional 
equivalent of these network elements in the case of a wireless carrier, 
necessary to access an interexchange carrier's network;
    (8) Access to directory assistance. ``Access to directory 
assistance'' is defined as access to a service that includes, but is not 
limited to, making available to customers, upon request, information 
contained in directory listings; and
    (9) Toll limitation for qualifying low-income consumers. Toll 
limitation for qualifying low-income consumers is described in subpart E 
of this part.
    (b) Requirement to offer all designated services. An eligible 
telecommunications carrier must offer each of the services set forth in 
paragraph (a) of this section in order to receive federal universal 
service support.
    (c) Additional time to complete network upgrades. A state commission 
may grant the petition of a telecommunications carrier that is otherwise 
eligible to receive universal service support under Sec. 54.201 
requesting additional time to complete the network upgrades needed to 
provide single-party service, access to enhanced 911 service, or toll 
limitation. If such petition is granted, the otherwise eligible 
telecommunications carrier will be permitted to receive universal 
service support for the duration of the period designated by the state 
commission. State commissions should grant such a request only upon a 
finding that exceptional circumstances prevent an otherwise eligible 
telecommunications carrier from providing single-party service, access 
to enhanced 911 service, or toll limitation. The period should extend 
only as long as the relevant state commission finds that exceptional 
circumstances exist and should not extend beyond the time that the state 
commission deems necessary for that eligible telecommunications carrier 
to complete network upgrades. An otherwise eligible telecommunications 
carrier that is incapable of offering one or more of these three 
specific universal services

[[Page 80]]

must demonstrate to the state commission that exceptional circumstances 
exist with respect to each service for which the carrier desires a grant 
of additional time to complete network upgrades.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2125, Jan. 13, 1998; 63 
FR 33585, June 19, 1998]



       Subpart C--Carriers Eligible for Universal Service Support



Sec. 54.201  Definition of eligible telecommunications carriers, generally.

    (a) Carriers eligible to receive support. (1) Beginning January 1, 
1998, only eligible telecommunications carriers designated under 
paragraphs (b) through (d) of this section shall receive universal 
service support distributed pursuant to part 36 and part 69 of this 
chapter, and subparts D and E of this part.
    (2) A state commission that is unable to designate as an eligible 
telecommunications carrier, by January 1, 1998, a carrier that sought 
such designation before January 1, 1998, may, once it has designated 
such carrier, file with the Commission a petition for waiver of 
paragraph (a)(1) of this section requesting that the carrier receive 
universal service support retroactive to January 1, 1998. The state 
commission must explain why it did not designate such carrier as 
eligible by January 1, 1998, and provide a justification for why 
providing support retroactive to January 1, 1998, serves the public 
interest.
    (3) Only eligible telecommunications carriers designated under 
paragraphs (b) through (d) of this section shall receive universal 
service support distributed pursuant to subpart G of this part. This 
paragraph does not apply to support distributed pursuant to 
Sec. 54.621(a).
    (4) This paragraph does not apply to support distributed pursuant to 
subpart F of this part.
    (b) A state commission shall upon its own motion or upon request 
designate a common carrier that meets the requirements of paragraph (d) 
of this section as an eligible telecommunications carrier for a service 
area designated by the state commission.
    (c) Upon request and consistent with the public interest, 
convenience, and necessity, the state commission may, in the case of an 
area served by a rural telephone company, and shall, in the case of all 
other areas, designate more than one common carrier as an eligible 
telecommunications carrier for a service area designated by the state 
commission, so long as each additional requesting carrier meets the 
requirements of paragraph (d) of this section. Before designating an 
additional eligible telecommunications carrier for an area served by a 
rural telephone company, the state commission shall find that the 
designation is in the public interest.
    (d) A common carrier designated as an eligible telecommunications 
carrier under this section shall be eligible to receive universal 
service support in accordance with section 254 of the Act and shall, 
throughout the service area for which the designation is received:
    (1) Offer the services that are supported by federal universal 
service support mechanisms under subpart B of this part and section 
254(c) of the Act, either using its own facilities or a combination of 
its own facilities and resale of another carrier's services (including 
the services offered by another eligible telecommunications carrier); 
and
    (2) Advertise the availability of such services and the charges 
therefore using media of general distribution.
    (e) For the purposes of this section, the term facilities means any 
physical components of the telecommunications network that are used in 
the transmission or routing of the services that are designated for 
support pursuant to subpart B of this part.
    (f) For the purposes of this section, the term ``own facilities'' 
includes, but is not limited to, facilities obtained as unbundled 
network elements pursuant to part 51 of this chapter, provided that such 
facilities meet the definition of the term ``facilities'' under this 
subpart.
    (g) A state commission shall not require a common carrier, in order 
to satisfy the requirements of paragraph (d)(1) of this section, to use 
facilities that are located within the relevant service area, as long as 
the carrier uses facilities to provide the services designated for 
support pursuant to subpart B of this part within the service area.

[[Page 81]]

    (h) A state commission shall designate a common carrier that meets 
the requirements of this section as an eligible telecommunications 
carrier irrespective of the technology used by such carrier.
    (i) A state commission shall not designate as an eligible 
telecommunications carrier a telecommunications carrier that offers the 
services supported by federal universal service support mechanisms 
exclusively through the resale of another carrier's services.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2125, Jan. 13, 1998]



Sec. 54.203  Designation of eligible telecommunications carriers for unserved areas.

    (a) If no common carrier will provide the services that are 
supported by federal universal service support mechanisms under section 
254(c) of the Act and subpart B of this part to an unserved community or 
any portion thereof that requests such service, the Commission, with 
respect to interstate services, or a state commission, with respect to 
intrastate services, shall determine which common carrier or carriers 
are best able to provide such service to the requesting unserved 
community or portion thereof and shall order such carrier or carriers to 
provide such service for that unserved community or portion thereof.
    (b) Any carrier or carriers ordered to provide such service under 
this section shall meet the requirements of section 54.201(d) and shall 
be designated as an eligible telecommunications carrier for that 
community or portion thereof.



Sec. 54.205  Relinquishment of universal service.

    (a) A state commission shall permit an eligible telecommunications 
carrier to relinquish its designation as such a carrier in any area 
served by more than one eligible telecommunications carrier. An eligible 
telecommunications carrier that seeks to relinquish its eligible 
telecommunications carrier designation for an area served by more than 
one eligible telecommunications carrier shall give advance notice to the 
state commission of such relinquishment.
    (b) Prior to permitting a telecommunications carrier designated as 
an eligible telecommunications carrier to cease providing universal 
service in an area served by more than one eligible telecommunications 
carrier, the state commission shall require the remaining eligible 
telecommunications carrier or carriers to ensure that all customers 
served by the relinquishing carrier will continue to be served, and 
shall require sufficient notice to permit the purchase or construction 
of adequate facilities by any remaining eligible telecommunications 
carrier. The state commission shall establish a time, not to exceed one 
year after the state commission approves such relinquishment under this 
section, within which such purchase or construction shall be completed.



Sec. 54.207  Service areas.

    (a) The term service area means a geographic area established by a 
state commission for the purpose of determining universal service 
obligations and support mechanisms. A service area defines the overall 
area for which the carrier shall receive support from federal universal 
service support mechanisms.
    (b) In the case of a service area served by a rural telephone 
company, service area means such company's ``study area'' unless and 
until the Commission and the states, after taking into account 
recommendations of a Federal-State Joint Board instituted under section 
410(c) of the Act, establish a different definition of service area for 
such company.
    (c) If a state commission proposes to define a service area served 
by a rural telephone company to be other than such company's study area, 
the Commission will consider that proposed definition in accordance with 
the procedures set forth in this paragraph.
    (1) A state commission or other party seeking the Commission's 
agreement in redefining a service area served by a rural telephone 
company shall submit a petition to the Commission. The petition shall 
contain:
    (i) The definition proposed by the state commission; and
    (ii) The state commission's ruling or other official statement 
presenting the

[[Page 82]]

state commission's reasons for adopting its proposed definition, 
including an analysis that takes into account the recommendations of any 
Federal-State Joint Board convened to provide recommendations with 
respect to the definition of a service area served by a rural telephone 
company.
    (2) The Commission shall issue a Public Notice of any such petition 
within fourteen (14) days of its receipt.
    (3) The Commission may initiate a proceeding to consider the 
petition within ninety (90) days of the release date of the Public 
Notice.
    (i) If the Commission initiates a proceeding to consider the 
petition, the proposed definition shall not take effect until both the 
state commission and the Commission agree upon the definition of a rural 
service area, in accordance with paragraph (b) of this section and 
section 214(e)(5) of the Act.
    (ii) If the Commission does not act on the petition within ninety 
(90) days of the release date of the Public Notice, the definition 
proposed by the state commission will be deemed approved by the 
Commission and shall take effect in accordance with state procedures.
    (d) The Commission may, on its own motion, initiate a proceeding to 
consider a definition of a service area served by a rural telephone 
company that is different from that company's study area. If it proposes 
such different definition, the Commission shall seek the agreement of 
the state commission according to this paragraph.
    (1) The Commission shall submit a petition to the state commission 
according to that state commission's procedures. The petition submitted 
to the relevant state commission shall contain:
    (i) The definition proposed by the Commission; and
    (ii) The Commission's decision presenting its reasons for adopting 
the proposed definition, including an analysis that takes into account 
the recommendations of any Federal-State Joint Board convened to provide 
recommendations with respect to the definition of a service area served 
by a rural telephone company.
    (2) The Commission's proposed definition shall not take effect until 
both the state commission and the Commission agree upon the definition 
of a rural service area, in accordance with paragraph (b) of this 
section and section 214(e)(5) of the Act.
    (e) The Commission delegates its authority under paragraphs (c) and 
(d) of this section to the Chief, Common Carrier Bureau.



        Subpart D--Universal Service Support for High Cost Areas



Sec. 54.301  Local switching support.

    (a) Calculation of local switching support. (1) Beginning January 1, 
1998, an incumbent local exchange carrier that has been designated an 
eligible telecommunications carrier and that serves a study area with 
50,000 or fewer access lines shall receive support for local switching 
costs using the following formula: the carrier's projected annual 
unseparated local switching revenue requirement, calculated pursuant to 
paragraph (d) of this section, shall be multiplied by the local 
switching support factor. For purposes of this section, local switching 
costs shall be defined as Category 3 local switching costs under part 36 
of this chapter.
    (2) Local switching support factor. (i) The local switching support 
factor shall be defined as the difference between the 1996 weighted 
interstate DEM factor, calculated pursuant to Sec. 36.125(f) of this 
chapter, and the 1996 unweighted interstate DEM factor.
    (ii) If the number of a study area's access lines increases such 
that, under Sec. 36.125(f) of this chapter, the weighted interstate DEM 
factor for 1997 or any successive year would be reduced, that lower 
weighted interstate DEM factor shall be applied to the carrier's 1996 
unweighted interstate DEM factor to derive a new local switching support 
factor.
    (3) Beginning January 1, 1998, the sum of the unweighted interstate 
DEM factor, as defined in Sec. 36.125(a)(5) of this chapter, and the 
local switching support factor shall not exceed 0.85. If the sum of 
those two factors would exceed 0.85, the local switching support factor 
shall be reduced to a level that would reduce the sum of the factors to 
0.85.
    (b) Submission of data to the Administrator. Each incumbent local 
exchange

[[Page 83]]

carrier that has been designated an eligible telecommunications carrier 
and that serves a study area with 50,000 or fewer access lines shall, 
for each study area, provide the Administrator with the projected total 
unseparated dollar amount assigned to each account listed below for the 
calendar year following each filing. This information must be provided 
to the Administrator no later than October 1 of each year. The 
Administrator shall use this information to calculate the projected 
annual unseparated local switching revenue requirement pursuant to 
paragraph (d) of this section.

                                    I
 
Telecommunications Plant in    Account 2001
 Service (TPIS).
Telecommunications Plant--     Accounts 2002, 2003, 2005
 Other.
General Support Assets.......  Account 2110
Central Office Assets........  Accounts 2210, 2220, 2230
Central Office--switching,     Account 2210, Category 3
 Category 3 (local switching).
Information Origination/       Account 2310
 Termination Assets.
Cable and Wire Facilities      Account 2410
 Assets.
Amortizable Tangible Assets..  Account 2680
Intangibles..................  Account 2690
 
                                   II
 
Rural Telephone Bank (RTB)     Included in Account 1402
 Stock.
Materials and Supplies.......  Account 1220.1
Cash Working Capital.........  Defined in 47 CFR 65.820(d)
 
                                   III
 
Accumulated Depreciation.....  Account 3100
Accumulated Amortization.....  Accounts 3400, 3500, 3600
Net Deferred Operating Income  Accounts 4100, 4340
 Taxes.
Network Support Expenses.....  Account 6110
General Support Expenses.....  Account 6120
Central Office Switching,      Accounts 6210, 6220, 6230
 Operator Systems, and
 Central Office Transmission
 Expenses.
Information Origination/       Account 6310
 Termination Expenses.
Cable and Wire Facilities      Account 6410
 Expenses.
Other Property, Plant and      Account 6510
 Equipment Expenses.
Network Operations Expenses..  Account 6530
Access Expense...............  Account 6540
Depreciation and Amortization  Account 6560
 Expense.
Marketing Expense............  Account 6610
Services Expense.............  Account 6620
Corporate Operations Expense.  Accounts 6710, 6720
Operating Taxes..............  Accounts 7230, 7240
Federal Investment Tax         Accounts 7210
 Credits.
Provision for Deferred         Account 7250
 Operating Income Taxes--Net.
Allowance for Funds Used       Account 7340
 During Construction.
Charitable Contributions.....  Included in Account 7370
Interest and Related Items...  Account 7500
 
                                   IV
 
Other Non-Current Assets.....  Account 1410
Deferred Maintenance and       Account 1438
 Retirements.
Deferred Charges.............  Account 1439
Other Jurisdictional Assets    Accounts 1500, 4370
 and Liabilities.
Customer Deposits............  Account 4040
Other Long-Term Liabilities..  Account 4310
 

    (c) Allocation of accounts to switching. The Administrator shall 
allocate to local switching, the accounts reported pursuant to paragraph 
(b) of this section as prescribed in this paragraph.
    (1) General Support Assets (Account 2110); Amortizable Tangible 
Assets (Account 2680); Intangibles (Account 2690); and General Support 
Expenses (Account 6120) shall be allocated according to the following 
factor:


[[Page 84]]


Account 2210 Category3 (Account 2210 + Account 2220 + Account 
2230 + Account 2310 + Account 2410).

    (2) Telecommunications Plant--Other (Accounts 2002, 2003, 2005); 
Rural Telephone Bank (RTB) Stock (included in Account 1402); Materials 
and Supplies (Account 1220.1); Cash Working Capital (Sec. 65.820(d) of 
this chapter); Accumulated Amortization (Accounts 3400, 3500, 3600); Net 
Deferred Operating Income Taxes (Accounts 4100, 4340); Network Support 
Expenses (Account 6110); Other Property, Plant and Equipment Expenses 
(Account 6510); Network Operations Expenses (Account 6530); Marketing 
Expense (Account 6610); Services Expense (Account 6620); Operating Taxes 
(Accounts 7230, 7240); Federal Investment Tax Credits (Accounts 7210); 
Provision for Deferred Operating Income Taxes--Net (Account 7250); 
Interest and Related Items (Account 7500); Allowance for Funds Used 
During Construction (Account 7340); Charitable Contributions (included 
in Account 7370); Other Non-current Assets (Account 1410); Other 
Jurisdictional Assets and Liabilities (Accounts 1500, 4370); Customer 
Deposits (Account 4040); Other Long-term Liabilities (Account 4310); and 
Deferred Maintenance and Retirements (Account 1438) shall be allocated 
according to the following factor:

Account 2210 Category 3Account 2001.

    (3) Accumulated Depreciation for Central Office--switching (Account 
3100 associated with Account 2210) and Depreciation and Amortization 
Expense for Central Office--switching (Account 6560 associated with 
Account 2210) shall be allocated according to the following factor:

Account 2210 Category 3Account 2210.

    (4) Accumulated Depreciation for General Support Assets (Account 
3100 associated with Account 2110) and Depreciation and Amortization 
Expense for General Support Assets (Account 6560 associated with Account 
2110) shall be allocated according to the following factor:

Account 2210 Category 3  Account 2001.

    (5) Corporate Operations Expenses (Accounts 6710, 6720) shall be 
allocated according to the following factor:

[[Account 2210 Category 3  (Account 2210 + Account 2220 + 
Account 2230)]]  x  (Account 6210 + Account 6220 + Account 6230)] + 
[(Account 6530 + Account 6610 + Account 6620)  x  (Account 2210 Category 
3  Account 2001)]  (Account 6210 + Account 6220 + 
Account 6230 + Account 6310 + Account 6410 + Account 6530 + Account 6610 
+ Account 6620).

    (6) Central Office Switching, Operator Systems, and Central Office 
Transmission Expenses (Account 6210, Account 6220, Account 6230) shall 
be allocated according to the following factor:

Account 2210 Category 3  (Accounts 2210 + 2220 + 2230).

    (d) Calculation of the projected annual unseparated local switching 
revenue requirement. The Administrator shall calculate the projected 
annual unseparated local switching revenue requirement by summing the 
components listed in this paragraph.
    (1) Return on Investment attributable to COE Category 3 shall be 
obtained by multiplying the average projected unseparated local 
switching net investment by the authorized interstate rate of return. 
Projected unseparated local switching net investment shall be calculated 
as of each December 31 by deducting the accumulated reserves, deferrals 
and customer deposits attributable to the COE Category 3 investment from 
the gross investment attributable to COE Category 3. The average 
projected unseparated local switching net investment shall be calculated 
by summing the projected unseparated local switching net investment as 
of December 31 of the calendar year following the filing year and such 
investment as of December 31 of the filing year and dividing by 2.
    (2) Depreciation expense attributable to COE Category 3 investment, 
allocated pursuant to paragraph (c) of this section.
    (3) All expenses, excluding depreciation expense, collected in 
paragraph (b) of this section, allocated pursuant to paragraph (c) of 
this section.
    (4) Federal income tax attributable to COE Category 3 shall be 
calculated using the following formula; the accounts listed shall be 
allocated pursuant to paragraph (c) of this section:


[[Page 85]]


[Return on Investment attributable to COE Category 3 - Account 7340 - 
Account 7500--Account 7210)]  x  [Federal Income Tax Rate  (1 - 
Federal Income Tax Rate)].

    (e) True-up adjustment--(1) Submission of true-up data. Each 
incumbent local exchange carrier that has been designated an eligible 
telecommunications carrier and that serves a study area with 50,000 or 
fewer access lines shall, for each study area, provide the Administrator 
with the historical total unseparated dollar amount assigned to each 
account listed in paragraph (b) of this section for each calendar year 
no later than 12 months after the end of such calendar year.
    (2) Calculation of true-up adjustment. (i) The Administrator shall 
calculate the historical annual unseparated local switching revenue 
requirement for each carrier when historical data for each calendar year 
are submitted.
    (ii) The Administrator shall calculate each carrier's local 
switching support payment, calculated pursuant to 54.301(a), using its 
historical annual unseparated local switching revenue requirement.
    (iii) For each carrier receiving local switching support, the 
Administrator shall calculate the difference between the support payment 
calculated pursuant to paragraph (e)(2)(ii) of this section and its 
support payment calculated using its projected annual unseparated local 
switching revenue requirement.
    (iv) The Administrator shall adjust each carrier's local switching 
support payment by the difference calculated in paragraph (e)(2)(iii) of 
this section no later than 15 months after the end of the calendar year 
for which historical data are submitted.
    (f) Calculation of the local switching revenue requirement for 
average schedule companies. (1) The local switching revenue requirement 
for average schedule companies, as defined in Sec. 69.605(c) of this 
chapter, shall be calculated in accordance with a formula approved or 
modified by the Commission. The Administrator shall submit to the 
Commission and the Common Carrier Bureau for review and approval a 
formula that simulates the disbursements that would be received pursuant 
to this section by a company that is representative of average schedule 
companies. For each annual period, the Administrator shall submit the 
formula, any proposed revisions of such formula, or a certification that 
no revisions to the formula are warranted on or before December 31 of 
each year.
    (2) The Commission delegates its authority to review, modify, and 
approve the formula submitted by the Administrator pursuant to this 
paragraph to the Chief, Common Carrier Bureau.

[63 FR 2126, Jan. 13, 1998; 63 FR 33585, June 19, 1998]



Sec. 54.303  Long term support.

    (a) Beginning January 1, 1998, an eligible telecommunications 
carrier that participates in the association Common Line pool shall 
receive Long Term Support.
    (b) Long Term Support shall be calculated as prescribed in this 
paragraph.
    (1) To calculate the unadjusted base-level of Long Term Support for 
1998, the Administrator shall calculate the difference between the 
projected Common Line revenue requirement of association Common Line 
tariff participants projected to be recovered in 1997 and the sum of end 
user common line charges and the 1997 projected revenue recovered by the 
association Carrier Common Line charge as calculated pursuant to 
Sec. 69.105(b)(2) of this chapter.
    (2) To calculate Long Term Support for calendar year 1998, the 
Administrator shall adjust the base-level of Long Term Support 
calculated in paragraph (b)(1) of this section to reflect the annual 
percentage change in the actual nationwide average unseparated loop cost 
per working loop as filed by the Administrator in the previous calendar 
year, pursuant to Sec. 36.622 of this chapter.
    (3) To calculate Long Term Support for calendar year 1999, the 
Administrator shall adjust the level of support calculated in paragraph 
(b)(2) of this section to reflect the annual percentage change in the 
actual nationwide average unseparated loop cost per working loop as 
filed by the Administrator in the previous calendar year, pursuant to 
Sec. 36.622 of this chapter.

[[Page 86]]

    (4) Beginning January 1, 2000, the Administrator shall calculate 
Long Term Support annually by adjusting the previous year's level of 
support to reflect the annual percentage change in the Department of 
Commerce's Gross Domestic Product-Consumer Price Index (GDP-CPI).

[63 FR 2128, Jan. 13, 1998; 63 FR 33586, June 19, 1998]



Sec. 54.305  Sale or transfer of exchanges.

    A carrier that acquires telephone exchanges from an unaffiliated 
carrier shall receive universal service support for the acquired 
exchanges at the same per-line support levels for which those exchanges 
were eligible prior to the transfer of the exchanges. A carrier that has 
entered into a binding commitment to buy exchanges prior to May 7, 1997 
will receive support for the newly acquired lines based upon the average 
cost of all of its lines, both those newly acquired and those it had 
prior to execution of the sales agreement.



Sec. 54.307  Support to a competitive eligible telecommunications carrier.

    (a) Calculation of support. A competitive eligible 
telecommunications carrier shall receive universal service support to 
the extent that the competitive eligible telecommunications carrier 
captures an incumbent local exchange carrier's (ILEC) subscriber lines 
or serves new subscriber lines in the ILEC's service area.
    (1) A competitive eligible telecommunications carrier shall receive 
support for each line it serves based on the support the ILEC receives 
for each line.
    (2) The ILEC's per-line support shall be calculated by dividing the 
ILEC's universal service support by the number of loops served by that 
ILEC at its most recent annual loop count.
    (3) A competitive eligible telecommunications carrier that uses 
switching functionalities purchased as unbundled network elements 
pursuant to Sec. 51.307 of this chapter to provide the supported 
services shall receive the lesser of the unbundled network element price 
for switching or the per-line DEM support of the ILEC, if any. A 
competitive eligible telecommunications carrier that uses loops 
purchased as unbundled network elements pursuant to Sec. 51.307 of this 
chapter to provide the supported services shall receive the lesser of 
the unbundled network element price for the loop or the ILEC's per-line 
payment from the high cost loop support and LTS, if any. The ILEC 
providing nondiscriminatory access to unbundled network elements to such 
competitive eligible telecommunications carrier shall receive the 
difference between the level of universal service support provided to 
the competitive eligible telecommunications carrier and the per-customer 
level of support previously provided to the ILEC.
    (4) A competitive eligible telecommunications carrier that provides 
the supported services using neither unbundled network elements 
purchased pursuant to Sec. 51.307 of this chapter nor wholesale service 
purchased pursuant to section 251(c)(4) of the Act will receive the full 
amount of universal service support previously provided to the incumbent 
local exchange carrier for that customer. The amount of universal 
service support provided to such incumbent local exchange carrier shall 
be reduced by an amount equal to the amount provided to such competitive 
eligible telecommunications carrier.
    (b) Submission of information to the Administrator. In order to 
receive universal service support, a competitive eligible 
telecommunications carrier must provide the Administrator on or before 
July 31st of each year the number of working loops it serves in a 
service area. For universal service support purposes, working loops are 
defined as the number of working Exchange Line C&WF loops used jointly 
for exchange and message telecommunications service, including C&WF 
subscriber lines associated with pay telephones in C&WF Category 1, but 
excluding WATS closed end access and TWX service. This figure shall be 
calculated as of December 31st of the year preceding each July 31st 
filing.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2128, Jan. 13, 1998]

[[Page 87]]



      Subpart E--Universal Service Support for Low-Income Consumers



Sec. 54.400  Terms and definitions.

    As used in this subpart, the following terms shall be defined as 
follows:
    (a) Qualifying low-income consumer. A ``qualifying low-income 
consumer'' is a consumer who meets the low-income eligibility criteria 
established by the state commission, or, in states that do not provide 
state Lifeline support, a consumer who participates in one of the 
following programs: Medicaid; food stamps; supplemental security income; 
federal public housing assistance; or Low-Income Home Energy Assistance 
Program.
    (b) Toll blocking. ``Toll blocking'' is a service provided by 
carriers that lets consumers elect not to allow the completion of 
outgoing toll calls from their telecommunications channel.
    (c) Toll control. ``Toll control'' is a service provided by carriers 
that allows consumers to specify a certain amount of toll usage that may 
be incurred on their telecommunications channel per month or per billing 
cycle.
    (d) Toll limitation. ``Toll limitation'' denotes either toll 
blocking or toll control for eligible telecommunications carriers that 
are incapable of providing both services. For eligible 
telecommunications carriers that are capable of providing both services, 
``toll limitation'' denotes both toll blocking and toll control.

[62 FR 32952, June 17, 1997, as amended at 63 FR 2128, Jan. 13, 1998]



Sec. 54.401  Lifeline defined.

    (a) As used in this subpart, Lifeline means a retail local service 
offering:
    (1) That is available only to qualifying low-income consumers;
    (2) For which qualifying low-income consumers pay reduced charges as 
a result of application of the Lifeline support amount described in 
Sec. 54.403; and
    (3) That includes the services or functionalities enumerated in 
Sec. 54.101 (a)(1) through (a)(9). The carriers shall offer toll 
limitation to all qualifying low-income consumers at the time such 
consumers subscribe to Lifeline service. If the consumer elects to 
receive toll limitation, that service shall become part of that 
consumer's Lifeline service.
    (b) Eligible telecommunications carriers may not disconnect Lifeline 
service for non-payment of toll charges.
    (1) State commissions may grant a waiver of this requirement if the 
local exchange carrier can demonstrate that:
    (i) It would incur substantial costs in complying with this 
requirement;
    (ii) It offers toll limitation to its qualifying low-income 
consumers without charge; and
    (iii) Telephone subscribership among low-income consumers in the 
carrier's service area is greater than or equal to the national 
subscribership rate for low-income consumers. For purposes of this 
paragraph, a low-income consumer is one with an income below the poverty 
level for a family of four residing in the state for which the carrier 
seeks the waiver. The carrier may reapply for the waiver.
    (2) A carrier may file a petition for review of the state 
commission's decision with the Commission within 30 days of that 
decision. If a state commission has not acted on a petition for a waiver 
of this requirement within 30 days of its filing, the carrier may file 
that petition with the Commission on the 31st day after that initial 
filing.
    (c) Eligible telecommunications carriers may not collect a service 
deposit in order to initiate Lifeline service, if the qualifying low-
income consumer voluntarily elects toll blocking from the carrier, where 
available. If toll blocking is unavailable, the carrier may charge a 
service deposit.
    (d) The state commission shall file or require the carrier to file 
information with the Administrator demonstrating that the carrier's 
Lifeline plan meets the criteria set forth in this subpart and stating 
the number of qualifying low-income consumers and the amount of state 
assistance. Lifeline assistance shall be made available to qualifying 
low-income consumers as soon as the Administrator certifies that the 
carrier's Lifeline plan satisfies the criteria set out in this subpart.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2128, Jan. 13, 1998]

[[Page 88]]



Sec. 54.403  Lifeline support amount.

    (a) The federal baseline Lifeline support amount shall equal $3.50 
per qualifying low-income consumer. If the state commission approves an 
additional reduction of $1.75 in the amount paid by consumers, 
additional federal Lifeline support in the amount of $1.75 will be made 
available to the carrier providing Lifeline service to that consumer. 
Additional federal Lifeline support in an amount equal to one-half the 
amount of any state Lifeline support will be made available to the 
carrier providing Lifeline service to a qualifying low-income consumer 
if the state commission approves an additional reduction in the amount 
paid by that consumer equal to the state support multiplied by 1.5. The 
federal Lifeline support amount shall not exceed $7.00 per qualifying 
low-income consumer.
    (b) Eligible carriers that charge federal End-User Common Line 
charges or equivalent federal charges shall apply the federal baseline 
Lifeline support to waive Lifeline consumers' federal End-User Common 
Line charges. Such carriers shall apply any additional federal support 
amount to a qualifying low-income consumer's intrastate rate, if the 
state has approved of such additional support. Other carriers shall 
apply the federal baseline Lifeline support amount, plus the additional 
support amount, where applicable, to reduce their lowest tariffed (or 
otherwise generally available) residential rate for the services 
enumerated in Sec. 54.101(a)(1) through (a)(9), and charge Lifeline 
consumers the resulting amount.
    (c) Lifeline support for providing toll limitation shall equal the 
eligible telecommunications carrier's incremental cost of providing 
either toll blocking or toll control, whichever is selected by the 
particular consumer.
    (d) In addition to the $7.00 per qualifying low-income consumer 
described in paragraph (a) of this section, eligible incumbent local 
exchange carriers that serve qualifying low-income consumers who have 
toll blocking shall receive federal Lifeline support in amounts equal to 
the presubscribed interexchange carrier charge that incumbent local 
exchange carriers would be permitted to recover from such low-income 
consumers pursuant to Sec. 69.153(b) of this chapter. Eligible incumbent 
local exchange carriers that serve qualifying low-income consumers who 
have toll blocking shall apply this support to waive qualifying low-
income consumers' presubscribed interexchange carrier charges. A 
competitive eligible telecommunications carrier that serves qualifying 
low-income consumers who have toll blocking shall receive federal 
Lifeline support in an amount equal to the presubscribed interexchange 
carrier charge that the incumbent local exchange carrier in that area 
would be permitted to recover, if it served those consumers.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2128, Jan. 13, 1998]



Sec. 54.405  Carrier obligation to offer Lifeline.

    All eligible telecommunications carriers shall make available 
Lifeline service, as defined in Sec. 54.401, to qualifying low-income 
consumers.



Sec. 54.407  Reimbursement for offering Lifeline.

    (a) Universal service support for providing Lifeline shall be 
provided directly to the eligible telecommunications carrier, based on 
the number of qualifying low-income consumers it serves, under 
administrative procedures determined by the Administrator.
    (b) The eligible telecommunications carrier may receive universal 
service support reimbursement for each qualifying low-income consumer 
served. For each consumer receiving Lifeline service, the reimbursement 
amount shall equal the federal support amount, including the support 
amount described in Sec. 54.403(c). The eligible telecommunications 
carrier's universal service support reimbursement shall not exceed the 
carrier's standard, non-Lifeline rate.
    (c) In order to receive universal service support reimbursement, the 
eligible telecommunications carrier must keep accurate records of the 
revenues it forgoes in providing Lifeline in conformity with 
Sec. 54.401. Such records shall be kept in the form directed by the 
Administrator and provided to the Administrator at intervals as directed 
by

[[Page 89]]

the Administrator or as provided in this Subpart.



Sec. 54.409  Consumer qualification for Lifeline.

    (a) To qualify to receive Lifeline service in states that provide 
state Lifeline service support, a consumer must meet the criteria 
established by the state commission. The state commission shall 
establish narrowly targeted qualification criteria that are based solely 
on income or factors directly related to income.
    (b) To qualify to receive Lifeline in states that do not provide 
state Lifeline support, a consumer must participate in one of the 
following programs: Medicaid; food stamps; Supplemental Security Income; 
federal public housing assistance; or Low-Income Home Energy Assistance 
Program. In states not providing state Lifeline support, each carrier 
offering Lifeline service to a consumer must obtain that consumer's 
signature on a document certifying under penalty of perjury that 
consumer receives benefits from one of the programs mentioned in this 
paragraph and identifying the program or programs from which that 
consumer receives benefits. On the same document, a qualifying low-
income consumer also must agree to notify the carrier if that consumer 
ceases to participate in the program or programs.



Sec. 54.411  Link Up program defined.

    (a) For purposes of this subpart, the term ``Link Up'' shall 
describe the following assistance program for qualifying low-income 
consumers, which an eligible telecommunications carrier shall offer as 
part of its obligation set forth in Secs. 54.101(a)(9) and 54.101(b):
    (1) A reduction in the carrier's customary charge for commencing 
telecommunications service for a single telecommunications connection at 
a consumer's principal place of residence. The reduction shall be half 
of the customary charge or $30.00, whichever is less; and
    (2) A deferred schedule for payment of the charges assessed for 
commencing service, for which the consumer does not pay interest. The 
interest charges not assessed to the consumer shall be for connection 
charges of up to $200.00 that are deferred for a period not to exceed 
one year. Charges assessed for commencing service include any charges 
that the carrier customarily assesses to connect subscribers to the 
network. These charges do not include any permissible security deposit 
requirements.
    (b) A qualifying low-income consumer may choose one or both of the 
programs set forth in paragraph (a) of this section.
    (c) A carrier's Link Up program shall allow a consumer to receive 
the benefit of the Link Up program for a second or subsequent time only 
for a principal place of residence with an address different from the 
residence address at which the Link Up assistance was provided 
previously.



Sec. 54.413  Reimbursement for revenue forgone in offering a Link Up program.

    (a) Eligible telecommunications carriers may receive universal 
service support reimbursement for the revenue they forgo in reducing 
their customary charge for commencing telecommunications service and for 
providing a deferred schedule for payment of the charges assessed for 
commencing service for which the consumer does not pay interest, in 
conformity with Sec. 54.411.
    (b) In order to receive universal service support reimbursement for 
providing Link Up, eligible telecommunications carriers must keep 
accurate records of the revenues they forgo in reducing their customary 
charge for commencing telecommunications service and for providing a 
deferred schedule for payment of the charges assessed for commencing 
service for which the consumer does not pay interest, in conformity with 
Sec. 54.411. Such records shall be kept in the form directed by the 
Administrator and provided to the Administrator at intervals as directed 
by the Administrator or as provided in this subpart. The forgone 
revenues for which the eligible telecommunications carrier may receive 
reimbursement shall include only the difference between the carrier's 
customary connection or interest charges and the charges actually 
assessed to the participating low-income consumer.

[[Page 90]]



Sec. 54.415  Consumer qualification for Link Up.

    (a) In states that provide state Lifeline service, the consumer 
qualification criteria for Link Up shall be the same criteria that the 
state established for Lifeline qualification in accord with 
Sec. 54.409(a).
    (b) In states that do not provide state Lifeline service, the 
consumer qualification criteria for Link Up shall be the same as the 
criteria set forth in Sec. 54.409(b).



Sec. 54.417  Transition to the new Lifeline and Link Up programs.

    The rules in this subpart shall take effect on January 1, 1998.



     Subpart F--Universal Service Support for Schools and Libraries



Sec. 54.500  Terms and definitions.

    (a) Billed entity. A ``billed entity'' is the entity that remits 
payment to service providers for services rendered to eligible schools 
and libraries.
    (b) Elementary school. An ``elementary school'' is a non-profit 
institutional day or residential school that provides elementary 
education, as determined under state law.
    (c) Library. A ``library'' includes:
    (1) A public library;
    (2) A public elementary school or secondary school library;
    (3) An academic library;
    (4) A research library, which for the purpose of this section means 
a library that:
    (i) Makes publicly available library services and materials suitable 
for scholarly research and not otherwise available to the public; and
    (ii) Is not an integral part of an institution of higher education; 
and
    (5) A private library, but only if the state in which such private 
library is located determines that the library should be considered a 
library for the purposes of this definition.
    (d) Library consortium. A ``library consortium'' is any local, 
statewide, regional, or interstate cooperative association of libraries 
that provides for the systematic and effective coordination of the 
resources of schools, public, academic, and special libraries and 
information centers, for improving services to the clientele of such 
libraries. For the purposes of these rules, references to library will 
also refer to library consortium.
    (e) Lowest corresponding price. ``Lowest corresponding price'' is 
the lowest price that a service provider charges to non-residential 
customers who are similarly situated to a particular school, library, or 
library consortium for similar services.
    (f) Master contract. A ``master contract'' is a contract negotiated 
with a service provider by a third party, the terms and conditions of 
which are then made available to an eligible school, library, rural 
health care provider, or consortium that purchases directly from the 
service provider.
    (g) Minor contract modification. A ``minor contract modification'' 
is a change to a universal service contract that is within the scope of 
the original contract and has no effect or merely a negligible effect on 
price, quantity, quality, or delivery under the original contract.
    (h) National school lunch program. The ``national school lunch 
program'' is a program administered by the U.S. Department of 
Agriculture and state agencies that provides free or reduced price 
lunches to economically disadvantaged children. A child whose family 
income is between 130 percent and 185 percent of applicable family size 
income levels contained in the nonfarm poverty guidelines prescribed by 
the Office of Management and Budget is eligible for a reduced price 
lunch. A child whose family income is 130 percent or less of applicable 
family size income levels contained in the nonfarm income poverty 
guidelines prescribed by the Office of Management and Budget is eligible 
for a free lunch.
    (i) Pre-discount price. The ``pre-discount price'' means, in this 
subpart, the price the service provider agrees to accept as total 
payment for its telecommunications or information services. This amount 
is the sum of the amount the service provider expects to receive from 
the eligible school or library and the amount it expects to receive as 
reimbursement from the universal service support mechanisms for the 
discounts provided under this subpart.

[[Page 91]]

    (j) Secondary school. A ``secondary school'' is a non-profit 
institutional day or residential school that provides secondary 
education, as determined under state law. A secondary school does not 
offer education beyond grade 12.
    (k) State telecommunications network. A ``state telecommunications 
network'' is a state government entity that procures, among other 
things, telecommunications offerings from multiple service providers and 
bundles such offerings into packages available to schools, libraries, or 
rural health care providers that are eligible for universal service 
support, or a state government entity that provides, using its own 
facilities, such telecommunications offerings to such schools, 
libraries, and rural health care providers.
    (l) Wide area network. For purposes of this subpart, a ``wide area 
network'' is a voice or data network that provides connections from one 
or more computers within an eligible school or library to one or more 
computers or networks that are external to such eligible school or 
library. Excluded from this definition is a voice or data network that 
provides connections between or among instructional buildings of a 
single school campus or between or among non-administrative buildings of 
a single library branch.

[63 FR 2128, Jan. 13, 1998]



Sec. 54.501  Eligibility for services provided by telecommunications carriers.

    (a) Telecommunications carriers shall be eligible for universal 
service support under this subpart for providing supported services to 
eligible schools, libraries, and consortia including those entities.
    (b) Schools. (1) Only schools meeting the statutory definitions of 
``elementary school,'' as defined in 20 U.S.C. 8801(14), or ``secondary 
school,'' as defined in 20 U.S.C. 8801(25), and not excluded under 
paragraphs (b)(2) or (b)(3) of this section shall be eligible for 
discounts on telecommunications and other supported services under this 
subpart.
    (2) Schools operating as for-profit businesses shall not be eligible 
for discounts under this subpart.
    (3) Schools with endowments exceeding $50,000,000 shall not be 
eligible for discounts under this subpart.
    (c) Libraries. (1) Only libraries eligible for assistance from a 
State library administrative agency under the Library Services and 
Technology Act (Public Law 104-208) and not excluded under paragraphs 
(c)(2) or (c)(3) of this section shall be eligible for discounts under 
this subpart.
    (2) A library's eligibility for universal service funding shall 
depend on its funding as an independent entity. Only libraries whose 
budgets are completely separate from any schools (including, but not 
limited to, elementary and secondary schools, colleges, and 
universities) shall be eligible for discounts as libraries under this 
subpart.
    (3) Libraries operating as for-profit businesses shall not be 
eligible for discounts under this subpart.
    (d) Consortia. (1) For purposes of seeking competitive bids for 
telecommunications services, schools and libraries eligible for support 
under this subpart may form consortia with other eligible schools and 
libraries, with health care providers eligible under subpart G, and with 
public sector (governmental) entities, including, but not limited to, 
state colleges and state universities, state educational broadcasters, 
counties, and municipalities, when ordering telecommunications and other 
supported services under this subpart. With one exception, eligible 
schools and libraries participating in consortia with ineligible private 
sector members shall not be eligible for discounts for interstate 
services under this subpart. A consortium may include ineligible private 
sector entities if the pre-discount prices of any services that such 
consortium receives from ILECs are generally tariffed rates.
    (2) For consortia, discounts under this subpart shall apply only to 
the portion of eligible telecommunications and other supported services 
used by eligible schools and libraries.
    (3) Service providers shall keep and retain records of rates charged 
to and discounts allowed for eligible schools and libraries--on their 
own or as part

[[Page 92]]

of a consortium. Such records shall be available for public inspection.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2129, Jan. 13, 1998]



Sec. 54.502  Supported telecommunications services.

    For purposes of this subpart, supported telecommunications services 
provided by telecommunications carriers include all commercially 
available telecommunications services in addition to all reasonable 
charges that are incurred by taking such services, such as state and 
federal taxes. Charges for termination liability, penalty surcharges, 
and other charges not included in the cost of taking such service shall 
not be covered by the universal service support mechanisms.

[63 FR 2129, Jan. 13, 1998]



Sec. 54.503  Other supported special services.

    For the purposes of this subpart, other supported special services 
provided by telecommunications carriers include Internet access and 
installation and maintenance of internal connections in addition to all 
reasonable charges that are incurred by taking such services, such as 
state and federal taxes. Charges for termination liability, penalty 
surcharges, and other charges not included in the cost of taking such 
services shall not be covered by the universal service support 
mechanisms.

[63 FR 2129, Jan. 13, 1998]



Sec. 54.504  Requests for services.

    (a) Competitive bid requirements. Except as provided in 
Sec. 54.511(c), an eligible school, library, or consortium that includes 
an eligible school or library shall seek competitive bids, pursuant to 
the requirements established in this subpart, for all services eligible 
for support under Secs. 54.502 and 54.503. These competitive bid 
requirements apply in addition to state and local competitive bid 
requirements and are not intended to preempt such state or local 
requirements.
    (b) Posting of FCC Form 470. (1) An eligible school, library, or 
consortium that includes an eligible school or library seeking to 
receive discounts for eligible services under this subpart, shall submit 
a completed FCC Form 470 to the Schools and Libraries Corporation. FCC 
Form 470 shall include, at a minimum, the following information, to the 
extent applicable with respect to the services requested:
    (i) The computer equipment currently available or budgeted for 
purchase for the current, next, or other future academic years, as well 
as whether the computers have modems and, if so, what speed modems;
    (ii) The internal connections, if any, that the school or library 
has in place or has budgeted to install in the current, next, or future 
academic years, or any specific plans for an organized voluntary effort 
to connect the classrooms;
    (iii) The computer software necessary to communicate with other 
computers over an internal network and over the public 
telecommunications network currently available or budgeted for purchase 
for the current, next, or future academic years;
    (iv) The experience of, and training received by, the relevant staff 
in the use of the equipment to be connected to the telecommunications 
network and training programs for which funds are committed for the 
current, next, or future academic years;
    (v) Existing or budgeted maintenance contracts to maintain 
computers; and
    (vi) The capacity of the school's or library's electrical system in 
terms of how many computers can be operated simultaneously without 
creating a fire hazard.
    (2) FCC Form 470 shall be signed by the person authorized to order 
telecommunications and other supported services for the eligible school, 
library, or consortium and shall include that person's certification 
under oath that:
    (i) The school or library is an eligible entity under 
Secs. 254(h)(4) and 254(h)(5) of the Act and the rules adopted under 
this subpart;
    (ii) The services requested will be used solely for educational 
purposes;
    (iii) The services will not be sold, resold, or transferred in 
consideration for money or any other thing of value;
    (iv) If the services are being purchased as part of an aggregated 
purchase with other entities, the request

[[Page 93]]

identifies all co-purchasers and the services or portion of the services 
being purchased by the school or library;
    (v) All of the necessary funding in the current funding year has 
been budgeted and approved to pay for the ``non-discount'' portion of 
requested connections and services as well as any necessary hardware or 
software, and to undertake the necessary staff training required to use 
the services effectively;
    (vi) The school, library, or consortium including those entities has 
complied with all applicable state and local procurement processes; and
    (vii) The school, library, or consortium including those entities 
has a technology plan that has been certified by its state, the Schools 
and Libraries Corporation, or an independent entity approved by the 
Commission.
    (3) The Schools and Libraries Corporation shall post each FCC Form 
470 that it receives from an eligible school, library, or consortium 
that includes an eligible school or library on its website designated 
for this purpose.
    (4) After posting on the schools and libraries website an eligible 
school's, library's, or consortium's FCC Form 470, the Schools and 
Libraries Corporation shall send confirmation of the posting to the 
entity requesting service.
    (c) Filing of FCC Form 471. An eligible school, library, or 
consortium that includes an eligible school or library seeking to 
receive discounts for eligible services under this subpart, shall, upon 
signing a contract for eligible services, submit a completed FCC Form 
471 to the Schools and Libraries Corporation. A commitment of support is 
contingent upon the filing of FCC Form 471.
    (d) Rate disputes. Schools, libraries, and consortia including those 
entities, and service providers may have recourse to the Commission, 
regarding interstate rates, and to state commissions, regarding 
intrastate rates, if they reasonably believe that the lowest 
corresponding price is unfairly high or low.
    (1) Schools, libraries, and consortia including those entities may 
request lower rates if the rate offered by the carrier does not 
represent the lowest corresponding price.
    (2) Service providers may request higher rates if they can show that 
the lowest corresponding price is not compensatory, because the relevant 
school, library, or consortium including those entities is not similarly 
situated to and subscribing to a similar set of services to the customer 
paying the lowest corresponding price.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997; 63 
FR 2129, Jan. 13, 1998]



Sec. 54.505  Discounts.

    (a) Discount mechanism. Discounts for eligible schools and libraries 
shall be set as a percentage discount from the pre-discount price.
    (b) Discount percentages. The discounts available to eligible 
schools and libraries shall range from 20 percent to 90 percent of the 
pre-discount price for all eligible services provided by eligible 
providers, as defined in this subpart. The discounts available to a 
particular school, library, or consortium of only such entities shall be 
determined by indicators of poverty and high cost.
    (1) For schools and school districts, the level of poverty shall be 
measured by the percentage of their student enrollment that is eligible 
for a free or reduced price lunch under the national school lunch 
program or a federally-approved alternative mechanism. School districts 
applying for eligible services on behalf of their individual schools may 
calculate the district-wide percentage of eligible students using a 
weighted average. For example, a school district would divide the total 
number of students in the district eligible for the national school 
lunch program by the total number of students in the district to compute 
the district-wide percentage of eligible students. Alternatively, the 
district could apply on behalf of individual schools and use the 
respective percentage discounts for which the individual schools are 
eligible.
    (2) For libraries and library consortia, the level of poverty shall 
be based on the percentage of the student enrollment that is eligible 
for a free or reduced price lunch under the national school lunch 
program or a federally-approved alternative mechanism in the public 
school district in which they are

[[Page 94]]

located. If the library is not in a school district then its level of 
poverty shall be based on an average of the percentage of students 
eligible for the national school lunch program in each of the school 
districts that children living in the library's location attend. Library 
systems applying for discounted services on behalf of their individual 
branches shall calculate the system-wide percentage of eligible families 
using an unweighted average based on the percentage of the student 
enrollment that is eligible for a free or reduced price lunch under the 
national school lunch program in the public school district in which 
they are located for each of their branches or facilities.
    (3) The Schools and Libraries Corporation shall classify schools and 
libraries as ``urban'' or ``rural'' based on location in an urban or 
rural area, according to the following desigantions.
    (i) Schools and libraries located in metropolitan counties, as 
measured by the Office of Management and Budget's Metropolitan 
Statistical Area method, shall be designated as urban, except for those 
schools and libraries located within metropolitan counties identified by 
census block or tract in the Goldsmith Modification.
    (ii) Schools and libraries located in non-metropolitan counties, as 
measured by the Office of Management and Budget's Metropolitan 
Statistical Area method, shall be designated as rural. Schools and 
libraries located in rural areas within metropolitan counties identified 
by census block or tract in the Goldsmith Modification shall also be 
designated as rural.
    (4) School districts, library systems, or other billed entities 
shall calculate discounts on supported services described in Sec. 54.502 
or other supported special services described in Sec. 54.503 that are 
shared by two or more of their schools, libraries, or consortia members 
by calculating an average based on the applicable discounts of all 
member schools and libraries. School districts, library systems, or 
other billed entities shall ensure that, for each year in which an 
eligible school or library is included for purposes of calculating the 
aggregate discount rate, that eligible school or library shall receive a 
proportionate share of the shared services for which support is sought. 
For schools, the average discount shall be a weighted average of the 
applicable discount of all schools sharing a portion of the shared 
services, with the weighting based on the number of students in each 
school. For libraries, the average discount shall be a simple average of 
the applicable discounts to which the libraries sharing a portion of the 
shared services are entitled.
    (c) Matrix. The Schools and Libraries Corporation shall use the 
following matrix to set a discount rate to be applied to eligible 
interstate services purchased by eligible schools, school districts, 
libraries, or library consortia based on the institution's level of 
poverty and location in an ``urban'' or ``rural'' area.

----------------------------------------------------------------------------------------------------------------
                   Schools and Libraries discount matrix                               Discount level
----------------------------------------------------------------------------------------------------------------
                            How disadvantaged?
---------------------------------------------------------------------------   Urban discount     Rural discount
         % of students eligible for national school lunch program
----------------------------------------------------------------------------------------------------------------
1.........................................................................                 20                 25
1-19......................................................................                 40                 50
20-34.....................................................................                 50                 60
35-49.....................................................................                 60                 70
50-74.....................................................................                 80                 80
75-100....................................................................                 90                 90
----------------------------------------------------------------------------------------------------------------

    (d) [Reserved]
    (e) Interstate and intrastate services. Federal universal service 
support for schools and libraries shall be provided for both interstate 
and intrastate services.
    (1) Federal universal service support under this subpart for 
eligible schools and libraries in a state is contingent upon the 
establishment of intrastate discounts no less than the discounts 
applicable for interstate services.

[[Page 95]]

    (2) A state may, however, secure a temporary waiver of this latter 
requirement based on unusually compelling conditions.
    (f) State support. Federal universal service discounts shall be 
based on the price of a service prior to the application of any state 
provided support for schools or libraries.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997; 63 
FR 2130, Jan. 13, 1998]



Sec. 54.506  Internal connections.

    A service is eligible for support as a component of an institution's 
internal connections if such service is necessary to transport 
information within one or more instructional buildings of a single 
school campus or within one or more non-administrative buildings that 
comprise a single library branch. Discounts are not available for 
internal connections in non-instructional buildings of a school or 
school district, or in administrative buildings of a library, to the 
extent that a library system has separate administrative buildings, 
unless those internal connections are essential for the effective 
transport of information to an instructional building of a school or to 
a non-administrative building of a library. Internal connections do not 
include connections that extend beyond a single school campus or single 
library branch. There is a rebuttable presumption that a connection does 
not constitute an internal connection if it crosses a public right-of-
way.

[63 FR 2130, Jan. 13, 1998]



Sec. 54.507  Cap.

    (a) Amount of the annual cap. The annual cap on federal universal 
service support for schools and libraries shall be $2.25 billion per 
funding year, and all funding authority for a given funding year that is 
unused in that funding year shall be carried forward into subsequent 
funding years for use in accordance with demand, with the following 
exceptions:
    (1) No more than $625 million shall be collected or spent for the 
funding period from January 1, 1998 through June 30, 1998. No more than 
$325 million shall be collected for the funding period from July 1, 1998 
through September 30, 1998. No more than $325 million shall be collected 
for the funding period from October 1, 1998 through December 31, 1998. 
No more than $325 million shall be collected for the funding period from 
January 1, 1999 through March 31, 1999. No more than $325 million shall 
be collected for the funding period from April 1, 1999 through June 30, 
1999. No more than $1.925 billion shall be collected or disbursed during 
the eighteen month period from January 1, 1998 through June 30, 1999.
    (2) The carryover of unused funding authority will not apply for the 
funding period January 1, 1998 through June 30, 1999. To the extent that 
the amounts collected in the funding period January 1, 1998 through June 
30, 1999 are less than $2.25 billion, the difference will not be carried 
over to subsequent funding years. Carryover of funds will occur only to 
the extent that funds are collected but not disbursed in the funding 
period January 1, 1998 through June 30, 1999.
    (b) Funding year. A funding year for purposes of the schools and 
libraries cap shall be the period July 1 through June 30. For the 
initiation of the mechanism only, the eighteen month period from January 
1, 1998 to June 30, 1999 shall be considered a funding year. Schools and 
libraries filing applications within the initial 75-day filing window 
shall receive funding for requested services through June 30, 1999.
    (c) Requests. Funds shall be available to fund discounts for 
eligible schools and libraries and consortia of such eligible entities 
on a first-come-first-served basis, with requests accepted beginning on 
the first of July prior to each funding year. The Schools and Libraries 
Corporation shall maintain a running tally of the funds already 
committed for the existing funding year on the school and library 
website. The Schools and Libraries Corporation shall implement an 
initial filing period that treats all schools and libraries filing 
within that period as if they were simultaneously received. The initial 
filing period shall begin on the date that the Schools and Libraries 
Corporation begins to receive applications for support, and shall 
conclude on a date to be determined by the Schools

[[Page 96]]

and Libraries Corporation. The Schools and Libraries Corporation may 
implement such additional filing periods as it deems necessary.
    (d) Annual filing requirement. Schools and libraries, and consortia 
of such eligible entities shall file new funding requests for each 
funding year no sooner than the July 1 prior to the start of that 
funding year.
    (e) Long term contracts. If schools and libraries enter into long 
term contracts for eligible services, the Schools and Libraries 
Corporation shall only commit funds to cover the pro rata portion of 
such a long term contract scheduled to be delivered during the funding 
year for which universal service support is sought.
    (f) Date services must be supplied. The Schools and Libraries 
Corporation shall not approve funding for services received by a school 
or library before January 1, 1998.
    (g) Rules of priority. Schools and Libraries Corporation shall act 
in accordance with paragraph (g)(1) of this section with respect to 
applicants that file a Form 471, as described in Sec. 54.504(c) of this 
part, when a filing period described in paragraph (c) of this section is 
in effect. Schools and Libraries Corporation shall act in accordance 
with paragraph (g)(2) of this section with respect to applicants that 
file a Form 471, as described in Sec. 54.504(c) of this part, at all 
times other than within a filing period described in paragraph (c) of 
this section.
    (1) When the filing period described in paragraph (c) of this 
section closes, Schools and Libraries Corporation shall calculate the 
total demand for support submitted by applicants during the filing 
period. If total demand exceeds the total support available for that 
funding year, Schools and Libraries Corporation shall take the following 
steps:
    (i) Schools and Libraries Corporation shall first calculate the 
demand for telecommunications services and Internet access for all 
discount categories, as determined by the schools and libraries discount 
matrix in Sec. 54.505(c) of this part. These services shall receive 
first priority for the available funding.
    (ii) Schools and Libraries Corporation shall then calculate the 
amount of available funding remaining after providing support for all 
telecommunications services and Internet access for all discount 
categories. Schools and Libraries Corporation shall allocate the 
remaining funds to the requests for support for internal connections, 
beginning with the most economically disadvantaged schools and 
libraries, as determined by the schools and libraries discount matrix in 
Sec. 54.505(c) of this part. Schools and libraries eligible for a 90 
percent discount shall receive first priority for the remaining funds, 
and those funds will be applied to their requests for internal 
connections.
    (iii) To the extent that funds remain after the allocation described 
in Sec. 54.507(g)(1) (i) and (ii), Schools and Libraries Corporation 
shall next allocate funds toward the requests for internal connections 
submitted by schools and libraries eligible for an 80 percent discount, 
then for a 70 percent discount, and shall continue committing funds for 
internal connections in the same manner to the applicants at each 
descending discount level until there are no funds remaining.
    (iv) If the remaining funds are not sufficient to support all of the 
funding requests within a particular discount level, Schools and 
Libraries Corporation shall divide the total amount of remaining support 
available by the amount of support requested within the particular 
discount level to produce a pro-rata factor. Schools and Libraries 
Corporation shall reduce the support level for each applicant within the 
particular discount level, by multiplying each applicant's requested 
amount of support by the pro-rata factor.
    (v) Schools and Libraries Corporation shall commit funds to all 
applicants consistent with the calculations described herein.
    (2) Rules of priority. When expenditures in any funding year reach 
the level where only $250 million remains before the cap will be 
reached, funds shall be distributed in accordance to the following rules 
of priority:
    (i) The Schools and Libraries Corporation shall post a message on 
the school and library website, notify the Commission, and take 
reasonable steps to notify the educational and library

[[Page 97]]

communities that commitments for the remaining $250 million of support 
will only be made available to the most economically disadvantaged 
schools and libraries (those in the two most disadvantaged categories) 
for the next 30 days or the remainder of the funding year, whichever is 
shorter.
    (ii) The most economically disadvantaged schools and libraries 
(those in the two most disadvantaged categories) that have not received 
discounts from the universal service support mechanism in the previous 
or current funding years shall have exclusive rights to secure 
commitments for universal service support under this subpart for a 30-
day period or the remainder of the funding year, whichever is shorter. 
If such schools and libraries have received universal service support 
only for basic telephone service in the previous or current funding 
years, they shall remain eligible for the highest priority once spending 
commitments leave only $250 million remaining before the funding cap is 
reached.
    (iii) Other economically disadvantaged schools and libraries (those 
in the two most disadvantaged categories) that have received discounts 
from the universal service support mechanism in the previous or current 
funding years shall have the next highest priority, if additional funds 
are available at the end of the 30-day period or the funding year, 
whichever is shorter.
    (iv) The Administrator shall notify the Schools and Libraries 
Corporation of any funds still remaining after all requests submitted by 
schools and libraries described in paragraphs (g)(2) and (g)(3) of this 
section during the 30-day period have been met. The Schools and 
Libraries Corporation shall direct the Administrator to allocate the 
remaining available funds to all other eligible schools and libraries in 
the order in which their requests have been received by the Schools and 
Libraries Corporation, until the $250 million is exhausted or the 
funding year ends.

[62 FR 32948, June 17, 1997, as amended at 62 FR 40748, July 30, 1997; 
62 FR 41304, Aug. 1, 1997; 62 FR 56120, Oct. 29, 1997; 63 FR 2130, Jan. 
13, 1998; 63 FR 3832, Jan. 27, 1998; 63 FR 45958, Aug. 28, 1998]



Sec. 54.509  Adjustments to the discount matrix.

    (a) Estimating future spending requests. When submitting their 
requests for specific amounts of funding for a funding year, schools, 
libraries, library consortia, and consortia including such entities 
shall also estimate their funding requests for the following funding 
year to enable the Administrator, to estimate funding demand for the 
following year.
    (b) Reduction in percentage discounts. If the estimates schools and 
libraries make of their future funding needs lead the Schools and 
Libraries Corporation to predict that total funding requests for a 
funding year will exceed the available funding, the Schools and 
Libraries Corporation shall calculate the percentage reduction to all 
schools and libraries, except those in the two most disadvantaged 
categories, necessary to permit all requests in the next funding year to 
be fully funded.
    (c) Remaining funds. If funds remain under the cap at the end of the 
funding year in which the discounts have been reduced below those set in 
the matrices above, the Administrator shall inform the Schools and 
Libraries Corporation of such remaining funds. The Schools and Libraries 
Corporation then shall consult with the Commission to establish the best 
way to distribute those funds.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997]



Sec. 54.511  Ordering services.

    (a) Selecting a provider of eligible services. In selecting a 
provider of eligible services, schools, libraries, library consortia, 
and consortia including any of those entities shall carefully consider 
all bids submitted and may consider relevant factors other than the pre-
discount prices submitted by providers.
    (b) Lowest corresponding price. Providers of eligible services shall 
not charge schools, school districts, libraries, library consortia, or 
consortia including any of these entities a price above the lowest 
corresponding price for supported services, unless the Commission, with 
respect to interstate services or the state commission with respect to 
intrastate services, finds that the

[[Page 98]]

lowest corresponding price is not compensatory. Promotional rates 
offered by a service provider for a period of more than 90 days must be 
included among the comparable rates upon which the lowest corresponding 
price is determined.
    (c) Existing contracts. (1) A signed contract for services eligible 
for discounts pursuant to this subpart between an eligible school or 
library as defined under Sec. 54.501 or consortium that includes an 
eligible school or library and a service provider shall be exempt from 
the requirements set forth in Sec. 54.504(a), (b)(3), and (b)(4) as 
follows:
    (i) A contract signed on or before July 10, 1997 is exempt from the 
competitive bid requirements for the life of the contract; or
    (ii) A contract signed after July 10, 1997, but before the date on 
which the universal service competitive bid system described in 
Sec. 54.504 is operational, is exempt from the competitive bid 
requirements only with respect to services that are provided under such 
contract between January 1, 1998 and December 31, 1998.
    (2) For a school, library, or consortium that includes an eligible 
school or library that takes service under or pursuant to a master 
contract, the date of execution of that master contract represents the 
applicable date for purposes of determining whether and to what extent 
the school, library, or consortium is exempt from the competitive bid 
requirements.
    (3) The competitive bid system will be deemed to be operational when 
the Schools and Libraries Corporation is ready to accept and post FCC 
Form 470 from schools and libraries on a website and that website is 
available for use by service providers.
    (d) The exemption from the competitive bid requirements set forth in 
paragraph (c) of this section shall not apply to voluntary extensions of 
existing contracts, with the exception that an eligible school or 
library as defined under Sec. 54.501 or consortium that includes an 
eligible school or library, that filed an application within the 75-day 
initial filing window (January 30, 1998-April 15, 1998) may voluntarily 
extend, to a date no later than June 30, 1999, an existing contract that 
otherwise would terminate between December 31, 1998 and June 30, 1999.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2130, Jan. 13, 1998; 63 
FR 33586, June 19, 1998; 63 FR 43097, Aug. 12, 1998]



Sec. 54.513  Resale.

    (a) Prohibition on resale. Eligible services purchased at a discount 
under this subpart shall not be sold, resold, or transferred in 
consideration of money or any other thing of value.
    (b) Permissible fees. This prohibition on resale shall not bar 
schools, school districts, libraries, and library consortia from 
charging either computer lab fees or fees for classes in how to navigate 
over the Internet. There is no prohibition on the resale of services 
that are not purchased pursuant to the discounts provided in this 
subpart.



Sec. 54.515  Distributing support.

    (a) A telecommunications carrier providing services eligible for 
support under this subpart to eligible schools and libraries shall treat 
the amount eligible for support under this subpart as an offset against 
the carrier's universal service support obligation for the year in which 
the costs for providing eligible services were incurred.
    (b) If the total amount of support owed to a carrier, as set forth 
in paragraph (a) of this section, exceeds its universal service 
obligation, calculated on an annual basis, the carrier may receive a 
direct reimbursement in the amount of the difference.
    (c) Any reimbursement due a carrier shall be made after the offset 
is credited against that carrier's universal service obligation.
    (d) Any reimbursement due a carrier shall be submitted to that 
carrier no later than the end of the first quarter of the calendar year 
following the year in which the costs were incurred and the offset 
against the carrier's universal service obligation was applied.



Sec. 54.516  Auditing.

    (a) Recordkeeping requirements. Schools and libraries shall be 
required to maintain for their purchases of telecommunications and other 
supported services at discounted rates the kind of procurement records 
that they maintain for other purchases.

[[Page 99]]

    (b) Production of records. Schools and libraries shall produce such 
records at the request of any auditor appointed by a state education 
department, the Schools and Libraries Corporation, or any state or 
federal agency with jurisdiction.
    (c) Random audits. Schools and libraries shall be subject to random 
compliance audits to evaluate what services they are purchasing and how 
such services are being used.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997]



Sec. 54.517  Services provided by non-telecommunications carriers.

    (a) Non-telecommunications carriers shall be eligible for universal 
service support under this subpart for providing the supported services 
described in paragraph (b) of this section for eligible schools, 
libraries, and consortia including those entities.
    (b) Supported services. Non-telecommunications carriers shall be 
eligible for universal service support under this subpart for providing 
Internet access and installation and maintenance of internal 
connections.
    (c) Requirements. Such services provided by non-telecommunications 
carriers shall be subject to all the provisions of this subpart, except 
Secs. 54.501(a), 54.502, 54.503, 54.515.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2131, Jan. 13, 1998]



Sec. 54.518  Support for wide area networks.

    To the extent that states, schools, or libraries build or purchase a 
wide area network to provide telecommunications services, the cost of 
such wide area networks shall not be eligible for universal service 
discounts provided under this subpart.

[63 FR 2131, Jan. 13, 1998]



Sec. 54.519  State telecommunications networks.

    (a) Telecommunications services. State telecommunications networks 
may secure discounts under the universal service support mechanisms on 
supported telecommunications services (as described in Sec. 54.502) on 
behalf of eligible schools and libraries (as described in Sec. 54.501) 
or consortia that include an eligible school or library. Such state 
telecommunications networks shall pass on such discounts to eligible 
schools and libraries and shall:
    (1) Maintain records listing each eligible school and library and 
showing the basis for each eligibility determination;
    (2) Maintain records demonstrating the discount amount to which each 
eligible school and library is entitled and the basis for such 
determination;
    (3) Take reasonable steps to ensure that each eligible school or 
library receives a proportionate share of the shared services;
    (4) Request that service providers apply the appropriate discount 
amounts on the portion of the supported services used by each school or 
library;
    (5) Direct eligible schools and libraries to pay the discounted 
price; and
    (6) Comply with the competitive bid requirements set forth in 
Sec. 54.504(a).
    (b) Internet access and installation and maintenance of internal 
connections. State telecommunications networks either may secure 
discounts on Internet access and installation and maintenance of 
internal connections in the manner described in paragraph (a) of this 
section with regard to telecommunications, or shall be eligible, 
consistent with Sec. 54.517(b), to receive universal service support for 
providing such services to eligible schools, libraries, and consortia 
including those entities.

[63 FR 2131, Jan. 13, 1998; 63 FR 33586, June 19, 1998]



     Subpart G--Universal Service Support for Health Care Providers



Sec. 54.601  Eligibility.

    (a) Health care providers. (1) Only an entity meeting the definition 
of ``health care provider'' as defined in this section shall be eligible 
to receive supported services under this subpart.
    (2) For purposes of this subpart, a ``health care provider'' is any:
    (i) Post-secondary educational institution offering health care 
instruction, including a teaching hospital or medical school;

[[Page 100]]

    (ii) Community health center or health center providing health care 
to migrants;
    (iii) Local health department or agency;
    (iv) Community mental health center;
    (v) Not-for-profit hospital;
    (vi) Rural health clinic; or
    (vii) Consortium of health care providers consisting of one or more 
entities described in paragraphs (a)(2)(i) through (a)(2)(vi) of this 
section.
    (3) Only public or non-profit health care providers shall be 
eligible to receive supported services under this subpart.
    (4) Except with regard to those services provided under Sec. 54.621, 
only a rural health care provider shall be eligible to receive supported 
services under this subpart. A ``rural health care provider'' is a 
health care provider located in a rural area, as defined in this part.
    (5) Each separate site or location of a health care provider shall 
be considered an individual health care provider for purposes of 
calculating and limiting support under this subpart.
    (b) Consortia. (1) An eligible health care provider may join a 
consortium with other eligible health care providers; with schools, 
libraries, and library consortia eligible under Subpart F; and with 
public sector (governmental) entities to order telecommunications 
services. With one exception, eligible health care providers 
participating in consortia with ineligible private sector members shall 
not be eligible for supported services under this subpart. A consortium 
may include ineligible private sector entities if such consortium is 
only receiving services at tariffed rates or at market rates from those 
providers who do not file tariffs.
    (2) For consortia, universal service support under this subpart 
shall apply only to the portion of eligible services used by an eligible 
health care provider.
    (3) Telecommunications carriers shall carefully maintain complete 
records of how they allocate the costs of shared facilities among 
consortium participants in order to charge eligible health care 
providers the correct amounts. Such records shall be available for 
public inspection.
    (4) Telecommunications carriers shall calculate and justify with 
supporting documentation the amount of support for which each member of 
a consortium is eligible.
    (c) Services. (1) Any telecommunications service of a bandwidth up 
to and including 1.544 Mbps that is the subject of a properly completed 
bona fide request by a rural health care provider shall be eligible for 
universal service support, subject to the limitations described in this 
subpart. The length of a supported telecommunications service may not 
exceed the distance between the health care provider and the point 
farthest from that provider on the jurisdictional boundary of the 
nearest large city as defined in Sec. 54.605(c).
    (2) Limited toll-free access to an Internet service provider shall 
be eligible for universal service support under Sec. 54.621.



Sec. 54.603  Competitive bid requirements.

    (a) Competitive bidding requirement. To select the 
telecommunications carriers that will provide services eligible for 
universal service support to it under this subpart, each eligible health 
care provider shall participate in a competitive bidding process 
pursuant to the requirements established in this subpart and any 
additional and applicable state, local, or other procurement 
requirements.
    (b) Posting of FCC Form 465. (1) An eligible health care provider 
seeking to receive telecommunications services eligible for universal 
service support under this subpart shall submit a completed FCC Form 465 
to the Rural Health Care Corporation. FCC Form 465 shall be signed by 
the person authorized to order telecommunications services for the 
health care provider and shall include, at a minimum, that person's 
certification under oath that:
    (i) The requester is a public or non-profit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec. 54.601(a);
    (ii) The requester is physically located in a rural area, unless the 
health care provider is requesting services provided under Sec. 54.621;

[[Page 101]]

    (iii) If the health care provider is requesting services provided 
under Sec. 54.621, that the requester cannot obtain toll-free access to 
an Internet service provider;
    (iv) The requested service or services will be used solely for 
purposes reasonably related to the provision of health care services or 
instruction that the health care provider is legally authorized to 
provide under the law in the state in which such health care services or 
instruction are provided;
    (v) The requested service or services will not be sold, resold or 
transferred in consideration of money or any other thing of value; and
    (vi) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full details 
of any such arrangement, including the identities of all co-purchasers 
and the portion of the service or services being purchased by the health 
care provider.
    (2) The Rural Health Corporation shall post each FCC Form 465 that 
it receives from an eligible health care provider on its website 
designated for this purpose.
    (3) After posting an eligible health care providers FCC Form 465 on 
the Rural Health Care Corporation website, the Rural Health Care 
Corporation shall send confirmation of the posting to the entity 
requesting services. The health care provider shall wait at least 28 
days from the date on which its FCC Form 465 is posted on the website 
before making commitments with the selected telecommunications 
carrier(s).
    (4) After selecting a telecommunications carrier, the health care 
provider shall certify to the Rural Health Care Corporation that the 
provider is selecting the most cost-effective method of providing the 
requested service or services, where the most cost-effective method of 
providing a service is defined as the method that costs the least after 
consideration of the features, quality of transmission, reliability, and 
other factors that the health care provider deems relevant to choosing a 
method of providing the required health care services. The health care 
provider shall submit to the Rural Health Care Corporation paper copies 
of the responses or bids received in response to the requested services.
    (5) The confirmation from the Rural Health Care Corporation shall 
include the date after which the requester may sign a contract with its 
chosen telecommunications carrier(s).

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997; 63 
FR 2131, Jan. 13, 1998]



Sec. 54.604  Existing contracts.

    (a) Existing contracts. A signed contract for services eligible for 
support pursuant to this subpart between an eligible health care 
provider as defined under Sec. 54.601 and a telecommunications carrier 
shall be exempt from the competitive bid requirements set forth in 
Sec. 54.603(a) as follows:
    (1) A contract signed on or before July 10, 1997 is exempt from the 
competitive bid requirement for the life of the contract; or
    (2) A contract signed after July 10, 1997 but before the date on 
which the universal service competitive bid system described in 
Sec. 54.603 is operational is exempt from the competitive bid 
requirements only with respect to services that will be provided under 
such contract between January 1, 1998 and December 31, 1998.
    (b) For rural health care providers that take service under or 
pursuant to a master contract, as defined in Sec. 54.500(f), the date of 
execution of that master contract represents the applicable date for 
purposes of determining whether and to what extent the rural health care 
provider is exempt from the competitive bid requirements.
    (c) The competitive bid system will be deemed to be operational when 
the Rural Health Care Corporation is ready to accept and post FCC Form 
465 from rural health care providers on a website and that website is 
available for use by telecommunications carriers.
    (d) The exemption from competitive bid requirements set forth in 
paragraph (a) shall not apply to voluntary extensions of existing 
contracts.

[63 FR 2131, Jan. 13, 1998; 63 FR 33586, June 19, 1998]

[[Page 102]]



Sec. 54.605  Determining the urban rate.

    (a) If a rural health care provider requests an eligible service to 
be provided over a distance that is less than or equal to the ``standard 
urban distance,'' as defined in paragraph (d) of this section, for the 
state in which it is located, the urban rate for that service shall be a 
rate no higher than the highest tariffed or publicly-available rate 
charged to a commercial customer for a similar service provided over the 
same distance in the nearest large city in the state, calculated as if 
it were provided between two points within the city.
    (b) If a rural health care provider requests an eligible service to 
be provided over a distance that is greater than the ``standard urban 
distance'' for the state in which it is located, the urban rate shall be 
no higher than the highest tariffed or publicly-available rate charged 
to a commercial customer for a similar service provided over the 
standard urban distance in the nearest large city in the state, 
calculated as if the service were provided between two points within the 
city.
    (c) The ``nearest large city'' is the city located in the eligible 
health care provider's state, with a population of at least 50,000, that 
is nearest to the health care provider's location, measured point to 
point, from the health care provider's location to the point on that 
city's jurisdictional boundary closest to the health care provider's 
location.
    (d) The ``standard urban distance'' for a state is the average of 
the longest diameters of all cities with a population of 50,000 or more 
within the state.
    (e) The Rural Health Care Corporation shall calculate the ``standard 
urban distance'' and shall post the ``standard urban distance'' and the 
maximum supported distance for each state on its website.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2131, Jan. 13, 1998]



Sec. 54.607  Determining the rural rate.

    (a) The rural rate shall be the average of the rates actually being 
charged to commercial customers, other than health care providers, for 
identical or similar services provided by the telecommunications carrier 
providing the service in the rural area in which the health care 
provider is located. The rates included in this average shall be for 
services provided over the same distance as the eligible service. The 
rates averaged to calculate the rural rate must not include any rates 
reduced by universal service support mechanisms. The ``rural rate'' 
shall be used as described in this subpart to determine the credit or 
reimbursement due to a telecommunications carrier that provides eligible 
telecommunications services to eligible health care providers.
    (b) If the telecommunications carrier serving the health care 
provider is not providing any identical or similar services in the rural 
area, then the rural rate shall be the average of the tariffed and other 
publicly available rates, not including any rates reduced by universal 
service programs, charged for the same or similar services in that rural 
area over the same distance as the eligible service by other carriers. 
If there are no tariffed or publicly available rates for such services 
in that rural area, or if the carrier reasonably determines that this 
method for calculating the rural rate is unfair, then the carrier shall 
submit for the state commission's approval, for intrastate rates, or the 
Commission's approval, for interstate rates, a cost-based rate for the 
provision of the service in the most economically efficient, reasonably 
available manner.
    (1) The carrier must provide, to the state commission, or intrastate 
rates, or to the Commission, for interstate rates, a justification of 
the proposed rural rate, including an itemization of the costs of 
providing the requested service.
    (2) The carrier must provide such information periodically 
thereafter as required, by the state commission for intrastate rates or 
the Commission for interstate rates. In doing so, the carrier must take 
into account anticipated and actual demand for telecommunications 
services by all customers who will use the facilities over which 
services are being provided to eligible health care providers.

[[Page 103]]



Sec. 54.609   Calculating support.

    (a) Except with regard to services provided under Sec. 54.621 and 
subject to the limitations set forth in this subpart, the amount of 
universal service support for an eligible service provided to a rural 
health care provider shall be the difference, if any, between the urban 
rate and the rural rate charged for the service, as defined herein. In 
addition, all reasonable charges that are incurred by taking such 
services, such as state and federal taxes shall be eligible for 
universal service support. Charges for termination liability, penalty 
surcharges, and other charges not included in the cost of taking such 
service shall not be covered by the universal service support 
mechanisms.
    (b) Except with regard to services provided under Sec. 54.621, a 
telecommunications carrier that provides telecommunications service to a 
rural health care provider participating in an eligible health care 
consortium must establish the applicable rural rate for the health care 
provider's portion of the shared telecommunications services, as well as 
the applicable urban rate. Absent documentation justifying the amount of 
universal service support requested for health care providers 
participating in a consortium, the Rural Health Care Corporation shall 
not allow telecommunications carriers to offset, or receive 
reimbursement for, the amount eligible for universal service support.
    (c) The universal service support mechanisms shall cover reduced 
rates on intrastate telecommunications services, as set forth in 
Sec. 54.101(a), provided to rural health care providers as well as 
interstate telecommunications services.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41305, Aug. 1, 1997; 63 
FR 2131, Jan. 13, 1998]



Sec. 54.611   Distributing support.

    (a) A telecommunications carrier providing services eligible for 
support under this subpart to eligible health care providers shall treat 
the amount eligible for support under this subpart as an offset against 
the carrier's universal service support obligation for the year in which 
the costs for providing eligible services were incurred.
    (b) If the total amount of support owed to a carrier, as set forth 
in paragraph (a) of this section, exceeds its universal service 
obligation, calculated on an annual basis, the carrier may receive a 
direct reimbursement in the amount of the difference.
    (c) Any reimbursement due a carrier shall be made after the offset 
is credited against that carrier's universal service obligation.
    (d) Any reimbursement due a carrier shall be submitted to that 
carrier no later than the end of the first quarter of the calendar year 
following the year in which the costs were incurred and the offset 
against the carrier's universal service obligation was applied.



Sec. 54.613   Limitations on supported services for rural health care providers.

    (a) Upon submitting a bona fide request to a telecommunications 
carrier, each eligible rural health care provider is entitled to receive 
the most cost-effective, commercially-available telecommunications 
service using a bandwidth capacity of 1.544 Mbps, at a rate no higher 
than the highest urban rate, as defined in this subpart, at a distance 
not to exceed the distance between the eligible health care provider's 
site and the farthest point from that site that is on the jurisdictional 
boundary of the nearest large city, as defined in Sec. 54.605(c).
    (b) The rural health care provider may substitute any other service 
or combination of services with transmission capacities of less than 
1.544 Mbps transmitted over the same or a shorter distances, so long as 
the total annual support amount for all such services combined, 
calculated as provided in this subpart, does not exceed what the support 
amount would have been for the service described in paragraph (a) of 
this section. If the rural health care provider is located in an area 
where a service using a bandwidth capacity of 1.544 Mbps is not 
available, then the total annual support amount for that provider shall 
not exceed what the support amount would have been

[[Page 104]]

under paragraph (a) of this section, calculated using the rural rate for 
a service of that capacity in another area of the state.
    (c) This section shall not affect a rural health care provider's 
ability to obtain supported services under Sec. 54.621.



Sec. 54.615   Obtaining services.

    (a) Selecting a provider. In selecting a telecommunications carrier, 
a health care provider shall consider all bids submitted and select the 
most cost-effective alternative.
    (b) Receiving supported rate. Except with regard to services 
provided under Sec. 54.621, upon receiving a bona fide request for an 
eligible service from an eligible health care provider, as set forth in 
paragraph (c) of this section, a telecommunications carrier shall 
provide the service at a rate no higher than the urban rate, as defined 
in Sec. 54.605, subject to the limitations set forth in this Subpart.
    (c) Bona fide request. In order to receive services eligible for 
universal service support under this subpart, an eligible health care 
provider must submit a request for services to the telecommunications 
carrier, Signed by an authorized officer of the health care provider, 
and shall include that person's certification under oath that:
    (1) The requester is a public or non-profit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec. 54.601(a);
    (2) The requester is physically located in a rural area, unless the 
health care provider is requesting services provided under Sec. 54.621;
    (3) If the health care provider is requesting services provided 
under Sec. 54.621, that the requester cannot obtain toll-free access to 
an Internet service provider;
    (4) The requested service or services will be used solely for 
purposes reasonably related to the provision of health care services or 
instruction that the health care provider is legally authorized to 
provide under the law in the state in which such health care services or 
instruction are provided;
    (5) The requested service or services will not be sold, resold or 
transferred in consideration of money or any other thing of value;
    (6) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full details 
of any such arrangement, including the identities of all co-purchasers 
and the portion of the service or services being purchased by the health 
care provider; and
    (7) The requester is selecting the most cost-effective method of 
providing the requested service or services, where the most cost-
effective method of providing a service is defined as the method that 
costs the least after consideration of the features, quality of 
transmission, reliability, and other factors that the health care 
provider deems relevant to choosing a method of providing the required 
health care services.
    (d) Annual renewal. The certification set forth in paragraph (c) of 
this section shall be renewed annually.



Sec. 54.617   Resale.

    (a) Prohibition on resale. Services purchased pursuant to universal 
service support mechanisms under this subpart shall not be sold, resold, 
or transferred in consideration for money or any other thing of value.
    (b) Permissible fees. The prohibition on resale set forth in 
paragraph (a) of this section shall not prohibit a health care provider 
from charging normal fees for health care services, including 
instruction related to such services rendered via telecommunications 
services purchased under this subpart.



Sec. 54.619   Audit program.

    (a) Recordkeeping requirements. Health care providers shall maintain 
for their purchases of services supported under this subpart the same 
kind of procurement records that they maintain for other purchases.
    (b) Production of records. Health care providers shall produce such 
records at the request of any auditor appointed by the Rural Health Care 
Corporation or any other state or federal agency with jurisdiction.

[[Page 105]]

    (c) Random audits. Health care providers shall be subject to random 
compliance audits to ensure that requesters are complying with the 
certification requirements set forth in Sec. 54.615(c) and are otherwise 
eligible to receive universal service support and that rates charged 
comply with the statute and regulations.
    (d) Annual report. The Rural Health Care Corporation shall use the 
information obtained under paragraph (a) of this section to evaluate the 
effects of the regulations adopted in this subpart and shall report its 
findings to the Commission on the first business day in May of each 
year.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2132, Jan. 13, 1998]



Sec. 54.621  Access to advanced telecommunications and information services.

    (a) Each eligible health care provider that cannot obtain toll-free 
access to an Internet service provider shall be entitled to receive the 
lesser of the toll charges incurred for 30 hours of access per month to 
an Internet service provider or $180 per month in toll charge credits 
for toll charges imposed for connecting to an Internet service provider.
    (b) Both telecommunications carriers designated as eligible 
telecommunications carriers pursuant to Sec. 54.201(d) and 
telecommunications carriers not so designated that provide services 
described in paragraph (a) of this section shall be eligible for 
universal service support under this section.



Sec. 54.623  Cap.

    (a) Amount of the annual cap. The annual cap on federal universal 
service support for health care providers shall be $400 million per 
funding year, with the following exceptions. No more than $50 million 
shall be collected for the funding period from January 1, 1998 through 
June 30, 1998. No more than $25 million shall be collected for the 
funding period from July 1, 1998 through September 30, 1998. No more 
than $25 million shall be collected for the funding period from October 
1, 1998 through December 31, 1998. No more than $100 million shall be 
committed or disbursed for the 1998 funding year.
    (b) Funding year. The funding year for purposes of the health care 
providers cap shall be the calendar year.
    (c) Requests. Funds shall be available to eligible health care 
providers on a first-come-first-served basis, with requests accepted 
beginning on the first of July prior to each funding year. The Rural 
Health Care Corporation shall implement an initial filing period that 
treats all health care providers filing within that period as if they 
were simultaneously received. The initial filing period shall begin on 
the date that the Rural Health Care Corporation begins to receive 
applications for support, and shall conclude on a date to be determined 
by the Rural Health Care Corporation. The Rural Health Care Corporation 
may implement such additional filing periods as it deems necessary.
    (d) Annual filing requirement. Health care providers shall file new 
funding requests for each funding year.
    (e) Long term contracts. If health care providers enter into long 
term contracts for eligible services, the rural Health Care Corporation 
shall only commit funds to cover the portion of such a long term 
contract scheduled to be delivered during the funding year for which 
universal service support is sought.
    (f) Pro-rata reductions. Rural Health Care Corporation shall act in 
accordance with this paragraph when a filing period described in 
paragraph (c) of this section is in effect. When a filing period 
described in paragraph (c) of this section closes, Rural Health Care 
Corporation shall calculate the total demand for support submitted by 
all applicants during the filing window. If the total demand exceeds the 
total support available for the funding year, Rural Health Care 
Corporation shall take the following steps:
    (1) Rural Health Care Corporation shall divide the total funds 
available for the funding year by the total amount of support requested 
to produce a pro-rata factor.
    (2) Rural Health Care Corporation shall calculate the amount of 
support requested by each applicant that has filed during the filing 
window.
    (3) Rural Health Care Corporation shall multiply the pro-rata factor 
by

[[Page 106]]

the total dollar amount requested by each applicant. Rural Health Care 
Corporation shall then commit funds to each applicant consistent with 
this calculation.

[62 FR 32948, June 17, 1997, as amended at 62 FR 56120, Oct. 29, 1997; 
63 FR 2132, Jan. 13, 1998; 63 FR 3832, Jan. 27, 1998; 63 FR 43097, Aug. 
12, 1998]



Sec. 54.625  Support for services beyond the maximum supported distance for rural health care providers.

    (a) The maximum support distance is the distance from the health 
care provider to the farthest point on the boundary of the nearest large 
city, as calculated by the Rural Health Care Corporation.
    (b) An eligible rural health care provider may purchase an eligible 
telecommunications service, as defined in Sec. 54.601(c)(1) through 
(c)(2), that is provided over a distance that exceeds the maximum 
supported distance.
    (c) If an eligible rural health care provider purchases an eligible 
telecommunications service, as defined in Sec. 54.601(c)(1) through 
(c)(2), that exceeds the maximum supported distance, the health care 
provider must pay the applicable rural rate for the distance that such 
service is carried beyond the maximum supported distance.

[63 FR 2132, Jan. 13, 1998]



                        Subpart H--Administration



Sec. 54.701  Administrator of universal service support mechanisms.

    (a) A Federal Advisory Committee (Committee) shall recommend a 
neutral, third-party administrator of the universal service support 
programs to the Commission within six months of the Committee's first 
meeting. The Commission shall act upon that recommendation within six 
months. The Administrator must:
    (1) Be neutral and impartial;
    (2) Not advocate specific positions before the Commission in non-
universal service administration proceedings related to common carrier 
issues, except that membership in a trade association that advocates 
positions before the Commission will not render it ineligible to serve 
as the Administrator;
    (3) Not be an affiliate of any provider of telecommunications 
services; and
    (4) Not issue a majority of its debt to, nor derive a majority of 
its revenues from any provider(s) of telecommunications services. This 
prohibition also applies to any affiliates of the Administrator.
    (b) If the Administrator has a Board of Directors that includes 
members with direct financial interests in entities that contribute to 
or receive support from the universal service support programs, no more 
than a third of the Board members may represent any one category (e.g., 
local exchange carriers, interexchange carriers, wireless carriers, 
schools, libraries) of contributing carriers or support recipients, and 
the Board's composition must reflect the broad base of contributors to 
and recipients of universal service.
    (1) An individual does not have a direct financial interest in 
entities that contribute to or receive support from the universal 
service support programs if he or she is not an employee of a 
telecommunications carrier or of a recipient of universal service 
support programs funds, does not own equity interests in bonds or equity 
instruments issued by any telecommunications carrier, and does not own 
mutual funds that specialize in the telecommunications industry. If a 
mutual fund invests more than 50 percent of its money in 
telecommunications stocks and bonds, then it specializes in the 
telecommunications industry.
    (2) An individual's ownership interest in entities that contribute 
to or receive support from the universal service support programs is de 
minimis if in aggregate the individual, spouse, and minor children's 
impermissible interests do not exceed $5,000.
    (c) The Administrator chosen by the Committee shall begin 
administering the support programs within six months of its appointment. 
The Administrator's performance shall be reviewed by the Commission 
after two years. The Administrator shall serve an initial term of five 
years. At any time prior to nine months before the end of the 
Administrator's five-year term, the Commission may re-appoint the 
Administrator for another term of not more than five years. Otherwise,

[[Page 107]]

nine months before the end of the Administrator's term, the Commission 
will create another Federal Advisory Committee to recommend another 
neutral, third-party administrator.
    (d) The Committee's and Administrator's reasonable administrative 
projected annual costs shall be included within the universal service 
support programs' projected expenses.
    (e) The Administrator shall keep the universal service support 
program funds separate from all other funds under the control of the 
Administrator.
    (f) The Administrator shall be subject to a yearly audit by an 
independent accounting firm and may be subject to an additional audit by 
the Commission, if the Commission so requests.
    (1) The Administrator shall report annually to the Commission an 
itemization of monthly administrative costs that shall include all 
expenses, receipts, and payments associated with the administration of 
the universal service support programs and shall provide the Commission 
full access to the data collected pursuant to the administration of the 
universal service support programs.
    (2) Pursuant to Sec. 64.903 of this chapter, the Administrator shall 
file with the Commission a cost allocation manual (CAM), that describes 
the accounts and procedures the Administrator will use to allocate the 
shared costs of administering the universal service support programs and 
its other operations.
    (3) Information based on the Administrator's reports will be made 
public at least once a year as part of a Monitoring Report.
    (g) The Administrator shall report quarterly to the Commission on 
the disbursement of universal service support program funds. The 
Administrator shall keep separate accounts for the amounts of money 
collected and disbursed for eligible schools and libraries, rural health 
care providers, low-income consumers, and high cost and insular areas.
    (h) The Administrator shall be subject to close-out audits at the 
end of their terms.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41305, Aug. 1, 1997]



Sec. 54.703  Contributions.

    (a) Entities that provide interstate telecommunications to the 
public, or to such classes of users as to be effectively available to 
the public, for a fee will be considered telecommunications carriers 
providing interstate telecommunications services and must contribute to 
the universal service support programs. Interstate telecommunications 
include, but are not limited to:
    (1) Cellular telephone and paging services;
    (2) Mobile radio services;
    (3) Operator services;
    (4) Personal communications services (PCS);
    (5) Access to interexchange service;
    (6) Special access service;
    (7) WATS;
    (8) Toll-free service;
    (9) 900 service;
    (10) Message telephone service (MTS);
    (11) Private line service;
    (12) Telex;
    (13) Telegraph;
    (14) Video services;
    (15) Satellite service;
    (16) Resale of interstate services; and
    (17) Payphone services.
    (b) Every telecommunications carrier that provides interstate 
telecommunications services, every provider of interstate 
telecommunications that offers telecommunications for a fee on a non-
common carrier basis, and payphone providers that are aggregators shall 
contribute to the programs for eligible schools, libraries, and health 
care providers on the basis of its interstate, intrastate, and 
international end-user telecommunications revenues. Entities providing 
open video systems (OVS), cable leased access, or direct broadcast 
satellite (DBS) services are not required to contribute on the basis of 
revenues derived from those services. The following entities will not be 
required to contribute to universal service: non-profit schools, non-
profit colleges, non-profit universities, non-profit libraries, and non-
profit health care providers; broadcasters; systems integrators that 
derive less than five percent of their systems integration revenues from 
the resale of telecommunications.

[[Page 108]]

    (c) Every telecommunications carrier that provides interstate 
telecommunications services, every provider of interstate 
telecommunications that offers telecommunications for a fee on a non-
common carrier basis, and payphone providers that are aggregators shall 
contribute to the programs for high cost, rural and insular areas, and 
low-income consumers on the basis of its interstate and international 
end-user telecommunications revenues. Entities providing OVS, cable 
leased access, or DBS services are not required to contribute on the 
basis of revenues derived from those services. The following entities 
will not be required to contribute to universal service: non-profit 
schools, non-profit colleges, non-profit universities, non-profit 
libraries, and non-profit health care providers; broadcasters; systems 
integrators that derive less than five percent of their systems 
integration revenues from the resale of telecommunications.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2132, Jan. 13, 1998; 63 
FR 33586, June 19, 1998]



Sec. 54.705  De minimis exemption.

    If a contributor's contribution to universal service in any given 
year is less than $10,000 that contributor will not be required to 
submit a contribution or Universal Service Worksheet for that year. If a 
contributor improperly claims exemption from the contribution 
requirement, it will subject to the criminal provisions of sections 
220(d) and (e) of the Act regarding willful false submissions and will 
be required to pay the amounts withheld plus interest.

[63 FR 2132, Jan. 13, 1998]



Sec. 54.707  Audit controls.

    The Administrator shall have authority to audit contributors and 
carriers reporting data to the administrator. The Administrator shall 
establish procedures to verify discounts, offsets, and support amounts 
provided by the universal service support programs, and may suspend or 
delay discounts, offsets, and support amounts provided to a carrier if 
the carrier fails to provide adequate verification of discounts, 
offsets, or support amounts provided upon reasonable request, or if 
directed by the Commission to do so. The Administrator shall not provide 
reimbursements, offsets or support amounts pursuant to part 36 and 
Sec. 69.116 through 69.117 of this chapter, and subparts D, E, and G of 
this part to a carrier until the carrier has provided to the 
Administrator a true and correct copy of the decision of a state 
commission designating that carrier as an eligible telecommunications 
carrier in accordance with Sec. 54.201.



Sec. 54.709  Computations of required contributions to universal service support mechanisms.

    (a) Contributions to the universal service support mechanisms shall 
be based on contributors' end-user telecommunications revenues and 
contribution factors determined quarterly by the Commission.
    (1) For funding the schools and libraries and rural health care 
programs, the subject revenues will be contributors' interstate, 
intrastate, and international revenues derived from domestic end users 
for telecommunications or telecommunications services. For funding the 
high cost and low-income programs, the subject revenues will be 
contributors' interstate and international revenues derived from 
domestic end users for telecommunications or telecommunications 
services.
    (2) The quarterly universal service contribution factors shall be 
based on the ratio of total projected quarterly expenses of the 
universal service support programs to total end-user telecommunications 
revenues. The Commission shall determine two contribution factors, one 
of which shall be applied to interstate and international end-user 
telecommunications revenues and the other of which shall be applied to 
interstate, intrastate, and international end-user telecommunications 
revenues. The Commission shall approve the Administrator's, the Schools 
and Libraries Corporation's, and the

[[Page 109]]

Rural Health Care Corporation's quarterly projected costs of universal 
service support programs, taking into account demand for support and 
administrative expenses. The total subject revenues shall be compiled by 
the Administrator based on information contained in the Universal 
Service Worksheets described in Sec. 54.711(a).
    (3) Total projected expenses for universal service support programs 
for each quarter must be approved by the Commission before they are used 
to calculate the quarterly contribution factors and individual 
contribution. For each quarter, the High Cost and Low Income Committee 
or the permanent Administrator once the permanent Administrator is 
chosen and the Schools and Libraries and Rural Health Care Corporations 
must submit their projections of demand for the high cost and low-income 
programs, the school and libraries program, and rural health care 
program, respectively, and the basis for those projections, to the 
Commission and the Common Carrier Bureau at least 60 calendar days prior 
to the start of that quarter. For each quarter, the Administrator and 
the Schools and Libraries and Rural Health Care Corporations must submit 
their projections of administrative expenses for the high cost and low-
income programs, the schools and libraries program and the rural health 
care program, respectively, and the basis for those projections to the 
Commission and the Common Carrier Bureau at least 60 calendar days prior 
to the start of that quarter. Based on data submitted to the 
Administrator on the Universal Service Worksheets, the Administrator 
must submit the total contribution bases to the Common Carrier Bureau at 
least 60 days before the start of each quarter. The projections of 
demand and administrative expenses and the contribution factors shall be 
announced by the Commission in a public notice and shall be made 
available on the Commission's website. The Commission reserves the right 
to set projections of demand and administrative expenses at amounts that 
the Commission determines will serve the public interest at any time 
within the 14-day period following release of the Commission's public 
notice. If the Commission takes no action within 14 days of the date of 
release of the public notice announcing the projections of demand and 
administrative expenses, the projections of demand and administrative 
expenses, and contribution factors shall be deemed approved by the 
Commission. Once the projections and contribution factors are approved, 
the Administrator shall apply the quarterly contribution factors to 
determine individual contributions.
    (4) For each quarter, the Administrator shall bill contributors 
monthly and require payment of contributions in equal monthly 
installments.
    (5) The Administrator shall not require contributors to make 
payments pursuant to the universal service mechanisms set forth in 47 
U.S.C. 254 prior to February 1998.
    (b) If the contributions received by the Administrator in a quarter 
exceed the amount of universal service support program contributions and 
administrative costs for that quarter, the excess payments will be 
carried forward to the following quarter. The contribution factors for 
the following quarter will take into consideration the projected costs 
of the support mechanisms for that quarter and the excess contributions 
carried over from the previous quarter.
    (c) If the contributions received by the Administrator in a quarter 
are inadequate to meet the amount of universal service support program 
payments and administrative costs for that quarter, the Administrator 
shall request authority from the Commission to borrow funds 
commercially, with such debt secured by future contributions. Subsequent 
contribution factors will take into consideration the projected costs of 
the support mechanisms and the additional costs associated with 
borrowing funds.
    (d) If a contributor fails to file a Universal Service Worksheet by 
the date on which it is due, the Administrator shall bill that 
contributor based on whatever relevant data the Administrator has 
available, including, but not limited to, the number of lines 
presubscribed to the contributor and data from previous years, taking 
into

[[Page 110]]

consideration any estimated changes in such data.

[62 FR 41305, Aug. 1, 1997, as amended at 62 FR 65038, Dec. 10, 1997; 63 
FR 2132, Jan. 13, 1998; 63 FR 43098, Aug. 12, 1998]



Sec. 54.711  Contributor reporting requirements.

    (a) Contributions shall be calculated and filed in accordance with 
the Universal Service Worksheet. The Universal Service Worksheet sets 
forth information that the contributor must submit to the Administrator 
on a semi-annual basis. The Commission shall announce by Public Notice 
published in the Federal Register and on its website the manner of 
payment and dates by which payments must be made. An officer of the 
contributor must certify to the truth and accuracy of the Universal 
Service Worksheet, and the Commission or the Administrator may verify 
any information contained in the Universal Service Worksheet at the 
discretion of the Commission. Inaccurate or untruthful information 
contained in the Universal Service Worksheet may lead to prosecution 
under the criminal provisions of Title 18 of the United States Code. The 
Administrator shall advise the Commission of any enforcement issues that 
arise and provide any suggested response.
    (b) The Commission shall have access to all data reported to the 
Administrator, Rural Health Care Corporation, and Schools and Libraries 
Corporation. Contributors may make requests for Commission nondisclosure 
of company-specific information under Sec. 0.459 of this chapter at the 
time that the subject data are submitted to the Administrator. The 
Commission shall make all decisions regarding nondisclosure of company-
specific information. The Administrator, Rural Health Care Corporation, 
and Schools and Libraries Corporation shall keep confidential all data 
obtained from contributors, shall not use such data except for purposes 
of administering the universal service support programs, and shall not 
disclose such data in company-specific form unless directed to do so by 
the Commission.
    (c) The Bureau may waive, reduce, or eliminate contributor reporting 
requirements that prove unnecessary and require additional reporting 
requirements that the Bureau deems necessary to the sound and efficient 
administration of the universal service support mechanisms.

[62 FR 41305, Aug. 1, 1997]



Sec. 54.713  Contributors' failure to report or to contribute.

    A contributor that fails to file a Universal Service Worksheet and 
subsequently is billed by the Administrator shall pay the amount for 
which it is billed. The Administrator may bill a contributor a separate 
assessment for reasonable costs incurred because of that contributor's 
filing of an untruthful or inaccurate Universal Service Worksheet, 
failure to file the Universal Service Worksheet, or late payment of 
contributions. Failure to file the Universal Service Worksheet or to 
submit required quarterly contributions may subject the contributor to 
the enforcement provisions of the Act and any other applicable law. The 
Administrator shall advise the Commission of any enforcement issues that 
arise and provide any suggested response. Once a contributor complies 
with the Universal Service Worksheet filing requirements, the 
Administrator may refund any overpayments made by the contributor, less 
any fees, interest, or costs.

[62 FR 41306, Aug. 1, 1997]



Sec. 54.715  Administrator's functions.

    The Administrator shall have the same functions as the independent 
subsidiary set out in Sec. 69.616 of this chapter.

[62 FR 41306, Aug. 1, 1997]



PART 59--INFRASTRUCTURE SHARING--Table of Contents




Sec.
59.1  General duty.
59.2  Terms and conditions of infrastructure sharing.
59.3  Information concerning deployment of new services and equipment.
59.4  Definition of ``qualifying carrier''.

    Authority: 47 U.S.C. 154(i), 154(j), 201-205, 259, 303(r), 403.

[[Page 111]]


    Source:  62 FR 9713, Mar. 4, 1997, unless otherwise noted.



Sec. 59.1  General duty.

    Incumbent local exchange carriers (as defined in 47 U.S.C. section 
251(h)) shall make available to any qualifying carrier such public 
switched network infrastructure, technology, information, and 
telecommunications facilities and functions as may be requested by such 
qualifying carrier for the purpose of enabling such qualifying carrier 
to provide telecommunications services, or to provide access to 
information services, in the service area in which such qualifying 
carrier has obtained designation as an eligible telecommunications 
carrier under section 214(e) of 47 U.S.C.



Sec. 59.2  Terms and conditions of infrastructure sharing.

    (a) An incumbent local exchange carrier subject to the requirements 
of section 59.1 shall not be required to take any action that is 
economically unreasonable or that is contrary to the public interest.
    (b) An incumbent local exchange carrier subject to the requirements 
of section 59.1 may, but shall not be required to, enter into joint 
ownership or operation of public switched network infrastructure, 
technology, information and telecommunications facilities and functions 
and services with a qualifying carrier as a method of fulfilling its 
obligations under section 59.1.
    (c) An incumbent local exchange carrier subject to the requirements 
of section 59.1 shall not be treated by the Commission or any State as a 
common carrier for hire or as offering common carrier services with 
respect to any public switched network infrastructure, technology, 
information, or telecommunications facilities, or functions made 
available to a qualifying carrier in accordance with regulations issued 
pursuant to this section.
    (d) An incumbent local exchange carrier subject to the requirements 
of section 59.1 shall make such public switched network infrastructure, 
technology, information, and telecommunications facilities, or functions 
available to a qualifying carrier on just and reasonable terms and 
pursuant to conditions that permit such qualifying carrier to fully 
benefit from the economies of scale and scope of such local exchange 
carrier. An incumbent local exchange carrier that has entered into an 
infrastructure sharing agreement pursuant to section 59.1 must give 
notice to the qualifying carrier at least sixty days before terminating 
such infrastructure sharing agreement.
    (e) An incumbent local exchange carrier subject to the requirements 
of section 59.1 shall not be required to engage in any infrastructure 
sharing agreement for any services or access which are to be provided or 
offered to consumers by the qualifying carrier in such local exchange 
carrier's telephone exchange area.
    (f) An incumbent local exchange carrier subject to the requirements 
of section 59.1 shall file with the State, or, if the State has made no 
provision to accept such filings, with the Commission, for public 
inspection, any tariffs, contracts, or other arrangements showing the 
rates, terms, and conditions under which such carrier is making 
available public switched network infrastructure, technology, 
information and telecommunications facilities and functions pursuant to 
this part.



Sec. 59.3  Information concerning deployment of new services and equipment.

    An incumbent local exchange carrier subject to the requirements of 
section 59.1 that has entered into an infrastructure sharing agreement 
under section 59.1 shall provide to each party to such agreement timely 
information on the planned deployment of telecommunications services and 
equipment, including any software or upgrades of software integral to 
the use or operation of such telecommunications equipment.



Sec. 59.4  Definition of ``qualifying carrier''.

    For purposes of this part, the term ``qualifying carrier'' means a 
telecommunications carrier that:
    (a) Lacks economies of scale or scope; and
    (b) Offers telephone exchange service, exchange access, and any 
other service that is included in universal service, to all consumers 
without preference

[[Page 112]]

throughout the service area for which such carrier has been designated 
as an eligible telecommunications carrier under section 214(e) of 47 
U.S.C.



PART 61--TARIFFS--Table of Contents




Sec.
61.1  Purpose and application.
61.2  Clear and explicit explanatory statements.

                               Definitions

61.3  Definitions.
61.11--12  [Reserved]

                              GENERAL RULES

                       Rules for Electronic Filing

61.13  Scope.
61.14  Method of filing publications.
61.15  Letters of transmittal and cover letters.
61.16  Base documents.
61.17  Method of filing applications for special permission.
61.18--61.19  [Reserved]

    General Rules for Domestic and International Nondominant Carriers

61.20  Detariffing of interstate, domestic, interexchange services.
61.21  Method of filing publications.
61.22  Cover letters.

   Specific Rules for Domestic and International Nondominant Carriers

61.23  Composition of tariffs.
61.24  Notice requirements.
61.32  Method of filing publications.
61.33  Letters of transmittal.
61.35  Delivered free of charges.
61.36  Tariff publications not returned.
61.38  Supporting information to be submitted with letters of 
          transmittal.
61.39  Optional supporting information to be submitted with letters of 
          transmittal for Access Tariff filings effective on or after 
          April 1, 1989, by local exchange carriers serving 50,000 or 
          fewer access lines in a given study area that are described as 
          subset 3 carriers in Sec. 69.602.
61.40  Private line rate structure guidelines.
61.41  Price cap requirements generally.
61.42  Price cap baskets and service categories.
61.43  Annual price cap filings required.
61.44  Adjustments to the PCI for Dominant Interexchange Carriers.
61.45  Adjustments to the PCI for Local Exchange Carriers.
61.46  Adjustments to the API.
61.47  Adjustments to the SBI; pricing bands.
61.48  Transition rules for price cap formula calculations.
61.49  Supporting information to be submitted with letters of 
          transmittal for tariffs of carriers subject to price cap 
          regulation.
61.50  Scope: Optional incentive regulation for rate of return local 
          exchange carriers.

                 Specific Rules for Tariff Publications

61.51  LEC tariff filings requirements pursuant to section 204(a)(3) of 
          the Communications Act.
61.52  Form, size, type, legibility, etc.
61.53  Consecutive numbering.
61.54  Composition of tariffs.
61.55  Contract-based tariffs.
61.56  Supplements.
61.57  Cancellations.
61.58  Notice requirements.
61.59  Effective period required before changes.
61.67  New or discontinued telephone and teletypewriter service points; 
          mileages.
61.68  Special notations.
61.69  Rejection.
61.71  Reissued matter.
61.72  Posting.
61.73  Duplication of rates or regulations.
61.74  References to other instruments.

                              Concurrences

61.131  Scope.
61.132  Method of filing concurrences.
61.133  Format of concurrences.
61.134  Concurrences for through services.
61.135  Concurrences for other purposes.
61.136  Revocation of concurrences.

                   Applications for Special Permission

61.151  Scope.
61.152  Terms of applications and grants.
61.153  Method of filing applications.

     Adoption of Tariffs and Other Documents of Predecessor Carriers

61.171  Adoption notice.
61.172  Changes to be incorporated in tariffs of successor carrier.

                               Suspensions

61.191  Carrier to file supplement when notified of suspension.
61.192  Contents of supplement announcing suspension.
61.193  Vacation of suspension order; supplements announcing same; etc.

    Authority: Secs. 1, 4(i), 4(j), 201-205, and 403 of the 
Communications Act of 1934, as amended; 47 U.S.C. 151, 154(i), 154(j), 
201-205, and 403, unless otherwise noted.

    Source: 49 FR 40869, Oct. 18, 1984, unless otherwise noted.

[[Page 113]]



Sec. 61.1  Purpose and application.

    (a) The purpose of this part is to prescribe the framework for the 
initial establishment of and subsequent revisions to tariff 
publications.
    (b) Tariff publications filed with the Commission must conform to 
the rules in this part. Failure to comply with any provisions of this 
part may be grounds for rejection of the non-complying publication.
    (c) No carrier required to file tariffs may provide any interstate 
or foreign communication service until every tariff publication for such 
communication service is on file with the Commission and in effect.



Sec. 61.2  Clear and explicit explanatory statements.

    In order to remove all doubt as to their proper application, all 
tariff publications must contain clean and explicit explanatory 
statements regarding the rates and regulations.

                               Definitions



Sec. 61.3  Definitions.

    (a) Act. The Communications Act of 1934 (48 Stat. 1004; 47 U.S.C. 
chapter 5), as amended.
    (b) Actual Price Index (API). An index of the level of aggregate 
rate element rates in a basket, which index is calculated pursunt to 
Sec. 61.46.
    (c) Association. This term has the meaning given it in Sec. 69.2(d).
    (d) Band. A zone of pricing flexibility for a service category, 
which zone is calculated pursuant to Sec. 61.47.
    (e) Base period. For carriers subject to Secs. 61.41--61.49, the 12-
month period ending six months prior to the effective date of annual 
price cap tariffs, or for carriers regulated under Sec. 61.50, the 24-
month period ending six months prior to the effective date of biennial 
optional incentive plan tariffs. Base year or base period earnings shall 
not include amounts associated with exogenous adjustments to the PCI for 
the sharing or lower formula adjustment mechanisms.
    (f) Basket. Any class or category of tariffed service or charge:
    (1) Which is established by the Commission pursuant to price cap 
regulation;
    (2) The rates of which are reflected in an Actual Price Index; and
    (3) The related costs of which are reflected in a Price Cap Index.
    (g) Change in rate structure. A restructuring or other alternation 
of the rate components for an existing service.
    (h) Charges. The price for service based on tariffed rates.
    (i) Commercial contractor. The commercial firm to whom the 
Commission annually awards a contract to make copies of Commission 
records for sale to the public.
    (j) Commission. The Federal Communications Commission.
    (k) Concurring carrier. A carrier (other than a connecting carrier) 
subject to the Act which concurs in and assents to schedules of rates 
and regulations filed on its behalf an issuing carrier or carriers.
    (l) Connecting carrier. A carrier engaged in interstate or foreign 
communication solely through physical connection with the facilities of 
another carrier not directly or indirectly controlling or controlled by, 
or under direct or indirect common control with, such carrier.
    (m) Contract-based tariff. A tariff based on a service contract 
entered into between an interexchange carrier subject to Sec. 61.42 (a) 
through (c) or a nondominant carrier and a customer.
    (n) Corrections. The remedy of errors in typing, spelling, or 
punctuations.
    (o) Dominant carrier. A carrier found by the Commission to have 
market power (i.e., power to control prices).
    (p) GDP Price Index (GDP-PI). The estimate of the ``Fixed Weight 
Price Index for Gross Domestic Product, 1987 Weights'' published by the 
United States Department of Commerce, which the Commission designates by 
Order.
    (q) GNP Price Index (GNP-PI). The estimate of the ``Fixed-Weighted 
Price Index for Gross National Product, 1982 Weights'' published by the 
United States Department of Commerce, which the Commission designates by 
Order.
    (r) Issuing carrier. A carrier subject to the Act that publishes and 
files a tariff or tariffs with the Commission.

[[Page 114]]

    (s) Local Exchange Carrier. Any person that is engaged in the 
provision of telephone exchange service or exchange access as defined in 
section 3(26) of the Act.
    (t) New service offering. A tariff filing that provides for a class 
or sub-class of service not previously offered by the carrier involved 
and that enlarges the range of service options available to ratepayers.
    (u) Non-dominant carrier. A carrier not found to be dominant.
    (v) Other participating carrier. A carrier subject to the Act that 
publishes a tariff containing rates and regulations applicable to the 
portion or through service it furnishes in conjunction with another 
subject carrier.
    (w) Price Cap Index (PCI). An index of costs applying to carriers 
subject to price cap regulation, which index is calculated for each 
basket pursuant to Sec. 61.44 or 61.45.
    (x) Price cap regulation. A method of regulation of dominant 
carriers provided in Secs. 61.41 through 61.49.
    (y) Price cap tariff. Any tariff filing involving a service that is 
within a price cap basket, or that requires calculations pursuant to 
Sec. 61.44, 61.45, 61.46, or 61.47.
    (z) Productivity factor. An adjustment factor used to make annual 
adjustments to the Price Cap Index to reflect the margin by which a 
carrier subject to price cap regulation is expected to improve its 
productivity relative to the economy as a whole.
    (aa) Rate. The tariffed price per unit of service.
    (bb) Rate increase. Any change in a tariff which results in an 
increased rate or charge to any of the filing carrier's customers.
    (cc) Rate level change. A tariff change that only affects the actual 
rate associated with a rate element, and does not affect any tariff 
regulations or any other wording of tariff language.
    (dd) Regulations. The body of carrier prescribed rules in a tariff 
governing the offering of service in that tariff, including rules, 
practices, classifications, and definitions.
    (ee) Restructured service. An offering which represents the 
modification of a method of charging or provisioning a service; or the 
introduction of a new method of charging or provisioning that does not 
result in a net increase in options available to customers.
    (ff) Service Band Index (SBI). An index of the level of aggregate 
rate element rates in a service category, which index is calculated 
pursuant to Sec. 61.47.
    (gg) Service category. Any group of rate elements subject to price 
cap regulation, which group is subject to a band.
    (hh) Supplement. A publication filed as part of a tariff for the 
purpose of suspending or cancelling that tariff, or tariff publication 
and numbered independently from the tariff page series.
    (ii) Tariff. Schedules of rates and regulations filed by common 
carriers.
    (jj) Tariff publication, or publication. A tariff, supplement, 
revised page, additional page, concurrence, notice of revocation, 
adoption notice, or any other schedule of rates or regulations filed by 
common carriers.
    (kk) Tariff year. The period from the day in a calendar year on 
which a carrier's annual access tariff filing is scheduled to become 
effective through the preceding day of the subsequent calendar year.
    (ll) Text change. A change in the text of a tariff which does not 
result in a change in any rate or regulation.
    (mm) United States. The several States and Territories, the District 
of Columbia, and the possessions of the United States.

[54 FR 19840, May 8, 1989, as amended at 55 FR 42382, Oct. 19, 1990; 56 
FR 55239, Oct. 25, 1991; 58 FR 36147, July 6, 1993; 59 FR 10301, Mar. 4, 
1994; 60 FR 19527, Apr. 19, 1995; 60 FR 20052, Apr. 24, 1995; 61 FR 
59366, Nov. 22, 1996; 62 FR 5777, Feb. 7, 1997; 62 FR 31930, June 11, 
1997]



Secs. 61.11--61.12  [Reserved]

                              GENERAL RULES

                       Rules for Electronic Filing

    Source: 63 FR 35540, June 30, 1998, unless otherwise noted.



Sec. 61.13  Scope.

    (a) This applies to all tariff publications of carriers required to 
file tariff publications electronically, and any tariff publication that 
a carrier chooses to file electronically.

[[Page 115]]

    (b) All incumbent local exchange carriers are required to file 
tariff publications electronically.
    (c) All tariff publications shall be filed in a manner that is 
compatible and consistent with the technical requirements of the 
Electronic Tariff Filing System.



Sec. 61.14  Method of filing publications.

    (a) Publications filed electronically must be addressed to 
``Secretary, Federal Communications Commission, Washington, DC 20554.'' 
The Electronic Tariff Filing System will accept filings 24 hours a day, 
seven days a week. The official filing date of a publication received by 
the Electronic Tariff Filing System will be determined by the date and 
time the transmission ends. If the transmission ends after the close of 
a business day, as that term is defined in Sec. 1.4(e)(2) of this 
Chapter, the filing will be date and time stamped as of the opening of 
the next business day.
    (b) In addition, except for issuing carriers filing tariffing fees 
electronically, for all tariff publications requiring fees as set forth 
in part 1, subpart G of this chapter, issuing carriers must submit the 
original of the transmittal letter, (without attachments), FCC Form 159, 
and the appropriate fee to the Mellon Bank, Pittsburgh, PA, at the 
address set forth in Sec. 1.1105 of this chapter. Issuing carriers 
submitting tariff fees electronically should submit a copy of the Form 
159 and the original transmittal letter to the Secretary of the 
Commission in lieu of the Mellon Bank. The Form 159 should display the 
Electronic Audit Code in the box in the upper left hand corner marked 
``reserved''. Issuing carriers should submit these fee materials on the 
same day as the transmission in paragraph (a) of this section.
    (c) Carriers that are required to file publications electronically 
may not file those publications on paper or other media unless 
specifically required to do so by the Commission.
    (d) Carriers that are required to file publications electronically 
need only transmit one set of files to the Commission. No other copies 
to any other party are required.
    (e) Carriers that are required to file publications electronically 
must continue to comply with the format requirements set forth in part 
61.



Sec. 61.15  Letters of transmittal and cover letters.

    (a) All tariff publications filed with the Commission electronically 
must be accompanied by a letter of transmittal. All letters of 
transmittal must:
    (1) Concisely explain the nature and purpose of the filing;
    (2) Specify whether supporting information is required for the new 
tariff or tariff revision, and specify the Commission rule or rules 
governing the supporting information requirements for that filing;
    (3) Contain a statement indicating the date and method of filing of 
the original of the transmittal as required by Sec. 61.14(b).
    (b) Carriers filing tariffs electronically pursuant to the notice 
requirements of section 204(a)(3) of the Communications Act shall 
display prominently, in the upper right hand corner of the letter of 
transmittal, a statement that the filing is made pursuant to that 
section and whether the tariff is filed on 7 or 15 days notice.
    (c) Any carrier filing a new or revised tariff made on 15 days' 
notice or less shall include in the letter of transmittal the name, room 
number, street address, telephone number, and facsimile number of the 
individual designated by the filing carrier to receive personal or 
facsimile service of petitions against the filing as required under 
Sec. 1.773(a)(4) of this chapter.
    (d) The letter of transmittal must specifically reference by number 
any special permission necessary to implement the tariff publication. 
Special permission must be granted prior to the filing of the tariff 
publication and may not be requested in the transmittal letter.
    (e) The letter of transmittal must be substantially in the format 
established in Secs. 61.33(g) and 61.33(h)(1).
    (f) All submissions of documents other than a new tariff or 
revisions to an existing tariff, such as Base Documents or Tariff Review 
Plans, must be accompanied by a cover letter that

[[Page 116]]

concisely explains the nature and purpose of the filing. Publications 
submitted under this paragraph are not required to submit a tariffing 
fee.



Sec. 61.16  Base documents.

    (a) The Base Document is a complete tariff which incorporates all 
effective revisions, as of the last day of the preceding month. The Base 
Document should be submitted with a cover letter as specified in 
Sec. 61.15(f) of this part and identified as the Monthly Updated Base 
Document.
    (b) Initially, carriers that currently have tariffs on file with the 
commission must file a Base Document within five days of the initiation 
of mandatory electronic filing.
    (c) Subsequently, if there have been revisions that became effective 
up to and including the last day of the preceding month, a new Base 
Document must be submitted within the first five business days of the 
current month that will incorporate those revisions.



Sec. 61.17  Method of filing applications for special permission.

    (a) An application for special permission filed electronically must 
be addressed to ``Secretary, Federal Communications Commission, 
Washington, DC 20554.'' The Electronic Tariff Filing System will accept 
filings 24 hours a day, seven days a week. The official filing date of a 
publication received by the Electronic Tariff Filing System will be 
determined by the date and time the transmission ends. If the 
transmission ends after the close of a business day, as that term is 
defined in Sec. 1.4(e)(2) of this chapter, the filing will be date and 
time stamped as of the opening of the next business day.
    (b) In addition, except for issuing carriers filing tariffing fees 
electronically, for special permission applications requiring fees as 
set forth in part 1, subpart G of this chapter, issuing carriers must 
submit the original of the application letter (without attachments), FCC 
Form 159, and the appropriate fee to the Mellon Bank, Pittsburgh, PA, at 
the address set forth in Sec. 1.1105 of this chapter. Issuing carriers 
submitting tariffing fees electronically should submit a copy of the 
Form 159 and the original application letter to the Secretary of the 
Commission in lieu of the Mellon Bank. The Form 159 should display the 
Electronic Audit Code in the box in the upper left hand corner marked 
``reserved''. Issuing carriers should submit these fee materials on the 
same day as the transmission in paragraph (a) of this section.
    (c) In addition, the requirements of Sec. 61.153(c) are applicable, 
except the additional copy addressed to the Chief, Tariff and Pricing 
Analysis Branch is not required.



Secs. 61.18--61.19  [Reserved]

    General Rules for Domestic and International Nondominant Carriers



Sec. 61.20  Detariffing of interstate, domestic, interexchange services.

    (a) Except as otherwise provided in paragraphs (b) and (c), or by 
Commission order, carriers that are nondominant in the provision of 
interstate, domestic, interexchange services shall not file tariffs for 
such services.
    (b) Carriers that are nondominant in the provision of interstate, 
domestic, interexchange services shall be allowed to file tariffs for 
dial-around 1+services. For the purposes of this paragraph, dial-around 
1+calls are those calls made by accessing the interexchange carrier 
through the use of that carrier's carrier access code. A carrier access 
code is a five or seven digit access code that enables callers to reach 
any carrier, presubscribed or otherwise, from any telephone.
    (c) Carriers that are nondominant in the provision of interstate, 
domestic, interexchange services shall be allowed to file tariffs for 
such service to those customers who contact the local exchange carrier 
to designate an interexchange carrier or to initiate a change with 
respect to their primary interexchange carrier. These tariffs shall 
remain in effect until the interexchange carrier and the customer 
consummate a written contract, but in no event for more than 45 days.

[62 FR 59604, Nov. 4, 1997]



Sec. 61.21  Method of filing publications.

    (a) Publications sent for filing must be addressed to ''Secretary, 
Federal

[[Page 117]]

Communications Commission, Washington, DC 20554.`` The date on which the 
publication is received by the Secretary of the Commission (or the Mail 
Room where submitted by mail) is considered the official filing date.
    (b)(1) In addition, for all tariff publications requiring fees as 
set forth in part 1, subpart G of this chapter, issuing carriers must 
submit the original of the cover letter (without attachments), FCC Form 
159, and the appropriate fee to the Mellon Bank, Pittsburgh, PA at the 
address set forth in Sec. 1.1105 of this chapter. Issuing carriers 
should submit these fee materials on the same date as the submission in 
paragraph (a) of this section.
    (2) International carriers must certify in their original cover 
letter that they are authorized under Section 214 of the Communications 
Act of 1934, as amended, to provide service, and reference the FCC file 
number of that authorization.
    (c) In addition to the requirements set forth in paragraphs (a) and 
(b) of this section, the issuing carrier must send a copy of the cover 
letter with one diskette containing both the complete tariff and any 
attachments, as appropriate, to the Secretary, Federal Communications 
Commission. In addition, the issuing carrier must send one diskette of 
the complete tariff and a copy of the cover letter to the commercial 
contractor (at its office on Commission premises), and to the Chief, 
Tariff Review Branch. The latter should be clearly labeled as the 
``Public Reference Copy.'' The issuing carrier should file the copies 
required by this paragraph so they will be received on the same date as 
the filings in paragraph (a) of this section.

[58 FR 44460, Aug. 23, 1993, as amended at 61 FR 15726, Apr. 9, 1996. 
Redesignated at 61 FR 59366, Nov. 22, 1996]



Sec. 61.22  Cover letters.

    (a)(1) Except as specified in Sec. 61.32(b), all publications filed 
with the Commission must be accompanied by a cover letter, 8.5 by 11 
inches (21.6 cm x 27.9 cm) in size. All cover letters should briefly 
explain the nature of the filing and indicate the date and method of 
filing of the original cover letter, as required by Sec. 61.20(b)(1).
    (2) International carriers must certify that they are authorized 
under Section 214 of the Communications Act of 1934, as amended, to 
provide service, and reference the FCC file number of that 
authorization.
    (b) A separate cover letter may accompany each publication, or an 
issuing carrier may file as many publications as desired with one cover 
letter.

    Note: If a receipt for accompanying publication is desired, the 
cover letter must be sent in duplicate. One copy showing the date of the 
receipt by the Commission will then be returned to the sender.

[58 FR 44460, Aug. 23, 1993, as amended at 61 FR 15726, Apr. 9, 1996. 
Redesignated at 61 FR 59366, Nov. 22, 1996]

   Specific Rules for Domestic and International Nondominant Carriers



Sec. 61.23  Composition of tariffs.

    (a) The tariff must be submitted on a 3\1/2\ inch (8.89 cm) 
diskette, formatted in an IBM compatible form using MS DOS 5.0 and 
WordPerfect 5.1 software. The diskette must be submitted in ``read 
only'' mode. The diskette must be clearly labelled with the carrier's 
name, Tariff Number, and the date of submission. The cover letter must 
be submitted on 8\1/2\ by 11 inch (21.6 cm x 27.9 cm) paper, and must be 
plainly printed in black ink.
    (b) The tariff must contain the carrier's name, the international 
Section 214 authorization FCC file number (when applicable), and the 
information required by Section 203 of the Act.
    (c) Changes to a tariff must be made by refiling the entire tariff 
on a new diskette, with the changed material included. The carrier must 
indicate in the tariff what changes have been made.
    (d) Domestic and international nondominant carriers subject to the 
provisions of this section are not subject to the tariff filing 
requirements of Sec. 61.54.

[58 FR 44460, Aug. 23, 1993; 58 FR 48323, Sept. 15, 1993, as amended at 
61 FR 15727, Apr. 9, 1996. Redesignated at 61 FR 59366, Nov. 22, 1996]



Sec. 61.24  Notice requirements.

    (a) Every proposed tariff filing must bear an effective date and, 
except as

[[Page 118]]

otherwise provided by regulation, special permission, or Commission 
order, must be made on at least the number of days notice specified in 
this section.
    (b) Notice is accomplished by filing the proposed tariff changes 
with the Commission. Any period of notice specified in this section 
begins on and includes the date the tariff is received by the 
Commission, but does not include the effective date. In computing the 
notice period required, all days including Sundays and holidays must be 
counted.
    (c) Tariff filings of domestic and international non-dominant 
carriers must be made on at least one-day notice.

[58 FR 44460, Aug. 23, 1993, as amended at 61 FR 15727, Apr. 9, 1996. 
Redesignated at 61 FR 59366, Nov. 22, 1996]



Sec. 61.32  Method of filing publications.

    (a) Publications sent for filing must be addressed to ``Secretary, 
Federal Communications Commission, Washington, DC 20554.'' The date on 
which the publication is received by the Secretary of the Commission (or 
the Mail Room where submitted by mail) is considered the official filing 
date.
    (b) In addition, for all tariff publications requiring fees as set 
forth in part 1, subpart G of this chapter, issuing carriers must submit 
the original of the transmittal letter (without attachments), FCC Form 
155, and the appropriate fee to the Mellon Bank, Pittsburgh, PA, at the 
address set forth in Sec. 1.1105. Issuing carriers should submit these 
fee materials on the same date as the submission in paragraph (a).
    (c) In addition to the requirements set forth in paragraphs (a) and 
(b) of this section, the issuing carrier must send a copy of the 
transmittal letter with two copies of the proposed tariff pages and all 
attachments, including the supporting information specified in 
Sec. 61.38 or Sec. 61.49, as appropriate, to the Secretary, Federal 
Communications Commission. In addition, the issuing carrier must send a 
copy of the publication, supporting information specified in Sec. 61.38 
or Sec. 61.49, as appropriate, and transmittal letter to the commercial 
contractor (at its office on Commission premises), and to the Chief, 
Tariff Review Branch. The latter should be clearly labeled as the 
``Public Reference Copy.'' The copies of supporting information required 
here are in addition to those required by Sec. 61.38(c). The issuing 
carrier must file the copies required by this paragraph so they will be 
received on the same date as the filings in paragraph (a).

[55 FR 19173, May 8, 1990]



Sec. 61.33  Letters of transmittal.

    (a) Except as specified in Sec. 61.32(b), all publications filed 
with the Commission must be accompanied by a letter of transmittal, A4 
(21 cm x 29.7 cm) or 8.5 x 11 inches (21.6 cm x 27.9 cm) in size. All 
letters of transmittal must (1) concisely explain the nature and purpose 
of the filing; (2) specify whether supporting information under 
Sec. 61.38 is required; (3) state whether copies have been delivered to 
the Commercial Contractor and Chief, Tariff Review Branch as required by 
Sec. 61.32, and (4) contain a statement indicating the date and method 
of filing of the original of the transmittal letter as required by 
Sec. 61.32(b), and the date and method of filing the copies as required 
by Sec. 61.32 (a) and (c).
    (b) In addition to the requirements set forth in paragraph (a) of 
this section, any local exchange carrier choosing to file an Access 
Tariff under Sec. 61.39 must include in the transmittal:
    (1) A summary of the filing's basic rates, terms and conditions;
    (2) A statement concerning whether any prior Commission facility 
authorization necessary to the implementation of the tariff has been 
obtained; and
    (3) A statement that the filing is made pursuant to Sec. 61.39.
    (c) In addition to the requirements set forth in paragraph (a) of 
this section, any carrier filing a price cap tariff must include in the 
letter of transmittal a statement that the filing is made pursuant to 
Sec. 61.49.
    (d) Tariffs filed pursuant to section 204(a)(3) of the 
Communications Act shall display prominently in the upper right hand 
corner of the letter of transmittal a statement that the filing is made 
pursuant to that section and whether it is being filed on 7- or 15-days' 
notice.

[[Page 119]]

    (e) In addition to the requirements set forth in paragraph (a) of 
this section, any carrier filing a new or revised tariff made on 15 
days' notice or less shall include in the letter of transmittal, the 
name, room number, street address, telephone number, and facsimile 
number of the individual designated by the filing carrier to receive 
personal or facsimile service of petitions against the filing as 
required under Sec. 1.773(a)(4) of this chapter.
    (f) In addition to the requirements set forth in paragraphs (a), 
(b), and (c) of this section, the letter of transmittal must 
specifically reference by number any special permission necessary to 
implement the tariff publication. Special permission must be granted 
prior to the filing of the tariff publication, and may not be requested 
in the transmittal letter.
    (g) The letter of transmittal must be substantially in the following 
format.

(Exact name of carrier in full)_________________________________________
(Post Office Address)___________________________________________________
______________, 19____._________________________________________________

(Date)__________________________________________________________________
Transmittal No.________
Secretary,
Federal Communications Commission
Washington, DC 20554

    Attention: Common Carrier Bureau.

    The accompanying tariff (or other publication) issued by 
________________, and bearing FCC No. ________, effective 
______________, 19____, is sent to you for filing in compliance with the 
requirements of the Communications Act of 1934, as amended. (Here give 
the additional information required.)

(Name of issuing officer or agent)______________________________________

(Title)_________________________________________________________________

    (h)(1) A separate letter of transmittal may accompany each 
publication, or the above format may be modified to provide for filing 
as many publications as desired with one transmittal letter.
    (2) For contract-based tariffs defined in Sec. 61.3(m), a separate 
letter of transmittal must accompany each tariff filed. The transmittals 
must be numbered in a series separate from transmittals for non-contract 
tariff filing. Numbers must appear on the face of the transmittal and be 
in the form of ``CTT No. ________'', using CTT as an abbreviation for 
contract-based tariff transmittals. Contract-based tariffs must also be 
numbered in a series separate from non-contract-based tariffs. Numbers 
must be in the form of ``CT No. ________'', using CT as an abbreviation 
for contract-based tariffs. Each contract-based tariff must be assigned 
a separate number. Transmittals and tariffs subject to this paragraph 
shall be filed beginning with the number ``1'' and shall be numbered 
consecutively.

    Note: If a receipt for accompanying publication is desired, the 
letter of transmittal must be sent in duplicate. One copy showing the 
date of receipt by the Commission will then be returned to the sender.

[55 FR 19173, May 8, 1990, as amended by 56 FR 55239, Oct. 25, 1991; 58 
FR 17530, Apr. 5, 1993; 58 FR 44906, Aug. 25, 1993; 62 FR 5777, Feb. 7, 
1997]



Sec. 61.35  Delivered free of charges.

    Tariff publications must be delivered to the Commission free from 
all charges, including claims for postage.



Sec. 61.36  Tariff publications not returned.

    Tariff publications will not be returned.



Sec. 61.38  Supporting information to be submitted with letters of transmittal.

    (a) Scope. This section applies to dominant carriers whose gross 
annual revenue exceed $500,000 for the most recent 12 month period of 
operations or are estimated to exceed $500,000 for a representative 12 
month period. Local exchange carriers serving 50,000 or fewer access 
lines in a given study area that are described as subset 3 carriers in 
Sec. 69.602 of this chapter may submit Access Tariff filings for that 
study area pursuant to either this section or Sec. 61.39. However, the 
Commission may require any carrier to submit such information as may be 
necessary for a review of a tariff filing. This section (other than the 
preceding sentence of this paragraph) shall not apply to tariff filings 
proposing rates for services identified in Sec. 61.42 (a), (b), (d), 
(e), and (g), promotional offerings that relate to services subject to 
price cap regulation, tariff filings proposing rates for services 
identified in Sec. 61.50, or to tariff filings, other than promotional 
filings, filed on 14 days' notice pursuant to Sec. 61.58(c)(6).

[[Page 120]]

    (b) Explanation and data supporting either changes or new tariff 
offerings. The material to be submitted for a tariff change which 
affects rates or charges or for a tariff offering a new service, must 
include an explanation of the changed or new matter, the reasons for the 
filing, the basis of ratemaking employed, and economic information to 
support the changed or new matter.
    (1) For a tariff change the carrier must submit the following, 
including complete explanations of the bases for the estimates.
    (i) A cost of service study for all elements for the most recent 12 
month period;
    (ii) A study containing a projection of costs for a representative 
12 month period;
    (iii) Estimates of the effect of the changed matter on the traffic 
and revenues from the service to which the changed matter applies, the 
carrier's other service classifications, and the carrier's overall 
traffic and revenues. These estimates must include the projected effects 
on the traffic and revenues for the same representative 12 month period 
used in (ii) above.
    (2) For a tariff filing offering a new service, the carrier must 
submit the following, including complete explanations of the bases for 
the estimates.
    (i) A study containing a projection of costs for a representative 12 
month period; and
    (ii) Estimates of the effect of the new matter on the traffic and 
revenues from the service to which the new matter applies, the carrier's 
other service classifications, and the carrier's overall traffic and 
revenues. These estimates must include the projected effects on the 
traffic and revenues for the same representative 12 month period used in 
paragraph (b)(2)(i) of this section.
    (3) For a tariff filing that introduces or changes a contribution 
charge for special access and expanded interconnection, as defined in 
Sec. 69.122 of this chapter, the carrier must submit information 
sufficient to establish that the charge has been calculated in a manner 
that complies with the Commission order authorizing the contribution 
charge.
    (4) For a tariff that introduces a system of density pricing zones, 
as described in Sec. 69.123 of this chapter, the carrier must, before 
filing its tariff, submit a density pricing zone plan including, inter 
alia, documentation sufficient to establish that the system of zones 
reasonably reflects cost-related characteristics, such as the density of 
total interstate traffic in central offices located in the respective 
zones, and receive approval of its proposed plan.
    (c) Working papers and statistical data. (1) Concurrently with the 
filing of any tariff change or tariff filing for a service not 
previously offered, the Chief, Tariff Review Branch must be provided two 
sets of working papers containing the information underlying the data 
supplied in response to paragraph (b) of this section, and a clear 
explanation of how the working papers relate to that information.
    (2) All statistical studies must be submitted and supported in the 
form prescribed in Sec. 1.363 of the Commission's Rules.
    (d) Form and content of additional material to be submitted with 
certain rate increases. In the circumstances set out in paragraphs 
(d)(1) and (2) of this section, the filing carrier must submit all 
additional cost, marketing and other data underlying the working papers 
to justify a proposed rate increase. The carrier must submit this 
information in suitable form to serve as the carrier's direct case in 
the event the rate increase is set by the Commission for investigation.
    (1) Rate increases affecting single services or tariffed items.
    (i) A rate increase in any service or tariffed item which results in 
more than $1 million in additional annual revenues, calculated on the 
basis of existing quantities in service, without regard to the 
percentage increase in such revenues; or
    (ii) A single rate increase in any service or tariffed item, or 
successive rate increases in the same service or tariffed item within a 
12 month period, either of which results in:
    (A) At least a 10 percent increase in annual revenues from that 
service or tariffed item, and

[[Page 121]]

    (B) At least $100,000 in additional annual revenues, both calculated 
on the basis of existing quantities in service.
    (2) Rate increases affecting more than one service or tariffed item.
    (i) A general rate increase in more than one service or tariffed 
item occurring at one time, which results in more than $1 million in 
additional revenues calculated on the basis of existing quantities in 
service, without regard to the percentage increase in such revenues; or
    (ii) A general rate increase in more than one service or tariffed 
item occurring at one time, or successive general rate increases in the 
same services or tariffed items occurring within a 12 month period, 
either of which results in:
    (A) At least a 10 percent increase in annual revenues from those 
services or tariffed items, and
    (B) At least $100,000 in additional annual revenues, both calculated 
on the basis of existing quantities in service.
    (e) Submission of explanation and data by connecting carriers. If 
the changed or new matter is being filed by the issuing carrier at the 
request of a connecting carrier, the connecting carrier must provide the 
data required by paragraphs (b) and (c) of this section on the date the 
issuing carrier files the tariff matter with the Commission.
    (f) Copies of explanation and data to customers. Concurrently with 
the filing of any rate for special construction (or special assembly 
equipment and arrangements) developed on the basis of estimated costs, 
the offering carrier must transmit to the customer a copy of the 
explanation and data required by paragraphs (b) and (c) of this section.

[49 FR 40869, Oct. 18, 1984, as amended at 53 FR 36289, Sept. 19, 1988; 
54 FR 19841, May 8, 1989; 55 FR 42382, Oct. 19, 1990; 56 FR 55239, Oct. 
25, 1991; 57 FR 54330, Nov. 18, 1992; 58 FR 36147, July 6, 1993; 58 FR 
48762, Sept. 17, 1993]



Sec. 61.39  Optional supporting information to be submitted with 
letters of transmittal for Access Tariff filings effective on or 

after April 1, 1989, by local exchange carriers serving 50,000 or 
fewer access lines in a given study area that are described as 
subset 3 carriers in Sec. 69.602.

    (a) Scope. This section provides for an optional method of filing 
for any local exchange carrier that is described as subset 3 carrier in 
Sec. 69.602 of this chapter, which elects to issue its own Access Tariff 
for a period commencing on or after April 1, 1989, and which serves 
50,000 or fewer access lines in a study area as determined under 
Sec. 36.611(a)(8) of this chapter. However, the Commission may require 
any carrier to submit such information as may be necessary for review of 
a tariff filing. This section (other than the preceding sentence of this 
paragraph) shall not apply to tariff filings proposing rates for 
services identified in Sec. 61.42 (d), (e) and (g), which filings are 
submitted by carriers subject to price cap regulation, or to tariff 
filings proposing rates for services identified in Sec. 61.50, which 
filings are submitted by carriers subject to optional incentive 
regulation.
    (b) Explanation and data supporting tariff changes. The material to 
be submitted to either a tariff change or a new tariff which affects 
rates or charges must include an explanation of the filing in the 
transmittal as required by Sec. 61.33. The basis for ratemaking must 
comply with the following requirements. Except as provided in paragraph 
(b)(5) of this section, it is not necessary to submit this supporting 
data at the time of filing. However, the local exchange carrier should 
be prepared to submit the data promptly upon reasonable request by the 
Commission or interested parties.
    (1) For a tariff change, the local exchange carrier that is a cost 
schedule carrier must propose Tariff Sensitive rates based on the 
following:
    (i) For the first period, a cost of service study for Traffic 
Sensitive elements for the most recent 12 month period with related 
demand for the same period.
    (ii) For subsequent filings, a cost of service study for Traffic 
Sensitive elements for the total period since the local exchange 
carrier's last annual filing, with related demand for the same period.
    (2) For a tariff change, the local exchange company that is an 
average schedule carrier must propose Traffic Sensitive rates based on 
the following:
    (i) For the first period, the local exchange carrier's most recent 
annual Traffic Sensitive settlement from the

[[Page 122]]

National Exchange Carrier Association pool.
    (ii) For subsequent filings, an amount calculated to reflect the 
Traffic Sensitive average schedule pool settlement the carrier would 
have received if the carrier had continued to participate, based upon 
the most recent average schedule formulas approved by the Commission.
    (3) For a tariff change, the local exchange carrier that is a cost 
schedule carrier must propose Common Line rates based on the following:
    (i) For the first biennial filing, the common line revenue 
requirement shall be determined by a cost of service study for the most 
recent 12-month period. Subscriber line charges shall be based on cost 
and demand data for the same period. Carrier common line rates shall be 
determined by the following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.008

where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.009

And where:

CCL Rev Req = carrier common line revenue requirement for the most 
          recent 12-month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 12-month period;
CCL MOU1 = CCL MOUb; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (ii) For subsequent biennial filings, the common line revenue 
requirement shall be determined by a cost of service study for the most 
recent 24-month period. Subscriber line charges shall be based on cost 
and demand data for the same period. Carrier common line rates shall be 
determined by the following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.010

Where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.011

And where:

CCL Rev Req = carrier common line revenue requirement for the most 
          recent 24-month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 24-month period;
CCL MOU1 = carrier common line minutes of use for the 12-
          month period; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (4) For a tariff change, the local exchange carrier which is an 
average schedule carrier must propose common line rates based on the 
following:
    (i) For the first biennial filings, the common line revenue 
requirement shall be determined by the local exchange carrier's most 
recent annual Common Line settlement from the National Exchange Carrier 
Association. Subscriber line charges shall be based on cost and demand 
data for the same period. Carrier common line rates shall be determined 
by the following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.012

Where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.013

And where:

CCL Rev Req = carrier common line settlement for the most recent 12-
          month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 12-month period;
CCL MOU1 = CCL MOUb; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (ii) For subsequent biennial filings, the common line revenue 
requirement shall be an amount calculated to reflect the average 
schedule pool settlements the carrier would have received if the carrier 
had continued to participate in the carrier common line pool, based upon 
the average schedule Common Line formulas developed by the National 
Exchange Carrier Association for the most recent 24-month period.

[[Page 123]]

Subscriber line charges shall be based on cost and demand data for the 
same period. Carrier common line rates shall be determined by the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.014

Where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.015

And where:

CCL Rev Req = carrier common line settlement for the most recent 24-
          month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 24-month period;
CCL MOU1 = carrier common line minutes of use for the most 
          recent 12-month period; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (5) For End User Common Line charges included in a tariff pursuant 
to this Section, the local exchange carrier must provide supporting 
information for the two-year historical period with its letter of 
transmittal in accordance with Sec. 61.38.
    (c) Maximum allowable rate of return. Local exchange carriers filing 
tariffs under this section are not required to comply with Secs. 65.700 
through 65.701, inclusive, of the Commission's Rules, except with 
respect to periods during which tariffs were not subject to this 
section. The Commission may require any carrier to submit such 
information if it deems it necessary to monitor the carrier's earnings. 
However, rates must be calculated based on the local exchange carrier's 
prescribed rate of return applicable to the period during which the 
rates are effective.
    (d) Rates for a new service that is the same as that offered by a 
price cap regulated local exchange carrier providing service in an 
adjacent serving area are deemed presumptively lawful, if the proposed 
rates, in the aggregate, are no greater than the rates established by 
the price cap local exchange carrier. Tariff filings made pursuant to 
this paragraph must include the following:
    (1) A brief explanation of why the service is like an existing 
service offered by a geographically adjacent price cap regulated local 
exchange carrier; and
    (2) Data to establish compliance with this subsection that, in 
aggregate, the proposed rates for the new service are no greater than 
those in effect for the same or comparable service offered by that same 
geographically adjacent price cap regulated local exchange carrier. 
Compliance may be shown through submission of applicable tariff pages of 
the adjacent carrier; a showing that the serving areas are adjacent; any 
necessary explanations and work sheets.
    (e) Average schedule companies filing pursuant to this section shall 
retain their status as average schedule companies.

[52 FR 26682, July 16, 1987, as amended at 53 FR 36289, Sept. 19, 1988; 
55 FR 42382, Oct. 19, 1990; 58 FR 36147, July 6, 1993; 62 FR 31004, June 
6, 1997]



Sec. 61.40  Private line rate structure guidelines.

    (a) The Commission uses a variety of tools to determine whether a 
carrier's private line tariffs are just, reasonable, and 
nondiscriminatory. The carrier's burden of cost justification can be 
reduced when its private line rate structures comply with the following 
five guidelines.
    (1) Rate structures for the same or comparable services should be 
integrated;
    (2) Rate structures for the same or comparable services should be 
consistent with one another;
    (3) Rate elements should be selected to reflect market demand, 
pricing convenience for the carrier and customers, and cost 
characteristics; a rate element which appears separately in one rate 
structure should appear separately in all other rate structures;
    (4) Rate elements should be consistently defined with respect to 
underlying service functions and should be consistently employed through 
all rate structures; and
    (5) Rate structures should be simple and easy to understand.
    (b) The guidelines do not preclude a carrier, in a given case when a 
private line tariff does not comply with these

[[Page 124]]

guidelines, from justifying its departure from the guidelines and 
showing that its tariff is just, reasonable, and nondiscriminatory.



Sec. 61.41  Price cap requirements generally.

    (a) Sections 61.42 through 61.49 shall apply as follows:
    (1) To dominant interexchange carriers, as specified by Commission 
order;
    (2) To such local exchange carriers as specified by Commission 
order, and to all local exchange carriers, other than average schedule 
companies, that are affiliated with such carriers; and
    (3) On an elective basis, to local exchange carriers, other than 
those specified in paragraph (a)(2) of this section, that are neither 
participants in any Association tariff, nor affiliated with any such 
participants, except that affiliation with average schedule companies 
shall not bar a carrier from electing price cap regulation provided the 
carrier is otherwise eligible.
    (b) If a telephone company, or any one of a group of affiliated 
telephone companies, files a price cap tariff in one study area, that 
telephone company and its affiliates, except its average schedule 
affiliates, must file price cap tariffs in all their study areas.
    (c) The following rules apply to telephone companies subject to 
price cap regulation, as that term is defined in Sec. 61.3(w), which are 
involved in mergers, acquisitions, or similar transactions.
    (1) Any telephone company subject to price cap regulation that is a 
party to a merger, acquisition, or similar transaction shall continue to 
be subject to price cap regulation notwithstanding such transaction.
    (2) Where a telephone company subject to price cap regulation 
acquires, is acquired by, merges with, or otherwise becomes affiliated 
with a telephone company that is not subject to price cap regulation, 
the latter telephone company shall become subject to price cap 
regulation no later than one year following the effective date of such 
merger, acquisition, or similar transaction and shall accordingly file 
price cap tariffs to be effective no later than that date in accordance 
with the applicable provisions of this part 61.
    (3) Notwithstanding the provisions of Sec. 61.41(c)(2) above, when a 
telephone company subject to price cap regulation acquires, is acquired 
by, merges with, or otherwise becomes affiliated with a telephone 
company that qualifies as an `average schedule' company, the latter 
company may retain its `average schedule' status or become subject to 
price cap regulation in accordance with Sec. 69.3(i)(3) and the 
requirements referenced in that section.
    (d) Local exchange carriers that become subject to price cap 
regulation as that term is defined in Sec. 61.3(w) of this chapter shall 
not be eligible to withdraw from such regulation.

[55 FR 42382, Oct. 19, 1990; 55 FR 50558, Dec. 7, 1990, as amended at 56 
FR 55239, Oct. 25, 1991]



Sec. 61.42  Price cap baskets and service categories.

    (a) Each dominant interexchange carrier subject to price cap 
regulation shall establish three baskets as follows:
    (1) A residential services basket;
    (2) An 800 service basket; and
    (3) A business services basket.
    (b)(1) The residential basket shall contain such services as the 
Commission shall permit or require, including the following service 
categories:
    (i) Domestic day MTS;
    (ii) Domestic evening MTS;
    (iii) Domestic night/weekend MTS;
    (iv) International MTS;
    (v) Operator and credit card services; and
    (vi) Reach Out America.
    (2) The 800 service basket shall contain 800 Directory Assistance.
    (3) The business services basket shall contain analog private lines, 
including analog voice grade private line, unless provided under 
contract to a government entity, and terrestrial television transmission 
service.
    (c) Dominant interexchange carriers subject to price cap regulations 
shall exclude the following offerings from their price cap baskets:
    (1) Special construction services relating to services in Sec. 61.42 
(b)(1), (b)(2), and (b)(3);
    (2) All other special construction services;
    (3) American Telephone and Telegraph Company Tariff F.C.C. No. 11 
services;

[[Page 125]]

    (4) American Telephone and Telegraph Company Tariff F.C.C. No. 12 
services;
    (5) American Telephone and Telegraph Company Tariff F.C.C. No. 16 
services;
    (6) Services subject to below-the-line accounting;
    (7) International private line and record carrier services;
    (8) Contract-based tariffs;
    (9) Services removed from price cap regulation pursuant to the 
Report and Order in Docket No. 90-132;
    (10)  [Reserved]
    (11) All other promotional offerings;
    (12) Custom tariff services;
    (13) Readyline 800 service;
    (14) AT&T 800 service;
    (15) Megacom 800 service;
    (16) Other 800 services; and
    (17) Commercial services.
    (18) Such other services as the Commission may specify.
    (d) Each local exchange carrier subject to price cap regulation 
shall establish baskets of services as follows:
    (1) A basket for the common line interstate access elements as 
described in Secs. 69.115, 69.152, 69.154, and 69.157 of this chapter, 
and that portion of the interstate access element described in 
Sec. 69.153 of this chapter that recovers common line interstate access 
revenues;
    (2) A basket for traffic sensitive switched interstate access 
elements;
    (3) A basket for trunking services as described in Secs. 69.110, 
69.111, 69.112, 69.114, 69.125(b), and 69.155 of this chapter, and that 
portion of the interstate access element described in Sec. 69.153 of 
this chapter that recovers residual interconnection charge revenues;
    (4) To the extent that a local exchange carrier specified in 
Sec. 61.41(a) (2) or (3) offers interstate interexchange services that 
are not classified as access services for the purpose of part 69 of this 
chapter, such exchange carrier shall establish a fourth basket for such 
services.
    (5) To the extent that a local exchange carrier specified in 
Sec. 61.41(a) (2) or (3) offers interstate video dialtone services, a 
basket for basic video dialtone services as described in Sec. 63.54 of 
this chapter.
    (6) A basket for the marketing expenses described in Sec. 69.156 of 
this chapter, including those recovered through End User Common Line 
charges and Presubscribed Interexchange Carrier charges.
    (e)(1) The traffice sensitive switched interstate access basket 
shall contain such services as the Commission shall permit or require, 
including the following service categories:
    (i) Local switching as described in Sec. 69.106(f) of this chapter;
    (ii) Information, as described in Sec. 69.109 of this chapter;
    (iii) Data base access services;
    (iv) Billing name and address, as described in Sec. 69.128 of this 
chapter;
    (v) Local switching trunk ports, as described in Sec. 69.106(f)(1) 
of this chapter; and
    (vi) Signalling transfer point port termination, as described in 
Sec. 69.125(c) of this chapter.
    (2) The trunking basket shall contain such transport and special 
access services as the Commission shall permit or require, including the 
following service categories and subcategories:
    (i) Voice grade entrance facilities, voice grade direct-trunked 
transport, voice grade dedicated signalling transport, voice grade 
special access, WATS special access, metallic special access, and 
telegraph special access services;
    (ii) Audio and video services;
    (iii) High capacity flat-rated transport, high capacity special 
access, and DDS services, including the following service subcategories:
    (A) DS1 entrance facilities, DS1 direct-trunked transport, DS1 
dedicated signalling transport, and DS1 special access services; and
    (B) DS3 entrance facilities, DS3 direct-trunked transport, DS3 
dedicated signalling transport, and DS3 special access services;
    (iv) Wideband data and wideband analog services;
    (v) Tandem-switched transport, as described in Sec. 69.111 of this 
chapter; and
    (vi) Interconnection charge, as recovered in Secs. 69.153 and 69.155 
of this chapter.
    (vii) Signalling for tandem switching, as described in Sec. 69.129 
of this chapter.

[[Page 126]]

    (f) Each local exchange carrier subject to price cap regulation 
shall exclude from its price cap baskets such services or portions of 
such services as the Commission has designated or may hereafter 
designate by order.
    (g) New services, other than those within the scope of paragraphs 
(c) and (f) of this section, must be included in the affected basket at 
the first annual price cap tariff filing following completion of the 
base period in which they are introduced. To the extent that such new 
services are permitted or required to be included in new or existing 
service categories within the assigned basket, they shall be so included 
at the first annual price cap tariff filing following completion of the 
base period in which they are introduced.

[54 FR 19842, May 8, 1989, as amended at 55 FR 42382, Oct. 19, 1990; 55 
FR 50558, Dec. 7, 1990; 56 FR 5956, Feb. 14, 1991; 56 FR 55239, Oct. 25, 
1991; 57 FR 54718, Nov. 20, 1992; 58 FR 7868, Feb. 10, 1993; 58 FR 
29552, May 21, 1993; 58 FR 31914, June 7, 1993; 58 FR 36145, July 6, 
1993; 59 FR 10301, Mar. 4, 1994; 59 FR 32930, June 27, 1994; 60 FR 4569, 
Jan. 24, 1995; 60 FR 13639, Mar. 14, 1995; 60 FR 52346, Oct. 6, 1995; 62 
FR 31930, June 11, 1997]



Sec. 61.43  Annual price cap filings required.

    Carriers subject to price cap regulation shall submit annual price 
cap tariff filings that propose rates for the upcoming year, that make 
appropriate adjustments to their PCI, API, and SBI values pursuant to 
Secs. 61.44 through 61.47, and that incorporate the costs and rates of 
new services into the PCI, API, or SBI calculations pursuant to 
Secs. 61.44(g), 61.45(g), 61.46(b), and 61.47 (b) and (c). Carriers may 
propose rate or other tariff changes more often than annually, 
consistent with the requirements of Sec. 61.59.

[54 FR 19842, May 8, 1989, as amended at 55 FR 42383, Oct. 19, 1990]



Sec. 61.44  Adjustments to the PCI for Dominant Interexchange Carriers.

    (a) Dominant interexchange carriers subject to price cap regulation 
shall file adjustments to the PCI for each basket as part of the annual 
price cap tariff filing, and shall maintain updated PCIs to reflect the 
effect of mid-year access and exogenous cost changes.
    (b) Subject to paragraph (d) of this section, adjustments to each 
PCI of dominant interexchange carriers subject to price cap regulation 
shall be made pursuant to the following formula:

PCIt=PCIt-1[1+w(GNP-PI-X)+ Y/R+ 
          Z/R]

where
GNP-PI=the percentage change in the GNP-PI between the quarter ending 
          six months prior to the effective date of the new annual 
          tariff and the corresponding quarter of the previous year,
X=productivity factor of 3.0%,
 Y=(new access rate--access rate at the time the PCI was 
          updated to PCIt-1)  x  (base period demand),
 Z=the dollar effect of current regulatory changes when 
          compared to the regulations in effect at the time the PCI was 
          updated to PCIt-1, measured at base period level of 
          operations,
R=base period quantities for each rate element ``i'', multiplied by the 
          price for each rate element ``i'' at the time the PCI was 
          updated to PCIt-1,
w=R - (access rate in effect at the time the PCI was updated to 
          PCIt-1  x  base period demand) +  Z, all 
          divided by R,
PCIt=the new PCI value, and
PCIt-1=the immediately preceding PCI value.

    (c) The exogenous cost changes represented by the term `` 
Z'' in the formula detailed in paragraph (b) of this section, shall be 
limited to those cost changes that the Commission shall permit or 
require, and include those caused by:
    (1) The completion of the amortization of depreciation reserve 
deficiencies;
    (2) Changes in the Uniform System of Accounts;
    (3) Changes in the Separations Manual;
    (4) The reallocation of investment from regulated to nonregulated 
activities pursuant to Sec. 64.901; and
    (5) Such tax law changes and other extraordinary exogenous cost 
changes as the Commission shall permit or require.

These exogenous cost changes shall be apportioned on a cost-causative 
basis between price cap services as a group, and excluded services as a 
group. Exogenous cost changes thus attributed to

[[Page 127]]

price cap services shall be further apportioned on a cost-causative 
basis among price cap baskets.

    (d) In calculating the `` Y'' variable in the formula 
detailed in paragraph (b) of this section:
    (1) The net change in total non-traffic sensitive access costs for 
all capped services (in all baskets), calculated at base period demand, 
shall be allocated among the baskets in proportion to each basket's 
share of total base period non-traffic sensitive minutes of access (both 
originating and terminating);
    (2) The net change in total traffic sensitive access costs for all 
capped services (in all baskets), calculated at base period demand, 
shall be allocated among the baskets in proportion to each basket's 
share of total base period traffic sensitive minutes of access; and
    (3) Changes in special access costs in each basket, calculated at 
base period demand, shall be assigned directly to the baskets in which 
such costs are incurred.
    (e) In calculating the ``w'' variable in the formula detailed in 
paragraph (b) of this section, the access costs that must be subtracted 
from the ``R'' variable shall be apportioned among the baskets in a 
manner that is consistent with the methodology provided in paragraph (d) 
of this section for calculating the `` Y'' in each basket.
    (f) The ``w(GNP-PI - X)'' component of the PCI formula shall be 
employed only in the adjustment made in connection with the annual price 
cap filing.
    (g) The exogenous cost changes and changes in access costs caused by 
new services subject to price cap regulation must be included in the 
appropriate PCI calculations under paragraph (b) of this section 
beginning at the first annual price cap tariff filing following 
completion of the base period in which they are introduced.
    (h) In the event that a price cap tariff becomes effective, which 
tariff results in an API value (calculated pursuant to Sec. 61.46) that 
exceeds the currently applicable PCI value, the PCI value shall be 
adjusted upward to equal the API value.

[54 FR 19842, May 8, 1989, as amended at 55 FR 42383, Oct. 19, 1990]



Sec. 61.45  Adjustments to the PCI for Local Exchange Carriers.

    (a) Local exchange carriers subject to price cap regulation shall 
file adjustments to the PCI for each basket as part of the annual price 
cap tariff filing, and shall maintain updated PCIs to reflect the effect 
of mid-year exogenous cost changes.
    (b) Adjustments to local exchange carrier PCIs for the baskets 
designated in Sec. 61.42(d) (2), (3), (4), (5), and (6) shall be made 
pursuant to the formula set forth in Sec. 61.44(b), and as further 
explained in Sec. 61.44 (e), (f), (g), and (h).
    (1) Notwithstanding the value of X defined in Sec. 61.44(b), the X 
value applicable to the baskets specified in Sec. 61.42(d) (2), (3), and 
(6) shall be 6.5%.
    (2) For the basket specified in Sec. 61.42(d)(4), the value of X, 
for all local exchange carriers subject to price cap regulation, shall 
be 3.0%.
    (3) Notwithstanding the value of X defined in Sec. 61.44(b), the 
value of X applicable to the basket specified in Sec. 61.42(d)(5) shall 
be 0%.
    (c)(1) Subject to paragraphs (c)(2) and (e) of this section, 
adjustments to local exchange carrier PCIs for the basket designated in 
Sec. 61.42(d)(1) shall be made pursuant to the following formula:

PCI1=PCIt-1[1+w[(GDP-PI-X-(g/2))/(1+(g/
2))]+ Z/R]
where
GDP-PI=the percentage change in the GDP-PI between the quarter ending 
six months prior to the effective date of the new annual tariff and the 
corresponding quarter of the previous year,
X=productivity factor of 6.5%,
g=the ratio of minutes of use per access line during the base period, to 
minutes of use per access line during the previous base period, minus 1,
 Z=the dollar effect of current regulatory changes when 
compared to the regulations in effect at the time the PCI was updated to 
PCIt-1, measured at base period level of operations,
R=base period quantities for each rate element ``i'', multiplied by the 
price for each rate element ``i'' at the time the PCI was updated to 
PCIt-1,
w=R+ Z, all divided by R,
PCIt=the new PCI value, and

[[Page 128]]

PCIt-1=the immediately preceding PCI value.

    (2) The formula set forth in paragraph (c)(1) of this section shall 
be used by a local exchange carrier subject to price cap regulation only 
if that carrier is imposing a carrier common line charge pursuant to 
Sec. 69.154 of this chapter. Otherwise, adjustments to local exchange 
carrier PCIs for the basket designated in Sec. 61.42(d)(1) shall be made 
pursuant to the formula set forth in Sec. 61.44(b), and paragraphs (i) 
and (j) of this section, and as further explained in Sec. 7thnsp;61.44 
(e), (f), (g), and (h). For the purposes of this paragraph, and 
notwithstanding the value of X defined in Sec. 61.44(b), the X value 
applicable to the basket specified in Sec. 7thnsp;61.42(d)(1), shall be 
6.5%.
    (d) The exogenous cost changes represented by the term `` 
Z'' in the formula detailed in paragraphs (b) and (c) of this section 
shall be limited to those cost changes that the Commission shall permit 
or require by rule, rule waiver, or declaratory ruling.
    (1) Subject to further order of the Commission, those exogenous 
changes shall include cost changes caused by:
    (i) The completion of the amortization of depreciation reserve 
deficiencies;
    (ii) Such changes in the Uniform System of Accounts, including 
changes in the Uniform System of Accounts requirements made pursuant to 
Sec. 32.16 of this chapter, as the Commission shall permit or require be 
treated as exogenous by rule, rule waiver, or declaratory ruling.
    (iii) Changes in the Separations Manual;
    (iv) Changes to the level of obligation associated with the Long 
Term Support Fund and the Transitional Support Fund described in 
Sec. 69.612;
    (v) The reallocation of investment from regulated to nonregulated 
activities pursuant to Sec. 64.901;
    (vi) Such tax law changes and other extraordinary cost changes as 
the Commission shall permit or require be treated as exogenous by rule, 
rule waiver, or declaratory ruling.
    (vii) Retargeting the PCI to the level specified by the Commission 
for carriers whose base year earnings are below the level of the lower 
adjustment mark.
    (viii) Inside wire amortizations.
    (ix) The completion of amortization of equal access expenses.
    (2)(i) Local exchange carriers specified in Sec. 61.41 (a)(2) or 
(a)(3) shall also make such temporary exogenous cost changes as may be 
necessary to reduce PCIs to give full effect to any sharing of base 
period earnings required by the sharing mechanism set forth in the 
Commission's Second Report and Order in Common carrier Docket No. 87-
313, FCC 90-314, adopted September 19, 1990. Such exogenous cost changes 
shall include interest, computed at the prescribed rate of return, from 
the day after the end of the period giving rise to the adjustment, to 
the midpoint of the period when the adjustment is in effect.
    (ii) Local exchange carriers specified in Sec. 61.41(a)(2) or (a)(3) 
shall not be subject to the sharing mechanism set forth in the 
Commission's Second Report and Order in Common Carrier Docket No. 87-
313, FCC 90-314, adopted September 19, 1990, with respect to earnings 
accruing on or after July 1, 1997/ This paragraph has no effect on any 
sharing obligation of any local exchange carrier relating to earnings 
accrued before July 1, 1997.
    (3) Local exchange carriers specified in Sec. 61.41 (a)(2) or (a)(3) 
of this part shall, in their annual access tariff filing, recognize all 
exogenous cost changes attributable to modifications during the coming 
tariff year in the obligations specified in Sec. 61.45(d)(1)(iv) as well 
as those changes attributable to alterations in their Subscriber Plant 
Factor and the Dial Equipment Minutes factor, and completions of inside 
wire amortizations and reserve deficiency amortizations.
    (4) Exogenous cost changes shall be apportioned on a cost-causative 
basis between price cap services as a group, and excluded services as a 
group. Exogenous cost changes thus attributed to price cap services 
shall be further apportioned on a cost-causative basis among the price 
cap baskets.
    (e) The ``w[(GDP-PI-X-[g/2))/(1+(g/2))]'' component of the PCI 
formula

[[Page 129]]

contained in paragraph (c) of this section shall be employed only in the 
adjustment made in connection with the annual price cap filing.
    (f) The exogenous costs caused by new services subject to price cap 
regulation must be included in the appropriate PCI calculations under 
paragraph (c) of this section beginning at the first annual price cap 
tariff filing following completion of the base period in which such 
services are introduced.
    (g) In the event that a price cap tariff becomes effective, which 
tariff results in an API value (calculated pursuant to Sec. 61.46) that 
exceeds the currently applicable PCI value, the PCI value shall be 
adjusted upward to equal the API value.
    (h) [Reserved]
    (i)(1) Notwithstanding the provisions of paragraphs (b) and (c) of 
this section, and subject to the limitations of paragraph (j) of this 
section, price cap local exchange carriers that are recovering 
interconnection charge revenues through per-minute rates pursuant to 
Sec. 69.124 or Sec. 69.155 of this chapter shall targt, to the extent 
necessary to eliminate the recovery of any residual interconnection 
charge revenues through per-minute rates, any PCI reductions associated 
with the baskets designated in Sec. 61.42(d) (1) and (2) that result 
from the application of the formula in Sec. 61.45(c) and, pursuant to 
Sec. 61.45(b), application of the formula in Sec. 61.44(b) as further 
explained in Sec. 61.44 (e), (f), (g), and (h), to the PCI for the 
basket designated in Sec. 61.42(d)(3), with no adjustment being made to 
the PCIs for the baskets designated in Sec. 61.42(d) (1) and (2) as a 
result of the application of the formulas in Secs.  61.44(b) and 
61.45(c). These reductions are to be made after the adjustment is made 
to the PCI for the basket designated in Sec. 61.42(d)(3) resulting from 
the application of the formula in Sec. 61.44(b), as further explained in 
Sec. 61.44 (e), (f), (g), and (h).
    (2) Notwithstanding the provisions of paragraph (b) of this section, 
and subject to the limitations of paragraph (j) of this section, price 
cap local exchange carriers that are recovering interconnection charge 
revenues through per-minute rates pursuant to Sec. 69.155 of this 
chapter shall target, to the extent necessary to eliminate the recovery 
of any residual interconnection charge revenues through per-minute 
rates, any PCI reduction associated with the basket designated in 
Sec. 61.42(d)(6) that result from the application, pursuant to 
Sec. 61.45(b), of the formula in Sec. 61.44(b), as further explained in 
Sec. 61.44 (e), (f), (g), and (h), to the PCI for the basket designated 
in Sec. 61.42(d)(3), with no adjustment being made to the PCIs for the 
basket designated in Sec. 61.42(d)(6) as a result of the application of 
the formula in Sec. 61.44(b). This reduction it to be made after any 
adjustment made pursuant to paragraph (i)(1) of this section.
    (3) Through December 31, 1997, the reduction in the PCI for the 
basket designated in Sec. 61.42(d)(3) that results from paragraph (i)(1) 
of this section shall be determined by diciding the sum of the dollar 
effects of the PCI reductions that would have applied to the baskets 
designated in Sec. 61.42(d)(1) and (d)(2) except for the provisions of 
paragraph (i)(1) of this section by the dollar amount associated with 
the PCI for the basket designated in Sec. 61.42(d)(3), and multiplying 
the PCI for the basket designated in Sec. 61.42(d)(3) by one minus the 
resulting ratio.
    (4) Effective January 1, 1998, the reduction in the PCI for the 
basket designated in Sec. 61.42(d)(3) that results from paragraphs 
(i)(1) and (i)(2) of this section shall be determined by dividing the 
sum of the dollar effects of the PCI reductions that would have been 
applied to the baskets designated in Sec. 61.42(d)(1), (d)(2), and 
(d)(6), except for the provisions of paragraphs (i)(1) and (i)(2) of 
this section, by the dollar amount associated with the PCI for the 
basket designated in Sec. 61.42(d)(3), and multiplying the PCI for the 
basket designated in Sec. 61.42(d)(3) by one minus the resulting ratio.
    (j) In determining the extent of the targeting that shall occur 
pursuant to paragraphs (i)(1) and (i)(1) of this section, local exchange 
carriers shall (1) compute their anticipated residual interconnection 
charge amount by excluding revenues that are expected to be reallocated 
to cost-causative facilities-based charges in the future. To determine 
interconnection charge amounts so excluded in connection with the July 
1, 1997 tariff filings, the

[[Page 130]]

following local exchange carriers shall use as an estimate of the 
residual interconnection charge revenues the specified residual 
interconnection charge percentage: NYNEX, 77.63 percent; BellSouth, 
56.93 persent; U S West, 59.14 percent; Bell Atlantic, 63.96 percent; 
Southwestern Bell Telephone, 69.11 percent; and Pacific Bell and Nevada 
Bell, 53.52 percent. Each remaining price cap local exchange carrier 
shall estimate a residual interconnection charge in an amount equal to 
55 percent of its current interconnection charge revenues. For 
subsequent tariff filings in which the PCI reductions are to be targeted 
to the interconnection charge, these initial estimates shall be adjusted 
to reflect the actual amounts that have or will be reallocated. If the 
use of these estimates results in more PCI reductions being targeted to 
the interconnection charge that required to eliminate the per-minute 
interconnection charge, the local exchange carrier shall make the 
necessary exogenous adjustments to reverse the effects of the access 
targeting,
    (2) Not include the amount of any exogenous adjustments reflected in 
the z component of the formulas in Secs. 61.44(b) and 61.45(c). Any such 
exogenous adjustments shall be reflected in the various PCIs and SIBs in 
the same manner as they would if there were no targeting.
    (k) The calculation of the PCI for the basket designated in 
Sec. 61.42(d)(3) shall include any residual interconnection charge 
revenues recovered pursuant to Secs. 69.153 and 69.155 of this chapter.
    (l) The calculation of the PCI for the basket designated in 
Sec. 61.42(d)(6) shall include any marketing expense revenues recovered 
pursuant to Secs. 69.153 and 69.156 of this chapter.

[55 FR 42383, Oct. 19, 1990; 55 FR 50558, Dec. 7, 1990, as amended at 56 
FR 21617, May 10, 1991; 58 FR 36148, July 6, 1993; 60 FR 19527, Apr. 19, 
1995; 60 FR 52346, Oct. 6, 1995; 62 FR 31930, 31941, June 11, 1997; 62 
FR 40460, July 29, 1997]



Sec. 61.46  Adjustments to the API.

    (a) Except as provided in paragraphs (d) and (e) of this section, in 
connection with any price cap tariff filing proposing rate changes, the 
carrier must calculate an API for each affected basket pursuant to the 
following methodology:

APIt = APIt-1 [i vi 
          (Pt/Pt-1)i]
where
APIt = the proposed API value,
APIt-1 = the existing API value,
Pt = the proposed price for rate element ``i,''
Pt-1 = the existing price for rate element ``i,'' and
vi = the current estimated revenue weight for rate element 
          ``i,'' calculated as the ratio of the base period demand for 
          the rate element ``i'' priced at the existing rate, to the 
          base period demand for the entire basket of services priced at 
          existing rates.

    (b) New services subject to price cap regulation must be included in 
the appropriate API calculations under paragraph (a) of this section 
beginning at the first annual price cap tariff filing following 
completion of the base period in which they are introduced. This index 
adjustment requires that the demand for the new service during the base 
period must be included in determining the weights used in calculating 
the API.
    (c) Any price cap tariff filing proposing rate restructuring shall 
require an adjustment to the API pursuant to the general methodology 
described in paragraph (a) of this section. This adjustment requires the 
conversion of existing rates into rates of equivalent value under the 
proposed structure, and then the comparison of the existing rates that 
have been converted to reflect restructuring to the proposed 
restructured rates. This calculation may require use of carrier data and 
estimation techniques to assign customers of the preexisting service to 
those services (including the new restructured service) that will remain 
or become available after restructuring.
    (d)(1) Subject to paragraph (d)(2) of this section, and in 
connection with any price cap tariff proposing changes to rates for 
services in the basket designated in Sec. 61.42(d)(1), the maximum 
allowable carrier common line (CCL) charges shall be computed pursuant 
to the following methodology:

CCLMOU=CLMOU * (1+ % change in CL 
          PCI)-(EUCLMOU+PICCMOU)*1/(1+(g/2))

Where:

CCLMOU=the sum of each of the proposed Carrier Common Line 
          rates multiplied by its

[[Page 131]]

          corresponding base period Carrier Common Line minutes of use, 
          divided by the sum of all types of base period Carrier Common 
          Line minutes of use,
CLMOU=the sum of each of the existing maximum allowable 
          Carrier Common Line rates multiplied by its corresponding base 
          period Carrier Common Line minutes of use, plus each existing 
          maximum allowable End User Common Line (EUCL) rate multiplied 
          by its corresponding base period lines, plus the common line 
          portion of each existing maximum allowable Presubscribed 
          Interexchange Carrier Charge (PICC) multiplied by its 
          corresponding base period lines, divided by the sum of all 
          types of base period Carrier Common Line minutes of use,
EUCLMOU= maximum allowable End User Common Line rates 
          multiplied by base period lines, and divided by the sum of all 
          types of base period Carrier Common Line minutes of use,
PICCMOU= the common line portion of maximum allowable 
          Presubscribed Interexchange Carrier charge rates multiplied by 
          base period lines, and divided by the sum of all types of base 
          period Carrier Common Line minutes of use, and
g= the ratio of minutes of use per access line during the base period to 
          minutes of use per access line during the previous base 
          period, minus 1.

    (2) The formula set forth in paragraph (d)(1) of this section shall 
be used by a local exchange carrier subject to price cap regulation only 
if that carrier is imposing a per-minute carrier common line charge 
pursuant to Sec. 69.154 of this chapter. Otherwise, adjustments to local 
exchange carrier APIs for the basket designated in Sec. 61.42(d)(1) 
shall be made pursuant to the formula set forth in paragraph (a) of this 
section.
    (e)(1) In addition, for the purposes of paragraph (d) of this 
section, ``Existing Carrier Common Line Rates'' shall include existing 
originating premium, originating non-premium, terminating premium and 
terminating non-premium rates; and ``End User Common Line Rates'' used 
to calculate the CLMOU and the EUCLMOU factors 
shall include, but not be limited to, Residential and Single Line 
Business rates, Centrex rates, and the Special Access surcharge.
    (2) For purposes of paragraph (d) of this section, ``each existing 
Presubscribed Interexchange Carrier Charge'' shall include all the 
charges specified in Sec. 69.153 of this chapter.
    (f) The ``1/(1+(g/2)'' component of the CCLMOU formula 
contained in paragraph (d) shall be employed only in the adjustment made 
in connection with the annual price cap filing.
    (g) The calculation of the API for the basket designated in 
Sec. 61.42(d)(3) shall include any residual interconnection charge 
revenues recovered pursuant to Secs. 69.153 and 69.155 of this chapter.
    (h) The calculation of the API for the basket designated in 
Sec. 61.42(d)(6) shall include any marketing expense revenues recovered 
pursuant to Secs. 69.153 and 69.156 of this chapter.

[54 FR 19843, May 8, 1989, as amended at 55 FR 42383, Oct. 19, 1990; 55 
FR 50558, Dec. 7, 1990; 62 FR 31931, June 11, 1997]



Sec. 61.47  Adjustments to the SBI; pricing bands.

    (a) In connection with any price cap tariff filing proposing changes 
in the rates of service categories or subcategories, the carrier must 
calculate an SBI value for each affected service category or subcategory 
pursuant to the following methodology:

SBIt = SBIt-1[i 
          vi(Pt/Pt-1)i]

where
SBIt = the proposed SBI value,
SBIt-1 = the existing SBI value,
Pt = the proposed price for rate element ``i,''
Pt-1 = the existing price for rate element ``i,'' and
vi = the current estimated revenue weight for rate element 
          ``i,'' calculated as the ratio of the base period demand for 
          the rate element ``i'' priced at the existing rate, to the 
          base period demand for the entire group of rate elements 
          comprising the service category priced at existing rates.

    (b) New services that are added to existing service categories or 
subcategories must be included in the appropriate SBI calculations under 
paragraph (a) of this section beginning at the first annual price cap 
tariff filing following completion of the base period in which they are 
introduced. This index adjustment requires that the demand for the new 
service during the base period must be included in determining the 
weights used in calculating the SBI.
    (c) In the event that the introduction of a new service requires the 
creation

[[Page 132]]

of a new service category or subcategory, a new SBI must be established 
for that service category or subcategory beginning at the first annual 
price cap tariff filing following completion of the base period in which 
the new service is introduced. The new SBI should be initialized at a 
value of 100, corresponding to the service category or subcategory rates 
in effect the last day of the base period, and thereafter should be 
adjusted as provided in paragraph (a) of this section.
    (d) Any price cap tariff filing proposing rate restructuring shall 
require an adjustment to the affected SBI pursuant to the general 
methodology described in paragraph (a) of this section. This adjustment 
requires the conversion of existing rates in the rate element group into 
rates of equivalent value under the proposed structure, and then the 
comparison of the existing rates that have been converted to reflect 
restructuring to the proposed restructured rates. This calculation may 
require use of carrier data and estimation techniques to assign 
customers of the preexisting service to those services (including the 
new restructured service) that will remain or become available after 
restructuring.
    (e) Pricing bands shall be established each tariff year for each 
service category and subcategory within a basket. Except as provided in 
paragraphs (f), (g), and (h) of this section, each band shall limit the 
pricing flexibility of the service category or subcategory, as reflected 
in the SBI, to an annual increase of five percent, relative to the 
percentage change in the PCI for that basket, measured from the levels 
in effect on the last day of the preceding tariff year. For local 
exchange carriers subject to price caps as that term is defined in 
Sec. 61.3(x), there shall be no lower pricing band for any service 
category or subcategory.
    (f) Dominant interexchange carriers. (1) The upper pricing bands for 
the evening MTS and night/weekend MTS service categories shall limit the 
annual upward pricing flexibility for those service categories, as 
reflected in their SBIs, to four percent, relative to the percentage 
change in the PCI for the residential and small business services 
basket, measured from the last day of the preceding tariff year.
    (2) Dominant interexchange carriers subject to price cap regulation 
shall calculate a composite average rate for services contained in the 
residential and small business services basket that are purchased by 
residential customers. Notwithstanding paragraph (f)(1) of this section, 
the annual upward pricing flexibility for this composite average rate 
shall be limited to one percent, relative to the percentage change in 
the PCI for the residential and small business services basket, measured 
from the last day of the preceding tariff year.
    (g)(1) Local Exchange Carriers--Service Categories and 
Subcategories. Local exchange carriers subject to price cap regulation 
as that term is defined in Sec. 61.3(x) shall use the methodology set 
forth in paragraphs (a) through (d) of this section to calculate two 
separate subindexes: One for the DS1 services offered by such carriers 
and the other for the DS3 services offered by such carriers. The annual 
pricing flexibility for each of these two subindexes shall be limited to 
an annual increase of five percent, relative to the percentage change in 
the PCI for the special access services basket, measured from the last 
day of the preceding tariff year. There shall be no lower pricing band 
for these two subindexes.
    (2) The upper pricing band for the tandem-switched transport service 
category shall limit the annual upward pricing flexibility for this 
service category, as reflected in its SBI, to two percent, relative to 
the percentage change in the PCI for the trunking basket, measured from 
the levels in effect on the last day of the preceding tariff year. There 
shall be no lower pricing band for the tandem-switched transport service 
category.
    (3) The upper pricing band for the interconnection charge service 
category shall limit the annual upward pricing flexibility for this 
service category, as reflected in its SBI, to zero percent, relative to 
the percentage change in the PCI for the trunking basket, measured from 
the levels in effect on the last day of the preceding tariff year. There 
shall be no lower pricing band for the interconnection charge.

[[Page 133]]

    (4) Local exchange carriers subject to price cap regulation as that 
term is defined in Sec. 61.3(x) shall use the methodology set forth in 
paragraphs (a) through (d) of this section to calculate a separate 
subindex for the 800 data base vertical features offered by such 
carriers. The annual pricing flexibility for this subindex shall be 
limited to an annual increase of five percent, relative to the 
percentage change in the PCI for the traffic sensitive basket, measured 
from the last day of the preceding tariff year. There shall be no lower 
pricing band for this subindex.
    (5) The upper pricing band for the ``Signalling for tandem 
switching'' service category shall limit the upward pricing flexibility 
for this service category, as reflected in its SBI, to two percent, 
relative to the percentage change in the PCI for the trunking basket, 
measured from the levels in effect on the last day of the preceding 
tariff year. There shall be no lower pricing band for this service 
category.
    (6) [Reserved]
    (7) The initial level of the local switch trunk ports service 
category designated in Sec. 61.42(e)(1)(v) shall be established to 
include those costs identified pursuant to Sec. 69.106(f)(1) of this 
chapter. This level shall be assigned a value of 100, and thereafter 
must be adjusted as provided in paragraph (a) of this section, subject 
to the banding restrictions of paragraph (e) of this section.
    (h) Local exchange carriers--Density pricing zones. (1) In addition 
to the requirements of paragraphs (g)(1) and (g)(2) of this section, 
those local exchange carriers subject to price cap regulation that have 
established density pricing zones pursuant to Sec. 69.123 of this 
chapter shall use the methodology set forth in paragraphs (a) through 
(d) of this section to calculate separate subindexes in each zone for 
each of the following groups of services:
    (i) DS1 entrance facilities, DS1 direct-trunked transport, DS1 
dedicated signalling transport, and DS1 special access services;
    (ii) DS3 entrance facilities, DS3 direct-trunked transport, DS3 
dedicated signalling transport, and DS3 special access services;
    (iii) Voice grade entrance facilities, voice grade direct-trunked 
transport, and voice grade dedicated signalling transport, and (if the 
Commission, by order, designates such services as subject to 
competition) voice grade special access;
    (iv) Tandem-switched transport; and
    (v) Such other special access services that the Commission may 
designate by order.
    (2) The annual pricing flexibility for each of the subindexes 
specified in paragraph (h)(1) of this section shall be limited to an 
annual increase of five percent, relative to the percentage change in 
the PCI for the trunking basket, measured from the levels in effect on 
the last day of the preceding tariff year. There shall be no lower 
pricing band for these subindexes.
    (i)(1) Through December 31, 1997, notwithstanding the requirements 
of paragraph (a) of this section, and subject to the limitations of 
Sec. 61.45(j), if a local exchange carrier is recovering interconnection 
charge revenues through per-minute rates pursuant to Sec. 69.124 or 
Sec. 69.155 of this chapter, any reductions to the PCI for the basket 
designated in Sec. 61.42(d)(3) resulting from the application of the 
provisions of Sec. 61.45 (b) and the formula in Sec. 61.44(b) and from 
application of the provisions of Sec. 61.45(i)(1) shall be directed to 
the SBI of the service category designated in Sec. 61.42(e)(2)(vi).
    (2) Effective January 1, 1998, notwithstanding the requirements of 
paragraph (a) of this section and subject to the limitations of 
Sec. 61.45(j), if a local exchange carrier is recovering interconnection 
charge revenues through per-minute rates pursuant to Sec. 69.155 of this 
chapter, any reductions to the PCI for the basket designated in 
Sec. 61.42(d)(3) resulting from the application of the provisions of 
Sec. 61.45(b) and the formula in Sec. 61.44(b) and from the application 
of the provisions of Sec. 61.45 (i)(1), and (i)(2) shall be directed to 
the SBI of the service category designated in Sec. 61.42(e)(2)(vi).
    (3) Through December 31, 1997, the SBI reduction required by 
paragraph (i)(1) of this section shall be determined by dividing the sum 
of the dollar amount of any PCI reduction required

[[Page 134]]

by Sec. 61.45(i)(1) by the dollar amount associated with the SBI for the 
service category designated in Sec. 61.42(e)(2)(vi), and multiplying the 
SBI for the service category designated in Sec. 61.42(e)(2)(vi) by one 
minus the resulting ratio.
    (4) Effective January 1, 1998, the SBI reduction required by 
paragraph (i)(2) of this section shall be determined by dividing the sum 
of the dollar amount of any PCI reduction required by Sec. 61.45 (i)(1) 
and (i)(2) by the dollar amount associated with the SBI for the service 
category designated in Sec. 61.42(e)(2)(vi), and multiplying the SBI for 
the service category designated in Sec. 61.42(e)(2)(vi) by one minus the 
resulting ratio.
    (j) The calculation of the SBI for the service category designated 
in Sec. 61.42(e)(2)(vi) shall include any residual interconnection 
charge revenues recovered pursuant to Secs. 69.153 and 69.155 of this 
chapter.

[54 FR 19843, May 8, 1989, as amended at 55 FR 42384, Oct. 19, 1990; 56 
FR 55239, Oct. 25, 1991; 57 FR 54331, Nov. 18, 1992; 58 FR 7868, Feb. 
10, 1993; 58 FR 48762, Sept. 17, 1993; 59 FR 10302, Mar. 4, 1994; 59 FR 
32930, June 27, 1994; 60 FR 19528, Apr. 19, 1995; 60 FR 52346, Oct. 6, 
1995; 62 FR 4659, Jan. 31, 1997; 62 FR 31932, June 11, 1997; 62 FR 
40460, July 29, 1997]



Sec. 61.48  Transition rules for price cap formula calculations.

    (a) Dominant interexchange carriers subject to price cap regulation 
shall file initial price cap tariffs May 17, 1989, to be effective July 
1, 1989.
    (b)(1) In connection with the initial price cap tariff filing 
described in paragraph (a) of this section, each PCI, API, and SBI shall 
be assigned an initial value prior to adjustment of 100, corresponding 
to the costs and rates in effect as of December 31, 1988.
    (2) The PCI and API for offerings under Sec. 61.42(b)(3) shall be 
assigned a value equal to 100, corresponding to rates in effect as of 
August 1, 1991. Dominant interexchange carriers subject to price cap 
regulation shall file new business basket index levels with the first 
business basket tariff transmittal that is filed subsequent to the 
effective date of this rule.
    (c) Local exchange carriers subject to price cap regulation shall 
file initial price cap tariffs not later than November 1, 1990, to be 
effective January 1, 1991.
    (d)(1) In connection with the initial price cap filing described in 
paragraph (c) of this section, each PCI, API, and SBI shall be assigned 
an initial value prior to adjustment of 100, corresponding to the costs 
and rates in effect as of July 1, 1990.
    (2) Carriers electing price cap regulation under Sec. 61.41(a)(3) of 
this part in a year after 1991 shall file initial price cap tariffs not 
later than April 2 of the year of election, to be effective on July 1 of 
the year of election. Each PCI, API, and SBI shall be assigned an 
initial value prior to adjustment of 100, corresponding to the costs and 
rates in effect as of January 1 of the year of election.
    (e) In connection with the initial price cap filing described in 
paragraph (c) of this section, initial PCI calculations shall be made 
without adjustment for any changes in inflation or productivity. Annual 
price cap filings incorporating the full values of the GNP-PI and 
productivity offsets will commence April 2, 1991, with a scheduled 
effective date of July 1, 1991.
    (f) Local exchange carriers specified in Sec. 61.41(a) (2) or (3) 
shall, in their initial price cap filings described in paragraph (c) of 
this section, adjust their PCIs through use of an exogenous cost factor 
to account for the represcription of the rate of return, effective 
January 1, 1991.
    (g) Local Transport Restructure--Initial Rates. Local exchange 
carriers subject to price cap regulation shall set initial transport 
rates, as defined in Sec. 69.2(tt) of this chapter, according to the 
requirements set forth in Secs. 69.108, 69.110, 69.111, 69.112, 69.124, 
and 69.125 of this chapter.
    (h) Local Transport Restructure--Price Cap Transition Rules--(1) 
Definitions. The following definitions apply for purposes of paragraph 
(h) of this section:
    Effective date is March 4, 1994.
    Initial restructured rates are rates that are (or should have been) 
effective on the transport restructure date;
    Revenue weight of a given group of services included in a basket, 
service category, or subcategory is the ratio of base period demand for 
the given service rate elements included in the basket, service 
category, or subcategory priced at initial restructured rates, to

[[Page 135]]

the base period demand for the entire group of rate elements comprising 
the basket, service category, or subcategory priced at initial 
restructured rates; and
    Transport restructure date is the date on which local exchange 
carriers' initial transport rates, as defined in Sec. 69.2(tt) of this 
chapter, became effective.
    (2) Trunking Basket PCI and API. (i) On the effective date, the PCI 
value for the trunking basket, as defined in Sec. 61.42(d)(3), shall be 
computed by multiplying the API value for the special access basket on 
the day preceding the transport restructure date, by a weighted average 
of the following:
    (A) The ratio of the PCI value that applied to the special access 
basket on the day preceding the transport restructure date, to the API 
value that applied to the special access basket on the day preceding the 
transport restructure date, weighted by the revenue weight of the 
special access services included in the trunking basket; and
    (B) The ratio of the PCI value that applied to the traffic sensitive 
basket on the day preceding the transport restructure date, to the API 
value that applied to the traffic sensitive basket on the day preceding 
the transport restructure date, weighted by the revenue weight of the 
transport services included in the trunking basket.
    (ii) On the effective date, the API value for the trunking basket 
referred to in Sec. 61.42(e)(2) shall be equal to the API value for the 
special access basket on the day preceding the transport restructure 
date.
    (3) Service Category and Subcategory Pricing Bands for Flat-Rated 
Transport and Special Access. From the effective date through the end of 
the tariff year, the following shall govern instead of Secs. 61.47(e) 
and 61.47(g)(1). The pricing bands established for the voice grade and 
high capacity service categories referred to in Secs. 61.42(e)(2)(i) and 
61.42(e)(2)(iii) and the DS1 and DS3 service subcategories referred to 
in Secs.  61.42(e)(2)(iii)(A) and 61.42(e)(2)(iii)(B), shall limit the 
pricing flexibility of the service category or subcategory, as reflected 
in its SBI, as follows:
    (i) The upper pricing band shall be a weighted average of the 
following:
    (A) The upper pricing band that applied to the special access 
services included in the category or subcategory on the day preceding 
the transport restructure date, weighted by the revenue weight of the 
special access services included in the category or subcategory; and
    (B) 1.05 times the SBI value for the special access services 
included in the category or subcategory on the day preceding the 
transport restructure date, weighted by the revenue weight of the 
transport services included in the category or subcategory.
    (ii) The lower pricing band shall be a weighted average of the 
following:
    (A) The lower pricing band that applied to the special access 
services included in the category or subcategory on the day preceding 
the transport restructure date, weighted by the revenue weight of the 
special access services included in the category or subcategory; and
    (B) 0.90 times the SBI value for the special access services 
included in the category or subcategory on the day preceding the 
transport restructure date, weighted by the revenue weight of the 
transport services included in the category or subcategory.
    (iii) On the effective date, the SBI value for the category or 
subcategory shall be equal to the SBI value for the corresponding 
special access category or subcategory on the day preceding the 
effective date.
    (4) Tandem-Switched Transport and Interconnection Charge SBIs. On 
the effective date, the SBIs for the tandem-switched transport and 
interconnection charge service categories defined in Sec. 61.42(e)(2) 
(v) and (vi) shall be assigned an initial value prior to adjustment of 
100, corresponding to the initial restructured rates in those 
categories.
    (5) Tandem-Switched Transport and Interconnection Charge Service 
Category Pricing Bands. From the effective date through the end of the 
tariff year, the following shall govern instead of Sec. 61.47 (g)(2) and 
(g)(3):
    (i) The upper pricing band for the tandem-switched transport service 
category shall limit the upward pricing flexibility for this service 
category, as

[[Page 136]]

reflected in its SBI, to two percent, measured from the initial 
restructured rates for tandem-switched transport. The lower pricing band 
for the tandem-switched transport service category shall limit the 
downward pricing flexibility for this service category, as reflected in 
its SBI, to ten percent, measured from the initial restructured rates 
for tandem-switched transport.
    (ii) The upper pricing band for the interconnection charge service 
category shall limit the upward pricing flexibility for this service 
category, as reflected in its SBI, to zero percent, measured from the 
initial restructured rate for the interconnection charge.
    (i) Transport and Special Access Density Pricing Zone Transition 
Rules--(1) Definitions. The following definitions apply for purposes of 
paragraph (i) of this section:
    Earlier date is the earlier of the special access zone date and the 
transport zone date.
    Earlier service is special access if the special access zone date 
precedes the transport zone date, and is transport if the transport zone 
date precedes the special access zone date.
    Later date is the later of the special access zone date and the 
transport zone date.
    Later service is transport if the special access zone date precedes 
the transport zone date, and is special access if the transport zone 
date precedes the special access zone date.
    Revenue weight of a given group of services included in a zone 
category is the ratio of base period demand for the given service rate 
elements included in the category priced at existing rates, to the base 
period demand for the entire group of rate elements comprising the 
category priced at existing rates.
    Special access zone date is the date on which a local exchange 
carrier tariff establishing divergent special access rates in different 
zones, as described in Sec. 69.123(c) of this chapter, becomes 
effective.
    Transport zone date is the date on which a local exchange carrier 
tariff establishing divergent switched transport rates in different 
zones, as described in Sec. 69.123(d) of this chapter, becomes 
effective.
    (2) Simultaneous Introduction of Special Access and Transport Zones. 
Local exchange carriers subject to price cap regulation that have 
established density pricing zones pursuant to Sec. 69.123 of this 
chapter, and whose special access zone date and transport zone date 
occur on the same date, shall initially establish density pricing zone 
SBIs and bands pursuant to the methodology in Sec. 61.47(h).
    (3) Sequential Introduction of Zones in the Same Tariff Year. 
Notwithstanding Sec. 61.47(h), local exchange carriers subject to price 
cap regulation that have established density pricing zones pursuant to 
Sec. 69.123 of this chapter, and whose special access zone date and 
transport zone date occur on different dates during the same tariff 
year, shall, on the earlier date, establish density pricing zone SBIs 
and pricing bands using the methodology described in Sec. 61.47(h), but 
applicable to the earlier service only. On the later date, such carriers 
shall recalculate the SBIs and pricing bands to limit the pricing 
flexibility of the services included in each density pricing zone 
category, as reflected in its SBI, as follows:
    (i) The upper pricing band shall be a weighted average of the 
following:
    (A) The upper pricing band that applied to the earlier services 
included in the zone category on the day preceding the later date, 
weighted by the revenue weight of the earlier services included in the 
zone category; and
    (B) 1.05 times the SBI value for the services included in the zone 
category on the day preceding the later date, weighted by the revenue 
weight of the later services included in the zone category.
    (ii) The lower pricing band shall be a weighted average of the 
following:
    (A) The lower pricing band that applied to the earlier services 
included in the zone category on the day preceding the later date, 
weighted by the revenue weight of the earlier services included in the 
zone category; and
    (B) 0.85 times the SBI value for the services included in the zone 
category on the day preceding the later date, weighted by the revenue 
weight of the later services included in the zone category.

[[Page 137]]

    (iii) On the later date, the SBI value for the zone category shall 
be equal to the SBI value for the category on the day preceding the 
later date.
    (4) Introduction of Zones in Different Tariff Years. Notwithstanding 
Sec. 61.47(h), those local exchange carriers subject to price cap 
regulation that have established density pricing zones pursuant to 
Sec. 69.123 of this chapter, and whose special access zone date and 
transport zone date do not occur within the same tariff year, shall, on 
the earlier date, establish density pricing zone SBIs and pricing bands 
using the methodology described in Sec. 61.47(h), but applicable to the 
earlier service only.
    (i) On the later date, such carriers shall use the methodology set 
forth in paragraphs (a) through (d) of Sec. 61.47 to calculate separate 
SBIs in each zone for each of the following groups of services:
    (A) DS1 special access services;
    (B) DS3 special access services;
    (C) DS1 entrance facilities, DS1 direct-trunked transport, and DS1 
dedicated signalling transport;
    (D) DS3 entrance facilities, DS3 direct-trunked transport, and DS3 
dedicated signalling transport;
    (E) Voice grade entrance facilities, voice grade direct-trunked 
transport, and voice grade dedicated signalling transport;
    (F) Tandem-switched transport; and
    (G) Such other special access services as the Commission may 
designate by order.
    (ii) From the later date through the end of the following tariff 
year, the annual pricing flexibility for each of the subindexes 
specified in paragraph (i)(4)(i) of this section shall be limited to an 
annual increase of five percent or an annual decrease of fifteen 
percent, relative to the percentage change in the PCI for the trunking 
basket, measured from the levels in effect on the last day of the tariff 
year preceding the tariff year in which the later date occurs.
    (iii) On the first day of the second tariff year following the 
tariff year during which the later date occurs, the local exchange 
carriers to which this paragraph applies shall establish the separate 
subindexes provided in Sec. 61.47(h)(1), and shall set the initial SBIs 
for those density pricing zone categories that are combined (specified 
in paragraphs (i)(4)(i)(A) and (i)(4)(i)(C), (i)(4)(i)(B) and 
(i)(4)(i)(D), and (i)(4)(i)(E) and (i)(4)(i)(G) of this section) by 
computing the weighted averages of the SBIs that applied to the formerly 
separate zone categories, weighted by the revenue weights of the 
respective services included in the zone categories.
    (j) Video Dialtone Services. For local exchange carriers subject to 
price cap regulation, the video dialtone services basket, as designated 
in Sec. 61.42(d)(5), shall be established with an initial PCI and API 
level of 100 in the first annual price cap tariff filing following 
competition of the base period in which the initial video dialtone 
service was introduced. The initial value of 100 for the PCI and API for 
video dialtone service prior to adjustment of inflation and productivity 
shall correspond to the rates in effect just prior to the effective date 
of the annual filing in which rates for video dialtone service are 
initially included in the video dialtone basket.
    (k) Marketing expenses. In the January 1, 1998 price cap tariff 
filing, local exchange carriers shall establish the marketing expense 
basket designated in Sec. 61.42(d)(6) with an initial PCI and API level 
of 100. The initial value of 100 for the PCI and API for marketing 
expenses shall correspond to the marketing expenses described in 
Sec. 69.156(a) of this chapter.

[54 FR 19843, May 8, 1989, as amended at 55 FR 42384, Oct. 19, 1990; 56 
FR 21617, May 10, 1991; 56 FR 55239, Oct. 25, 1991; 59 FR 10302, Mar. 4, 
1994; 60 FR 19528, Apr. 19, 1995; 60 FR 52346, Oct. 6, 1995; 62 FR 
31932, June 11, 1997]



Sec. 61.49  Supporting information to be submitted with letters of transmittal for tariffs of carriers subject to price cap regulation.

    (a) Each price cap tariff filing must be accompanied by supporting 
materials sufficient to calculate required adjustments to each PCI, API, 
and SBI pursuant to the methodologies provided in Secs. 61.44, 61.45, 
61.46, and 61.47, as applicable
    (b) Each price cap tariff filing that proposes rates that are within 
applicable bands established pursuant to

[[Page 138]]

Sec. 61.47, and that results in an API value that is equal to or less 
than the applicable PCI value, must be accompanied by supporting 
materials sufficient to establish compliance with the applicable bands, 
and to calculate the necessary adjustment to the affected APIs and SBIs 
pursuant to Secs. 61.46 and 61.47, respectively.
    (c) Each price cap tariff filing that proposes rates above the 
applicable band limits established in Sec. 61.47 (e), (f)(1), (g), and 
(h) or above the limit on composite average residential rates 
established in Sec. 61.47(f)(2), must be accompanied by supporting 
materials establishing substantial cause for the proposed rates.
    (d) Each price cap tariff filing that proposes rates that will 
result in an API value that exceeds the applicable PCI value must be 
accompanied by:
    (1) An explanation of the manner in which all costs have been 
allocated among baskets; and
    (2) Within the affected basket, a cost assignment slowing down to 
the lowest possible level of disaggregation, including a detailed 
explanation of the reasons for the prices of all rate elements to which 
costs are not assigned.
    (e) Each price cap tariff filing that proposes restructuring of 
existing rates must be accompanied by supporting materials sufficient to 
make the adjustments to each affected API and SBI required by 
Secs. 61.46(c) and 61.47(d), respectively.
    (f)(1) Each tariff filing by a dominant interexchange carrier, as 
specified by Commission order, that introduces a new service that will 
later be included in a basket must be accompanied by cost data 
sufficient to establish that the new service, and each unbundled element 
thereof, will generate a net revenue increase--measured against revenues 
generated from all services subject to price cap regulation, and 
calculated based upon present value--within the lesser of a 24-month 
period after an annual price cap tariff including the new service takes 
effect, or 36 months from the date the new service becomes effective. 
Each carrier making such a tariff filing must, at the time the new 
service is incorporated into the price cap index, submit data sufficient 
to make the API and PCI calculations required by Secs. 61.46(b) and 
61.44(c) of this part, and, as necessary, to make the SBI calculations 
provided in Sec. 61.47 (b) or (c) of this part.
    (2) Each tariff filing submitted by a local exchange carrier 
specified in Sec. 61.41(a) (2) or (3) of this part that introduces a new 
service or a restructured unbundled basic service element (BSE) (as BSE 
is defined in Sec. 69.2 (mm)) that is or will later be included in a 
basket must be accompanied by cost data sufficient to establish that the 
new service or unbundled BSE will not recover more than a reasonable 
portion of the carrier's overhead costs.
    (g) Each tariff filing by a local exchange carrier subject to price 
cap regulation that introduces a new service or a restructured unbundled 
basis service element (BSE), as defined in Sec. 69.2(mm) of this 
chapter, that is or will later be included in a basket, or that 
introduces or changes the rates for connection charge subelments for 
expanded interconnection, as defined in Sec. 69.121 of this chapter, 
must also be accompanied by:
    (1) The following, including complete explanations of the bases for 
the estimates.
    (i) A study containing a projection of costs for a representative 12 
month period; and
    (ii) Estimates of the effect of the new tariff on the traffic and 
revenues from the service to which the new tariff applies, the carrier's 
other service classifications, and the carrier's overall traffic and 
revenues. These estimates must include the projected effects on the 
traffic and revenues for the same representative 12 month period used in 
paragraph (h)(1)(i) of this section.
    (2) Working papers and statistical data. (i) Concurrently with the 
filing of any tariff change or tariff filing for a service not 
previously offered, the Chief, Tariff Review Branch must be provided two 
sets of working papers containing the information underlying the data 
supplied in response to paragraph (h)(1) of this section, and a clear 
explanation of how the working papers relate to that information.
    (ii) All statistical studies must be submitted and supported in the 
form prescribed in Sec. 1.363 of the Commission's rules.

[[Page 139]]

    (h) Each tariff filing submitted by a local exchange carrier subject 
to price cap regulation that introduces or changes the rates for 
connection charge subelements for expanded interconnection, as defined 
in Sec. 69.121 of this chapter, must be accompanied by cost data 
sufficient to establish that such charges will not recover more than a 
just and reasonable portion of the carrier's overhead costs.
    (i) For a tariff filing that introduces or changes a contribution 
charge for special access and expanded interconnection, as defined in 
Sec. 69.122 of this chapter, the carrier must submit information 
sufficient to establish that the charge has been calculated in a manner 
that complies with the Commission order authorizing the contribution 
charge.
    (j) For a tariff that introduces a system of density pricing zones, 
as described in Sec. 69.123 of this chapter, the carrier must, before 
filing its tariff, submit a density pricing zone plan including, inter 
alia, documentation sufficient to establish that the system of zones 
reasonably reflects cost-related characteristics, such as the density of 
total interstate traffic in central offices located in the respective 
zones, and receive approval of its proposed plan.
    (k) In accordance with Secs. 61.41 through 61.49, local exchange 
carriers subject to price cap regulation that elect to file their annual 
access tariff pursuant to section 204(a)(3) of the Communications Act 
shall submit supporting material for their interstate annual access 
tariffs, absent rate information, 90 days prior to July 1 of each year.

[54 FR 19843, May 8, 1989, as amended at 55 FR 42384, Oct. 19, 1990; 56 
FR 5956, Feb. 14, 1991; 56 FR 21617, May 10, 1991; 56 FR 33880, July 24, 
1991; 57 FR 37730, Aug. 20, 1992; 57 FR 54331, Nov. 18, 1992; 58 FR 
17167, Apr. 1, 1993; 58 FR 38536, July 19, 1993; 58 FR 48762, Sept. 17, 
1993; 59 FR 10304, Mar. 4, 1994; 62 FR 4659, Jan. 31, 1997; 62 FR 5778, 
Feb. 7, 1997; 62 FR 42218, Aug. 6, 1997]



Sec. 61.50  Scope: Optional incentive regulation for rate of return local exchange carriers.

    (a) This section shall apply on an elective basis, to local exchange 
carriers for either traffic sensitive rates only or for both traffic 
sensitive and common line rates. Carriers electing the plan for traffic 
sensitive rates only must participate in the Association common line 
pool. Affiliation with average schedule companies shall not bar a 
carrier from electing optional incentive regulation provided the carrier 
is otherwise eligible.
    (b) If a telephone company, or any one of a group of affiliated 
telephone companies, files an optional incentive regulation tariff in 
one study area, that telephone company and its affiliates, except its 
average schedule affiliates, must file incentive plan tariffs in all 
their study areas.
    (c) The following rules apply to telephone companies subject to this 
section, that become involved in mergers, acquisitions, or similar 
transactions, except that mergers with, acquisitions by, or other 
similar transactions with companies subject to price cap regulation, as 
that term is defined in Sec. 61.3(w), shall be governed by 
Sec. 61.41(c).
    (1) Any telephone company subject to this section that is a party to 
a merger, acquisition, or similar transaction, shall continue to be 
subject to incentive regulation notwithstanding such transaction.
    (2) Where a telephone company subject to this section acquires, is 
acquired by, merged with, or otherwise becomes affiliated with a 
telephone company that is not subject to this section, the latter 
telephone company shall become subject to optional incentive plan 
regulation no later than one year following the effective date of such 
merger, acquisition, or similar transaction and shall accordingly file 
optional incentive plan tariffs to be effective no later than that date 
in accordance with the applicable provisions of this part 61.
    (3) Notwithstanding the provisions of paragraph (c)(2) of this 
section, when a telephone company subject to optional incentive plan 
regulation acquires, is acquired by, mergers with, or otherwise becomes 
affiliated with a telephone company that qualifies as an ``average 
schedule'' company, the latter company may retain its ``average 
schedule'' status or become subject to optional incentive plan 
regulations in

[[Page 140]]

accordance with Sec. 69.3(i)(3) of this chapter and the requirements 
referenced in that section.
    (d) Local exchange carriers that are subject to this section shall 
not withdraw from optional incentive regulation until the end of two, 
two-year tariff periods. If a local exchange carrier withdraws from 
optional incentive plan regulation, it must file company-specific 
tariffs under the provisions of Sec. 61.38 for four years before it may 
again elect to enter incentive plan regulation; such carrier may not 
participate in the applicable Association tariff during that four years. 
After the four year period, the carrier may either return to the 
incentive plan, or remain under Sec. 61.38.
    (e) Each local exchange carrier subject to this section shall 
establish the baskets of services, including service categories, as 
identified in Sec. 61.42 (d) and (e).
    (f) Each local exchange carrier subject to optional incentive 
regulation shall exclude from its baskets such services or portions of 
such services as the Commission has designated or may hereafter 
designate by order.
    (g) New services, other than those within the scope of paragraph (f) 
of this section, must be included in the affected basket at the first 
two-year tariff filing following completion of the two-year tariff 
period in which they are introduced. To the extent that such new 
services are permitted or required to be included in new or existing 
service categories within the assigned basket, they shall be so included 
at the first two-year tariff filing following completion of the two-year 
tariff period in which they are introduced.
    (h)(1) In connection with any optional incentive plan tariff filing 
proposin rate changes, the carrier must calculate an index for each 
affected basket as determined by the Common Carrier Bureau.
    (2) In connection with any tariff filed under this section proposing 
changes to rates for services in the basket designated in paragraph (e) 
of this section, the maximum allowable increase or decrease in a basket 
shall be limited to ten percent over the two-year tariff period.
    (3) Local exchange carriers subject to this section shall file 
tariff revisions that reflect rae changes due to exogenous costs, as 
defined in Sec. 61.45(d)(1), either in the biennial tariff filing or at 
the time the event causing the exogenous costs occurs during the two-
year period.
    (i) Rates for a new service that is the same as that offered by a 
price cap regulated local exchange carrier providing service in an 
adjacent serving area are deemed presumptively lawful, if the proposed 
rates, in the aggregate, are no greater than the rate established by the 
price cap local exchange carrier. Tariff filings made pursuant to this 
paragraph must include the following:
    (1) A brief explanation of why the service is like an existing 
service offered by a geographically adjacent price cap regulated local 
exchange carrier; and
    (2) Data to establish compliance with this subsection that, in 
aggregate, the proposed rates for the new service are no greater than 
those in effect for the same or comparable service offered by that same 
geographically adjacent price cap regulated local exchange carrier.
    (3) All filings for new services other than those described in 
paragraph (i) shall be supported using prospective data, as required by 
Sec. 61.38 of these rules.
    (j) The maximum allowable rate of return on earnings based on rates 
filed by a local exchange carrier subject to this section, shall be 
determined by adding a fixed increment of one and one-half percent to 
the carrier's prescribed rate of return. Rates of local exchange 
carriers subject to this section that result in earnings less than 
three-quarters percent below the carrier's prescribed rate of return may 
be retargeted to three-quarters percent below the carrier's prescribed 
rate of return, in a mid-course tariff filing.
    (k) For a tariff change, a local exchange carrier that is a cost 
schedule carrier must propose Common Line rates based on the following:
    (1) For the first biennial filing, the common line revenue 
requirement shall be determined by a cost of service study for the most 
recent 12-month period. Subscriber line charges shall be

[[Page 141]]

based on cost and demand data for the same period. Carrier common line 
rates shall be determined by the following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.016

Where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.017

And where:

CCL Rev Req = carrier common line settlement for the most recent 12-
          month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 12-month period;
CCL MOU1 = CCL MOUb; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (2) For the subsequent biennial filings, the common line revenue 
requirement shall be determined by a cost of service study for the most 
recent 24-month period. Subscriber line charges shall be based on cost 
and demand data for the same period. Carrier common line rates shall be 
determined by the following formula:
[GRAPHIC] [TIFF OMITTED] TR06JN97.018

where:
[GRAPHIC] [TIFF OMITTED] TR06JN97.019

and where:

CCL Rev Req = carrier common line revenue requirement for the most 
          recent 24-month period;
CCL MOUb = carrier common line minutes of use for the most 
          recent 24-month period;
CCL MOU1 = carrier common line minutes of use for the most 
          recent 12-month period; and
CCL MOU0 = carrier common line minutes of use for the 12-
          month period preceding the most recent 12-month period.

    (3) For End User Common Line charges included in a tariff pursuant 
to this section, the local exchange carrier must provide supporting 
information for the two-year historical period with its letter of 
transmittal in accordance with Sec. 61.38.

[58 FR 36148, July 6, 1993, as amended at 62 FR 31005, June 6, 1997]

                 Specific Rules for Tariff Publications



Sec. 61.51  LEC tariff filings requirements pursuant to section 204(a)(3) of the Communications Act.

    (a) Local exchange carriers may file tariffs pursuant to section 
204(a)(3) of the Communications Act. Such tariffs shall be filed in 
accordance with the notice periods set forth in Sec. 61.58(d).
    (b) Local exchange carriers may elect not to file any tariffs 
pursuant to section 204(a)(3) of the Communications Act that may be 
eligible for filing under that section. Any such tariffs not filed 
pursuant to section 204(a)(3) of the Communications Act shall be filed 
in accordance with the notice requirements of Secs. 61.23 and 61.58.
    (c) Local exchange carrier tariff filings pursuant to section 
204(a)(3) must comply with the requirements of Secs. 61.38, 61.39, and 
61.41 through 61.50.
    (d) Local exchange carriers subject to price cap regulation that 
elect to file their annual access tariff pursuant to section 204(a)(3) 
of the Communications Act shall submit support material for their 
interstate annual access tariffs, in accordance with Sec. 61.49(l).

[62 FR 5778, Feb. 7, 1997]



Sec. 61.52  Form, size, type, legibility, etc.

    (a) All tariff publications must be in loose-leaf form of size A4 
(21 cm x 29.7 cm) or 8.5 x 11 inches (21.6 cm x 27.9 cm), and must be 
plainly printed in black print on white paper of durable quality. Less 
than 6-point type may not be used. Erasures or alterations in writing 
must not be made in any tariff publication filed with the Commission or 
in those copies posted for public convenience. A margin of no less than 
2.5 cm (1 inch) in width must be allowed at the left edge of every 
tariff publication.
    (b) Pages of tariffs must be printed on one side only, and must be 
numbered consecutively and designated as ``Original title page,'' 
``Original page 1,'' ``Original page 2,'' etc.

[[Page 142]]

    (1) All such pages must show, in the upper left-hand corner the name 
of the issuing carrier; in the upper right-hand corner the FCC number of 
the tariff, with the page designation directly below; in the lower left-
hand corner the issued date; in the lower right-hand corner the 
effective date; and at the bottom, center, the street address of the 
issuing officer. The carrier must also specify the issuing officer's 
title either at the bottom center of all tariff pages, or on the title 
page and check sheet only.
    (2) As an alternative, the issuing carrier may show in the upper 
left-hand corner the name of the issuing carrier, the title and street 
address of the issuing officer, and the issued date; and in the upper 
right-hand corner the FCC number of the tariff, with the page 
designation directly below, and the effective date. The carrier must 
specify the issuing officer's title in the upper left-hand corner of 
either all tariff pages, or on the title page and check sheet only. A 
carrier electing to place the information at the top of the page should 
annotate the bottom of each page to indicate the end of the material, 
e.g., a line, or the term ``Printed in USA,'' or ``End''.
    (3) Only one format may be employed in a tariff publication.
    (c) Incumbent local exchange carriers shall file all tariff 
publications and associated documents, such as transmittal letters, 
requests for special permission, and supporting information, 
electronically in accordance with the requirements set forth in 
Sec. 61.13 through Sec. 61.17.

[49 FR 40869, Oct. 18, 1984, as amended at 58 FR 44906, Aug. 25, 1993; 
62 FR 5778, Feb. 7, 1997; 63 FR 35541, June 30, 1998]



Sec. 61.53  Consecutive numbering.

    Carriers should file tariff publications under consecutive FCC 
numbers. If this cannot be done, a memorandum containing an explanation 
of the missing number or numbers must be submitted. Supplements to a 
tariff must be numbered consecutively in a separate series.



Sec. 61.54  Composition of tariffs.

    (a) Tariffs must contain in consecutive order: A title page; check 
sheet; table of contents; list of concurring, connecting, and other 
participating carriers; explanation of symbols and abbreviations; 
application of tariff; general rules (including definitions), 
regulations, exceptions and conditions; and rates. If the issuing 
carrier elects to add a section assisting in the use of the tariff, it 
should be placed immediately after the table of contents.
    (b) The title page of every tariff and supplement must show:
    (1) FCC number, indication of cancellations. In the upper right-hand 
corner, the designation of the tariff or supplement as ``FCC No. ------
--,'' or ``Supplement No. -------- to FCC No. --------,'' and 
immediately below, the FCC number or numbers of tariffs or supplements 
cancelled thereby.
    (2) Name of carrier, class of service, geographical application, 
means of transmission. The exact name of the carrier, and such other 
information as may be necessary to identify the carrier issuing the 
tariff publication; a brief statement showing each class of service 
provided; the geographical application; and the type of facilities used 
to provide service.
    (3) Expiration Date. When the entire tariff or supplement is to 
expire with a fixed date, the expiration date must be shown in 
connection with the effective date in the following manner:


Expires at the end of -------------------- (date) unless sooner 
canceled, changed or extended.


    (4) Title and address of issuing officer. The title and street 
address of the officer issuing the tariff or supplement in the format 
specified in Sec. 61.52.
    (5) Revised title page. When a revised title page is issued, the 
following notation must be shown in connection with its effective date:


Original tariff effective -------------------- (here show the effective 
date of the original tariff).


    (c)(1) The page immediately following the title page must be 
designated as ``Original page 1'' and captioned ``Check Sheet.'' When 
the original tariff is filed, the check sheet must show the number of 
pages contained in the

[[Page 143]]

tariff. For example, ``Page 1 to 150, inclusive, of this tariff are 
effective as of the date shown.'' When new pages are added, they must be 
numbered in continuing sequence, and designated as ``Original page ----
---- .'' For example, when the original tariff filed has 150 pages, the 
first page added after page 150 is to be designated as ``Original page 
151,'' and the foregoing notation must be revised to include the added 
pages.
    (2) If pages are to be inserted between numbered pages, each such 
page must be designated as an original page and must bear the number of 
the immediately preceding page followed by an alpha or numeric suffix. 
For example, when two new pages are to be inserted between pages 44 and 
45 of the tariff, the first inserted page must be designated as Original 
page 44A or 44.1 and the second inserted page as Original page 44B or 
44.2. Issuing carriers may not utilize both the alpha and numeric 
systems in the same publication.
    (3) When pages are revised, when new pages (including pages with 
letter or numeric suffix as set forth above) are added to the tariff, or 
when supplements are issued, the check sheet must be revised 
accordingly. Revised check sheets must indicate with an asterisk the 
specific pages added or revised. In addition to the notation in (1), the 
check sheet must list, under the heading ``The original and revised 
pages named below (and Supplement No. --------) contain all changes from 
the original tariff that are in effect on the date shown,'' all original 
pages in numerical order that have been added to the tariff and the 
pages which have been revised, including the revision number. For 
example:

------------------------------------------------------------------------
                                               Number of revision except
                     Page                             as indicated
------------------------------------------------------------------------
Title........................................  1st
1............................................  *8th
3............................................  5th
5A...........................................  *Orig.
10...........................................  *8th
151..........................................  Orig.
------------------------------------------------------------------------
*New or Revised page.

    (4) Changes in, and additions to tariffs must be made by reprinting 
the page upon which a change or addition is made. Such changed page is 
to be designated as a revised page, cancelling the page which it amends. 
For example, ``First revised page 1 cancels original page 1,'' or 
``Second revised page 2 cancels first revised page 2,'' etc. When a 
revised page omits rates or regulations previously published on the page 
which it cancels, but such rates or regulations are published on another 
page, the revised page must make specific reference to the page on which 
the rates or regulations will be found. This reference must be 
accomplished by inserting a sentence at the bottom of the revised page 
that states ``Certain rates (or regulations) previously found on this 
page can now be found on page ------.'' In addition, the page on which 
the omitted material now appears must bear the appropriate symbol 
opposite such material, and make specific reference to the page from 
which the rates or regulations were transferred. This reference must be 
accomplished by inserting a sentence at the bottom of the other page 
that states ``Certain rates (or regulations) on this page formerly 
appeared on page --------.''
    (5) Rejected pages must be treated as indicated in Sec. 61.69.
    (d) Table of contents. The table of contents must contain a full and 
complete statement showing the exact location and specifying the page or 
section and page numbers, where information by subjects under general 
headings will be found. If a tariff contains so small a volume of matter 
that its title page or its interior arrangement plainly discloses its 
contents, the table of contents may be omitted.
    (e) Tariff User's guide. At its option, a carrier may include a 
section explaining how to use the tariff.
    (f) List of concurring carriers. This list must contain the exact 
name or names of carriers concurring in the tariff, alphabetically 
arranged, and the name of the city or town in which the principal office 
of every such carrier is located. If there are no concurring carriers, 
then the statement ``no concurring carriers'' must be made at the place 
where the names of the concurring carriers would otherwise appear. If 
the concurring carriers are numerous, their names may be stated in 
alphabetical order in a separate tariff filed with the

[[Page 144]]

Commission by the issuing carrier. Specific reference to such separate 
tariff by FCC number must be made in the tariff at the place where such 
names would otherwise appear.
    (g) List of connecting carriers. This list must contain the exact 
name or names of connecting carriers, alphabetically arranged, for which 
rates or regulations are published in the tariff, and the name of the 
city or town in which the principal office of every such carrier is 
located. If there are no connecting carriers, then the statement ``no 
connecting carriers'' must be made at the place where their names would 
otherwise appear. If connecting carriers are numerous, their names may 
be stated in alphabetical order in a separate tariff filed with the 
Commission by the issuing carrier. Specific reference to such separate 
tariff by FCC number must be made in the tariff at the place where such 
names would otherwise appear.
    (h) List of other participating carriers. This list must contain the 
exact name of every other carrier subject to the Act engaging or 
participating in the communication service to which the tariff or 
supplement applies, together with the name of the city or town in which 
the principal office of such carrier is located. If there is no such 
other carrier, then the statement ``no participating carriers'' must be 
made at the place where the names of such other carriers would otherwise 
appear. If such other carriers are numerous, their names may be stated 
in alphabetical order in a separate tariff filed with the Commission by 
the issuing carrier. Specific reference must be made in the tariff at 
the place where such names would otherwise appear. The names of 
concurring and connecting carriers properly listed in a tariff published 
by any other participating carrier need not be repeated in this list.
    (i)(1) Symbols, reference marks, abbreviations. The tariff must 
contain an explanation of symbols, reference marks, and abbreviations of 
technical terms used. The following symbols used in tariffs are reserved 
for the purposes indicated below:

R  to signify reduction.
I  to signify increase.
C  to signify changed regulation.
T  to signify a change in text but no change in rate or regulation.
S  to signify reissued matter.
M  to signify matter relocated without change.
N  to signify new rate or regulation.
D  to signify discontinued rate or regulation.
Z  to signify a correction.


    (2) The uniform symbols must be used as follows.
    (i) When a change of the same character is made in all or in 
substantially all matter in a tariff, it may be indicated at the top of 
the title page of the tariff or at the top of each affected page, in the 
following manner: ``All rates in this tariff are increases,'' or, ``All 
rates on this page are reductions, except as otherwise indicated.''
    (ii) When a change of the same character is made in all or 
substantially all matters on a page or supplement, it may be indiated at 
the top of the page or supplement in the following manner: All rates on 
this page (or supplement) are increases,'' or, ``All rates on this page 
(or supplement) are reductions except as otherwise indicated.''
    (3) Items which have not been in effect 30 days when brought forward 
on revised pages must be shown as reissued, in the manner prescribed in 
Sec. 61.54(i)(1). Items which have been in effect 30 days or more and 
are brought forward without change on revised pages must not be shown as 
reissued items.
    (j) Rates and general rules, regulations, exceptions and conditions. 
The general rules (including definitions), regulations, exceptions, and 
conditions which govern the tariff must be stated clearly and 
definitely. All general rules, regulations, exceptions or conditions 
which in any way affect the rates named in the tariff must be specified. 
A special rule, regulation, exception or condition affecting a 
particular item or rate must be specifically referred to in connection 
with such item or rate. Rates must be expressed in United States 
currency, per chargeable unit of service for all communication services, 
together with a list of all points of service to and from which the 
rates apply. They must be arranged in a simple and systematic manner. 
Complicated or ambiguous terminology may not be

[[Page 145]]

used, and no rate, rule, regulation, exception or condition shall be 
included which in any way attempts to substitute a rate, rule, 
regulation, exception or condition named in any other tariff.



Sec. 61.55  Contract-based tariffs.

    (a) Scope. This section shall apply to offerings as defined in 
Sec. 61.3(m).
    (b) Composition of contract-based tariffs shall comply with 
Sec. 61.54(b) through (i).
    (c) Contract-based tariffs shall include the following:
    (1) The term of the contract, including any renewal options;
    (2) A brief description of each of the services provided under the 
contract;
    (3) Minimum volume commitments for each service;
    (4) The contract price for each service or services at the volume 
levels committed to by the customers;
    (5) A general description of any volume discounts built into the 
contract rate structure; and
    (6) A general description of other classifications, practices and 
regulations affecting the contract rate.
    (d) Contract-based tariffs of an interexchange carrier subject to 
price cap regulation shall not include services included in 
Secs. 61.42(b), 61.42 (c)(1), (c)(4), and 61.42(c)(10).

[56 FR 55239, Oct. 25, 1991]



Sec. 61.56  Supplements.

    A carrier may not file a supplement except to suspend or cancel a 
tariff publication.



Sec. 61.57  Cancellations.

    The following paragraphs govern the cancellation of tariffs and 
supplements.
    (a) By tariff or supplement. A carrier may cancel any tariff or 
supplement in whole or in part by another tariff or supplement. 
Cancellation of a tariff automatically cancels every supplement to that 
tariff, except a cancelling supplement.
    (b) By expiration. Subject to Sec. 61.59, a carrier may cancel a 
tariff or supplement in whole or in part by fixing a date on which the 
rates or regulations will expire.
    (c) Indication of. (1) A carrier which cancels a tariff or 
supplement in whole by another tariff or supplement must comply with 
Sec. 61.54(b)(1). Cancellation of tariffs or supplements in whole by 
expiration must be indicated as provided in Sec. 61.54(b)(3).
    (2) Where a carrier issues a tariff, supplement, or revised page 
partially cancelling another tariff, supplement, or revised page, it 
must specifically state what portion of the other tariff publication is 
cancelled. Such other tariff or supplement must at the same time be 
correspondingly amended, effective on the same date.
    (3) When only a part of tariff or supplement is to expire, a carrier 
must show the expiration date on the same page, and associate it with 
the matter which is to expire. Changes in expiration date must be made 
pursuant to the notice requirements of Sec. 61.58, unless otherwise 
authorized by the Commission. Expirations must be indicated as follows:

Expires at the end of -------------------- (date) unless sooner 
cancelled, changed or extended.

    (d) Rates and regulations to apply. When a carrier cancels a tariff 
or supplement in whole or in part by another tariff or supplement, the 
cancelling publication must show where all rates and regulations will be 
found, or what rates and regulations will apply.
    (e) Omissions. When a tariff or supplement cancelling a previous 
tariff or supplement omits points of origin or destination, rates or 
regulations, or routes, which were contained in such tariff or 
supplement, the new tariff or supplement must indicate the omission in 
the manner prescribed in paragraph (c) of this section. If such 
omissions effect changes in rates of regulations, that fact must be 
indicated by the use of the uniform symbols prescribed in 
Sec. 61.54(i)(1).
    (f) Carriers ceasing operations. When a carrier ceases operations 
without a successor, it must cancel its tariffs pursuant to the notice 
requirements of Sec. 61.58, unless otherwise authorized by the 
Commission.

[[Page 146]]



Sec. 61.58  Notice requirements.

    (a) Every proposed tariff filing must bear an effective date and, 
except as otherwise provided by regulation, special permission, or 
Commission order, must be made on at least the number of days notice 
specified in this section.
    (1) Notice is accomplished by filing the proposed tariff changes 
with the Commission. Any period of notice specified in this section 
begins on and includes the date the tariff is received by the 
Commission, but does not include the effective date. If a tariff filing 
proposes changes governed by more than one of the notice periods listed 
below, the longest notice period will apply. In computing the notice 
period required, all days including Sundays and holidays must be 
counted.
    (2) Except for tariffs filed pursuant to section 204(a)(3) of the 
Communications Act, the Chief, Common Carrier Bureau, may require the 
deferral of the effective date of any tariff filing made on less than 
120-days' notice, so as to provide for a maximum of 120-days' notice, or 
of such other maximum period of notice permitted by section 203(b) of 
the Communications Act, regardless of whether petitions under Sec. 1.773 
of this chapter have been filed.
    (3) Tariff filings proposing corrections must be made on at least 3 
days' notice, and may be filed notwithstanding the provisions of 
Sec. 61.59. Corrections to tariff materials not yet effective cannot 
take effect before the effective date of the original material.
    (4) This subsection applies only to dominant carriers. If the tariff 
publication would increase any rate or charge, or would effectuate and 
authorized discountinuance, reduction or other impairment of service to 
any customer, the offering carrier must inform the affected customers of 
the content of the tariff publication. Such notification should be made 
in a form appropriate to the circumstance, and may include written 
notification, personal contact, or advertising in newspapers of general 
circulation.
    (b) Non-dominant carriers. Tariff filings of non-dominant carriers 
must be made on at least 14 days' notice.
    (c) Carriers subject to price cap regulation. This paragraph applies 
only to carriers subject to price cap regulation. Such carriers must 
file tariffs according to the following notice periods.
    (1) For annual adjustments to the PCI, API, and SBI values under 
Secs. 61.44, 61.46, and 61.47, respectively, dominant interexchange 
carrier filings must be made on at least 45 days' notice. For annual 
adjustments to the PCI, API, and SBI values under Secs. 61.45, 61.46, 
and 61.47, respectively, local exchange carrier tariff filings must be 
made on not less than 90 days' notice.
    (2) Tariff filings that do not cause any API to exceed any 
applicable PCI pursuant to calculations provided for in Sec. 61.46 of 
this part, and that do not cause any SBI to exceed its banding 
limitations established in Sec. 61.47 of this part, must be made on at 
least 14 days' notice, provided that the tariff filing is restricted to 
one or more of the following changes to the tariff:
    (i) Alters only a rate level;
    (ii) Adds a geographic location;
    (iii) Eliminates a rate element; or
    (iv) Changes the number or size of taper points in a volume discount 
plan without changing the initial volume quantity associated with the 
lowest discount level or the highest volume quantity associated with the 
highest discount level.
    (3) Tariff filings that will cause any API to exceed its applicable 
PCI pursuant to calculations provided for in Sec. 61.46 of this part, 
that will cause any SBI to exceed its upper banding limitations 
established in Sec. 61.47 (e), (f)(1), (g), and (h) of this part, or 
that will cause the composite average residential rate to exceed its 
limitation on upward pricing flexibility established in Sec. 61.47(f)(2) 
of this part, must be made on at least 120 days' notice, or such other 
maximum period of notice permitted by section 203(b) of the 
Communications Act, regardless of whether petitions under Sec. 1.773 of 
the Commission's Rules have been filed.
    (4) Tariff filings that will cause any SBI to decrease below its 
lower banding limit established in Sec. 61.47 (e), (g), and (h), must be 
made on at least 45 days' notice.
    (5) Tariff filings involving a change in rate structure of a service 
included in a basket listed in Sec. 61.42(a) or Sec. 61.42(d), or the 
introduction of a new service within the scope of Sec. 61.42(g),

[[Page 147]]

must be made on at least 45 days' notice.
    (6) Tariff filings involving services included in Sec. 61.42(c), 
except for services included in Sec. 61.42 (c)(1), (c)(4), and (c)(10), 
must be made on at least 14 days notice.
    (7) The required notice for services included in Sec. 61.42 (c)(1), 
(c)(4), and (c)(10), tariff filings involving services included in 
Sec. 61.42(f), or tariff filings involving changes in tariff 
regulations, other than tariff regulations for services described in 
paragraph (c)(6), shall be that required in connection with such filings 
by dominant carriers that are not subject to price cap regulation.
    (d) Tariffs filed pursuant to section 204(a)(3) of the 
Communications Act. Local exchange carriers filing tariffs pursuant to 
section 204(a)(3) of the Communications Act may file the tariff on 7-
days' notice if it proposes only rate decreases. Any other tariff filed 
pursuant to section 204(a)(3) of the Communications Act, including those 
that propose a rate increase or any change in terms and conditions of 
service other than a rate change, shall be filed on 15-days' notice.
    (e) Other carriers. (1) Tariff filings in the instances specified in 
paragraphs (d)(1) (i), (ii), and (iii) of this section must be made on 
at least 15 days' notice.
    (i) Tariffs filed in the first instance by new carriers.
    (ii) Tariffs filings involving new rates and regulations not 
previously filed at, from, to or via points on new lines; at, from to or 
via new radio facilities; or for new points of radio communication.
    (iii) Tariff filings involving a change in the name of a carrier, a 
change in Vertical or Horizontal coordinates (or other means used to 
determine airline mileages), a change in the lists of mileages, a change 
in the lists of connecting, concurring or other participating carriers, 
text changes, or the imposition of termination charges calculated from 
effective tariff provisions. The imposition of termination charges does 
not include the initial filing of termination liability provisions.
    (2) Tariff filings involving a change in rate structure, a new 
offering, or a rate increase must be made on at least 45 days' notice.
    (3) All tariff filings not specifically assigned a different period 
of public notice in this part must be made on at least 35 days' notice.
    (f) Carriers subject to optional incentive regulation. Paragraph (e) 
of this section applies only to carriers subject to Sec. 61.50. Such 
carriers must file tariffs according to the following notice periods:
    (1) For initial and renewal tariff filings whose effective date 
coincides with the start of any two-year tariff period as defined in 
Sec. 69.3(f) of this chapter, filings must be made on not less than 90 
days' notice.
    (2) For rate revisions made pursuant to Sec. 61.50 (g) and (i), and 
Sec. 61.39(d), tariff filings must be made on not less than 14 days' 
notice.

[49 FR 40869, Oct. 18, 1984, as amended at 54 FR 19844, May 8, 1989; 55 
FR 42384, Oct. 19, 1990; 56 FR 1500, Jan. 15, 1991; 56 FR 5956, Feb. 14, 
1991; 56 FR 55239, Oct. 25, 1991; 58 FR 36149, July 6, 1993; 59 FR 
10304, Mar. 4, 1994; 62 FR 5778, Feb. 7, 1997]



Sec. 61.59  Effective period required before changes.

    Except as provided in Sec. 61.58(a)(3) or except as otherwise 
authorized by the Commission, new rates or regulations must be effective 
for at least 30 days before any change may be made.



Sec. 61.67  New or discontinued telephone and teletypewriter service points; mileages.

    Message toll telephone service points and teletypewriter exchange 
service points added or discontinued during a calendar month may be 
filed not later than 20 days after the end of such month where the basic 
schedules of rates and regulations applicable to such message toll 
telephone and teletypewriter exchange service points are effective and 
the effective date of each addition of discontinuance is shown.



Sec. 61.68  Special notations.

    (a) A tariff filing must contain a statement of the authority for 
any matter to be filed on less than the notice required in Sec. 61.58. 
The following must be used:

    Issued on not less than -- days' notice under authority of -- 
(specific reference to

[[Page 148]]

the special permission, decision, order or section of these rules).


If all the matter in a tariff publication is to become effective on less 
than the notice required in Sec. 61.58, specific reference to the 
Commission authority must be shown on the title page. If only a part of 
the tariff publication is to become effective on less than the notice 
required in Sec. 61.58, reference to the Commission authority must 
appear on the same page(s), and be associated with the pertinent matter.
    (b) When a portion of any tariff publication is issued in order to 
comply with the Commission order, the following notation must be 
associated with that portion of the tariff publication:

    In compliance with the order of the Federal Communications 
Commission in -- (a specific citation to the applicable order should be 
made).



Sec. 61.69  Rejection.

    When a tariff publication is rejected by the Commission, its number 
may not be used again. The rejected tariff publication may not be 
referred to as cancelled or revised. The publication that is 
subsequently issued in lieu of the rejected tariff publication must bear 
the notation

    In lieu of --, rejected by the Federal Communications Commission.



Sec. 61.71  Reissued matter.

    Matter in effect for less than 30 days and brought forward without 
change from another tariff publication must bear the appropriate symbol 
provided in Sec. 61.54(i)(1) for reissued matter. The number and 
original effective date of the tariff publication in which the matter 
was originally published must be associated with the reissued matter.



Sec. 61.72  Posting.

    (a) Offering carriers must post (i.e., keep accessible to the 
public) during the carrier's regular business hours, a schedule of rates 
and regulations for those services for which tariff filings are required 
and those services for which carriers exercise the option to file 
tariffs. This schedule must include all effective and proposed rates and 
regulations pertaining to the services offered to and from the community 
or communities served, and must be the same as that on file with the 
Commission. This posting requirement must be satisfied by the following 
methods:
    (1) Where the filing has an office or offices open to the public in 
states or territories of the United States, the carrier must post the 
schedule of rates and regulations in one office in each state or 
territory of its operation.
    (2) A carrier must provide a telephone number for public inquiries 
about information contained in its tariffs. This telephone number should 
be made readily available to all interested parties.
    (3) A carrier must post a notice in each business office of the 
carrier open to the public in that state or territory, stating the 
street address of the location in which the schedule of rates and 
regulations can be found and the telephone number for public inquiries 
on tariffs.
    (b) The posting of rates and regulations for those services pursuant 
to paragraph (a) of this section shall be considered timely if they are 
available for public inspection at the posting locations within 15 days 
of their filing with the Commission.

[49 FR 40869, Oct. 18, 1984, as amended at 61 FR 59366, Nov. 22, 1996; 
62 FR 59604, Nov. 4, 1997]



Sec. 61.73  Duplication of rates or regulations.

    A carrier concurring in schedules of another carrier must not 
publish conflicting or duplicative rates or regulations.



Sec. 61.74  References to other instruments.

    (a) Except as otherwise provided in this and other sections of this 
part, no tariff publication filed with the Commission may make reference 
to any other tariff publication or to any other document or instrument.
    (b) Tariffs for end-on-end through services may reference the 
tariffs of other carriers participating in the offering.
    (c) Tariffs may reference concurrences for the purpose of starting 
where rates or regulations applicable to a service not governed by the 
tariff may be found.

[[Page 149]]

    (d) A tariff for international services offered by a carrier that is 
subject to detariffing for domestic, interstate, interexchange services, 
may reference other documents or instruments concerning the carrier's 
detariffed domestic, interstate, interexchange service offerings. A 
tariff for international services may contain such a reference if, and 
only if, it is necessary to incorporate information regarding the 
carrier's detariffed domestic, interstate, interexchange services in 
order to calculate discounts and minimum revenue requirements for 
international services provided in combination with detariffed domestic, 
interstate, interexchange services. Notwithstanding any such reference 
to documents or instruments concerning the carrier's detariffed 
domestic, interstate, interexchange service offerings, a tariff for 
international services shall specify rates, terms and conditions for the 
international service.

[49 FR 40869, Oct. 18, 1984, as amended at 61 FR 59366, Nov. 22, 1996]

                              Concurrences



Sec. 61.131  Scope.

    Sections 61.132 through 61.136 apply to a carrier which must file 
concurrences reflecting rates and regulations for through service 
provided in conjunction with other carriers and to a carrier which has 
chosen, as an alternative to publishing its own tariff, to arrange 
concurrence in an effective tariff of another carrier. Limited or 
partial concurrences will not be permitted.



Sec. 61.132  Method of filing concurrences.

    A carrier proposing to concur in another carrier's effective tariff 
must deliver two copies of the concurrence to the issuing carrier in 
whose favor the concurrence is issued. The concurrence must be signed by 
an officer or agent of the carrier executing the concurrence, and must 
be numbered consecutively in a separate series from its FCC tariff 
numbers. At the same time the issuing carrier revises its tariff to 
reflect such a concurrence, it must submit both copies of the 
concurrence to the Commission. The concurrence must bear the same 
effective date as the date of the tariff filing reflecting the 
concurrence.



Sec. 61.133  Format of concurrences.

    (a) Concurrences must be issued in the following format:

                               Concurrence

F.C.C. Concurrence No. --------
(Cancels F.C.C. Concurrence No. ----
(Name of Carrier ------------)
(Post Office Address ------------)
(Date) ---------------- 19--.
Secretary,
Federal Communications Commission, Washington, D.C. 20554.
This is to report that (name of concurring carrier) assents to and 
concurs in the tariffs described below. (Name of concurring carrier) 
thus makes itself a party to these tariffs and obligates itself (and its 
connecting carriers) to observe every provision in them, until a notice 
of revocation is filed with the Commission and delivered to the issuing 
carrier.
This concurrence applies to interstate (and foreign) communication:
    1. Between the different points on the concurring carrier's own 
system;
    2. Between all points on the concurring carrier's system and the 
systems of its connecting carriers; and
    3. Between all points on the system of the concurring carrier and 
the systems of its connecting carriers on the one hand, and, on the 
other hand, all points on the system of the carrier issuing the tariff 
or tariffs listed below and the systems of its connecting carriers and 
other carriers with which through routes have been established.

    (Note: Any of the above numbered paragraphs may be omitted or the 
wording modified to state the points to which the concurrence applies.)

                                 Tariff

    (Here describe the tariff or tariffs concurred in by the carrier, 
specifying FCC number, title, date of issuance, and date effective. 
Example: A.B.C. Communications Company, Tariff FCC No. 1, Interstate 
Telegraph Message Service, Issued January 1, 1983, Effective April 1, 
1983).
    Cancels FCC Concurrence No. ----, effective ----, 19--.

(Name of concurring carrier)____________________________________________
By______________________________________________________________________
(Title)_________________________________________________________________

    (b) No material is to be included in a concurrence other than that 
indicated in the above-prescribed form, unless

[[Page 150]]

specially authorized by the Commission. A concurrence in any tariff so 
described will be deemed to include all amendments and successive issues 
which the issuing carrier may make and file. All such amendments and 
successive issues will be binding between customers and carriers. 
Between carriers themselves, however, the filing by the issuing carrier 
of an amendment or successive issue with the Commission must not imply 
or be construed to imply an agreement to the filing by concurring 
carriers. Such filings do not affect the contractual rights or remedies 
of any concurring carrier(s) which have not, by contract or otherwise, 
specifically consented in advance to such amendment or successive issue.



Sec. 61.134  Concurrences for through services.

    A carrier filing rates or regulations for through services between 
points on its own system and points on another carrier's system (or 
systems), or between points on another carrier's system (or systems), 
must list all concurring, connecting or other participating carriers as 
provided in Sec. 61.54 (f), (g) and (h). A concurring carrier must 
tender a properly executed instrument of concurrence to the issuing 
carrier. If rates and regulations of the other carriers engaging in the 
through service(s) are not specified in the issuing carrier's tariff, 
that tariff must state where the other carrier's rates and regulations 
can be found. Such reference(s) must contain the FCC number(s) of the 
referenced tariff publication(s), the exact name(s) of the carrier(s) 
issuing such tariff publication(s), and must clearly state how the rates 
and regulations in the separate publications apply.



Sec. 61.135  Concurrences for other purposes.

    When an issuing carrier permits another carrier to concur in its 
tariff, the issuing carrier's tariff must state the concurring carrier's 
rates and points of service.



Sec. 61.136  Revocation of concurrences.

    A concurrence may be revoked by a revocation notice or cancelled by 
a new concurrence. A revocation notice or a new concurrence, if less 
broad in scope than the concurrence it cancels, must bear an effective 
date not less than 45 days after its receipt by the Commission. A 
revocation notice is not given a serial number, but must specify the 
number of the concurrence to be revoked and the name of the carrier in 
whose favor the concurrence was issued. It must be in the following 
format:

                            Revocation Notice

(Name of carrier ------------)
(Post office address ------------)
(Date) ----------------, 19--.
Secretary,
Federal Communications Commission, Washington, D.C. 20554.
    Effective ----, 19-- FCC Concurrence No. --, issued by (Name of 
concurring carrier) in favor of (Name of issuing carrier) is hereby 
cancelled and revoked. Rates and regulations of (Name of concurring 
carrier) and its connecting carriers will thereafter be found in Tariff 
FCC No. -- issued by ---- (If the concurring carrier has ceased 
operations, the revocation notice must so indicate.)

(Name of carrier)_______________________________________________________
By______________________________________________________________________
(Title)_________________________________________________________________

                   Applications for Special Permission



Sec. 61.151  Scope.

    Sections 61.152 and 61.153 set forth the procedures to be followed 
by a carrier applying for a waiver of any of the rules in this part.

[55 FR 19173, May 8, 1990]



Sec. 61.152  Terms of applications and grants.

    Applications for special permission must contain:
    (a) A detailed description of the tariff publication proposed to be 
put into effect;
    (b) A statement citing the specific rules and the grounds on which 
waiver is sought;
    (c) A showing of good cause; and
    (d) A statement as to the date and method of filing the original of 
the application for special permission as required by Sec. 61.153(b) and 
the date and method of filing the copies required by Sec. 61.153 (a) and 
(c).

If approved, the carrier must comply with all terms and use all 
authority specified in the grant. If a carrier

[[Page 151]]

elects to use less than the authority granted, it must apply to the 
Commission for modification of the original grant. If a carrier elects 
not to use the authority granted within sixty days of its effective 
date, the original grant will be automatically cancelled by the 
Commission.

[55 FR 19173, May 8, 1990]



Sec. 61.153  Method of filing applications.

    (a) An application for special permission must be addressed to 
``Secretary, Federal Communication Commission, Washington, DC 20554.'' 
The date on which the application is received by the Secretary of the 
Commission (or the Mail Room where submitted by mail) is considered the 
official filing date.
    (b) In addition, for all special permission applications requiring 
fees as set forth at part 1, subpart G of this chapter, the issuing 
carriers must submit the original of the application letter (without 
attachments), FCC Form 155, and the appropriate fee to the Mellon Bank, 
Pittsburgh, PA at the address set forth in Sec. 1.1105. The carrier 
should submit these fee materials on the same date as the submission in 
paragraph (a).
    (c) In addition to the requirements set forth in paragraphs (a) and 
(b) of this section, the issuing carrier must send a copy of the 
application letter with all attachments to the Secretary, Federal 
Communications Commission and a separate copy with all attachments to 
the Chief, Tariff Review Branch. If a carrier applies for special 
permission to revise joint tariffs, the application must state that it 
is filed on behalf of all carriers participating in the affected 
service. Applications must be numbered consecutively in a series 
separate from FCC tariff numbers, bear the signature of the officer or 
agent of the carrier, and be in the following format:

Application No.

(Date)

Secretary
Federal Communications Commission
Washington, DC 20554.

Attention: Common Carrier Bureau (here provide the statements required 
by Sec. 61.152).

(Exact name of carrier)_________________________________________________

(Name of officer or agent)______________________________________________

(Title of officer or agent)_____________________________________________

[55 FR 19173, May 8, 1990]

     Adoption of Tariffs and Other Documents of Predecessor Carriers



Sec. 61.171  Adoption notice.

    When a carrier's name is changed, or its operating control 
transferred from one carrier to another in whole or in part, the 
successor carrier must file tariff revisions to reflect the name change. 
The successor carrier may either immediately reissue the entire tariff 
in its own name, or immediately file an adoption notice. Within 35 days 
of filing an adoption notice, the successor must reissue the entire 
tariff in its own name. The reissued tariff must be numbered in the 
series of the successor carrier, and must contain all original pages 
without changes in regulations or rates. The transmittal letter must 
state the tariff is being filed to show a change in the carrier's name 
pursuant to Sec. 61.171 of the Commission's Rules. The adoption notice, 
if used, must read as follows:

    The (Exact name of successor carrier or receiver) here adopts, 
ratifies and makes its own in every respect, all applicable tariffs and 
amendments filed with the Federal Communications Commission by 
(predecessor) prior to (date).



Sec. 61.172  Changes to be incorporated in tariffs of successor carrier.

    When only a portion of properties is transferred to a successor 
carrier, that carrier must incorporate in its tariff the rates applying 
locally between points on the transferred portion. Moreover, the 
predecessor carrier must simultaneously cancel the corresponding rates 
from its tariffs, and reference the FCC number of the successor 
carrier's tariff containing the rates that will thereafter apply.

                               Suspensions



Sec. 61.191  Carrier to file supplement when notified of suspension.

    If a carrier is notified by the Commission that its tariff filing 
has been

[[Page 152]]

suspended, the carrier must file immediately a consecutively numbered 
supplement without an effective date, which specifies the schedules 
which have been suspended.



Sec. 61.192  Contents of supplement announcing suspension.

    (a) A supplement announcing a suspension by the Commission must 
specify the term of suspension imposed by the Commission.
    (b) A supplement announcing a suspension of either an entire tariff 
or a part of a tariff publication, must specify the applicable tariff 
publication effective during the period of suspension.



Sec. 61.193  Vacation of suspension order; supplements announcing same; etc.

    If the Commission vacates a suspension order, the affected carrier 
must issue a supplement or revised page stating the Commission's action 
as well as the lawful schedules.



PART 62--APPLICATIONS TO HOLD INTERLOCKING DIRECTORATES--Table of Contents




                                 General

Sec.
62.1  Scope and method of securing authorization.
62.2  Definitions.

                        Contents of Applications

62.11  Information required.
62.12  Information required for findings of common ownership.

                       Administrative Regulations

62.21  Signature.
62.22  Form of application; number of copies; size of paper, etc.
62.23  Additional or different positions with same companies.
62.24  Change in status; Commission to be informed.
62.25  Authorization to hold interlocking directorates in commonly owned 
          carriers.
62.26  Reporting requirements.

    Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. 
Interpret or apply sec. 212, 48 Stat. 1974, as amended; 47 U.S.C. 212.

    Source: 50 FR 31377, Aug. 2, 1985, unless otherwise noted.

                                 General



Sec. 62.1  Scope and method of securing authorization.

    No person may hold the position of officer or director in more than 
one carrier subject to the Communications Act of 1934, as amended, 
unless duly authorized to do so pursuant to the regulations set forth in 
this part:
    (a) Application must be made to hold interlocking positions with 
more than one carrier subject to the Act where any carrier sought to be 
interlocked has been found by the Commission to have market power and is 
therefore defined as a dominant carrier under 47 CFR part 61, or where 
any carrier has not yet been found to be non-dominant, except for 
cellular licensees in different geographic markets.
    (b) Persons seeking positions as officers or directors of (1) 
cellular radio licensees in different geographic markets; (2) carriers 
which have been found to be non-dominant; and (3) holding or parent 
companies of carriers, are authorized to serve in those capacities 
without making application to this Commission.

[51 FR 6116, Feb. 20, 1986]



Sec. 62.2  Definitions.

    As used in this part, the term:
    (a) Officer or director shall include the duties, or any of the 
duties, ordinarily performed by a director, president, vice president, 
secretary, treasurer, or other officer of a carrier, such as general 
counsel, general solicitor, general attorney, comptroller, general 
auditor, general manager, general commercial manager, chief engineer, 
general superintendent, general land and tax agent, or chief purchasing 
agent;
    (b) Interlocking director shall mean a person who performs the 
duties of ``officer of director'' in more than one carrier subject to 
the Communications Act of 1934, as amended; and
    (c) Commonly owned carriers shall mean two or more carriers, one of 
which directly or indirectly owns more than 50 percent of the stock of 
the other carrier or carriers, or 50 percent or more of whose stock is 
owned directly or indirectly by the same person.

[[Page 153]]

                        Contents of Applications



Sec. 62.11  Information required.

    Each application shall include the following information:
    (a) The full name, occupation, and business address of the 
applicant.
    (b) With respect to each carrier of which the applicant is an 
officer or director or seeks to be an officer of director, indicate the 
applicant's position, the nature of the applicant's duties, the date 
applicant assumed or will assume such duties, and specify every common 
carrier in which applicant has a financial interest, together with a 
description thereof.
    (c) Provide a full explanation of the reasons why grant of the 
authority sought will not adversely affect either public or private 
interests. In this regard, address whether grant of the permission 
requested could result in anticompetitive conduct by carriers covered by 
the request or by carriers upon which applicant already acts as officer 
or director, diminution in the independence of each carrier, or 
potential conflicts of interests on the part of common directors or 
officers in violation of their fiduciary duties. Set forth any steps 
which will be taken by the applicant to safeguard against such 
occurrences.
    (d) State whether the applicant has, as director or officer of any 
carrier subject to the Act, received for his own benefit, directly or 
indirectly, any money or thing of value in respect of negotiation, 
hypothecation, or sale of any securities issued or to be issued by such 
carriers, or has shared in any of the proceeds thereof, or has 
participated in the making or paying of any dividends of such carrier 
from any funds properly included in capital accounts.



Sec. 62.12  Information required for findings of common ownership.

    Authorization to hold interlocking directorates based upon a finding 
of common ownership must be obtained where a carrier found to be 
dominant under 47 CFR part 61 or where any carrier not yet found to be 
non-dominant is involved. Each application for such authorization shall 
state the following:
    (a) The name and address of the carrier which seeks a finding that 
it owns more than 50 percent of the stock of another or other carriers; 
or the name and address of the person who seeks a finding that he owns 
50 percent or more of the stock of two or more carriers; and
    (b) The name and address of each carrier with respect to which the 
finding is sought by the applicant; for each such carrier, the total 
number of outstanding shares of stock of each category (common, 
preferred, etc.); the voting rights of each category; for each category, 
the number of shares directly or indirectly owned by the applicant and 
the percentage of the total number of outstanding shares in each 
category so owned. Where ownership is indirect, the applicant shall 
submit information regarding each intermediate entity involved to show 
that the applicant is the owner of the stock described.

[50 FR 31377, Aug. 2, 1985, as amended at 51 FR 6116, Feb. 20, 1986]

                       Administrative Regulations



Sec. 62.21  Signature.

    (a) The original application filed pursuant to Sec. 62.11, and any 
amendment or change in status, shall be signed by the individual 
applicant.
    (b) The original application filed pursuant to Sec. 62.12 should be 
signed by the applicant, if an individual, or by a duly authorized 
officer, if a company or corporation.



Sec. 62.22  Form of application; number of copies; size of paper, etc.

    The original application and two copies thereof shall be filed with 
the Commission. Each copy shall bear the dates and signatures that 
appear on the original and shall be complete in itself, but the 
signatures on the copies may be stamped or typed. The application shall 
be submitted in typewritten or printed form, on paper not more than 8 
and \1/2\ inches wide and not more than 11 inches long, with a left-hand 
margin of approximately 1 and \1/2\ inches, and if typewritten, the 
impression must be on only one side of the paper and must be doubled 
spaced.

[52 FR 5294, Feb. 20, 1987]

[[Page 154]]



Sec. 62.23  Additional or different positions with same companies.

    If an applicant has been authorized by the Commission upon 
application filed pursuant to Sec. 62.11 to hold certain positions as 
officer or director of certain carriers and is subsequently elected or 
appointed, or anticipates election or appointment, to additional or 
different positions with one or more of the same carriers, he may report 
the change in the manner and form provided in Sec. 62.24 relating to 
``change in status''. Authorization for the holding of such additional 
or different positions shall be deemed granted as of the 15th day 
following the filing of such report, unless within that time the 
Commission shall call upon the applicant for additional information or 
for the filing of a formal application.



Sec. 62.24  Change in status; Commission to be informed.

    Should any change occur in the status as reported under this part, 
the applicant shall report such change to the Commission within 30 days 
after such change occurs.



Sec. 62.25  Authorization to hold interlocking directorates in commonly owned carriers.

    After the Commission has found upon application filed pursuant to 
Sec. 62.12 that two or more carriers are commonly owned carriers, any 
duly designated person is authorized hereby to be an interlocking 
director of two or more such carriers. However, the authorization herein 
granted to any interlocking director shall be automatically canceled 
with respect to any position held in any such carrier which at any time 
ceases to be a commonly owned carrier, without notice thereof by the 
Commission, either to the interlocking director, to the carrier, or to 
the person upon whose application a finding of common ownership was 
made. In event of such cancellation, the interlocking director shall 
immediately cease and desist from acting in that capacity with respect 
to the carrier which has ceased to be a commonly owned carrier until 
such time as appropriate authorization is obtained pursuant to this 
part.



Sec. 62.26  Reporting requirements.

    All persons holding interlocking positions on more than one carrier 
subject to the Act, including positions upon a parent or holding company 
of a carrier, shall report to the Commission within 30 days of 
assumption of the interlocking positions, including the title of the 
position(s) held for each carrier (or holding or parent company of a 
carrier) represented. This subsection shall also apply to positions upon 
connecting carriers as defined in 47 U.S.C. 153(u), so long as the 
interlock with the connecting carriers) also involves positions upon a 
fully subject carrier. This subsection shall not apply to persons who 
must file applications pursuant to Secs. 62.1(a), 62.12, and 62.25 
hereof.

[50 FR 31377, Aug. 2, 1985, as amended at 51 FR 6116, Feb. 20, 1986]



   PART 63--EXTENSION OF LINES AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING 
AGENCY STATUS--Table of Contents




                       Extensions and Supplements

Sec.
63.01  Contents of applications for domestic common carriers.
63.02  Special provisions relating to extensions involving small 
          projects.
63.03  Special provisions relating to small projects for supplementing 
          of facilities.
63.04  Special provisions relating to temporary or emergency service.
63.05  Commencement and completion of construction for domestic common 
          carriers.
63.06  Authority for supplementing facilities under approved annual 
          program plan.
63.07  Special procedures for non-dominant domestic common carriers.
63.08  Lines outside of a carrier's exchange telephone service area.
63.10  Regulatory classification of U.S. international carriers.
63.11  Notification by and prior approval for U.S. international 
          carriers that have or propose to acquire an affiliation with a 
          foreign carrier.
63.12  Processing of international Section 214 applications.
63.13  Procedures for modifying regulatory classification of U.S. 
          international carriers from dominant to non-dominant.

[[Page 155]]

63.14  Prohibition on agreeing to accept special concessions.
63.15  Special procedures for international service providers.
63.17  Special provisions for U.S. international common carriers.
63.18  Contents of applications for international common carriers.
63.19  Special procedures for discontinuances of international services.
63.20  Copies required; fees; and filing periods for international 
          service providers.
63.21  Conditions applicable to international Section 214 
          authorizations.

    General Provisions Relating to All Applications Under Section 214

63.50  Amendment of applications.
63.51  Additional information.
63.52  Copies required; fees; and filing periods for domestic 
          authorizations.
63.53  Form.

            Discontinuance, Reduction, Outage and Impairment

63.60  Definitions.
63.61  Applicability.
63.62  Type of discontinuance, reduction, or impairment of telephone or 
          telegraph service requiring formal application.
63.63  Emergency discontinuance, reduction, or impairment of service.
63.65  Closure of public toll station where another toll station of 
          applicant in the community will continue service.
63.66  Closure of or reduction of hours of service at telephone 
          exchanges at military establishments.
63.71  Special procedures for discontinuance, reduction or impairment of 
          service by domestic non-dominant carriers.
63.90  Publication and posting of notices.
63.100  Notification of service outage.

                   Contents of Applications; Examples

63.500  Contents of applications to dismantle or remove a trunk line.
63.501  Contents of applications to sever physical connection or to 
          terminate or suspend interchange of traffic with another 
          carrier.
63.504  Contents of applications to close a public toll station where no 
          other such toll station of the applicant in the community will 
          continue service and where telephone toll service is not 
          otherwise available to the public through a telephone exchange 
          connected with the toll lines of a carrier.
63.505  Contents of applications for any type of discontinuance, 
          reduction, or impairment of telephone service not specifically 
          provided for in this part.
63.601  Contents of applications for authority to reduce the hours of 
          service of public coast stations under the conditions 
          specified in Sec. 63.70.

    Request for Designation as a Recognized Private Operating Agency

63.701  Contents of application.
63.702  Form.

    Authority: 47 U.S.C. 151, 154(i), 154(j), 201-205, 218, 403 and 533, 
unless otherwise noted.

    Source: 28 FR 13229, Dec. 5, 1963, unless otherwise noted.

                       Extensions and Supplements



Sec. 63.01  Contents of applications for domestic common carriers.

    Except as otherwise provided in this part, any party proposing to 
undertake any construction of a new line, extension of any line, 
acquisition, lease, or operation of any line or extension thereof or 
engage in transmission over or by means of such line, and such line 
originates and terminates in the United States, for which authority is 
required under the provisions of Section 214 of the Communications Act 
of 1934, as amended, shall request such authority by formal application 
which shall be accompanied by a statement showing how the proposed 
construction, etc., will serve the public interest, convenience, and 
necessity. Such statement must include the following information as 
applicable:
    (a) The name and address of each applicant;
    (b) The Government, State, or Territory under the laws of which each 
corporate applicant is organized;
    (c) The name, title, and post office address of the officer to whom 
correspondence concerning the application is to be addressed;
    (d) A statement as to whether the applicant is a carrier subject to 
section 214 of the Act or will become such a carrier as a result of the 
proposed construction, acquisition, or operation;
    (e) A statement as to whether the facilities covered by the 
application will be used to extend communication service into territory 
at present not directly served by the applicant or to supplement 
existing facilities of the applicant, and the nature and classification 
of the communication services to be provided (e.g. telephone, telegraph, 
facsimile, data, private line, voice, television relay, etc.);

[[Page 156]]

    (f) The points between which the proposed facilities are to be 
located;
    (g) A description of applicant's existing facilities between these 
points, showing specifically the total number of channels presently 
provided between major points on each principal route;
    (h) A description of the facilities for which authority is 
requested, including:
    (1) The number of channels of each type to be provided by such 
facilities;
    (2) The number, if any, of wires, conductors, and coaxial units of 
each type (not equipped for immediate operation) capable of providing 
additional channels of communication only by the construction of 
additional apparatus, equipment, or other facilities;
    (3) The types of classes of toll telephone or telegraph offices to 
be established;
    (i) Applicant's present and estimated future requirements, both for 
the route of the proposed facilities and for routes from which any 
rerouting to the proposed facilities is contemplated within the period 
of the estimate. Where 60 domestic circuits or more are to be derived 
from the proposed construction, acquisition, or lease, list the 
principal circuit groups currently operated, the number of circuits in 
each group, and the estimate number of circuits required in each group 
to meet the load demands for the ensuing one year, two year, or five 
year period, as may be appropriate in order to provide adequate 
justification for said increases, including current traffic load trends, 
as indicated by periodic traffic load studies.
    (j) A map or sketch showing:
    (1) Route of proposed project;
    (2) Type and ownership of structures (open wire, aerial cable, 
underground cable, carrier systems, etc.);
    (3) Facilities, if any, to be removed;
    (4) Cities, towns, and villages along routes indicated on map or 
sketch, with approximate population of each, and route kilometers 
between the principal points;
    (5) Location of important operating centers, and repeater or relay 
points;
    (6) State boundary lines through which the proposed facilities will 
extend;
    (7) Topographical features which may require special consideration 
or entail added cost;
    (k) One or more of the following statements, as pertinent:
    (1) If proposed facilities are to be constructed, the details 
thereof, including summary of cost estimates separately by Plant 
Accounts affected (in case of construction by or for two or more 
parties, the quantities of facilities of each kind acquired by each and 
the cost attributed thereto), quantities and cost of major materials; 
and amount of labor and cost thereof;
    (2) If proposed facilities are to be leased, the details thereof, 
including the name of the lessor, a summary of the terms of the lease 
arrangements (or a copy of the lease), the anticipated lease rental, 
setting up charges, added equipment costs, and each other added cost to 
the applicant;
    (3) If proposed facilities are to be purchased, the name of the 
vendor; a detailed description of all the properties involved including 
assets other than plant being acquired in connection with the same 
transaction; a complete description of the contractual arrangements 
relating to the sale or a copy of the contract; added equipment cost and 
each other added cost to the applicant; a statement of the original cost 
of, and the related reserve requirement for depreciation applicable to, 
the plant to be acquired (with a full explanation of the manner in which 
these amounts were determined) including, when appropriate, a separate 
statement of such amounts applicable to duplicate or other plant which 
will be retired by the vendee in the reconstruction of the acquired 
property or its consolidation with previously owned property; and a 
statement of the estimated annual savings in expenses expected to result 
from the proposed acquisition;
    (4) If facilities are to be acquired or operated other than by lease 
or purchase a detailed description of the facilities involved; the terms 
of the contract or other arrangement relating to such acquisition or 
operation; added equipment costs; and each other added cost to the 
applicant;
    (l) A summary of the factors showing the public need for the 
proposed facilities;

[[Page 157]]

    (m) Economic justification for the proposed project including, where 
the application involves an extension into new territory at present not 
directly served by the applicant, estimated added revenues and costs and 
the basis therefor;
    (n) Description of the manner and means by which interstate and 
foreign communication services of a similar character are now being 
rendered by the applicant and others in the area to be served by the 
proposed facilities, including reasons why existing facilities are 
inadequate;
    (o) Proposed tariff charges and regulations for domestic 
applications;
    (p) A statement of the accounting proposed to be performed in 
connection with the project. If the facilities are to be acquired by 
purchase, such proposed accounting shall be presented in journal entry 
form (on an estimated basis if actual amounts are not available), 
together with a full explanation of the manner in which the respective 
amounts were determined.
    (q) A statement whether an authorization of the facilities is 
categorically excluded as defined by Sec. 1.1306 of the Commission's 
rules. If answered affirmatively, an environmental assessment as 
described in Sec. 1.1311 need not be filed with the application.

[28 FR 13229, Dec. 5, 1963, as amended at 41 FR 20661, May 20, 1976; 45 
FR 6585, Jan. 29, 1980; 50 FR 18659, May 2, 1985; 51 FR 15003, Apr. 22, 
1986; 57 FR 647, Jan. 8, 1992; 57 FR 57965, Dec. 8, 1992; 58 FR 44461, 
Aug. 23, 1993; 58 FR 44906, Aug. 25, 1993; 61 FR 15727, Apr. 9, 1996]



Sec. 63.02  Special provisions relating to extensions involving small projects.

    Applications involving extension of service into domestic territory 
at present not directly served by the applicant by the construction, 
acquisition, or operation of facilities, the cost of which to the 
applicant does not exceed $50,000 or the annual rental of which does not 
exceed $10,000, may omit the information called for by Sec. 63.01 that 
is clearly not relevant to such extension. (Normally the information 
required by Sec. 63.01 (h)(1), (h)(2), (i), (j), and (k)(1) may be 
omitted.) At minimum, the application shall contain a general 
description of the existing and proposed facilities, points of service, 
and cost.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20661, May 20, 1976]



Sec. 63.03  Special provisions relating to small projects for supplementing of facilities.

    (a) Facilities authorized under this section are limited to those 
that supplement existing facilities. Excluded from consideration under 
this section are applications that would involve:
    (1) A new or modified service;
    (2) One or more points of service not previously authorized to the 
applicant for the type of service involved;
    (3) New transmission facilities (excluding supplemental radio 
transmitters) over which applicant has not previously received authority 
under part 63;
    (4) An action that may have a significant impact upon the 
environment, see Sec. 1.1307 of this chapter.
    (5) International channels exceeding 60 64-kilobit per second 
circuits; or
    (6) Domestic channels where the construction or acquisition cost 
exceeds $2,000,000 or where the annual rental exceeds $500,000.
    (b) Applications submitted under this section shall be clearly 
identified as requesting authority pursuant to this section and the 
original shall be accompanied by two copies. The application shall 
contain a statement showing how the proposed acquisition, lease, 
operation or construction would serve the public interest, convenience, 
and necessity. Such statement must include information concerning:
    (1) The terminal communities between which the proposed facilities 
are to be located;
    (2) A statement as to the type of communications services which will 
be provided on the proposed facilities;
    (3) The need for the proposed construction, acquisition, lease or 
operation;
    (4) A description of the proposed facilities giving the number of 
each type of communication channel to be provided thereby;
    (5) The estimated construction cost, annual rental, or purchase 
price, as appropriate for the proposed facilities;

[[Page 158]]

    (6) The route kilometers of the facilities involved (excluding 
leased facilities) and airline kilometers between terminal communities 
in the proposed project; and
    (7) The accounting to be performed by the carrier with respect to 
the proposed project.
    (c) In addition to the requirements of paragraph (b) of this 
section, applications involving overseas circuits shall:
    (1) Cite by file number and date of adoption a currently effective 
Commission Order granted pursuant to Sec. 63.01 granting the applicant 
authority to acquire like facilities for the provision of service 
between the points for which authority for additional circuitry is being 
requested. Where the applicant has been granted a currently effective 
authorization (Blanket Order) which specifies in an appendix to that 
Commission Order all or most of the facilities of a specific type (e.g. 
satellite circuits provided by satellites over a given ocean basin, 
circuits in a single submarine cable system, etc.), the applicant has 
been authorized to use to serve the ocean basin, area or country to 
which applicant is seeking to acquire supplemental facilities, the 
applicant shall cite that authorization.
    (2) Contain a specific statement that applicant will construct, 
acquire and/or operate the requested facilities in accordance with the 
terms and conditions of the Order cited pursuant to paragraph (c)(1) of 
this section.
    (3) When the Commission Order cited pursuant to paragraph (c)(1) of 
this section is a Blanket Authorization, applicant shall submit a 
revised Appendix showing the changes thereto which will occur on grant 
of its application.
    (d) Such supplementing of facilities shall be deemed to have been 
authorized by the Commission effective as of the 21st day following the 
date the application appears on public notice unless on or before the 
21st day the Commission shall notify the applicant to the contrary. 
Where supplemental facilities are authorized under this section, they 
shall be considered subject to the same terms and conditions, if any, 
that the Commission has imposed upon a prior authorization which is 
being supplemented.
    (e) Any carrier may request continuing authority, subject to 
termination by the Commission at any time upon 10 days' notice to the 
carrier, to commence small projects for the supplementing of existing 
facilities. Such an application shall set forth the need for such 
authority; however, it shall not be considered granted pursuant to 
paragraph (d) of this section. Upon authorization of such continuing 
authority by the Commission, the carrier may commence small projects 
subject to the limitations set forth in paragraph (a) of this section, 
except that the construction, installation and acquisition cost for each 
project shall be limited to $70,000 or an annual rental of $14,000. Not 
later than the 30th day following the end of each calender year covered 
by such authority, the carrier shall file a report in writing on the 
projects commenced pursuant to continuing authority except that carriers 
planning to file an application under an approved annual program, see 
Sec. 63.06, shall file their report as an exhibit to the annual 
application. The report shall make reference to this paragraph and set 
forth, with respect to each project (construction, installation, 
acquisition, lease including any renewal thereof, and operation) which 
was commenced thereunder, the following information:
    (1) The type of facility constructed, installed, acquired, or 
leased;
    (2) The route kilometers thereof (excluding leased facilities);
    (3) The terminal communities served and airline kilometers between 
such communities;
    (4) The cost thereof, including construction, installation, 
acquisition, or lease; and
    (5) When appropriate, the name of the lessor company and the dates 
of commencement and termination of the lease.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20661, May 20, 1976, as amended at 49 FR 22818, June 1, 1984; 55 
FR 20397, May 16, 1990; 58 FR 44461, Aug. 23, 1993; 58 FR 44906, Aug. 
25, 1993]

[[Page 159]]



Sec. 63.04  Special provisions relating to temporary or emergency service.

    (a) For the purpose of this section the following definitions shall 
apply:
    (1) Temporary service shall mean service for a period not exceeding 
6 months;
    (2) Emergency service shall mean service for which there is an 
immediate need occasioned by conditions unforeseen by, and beyond the 
control of, the carrier.
    (b) Requests for immediate authority for temporary service or for 
emergency service may be made by letter or telegram setting forth why 
such immediate authority is required, the nature of the emergency, the 
type of facilities proposed to be used, the route kilometers thereof, 
the terminal communities to be served, and airline kilometers between 
such communities; how these points are presently being served by the 
applicant or other carriers, the need for the proposed service, the cost 
involved including any rentals, the date on which the service is to 
begin, and where known, the date or approximate date on which the 
service is to terminate.
    (c) Without regard to the other requirements of this part, and by 
application setting forth the need therefor, any carrier may request 
continuing authority, subject to termination by the Commission at any 
time upon 10 days' notice to the carrier, to provide temporary or 
emergency service by the construction or installation of facilities 
where the estimated construction, installation, and acquisition costs do 
not exceed $35,000 or an annual rental of not more than $7,000 provided 
that such project does not involve a major action under the Commission's 
environmental rules. (See subpart I of part 1 of this chapter.) Any 
carrier to which continuing authority has been granted under this 
paragraph shall, not later than the 30th day following the end of each 
6-month period covered by such authority, file with the Commission a 
statement in writing making reference to this paragraph and setting 
forth, with respect to each project (construction, installation, lease, 
including any renewals thereof), which was commenced or, in the case of 
leases, entered into under such authority, and renewal or renewals 
thereof which were in continuous effect for a period of more than one 
week, the following information:
    (1) The type of facility constructed, installed, or leased;
    (2) The route kilometers thereof (excluding leased facilities);
    (3) The terminal communities served and the airline kilometers 
between terminal communities in the proposed project;
    (4) The cost thereof, including construction, installation, or 
lease;
    (5) Where appropriate, the name of the lessor company, and the dates 
of commencement and termination of the lease.
    (d)(1) A request may be made by any carrier for continuing authority 
to lease and operate, during any emergency when its regular facilities 
become inoperative or inadequate to handle its traffic, facilities or 
any other carrier between points between which applicant is authorized 
to communicate by radio for the transmission of traffic which applicant 
is authorized to handle.
    (2) Such request may be made by letter or telegram making reference 
to this paragraph and setting forth the points between which applicant 
desires to operate facilities of other carriers and the nature of the 
traffic to be handled thereover.
    (3) Continuing authority for the operation thereafter of such 
alternate facilities during emergencies shall be deemed granted 
effective as of the 21st day following the filing of the request unless 
on or before that date the Commission shall notify the applicant to the 
contrary: provided, however, Applicant shall, not later than the 30th 
day following the end of each quarter in which it has operated 
facilities of any other carrier pursuant to authority granted under this 
paragraph, file with the Commission a statement in writing making 
reference to this paragraph and describing each occasion during the 
quarter when it has operated such facilities, giving dates, points 
between which such facilities were located, hours or minutes used, 
nature of traffic handled, and reasons why its own facilities could not 
be used.


[[Page 160]]


(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[28 FR 13229, Dec. 5, 1963, as amended at 41 FR 20662, May 20, 1976; 58 
FR 44906, Aug. 25, 1993]



Sec. 63.05  Commencement and completion of construction for domestic common carriers.

    Unless otherwise determined by the Commission upon proper showing in 
any particular case, in the event construction shall not have been begun 
upon a project involving an expenditure of more than $500,000, or where 
facilities authorized have not been leased or acquired, within 12 months 
from the date of the Commission's authorization, or all or part of the 
proposed facilities shall not have been placed in operation within 36 
months after such date, such authorization shall terminate at the end of 
such 12 or 36 months' period, as the case may be; in the case of 
projects involving an expenditure of $500,000 or less, the authorization 
therefor shall terminate at the end of 9 months or 18 months, as the 
case may be, in the event construction thereof shall not have been 
commenced, or the facilities placed in operation, within such respective 
periods.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20662, May 20, 1976]



Sec. 63.06  Authority for supplementing facilities under approved annual program plan.

    Any carrier may submit to the Commission a procedure pursuant to 
which such carrier proposes to request authority covering an annual 
program of projects for the supplementing of its existing facilities. 
After approval of such proposed procedure by the Commission, such 
carrier may request such authority in accordance with such procedure in 
lieu of filing separate applications for individual projects pursuant to 
Secs. 63.01 and 63.03.



Sec. 63.07  Special procedures for non-dominant domestic common carriers.

    (a) Any party that would be a non-dominant domestic interstate 
communications common carrier is authorized to provide domestic, 
interstate services to any domestic point and to construct, acquire, or 
operate any transmission line as long as it obtains all necessary 
authorizations from the Commission for use of radio frequencies.
    (b) Non-dominant, facilities-based domestic common carriers subject 
to this section shall not engage in any construction or extension of 
lines that may have a significant effect on the environment as defined 
in Sec. 1.1307 of this chapter without prior compliance with the 
Commission's environmental rules. See 1.1312 of this chapter.

[49 FR 34831, Sept. 4, 1984, as amended at 56 FR 13414, Apr. 2, 1991; 62 
FR 5165, Feb. 4, 1997]



Sec. 63.08  Lines outside of a carrier's exchange telephone service area.

    (a) An exchange telephone common carrier or its affiliate is not 
required to file for authority pursuant to 47 U.S.C. 214 and 47 CFR 
63.01 to provide lines, or for existing lines, outside of the exchange 
telephone service area of that carrier and any of its affiliates when 
the lines are:
    (1) For its non-common carrier services; or
    (2) Sold to an unaffiliated party.
    (b) If a nondominant common carrier and its affiliates are not 
affiliated with an exchange telephone common carrier, the nondominant 
carrier or its affiliate is not required to file for authority pursuant 
to 47 U.S.C. 214 and 47 CFR 63.01 to provide lines, or for existing 
lines, of the types described in paragraph (a) of this section between 
any domestic points. ``Nondominant'' is defined as in Sec. 61.15(a) of 
this chapter.
    (c) A common carrier or its affiliate is not required to file for 
authority pursuant to 47 U.S.C. 214 and Sec. 63.01 to discontinue, 
reduce, or impair other non-common carrier service.
    (d) A common carrier's costs of providing lines for non-common 
carrier offerings and costs of providing such offerings must be entered 
on books of account separate from those for its common carrier services.
    (e) As used above, the term ``affiliate'' bars any financial or 
business relationship whatsoever by contract or otherwise, directly or 
indirectly between the carrier and the customer, except only the 
carrier-user relationship.


[[Page 161]]


    Note to Paragraph (e): Examples of situations in which a carrier and 
its customer will be deemed to be controlled or having a relationship 
include the following, among others: Where one is the debtor or creditor 
of the other (except with respect to charges for communication 
services); where they have a common officer, director, or other employee 
at the management level; where there is any element of ownership or 
other financial interest by one in the other; and where any part has a 
financial interest in both.

[49 FR 21335, May 21, 1984, as amended at 61 FR 10476, Mar. 14, 1996]



Sec. 63.10  Regulatory classification of U.S. international carriers.

    (a) Unless otherwise determined by the Commission, any party 
authorized to provide an international communications service under this 
part shall be classified as either dominant or non-dominant for the 
provision of particular international communications services on 
particular routes as set forth in this section. The rules set forth in 
this section shall also apply to determinations of regulatory status 
pursuant to Secs. 63.11 and 63.13. For purposes of paragraphs (a)(1) 
through (a)(3) of this section, ``affiliation'' and ``foreign carrier'' 
are defined as set forth in Sec. 63.18(h)(1)(i) and (ii), respectively. 
For purposes of paragraphs (a)(2) and (a)(3) of this section, the 
relevant markets on the foreign end of a U.S. international route 
include: international transport facilities or services, including cable 
landing station access and backhaul facilities; inter-city facilities or 
services; and local access facilities or services on the foreign end of 
a particular route.
    (1) A U.S. carrier that has no affiliation with, and that itself is 
not, a foreign carrier in a particular country to which it provides 
service (i.e., a destination country) shall presumptively be considered 
non-dominant for the provision of international communications services 
on that route;
    (2) Except as provided in paragraph (a)(4) of this section, a U.S. 
carrier that is, or that has or acquires an affiliation with a foreign 
carrier that is a monopoly provider of communications services in a 
relevant market in a destination country shall presumptively be 
classified as dominant for the provision of international communications 
services on that route; and
    (3) A U.S. carrier that is, or that has or acquires an affiliation 
with a foreign carrier that is not a monopoly provider of communications 
services in a relevant market in a destination country and that seeks to 
be regulated as non-dominant on that route bears the burden of 
submitting information to the Commission sufficient to demonstrate that 
its foreign affiliate lacks sufficient market power on the foreign end 
of the route to affect competition adversely in the U.S. market. If the 
U.S. carrier demonstrates that the foreign affiliate lacks 50 percent 
market share in the international transport and the local access markets 
on the foreign end of the route, the U.S. carrier shall presumptively be 
classified as non-dominant.
    (4) A carrier that is authorized under this part to provide to a 
particular destination country a particular international communications 
service, and that provides such service solely through the resale of an 
unaffiliated U.S. facilities-based carrier's international switched 
services (either directly or indirectly through the resale of another 
U.S. resale carrier's international switched services), shall 
presumptively be classified as non-dominant for the provision of the 
authorized service. The existence of an affiliation with a U.S. 
facilities-based international carrier shall be assessed in accordance 
with the definition of affiliation contained in Sec. 63.18(h)(1)(i) of 
this chapter, except that the phrase ``U.S. facilities-based 
international carrier'' shall be substituted for the phrase ``foreign 
carrier.''
    (b) Any party that seeks to defeat the presumptions in paragraph (a) 
of this section shall bear the burden of proof upon any issue it raises 
as to the proper classification of the U.S. carrier.
    (c) Any carrier classified as dominant for the provision of 
particular services on particular routes under this section shall comply 
with the following requirements in its provision of such services on 
each such route:
    (1) File international service tariffs on one day's notice without 
cost support;

[[Page 162]]

    (2) Provide services as an entity that is separate from its foreign 
carrier affiliate, in compliance with the following requirements:
    (i) The authorized carrier shall maintain separate books of account 
from its affiliated foreign carrier. These separate books of account do 
not need to comply with Part 32 of this chapter; and
    (ii) The authorized carrier shall not jointly own transmission or 
switching facilities with its affiliated foreign carrier. Nothing in 
this section prohibits the U.S. carrier from sharing personnel or other 
resources or assets with its foreign affiliate;
    (3) File quarterly reports on traffic and revenue, consistent with 
the reporting requirements authorized pursuant to Sec. 43.61, within 90 
days from the end of each calendar quarter;
    (4) File quarterly reports summarizing the provisioning and 
maintenance of all basic network facilities and services procured from 
its foreign carrier affiliate or from an allied foreign carrier, 
including, but not limited to, those it procures on behalf of customers 
of any joint venture for the provision of U.S. basic or enhanced 
services in which the authorized carrier and the foreign carrier 
participate, within 90 days from the end of each calendar quarter. These 
reports should contain the following: the types of circuits and services 
provided; the average time intervals between order and delivery; the 
number of outages and intervals between fault report and service 
restoration; and for circuits used to provide international switched 
service, the percentage of ``peak hour'' calls that failed to complete;
    (5) In the case of an authorized facilities-based carrier, file 
quarterly circuit status reports within 90 days from the end of each 
calendar quarter in the format set out by the Sec. 43.82 annual circuit 
status manual, with two exceptions: activated or idle circuits must be 
reported on a facility-by-facility basis; and the derived circuits need 
not be specified in the three quarterly reports due on June 30, 
September 30, and December 31. For purposes of this paragraph, 
``facilities-based carrier'' is defined in Sec. 63.18 note 2 to 
paragraph (h).
    (d) A carrier classified as dominant under this section shall file 
an original and two copies of each report required by paragraphs (c)(3), 
(c)(4), and (c)(5) of this section with the Chief, International Bureau. 
The carrier shall include with its filings separate computer diskettes 
for the reports required by paragraphs (c)(3) and (c)(5), in the format 
specified by the Sec. 43.61 and Sec. 43.82 filing manuals, respectively. 
The carrier shall also file one paper copy of these reports, accompanied 
by the appropriate computer diskettes, with the Commission's copy 
contractor. The transmittal letter accompanying each report shall 
clearly identify the report as responsive to the appropriate paragraph 
of Sec. 63.10(c).

[62 FR 64752, Dec. 9, 1997]



Sec. 63.11  Notification by and prior approval for U.S. international carriers that have or propose to acquire an affiliation with a foreign carrier.

    (a) Any carrier authorized to provide international communications 
service under this part shall notify the Commission sixty days prior to 
the consummation of either of the following acquisitions of direct or 
indirect controlling interests in or by foreign carriers:
    (1) Acquisition of a direct or indirect controlling interest in a 
foreign carrier (as defined in Sec. 63.18(h)(1)(ii)) by the authorized 
carrier, or by any entity that directly or indirectly controls the 
authorized carrier, or that directly or indirectly owns more than 25 
percent of the capital stock of the authorized carrier; or
    (2) Acquisition of a direct or indirect interest in the capital 
stock of the authorized carrier by a foreign carrier or by an entity 
that directly or indirectly controls a foreign carrier where the 
interest would create an affiliation within the meaning of 
Sec. 63.18(h)(1)(i)(B).
    (b) Any carrier authorized to provide international communications 
service under this part that becomes affiliated with a foreign carrier 
within the meaning of Sec. 63.18(h)(1) that has not previously notified 
the Commission pursuant to this section or Sec. 63.18 shall notify the 
Commission within thirty days

[[Page 163]]

after acquiring the affiliation. In particular, acquisition by an 
authorized carrier (or by any entity that directly or indirectly 
controls, is controlled by, or is under direct or indirect common 
control with the authorized carrier) of a direct or indirect interest in 
a foreign carrier that is greater than 25 percent but not controlling is 
subject to this paragraph but not to paragraph (a).
    (c) The notification required under paragraphs (a) and (b) of this 
section shall contain a list of the affiliated foreign carriers named in 
paragraphs (a) and (b) of this section and shall state individually the 
country or countries in which the foreign carriers are authorized to 
provide telecommunications services to the public. It shall additionally 
specify which, if any, of these countries is a Member of the World Trade 
Organization; which, if any, of these countries the U.S. carrier is 
authorized to serve under this part; what services it is authorized to 
provide to each such country; and the FCC File No. under which each such 
authorization was granted. The notification shall certify to the 
information specified in this paragraph.
    (1) The carrier also should specify, where applicable, those 
countries named in paragraph (c) of this section for which it provides a 
specified international communications service solely through the resale 
of the international switched services of U.S. facilities-based carriers 
with which the resale carrier does not have an affiliation. Such an 
affiliation is defined in Sec. 63.18(h)(1)(i), except that the phrase 
``U.S. facilities-based international carrier'' shall be substituted for 
the phrase ``foreign carrier.''
    (2) The carrier shall also submit with its notification:
    (i) The ownership information as required to be submitted pursuant 
to Sec. 63.18(h)(2); and
    (ii) A ``special concessions'' certification as required to be 
submitted pursuant to Sec. 63.18(i).
    (d) In order to retain non-dominant status on the affiliated route, 
the carrier notifying the Commission of a foreign carrier affiliation 
under paragraph (a) or (b) of this section should provide information to 
demonstrate that it qualifies for non-dominant classification pursuant 
to Sec. 63.10.
    (e) After the Commission issues a public notice of the submissions 
made under this section, interested parties may file comments within 14 
days of the public notice.
    (1) In the case of a notification filed under paragraph (a) of this 
section, the Commission, if it deems it necessary, will by written order 
at any time before or after the submission of public comments impose 
dominant carrier regulation on the carrier for the affiliated routes 
based on the provisions of Sec. 63.10.
    (2) The Commission will, unless it notifies the carrier in writing 
within 30 days of issuance of the public notice that the investment 
raises a substantial and material question of fact as to whether the 
investment serves the public interest, convenience and necessity, 
presume the investment to be in the public interest. If notified that 
the investment raises a substantial and material question, then the 
carrier shall not consummate the planned investment until it has filed 
an application under Sec. 63.18 and submitted the information specified 
under Sec. 63.18(h)(5) or (6) as applicable, and Sec. 63.18(h)(7) and 
(8), as applicable, and the Commission has approved the application by 
formal written order.
    (f) All authorized carriers are responsible for the continuing 
accuracy of certifications with regard to affiliations with foreign 
carriers made under this section and under Sec. 63.18. Whenever the 
substance of any such certification is no longer accurate, the carrier 
shall as promptly as possible, and in any event within thirty days, file 
with the Secretary in duplicate a corrected certification referencing 
the FCC File No. under which the original certification was provided, 
except that the carrier shall immediately inform the Commission if at 
any time the representations in the ``special concessions'' 
certification provided under paragraph (c)(2)(ii) of this section or 
Sec. 63.18(i) are no longer true. See Sec. 63.18(i). This information 
may be used by the Commission to determine whether a change in 
regulatory status may be warranted under Sec. 63.10.


[[Page 164]]


    Note to Sec. 63.11: ``Control'' as used in this section includes 
actual working control in whatever manner exercised and is not limited 
to majority stock ownership.

[62 FR 64753, Dec. 9, 1997]



Sec. 63.12  Processing of international Section 214 applications.

    (a) Except as provided by paragraph (c) of this section, a complete 
application seeking authorization under Sec. 63.18 shall be granted by 
the Commission 35 days after the date of public notice listing the 
application as accepted for filing.
    (b) Issuance of public notice of the grant shall be deemed the 
issuance of Section 214 certification to the applicant, which may 
commence operation on the 36th day after the date of public notice 
listing the application as accepted for filing, but only in accordance 
with the operations proposed in its application and the rules, 
regulations, and policies of the Commission.
    (c) The streamlined processing procedures provided by paragraphs (a) 
and (b) of this section shall not apply where:
    (1) The applicant has an affiliation within the meaning of 
Sec. 63.18(h)(1)(i) with a foreign carrier in a destination market, and 
the Commission has not yet made a determination as to whether that 
foreign carrier lacks sufficient market power in that destination market 
to affect competition adversely in the U.S. market, unless the applicant 
clearly demonstrates in its application at least one of the following:
    (i) The applicant qualifies for a presumption of non-dominance under 
Sec. 63.10(a)(3);
    (ii) The affiliated destination market is a WTO Member country and 
the applicant qualifies for a presumption of non-dominance under 
Sec. 63.10(a)(4); or
    (iii) The affiliated destination market is a WTO Member country and 
the applicant agrees to be classified as a dominant carrier to the 
affiliated destination country under Sec. 63.10, without prejudice to 
its right to petition for reclassification at a later date; or
    (2) The applicant has an affiliation within the meaning of 
Sec. 63.18(h)(1)(i) with a dominant U.S. carrier whose international 
switched or private line services the applicant seeks authority to 
resell (either directly or indirectly through the resale of another 
reseller's services), unless the applicant agrees to be classified as a 
dominant carrier to the affiliated destination country under Sec. 63.10 
(without prejudice to its right to petition for reclassification at a 
later date); or
    (3) The applicant seeks authority to provide switched basic services 
over private lines to a country for which the Commission has not 
previously authorized the provision of switched services over private 
lines; or
    (4) The application is formally opposed by a pleading meeting the 
following criteria:
    (i) The caption and text of the pleading make it unmistakably clear 
that the pleading is intended to be a formal opposition;
    (ii) The pleading is served upon the other parties to the 
proceeding; and
    (iii) The pleading is filed within the time period prescribed for 
the filing of objections or comments; or
    (5) The Commission has informed the applicant in writing, within 28 
days after the date of public notice accepting the application for 
filing, that the application is not eligible for streamlined processing 
under this section.
    (d) Any complete application that is subject to paragraph (c) of 
this section will be acted upon only by formal written order, and 
operation for which such authorization is sought may not commence except 
in accordance with such order. The Commission will issue public notice 
that the application is ineligible for streamlined processing. Within 90 
days of the public notice, the Commission will issue an order acting 
upon the application or provide public notice that, because the 
application raises questions of extraordinary complexity, an additional 
90-day period for review is needed. Each successive 90-day period may be 
so extended.

[62 FR 64753, Dec. 9, 1997]



Sec. 63.13  Procedures for modifying regulatory classification of U.S. international carriers from dominant to non-dominant.

    Any party that desires to modify its regulatory status from dominant 
to non-dominant for the provision of particular international 
communications

[[Page 165]]

services on a particular route should provide information in its 
application to demonstrate that it qualifies for non-dominant 
classification pursuant to Sec. 63.10.

[62 FR 64754, Dec. 9, 1997]



Sec. 63.14  Prohibition on agreeing to accept special concessions.

    (a) Any carrier authorized to provide international communications 
service under this part shall be prohibited from agreeing to accept 
special concessions directly or indirectly from any foreign carrier with 
respect to any U.S. international route where the foreign carrier 
possesses sufficient market power on the foreign end of the route to 
affect competition adversely in the U.S. market, as described in 
paragraph (c) of this section, and from agreeing to accept special 
concessions in the future. For purposes of this section, ``foreign 
carrier'' is defined in Sec. 63.18(h)(1)(ii).
    (b) For purposes of this section and Secs. 63.11(c)(2)(ii) and 
63.18(i), a special concession is defined as an exclusive arrangement 
involving services, facilities, or functions on the foreign end of a 
U.S. international route that are necessary for the provision of basic 
telecommunications services where the arrangement is not offered to 
similarly situated U.S.-licensed carriers and involves:
    (1) Operating agreements for the provision of basic services;
    (2) Distribution arrangements or interconnection arrangements, 
including pricing, technical specifications, functional capabilities, or 
other quality and operational characteristics, such as provisioning and 
maintenance times; or
    (3) Any information, prior to public disclosure, about a foreign 
carrier's basic network services that affects either the provision of 
basic or enhanced services or interconnection to the foreign country's 
domestic network by U.S. carriers or their U.S. customers.
    (c) A U.S. carrier that seeks to enter a special concession with a 
foreign carrier bears the burden of submitting information, as part of 
the requirement to file the agreement with the Commission pursuant to 
Sec. 43.51, sufficient to demonstrate that the foreign carrier lacks 
sufficient market power on the foreign end of the route to affect 
competition adversely in the U.S. market. If the U.S. carrier makes a 
showing that the foreign carrier lacks 50 percent market share in the 
international transport and the local access markets on the foreign end 
of the route, the U.S. carrier will presumptively be allowed to agree to 
accept the special concession.
    (d) Any party that seeks to defeat the presumption in paragraph (c) 
of this section shall bear the burden of proof upon any issue it raises 
as to the ability of the foreign carrier to affect competition adversely 
in the U.S. market.

[62 FR 64754, Dec. 9, 1997]



Sec. 63.15  Special procedures for international service providers.

    (a) Any party seeking to construct, acquire or operate lines in any 
new major common carrier facility project or non-U.S. licensed satellite 
or cable system for the provision of international common carrier 
services shall file an application pursuant to Sec. 63.18(e)(6). If a 
carrier has global Section 214 authority pursuant to the provisions of 
Sec. 63.18(e)(1), and the carrier desires to use non-U.S. licensed 
facilities pursuant to the provisions of Sec. 63.18(e)(1)(ii)(B), this 
filing requirement does not apply.
    (b) Any non-dominant party certified to provide international resold 
private lines to a particular geographic market shall report its circuit 
additions on an annual basis. Circuit additions should indicate the 
specific services provided (e.g., IMTS or private line) and the country 
served. This report shall be filed on a consolidated basis not later 
than March 31 for the preceding calendar year.

[50 FR 48203, Nov. 22, 1985; 51 FR 2708, Jan. 21, 1986. Redesignated at 
57 FR 57966, Dec. 8, 1992, as amended at 60 FR 51368, Oct. 2, 1995; 61 
FR 15728, Apr. 9, 1996]



Sec. 63.17  Special provisions for U.S. international common carriers.

    (a) Unless otherwise prohibited by the terms of its Section 214 
certificate, a U.S. common carrier authorized under this part to provide 
international private line service, whether

[[Page 166]]

as a reseller or facilities-based carrier, may interconnect its 
authorized private lines to the public switched network on behalf of an 
end user customer for the end user customer's own use.
    (b) Except as provided in paragraph (b)(4) of this section, a U.S. 
common carrier, whether a reseller or facilities-based carrier, may 
engage in ``switched hubbing'' to countries for which the Commission has 
not authorized the provision of switched basic services over private 
lines provided the carrier complies with the following conditions:
    (1) U.S.-outbound switched traffic shall be routed over the 
carrier's authorized U.S. international private lines to a country for 
which the Commission has authorized the provision of switched services 
over private lines (i.e., the ``hub'' country), and then forwarded to 
the third country only by taking at published rates and reselling the 
international message telephone service (IMTS) of a carrier in the hub 
country;
    (2) U.S.-inbound switched traffic shall be carried to a country for 
which the Commission has authorized the provision of switched services 
over private lines (i.e., the ``hub'' country) as part of the IMTS 
traffic flow from a third country and then terminated in the United 
States over U.S. international private lines from the hub country;
    (3) U.S. common carriers that route U.S.-billed traffic via switched 
hubbing shall tariff their service on a ``through'' basis between the 
United States and the ultimate point of origination or termination;
    (4) No U.S. common carrier may engage in switched hubbing to or from 
a third country where it has an affiliation with a foreign carrier 
unless and until it has received authority to serve that country under 
Sec. 63.18(e)(1), (e)(2), or (e)(6).

[60 FR 67339, Dec. 29, 1995, as amended at 61 FR 15728, Apr. 9, 1996; 63 
FR 64754, Dec. 9, 1997]



Sec. 63.18  Contents of applications for international common carriers.

    Except as otherwise provided in this part, any party seeking 
authority pursuant to Section 214 of the Communications Act of 1934, as 
amended, to construct a new line, or acquire or operate any line, or 
engage in transmission over or by means of such additional line for the 
provision of common carrier communications services between the United 
States, its territories or possessions, and a foreign point shall 
request such authority by formal application which shall be accompanied 
by a statement showing how the grant of the application will serve the 
public interest, convenience, and necessity. Such statement shall 
consist of the following information, as applicable:
    (a) The name, address, and telephone number of each applicant;
    (b) The Government, State, or Territory under the laws of which each 
corporate or partnership applicant is organized;
    (c) The name, title, post office address, and telephone number of 
the officer and any other contact point, such as legal counsel, to whom 
correspondence concerning the application is to be addressed;
    (d) A statement as to whether the applicant has previously received 
authority under Section 214 of the Act and, if so, a general description 
of the categories of facilities and services authorized (i.e., 
authorized to provide international switched services on a facilities 
basis);
    (e) One or more of the following statements, as pertinent:
    (1) If applying for authority to acquire interests in facilities 
previously authorized by the Commission in order to provide 
international basic switched, private line, data, television and 
business services to all international points, the applicant shall:
    (i) State that it is requesting Section 214 authority to operate as 
a facilities-based carrier pursuant to the terms and conditions of 
paragraph (e)(1) of this section.
    (ii) Comply with the following terms and conditions:
    (A) Authority to provide services to all international points under 
this part extends to those countries for which the applicant qualifies 
for non-dominant regulation as set forth in Sec. 63.10, except in the 
following circumstance: If an applicant is affiliated with a foreign 
carrier in a destination market

[[Page 167]]

and the Commission has not determined that the foreign carrier lacks 
sufficient market power in the destination market to affect competition 
adversely in the U.S. market (see Sec. 63.10(a)), the applicant shall 
not commence service on any such route until it receives specific 
authority to do so under paragraph (e)(6) of this section.
    (B) The applicant may only provide service using half-circuits on 
appropriately licensed U.S. common and non-common carrier facilities 
(under either Title III of the Communications Act of 1934, as amended, 
or the Submarine Cable Landing License Act, 47 U.S.C. 34 et al.) 
provided that these facilities do not appear on an exclusion list 
published by the Commission and any necessary overseas connecting 
facilities. Applicants may not use non-U.S. licensed facilities unless 
and until the Commission specifically approves their use and so 
indicates on the exclusion list, and only then for service to the 
countries indicated thereon.
    (C) The applicant may provide service to any country not included on 
an exclusion list published by the Commission.
    (D) The applicant may provide international basic switched, private 
line, data, television and business services.
    (E) The authority granted under this paragraph shall be subject to 
all Commission rules and regulations and any conditions stated in the 
Commission's public notice or order that serves as the applicant's 
Section 214 certificate. See Sec. 63.12.
    (2) If applying for authority to resell the international services 
of authorized U.S. common carriers for the provision of international 
basic switched, private line, data, television and business services to 
all international points, the applicant shall:
    (i) State that it is requesting Section 214 authority to operate as 
a resale carrier pursuant to the terms and conditions of 
Sec. 63.18(e)(2).
    (ii) Comply with the following terms and conditions:
    (A) Authority to provide resold services to all international points 
under this part extends to those countries and services for which the 
applicant qualifies for non-dominant regulation as set forth in 
Sec. 63.10, except in the following circumstances, in which case an 
applicant shall not commence service until it receives specific 
authority to do so under paragraph (e)(6) of this section:
    (1) An application to provide switched resold services to a non-WTO 
Member country where the applicant is affiliated with a foreign carrier; 
and
    (2) An application to resell private line services to a destination 
market where the applicant is affiliated with a foreign carrier and the 
Commission has not determined that the foreign carrier lacks sufficient 
market power in the destination market to affect competition adversely 
in the U.S. market (see Sec. 63.10(a)).
    (B) The applicant may resell the international services of any 
authorized common carrier, except affiliated carriers regulated as 
dominant on the route to be served, pursuant to that carrier's tariff or 
contract duly filed with the Commission, for the provision of 
international basic switched, private line, data, television and 
business services to all international points;
    (C) The applicant may resell private line services for the provision 
of international switched basic services only in circumstances where the 
Commission has specifically authorized the provision of switched basic 
services over private lines to the particular country at the foreign end 
of the private line. In making determinations about particular 
destination countries, the Commission will follow the policies adopted 
in IB Docket Nos. 96-261 and 97-142 (these documents are available at 
the FCC's Reference Operations Division, Washington, D.C. 20554, and on 
the FCC's World Wide Web Site at http://www.fcc.gov). The Commission 
will provide public notice of its decisions to authorize the provision 
of switched basic services over private lines to particular countries.
    (D) The authority granted under this paragraph shall be subject to 
all Commission rules and regulations, including the limitation in 
Sec. 63.21 on the use of private lines for the provision of switched 
services, and any conditions stated in the Commission's public notice or 
order that serves as the applicant's Section 214 certificate. See 
Secs. 63.12, 63.21.

[[Page 168]]

    (3) If applying for authority to provide international switched 
basic services over resold private lines between the United States and a 
WTO Member country for which the Commission has not previously 
authorized the provision of switched services over private lines, the 
applicant shall demonstrate either that settlement rates for at least 50 
percent of the settled U.S.-billed traffic between the United States and 
the country at the foreign end of the private line are at or below the 
benchmark settlement rate adopted for that country in IB Docket No. 96-
261 or that the country affords resale opportunities equivalent to those 
available under U.S. law. If applying for authority to provide 
international switched basic services over resold private lines between 
the United States and a non-WTO Member country for which the Commission 
has not previously authorized the provision of switched services over 
private lines, the applicant shall demonstrate that settlement rates for 
at least 50 percent of the settled U.S.-billed traffic between the 
United States and the country at the foreign end of the private line are 
at or below the benchmark settlement rate adopted for that country in IB 
Docket No. 96-261 and that the country affords resale opportunities 
equivalent to those available under U.S. law. With regard to showing 
that a destination country affords resale opportunities equivalent to 
those available under U.S. law, an applicant shall include evidence 
demonstrating that equivalent resale opportunities exist between the 
United States and the subject country, including any relevant bilateral 
or multilateral agreements between the administrations involved. Parties 
must demonstrate that the foreign country at the other end of the 
private line provides U.S.-based carriers with:
    (i) The legal right to resell international private lines, 
interconnected at both ends, for the provision of switched services;
    (ii) Reasonable and nondiscriminatory charges, terms and conditions 
for interconnection to foreign domestic carrier facilities for 
termination and origination of international services, with adequate 
means of enforcement;
    (iii) Competitive safeguards to protect against anticompetitive and 
discriminatory practices affecting private line resale; and
    (iv) Fair and transparent regulatory procedures, including 
separation between the regulator and operator of international 
facilities-based services.
    (4) Any carrier authorized under this section to acquire and operate 
international private line facilities other than through resale may use 
those private lines to provide switched basic services only in 
circumstances where the Commission has previously authorized the 
provision of switched services over private lines to the particular 
country at the foreign end of the private line. The Commission will 
provide public notice of its decisions to authorize the provision of 
switched services over private lines to particular countries pursuant to 
its policies adopted in IB Docket Nos. 96-261 and 97-142. This provision 
is subject to the following exceptions and conditions:
    (i) The applicant shall not initiate such service on a particular 
route absent a grant of specific authority under paragraph (e)(6) of 
this section in circumstances where the applicant is affiliated with a 
carrier in the country at the foreign end of the private line and the 
Commission has not determined that the foreign carrier lacks sufficient 
market power in the country at the foreign end of the private line to 
affect competition adversely in the U.S. market. See Sec. 63.10(a).
    (ii) The applicant is subject to all applicable Commission rules and 
regulations, including the limitation Sec. 63.21 on the use of private 
lines for the provision of switched services, and any conditions stated 
in the Commission's public notice or order that serves as the 
applicant's Section 214 certificate. See Secs. 63.12, 63.21.
    (A) Except as provided in paragraph (e)(4)(ii)(B) of this section, 
any carrier that seeks to provide international switched basic services 
over its authorized private line facilities between the United States 
and a WTO Member country for which the Commission has not previously 
authorized the provision of switched services over private lines shall 
demonstrate that settlement

[[Page 169]]

rates for at least 50 percent of the settled U.S.-billed traffic between 
the United States and the country at the foreign end of the private line 
are at or below the benchmark settlement rate adopted for that country 
in IB Docket No. 96-261 or that the country affords resale opportunities 
equivalent to those available under U.S. law. Except as provided in 
paragraph (e)(4)(ii)(B) of this section, any carrier that seeks to 
provide international switched basic services over its authorized 
private line facilities between the United States and a non-WTO Member 
country for which the Commission has not previously authorized the 
provision of switched services over private lines shall demonstrate that 
settlement rates for at least 50 percent of the settled U.S.-billed 
traffic between the United States and the country at the foreign end of 
the private line are at or below the benchmark settlement rate adopted 
for that country in IB Docket No. 96-261 and that the country affords 
resale opportunities equivalent to those available under U.S. law. With 
regard to showing that a destination country affords resale 
opportunities equivalent to those available under U.S. law, an applicant 
shall include the information required by paragraph (e)(3) of this 
section.
    (B) No formal application is required under paragraph (e)(4) of this 
section in circumstances where the carrier's previously authorized 
private line facility is interconnected to the public switched network 
only on one end--either the U.S. or the foreign end--and where the 
carrier is not operating the facility in correspondence with a carrier 
that directly or indirectly owns the private line facility in the 
foreign country at the other end of the private line.
    (5) If applying for authority to acquire facilities through the 
transfer of control of a common carrier holding international Section 
214 authorization, or through the assignment of another carrier's 
existing authorization, the applicant shall complete paragraphs (a) 
through (d) of this section for both the transferor/assignor and the 
transferee/assignee. Paragraph (g) of this section is not applicable, 
and only the transferee/assignee needs to complete paragraphs (h) 
through (k) of this section. At the beginning of the application, the 
applicant should also include a narrative of the means by which the 
transfer or assignment will take place. The Commission reserves the 
right to request additional information as to the particulars of the 
transaction to aid it in making its public interest determination.
    (6) If applying for authority to acquire facilities or to provide 
services not covered by Sec. 63.18(e) (1) through (5), the applicant 
shall provide a description of the facilities and services for which it 
seeks authorization. Such description also shall include any additional 
information the Commission shall have specified previously in an order, 
public notice or other official action as necessary for authorization. 
Applicants for new submarine cable facilities also shall include a list 
of the proposed owners of the cable, their voting interests and 
ownership interests by segment in the cable.
    (f) Applicants may apply for any or all of the authority provided 
for in paragraph (e) of this section in the same application. The 
applicant may want to file separate applications for those services not 
subject to streamlined processing under Sec. 63.12.
    (g) Where the applicant is seeking facilities-based authority under 
paragraph (e)(6) of this section, a statement whether an authorization 
of the facilities is categorically excluded as defined by Sec. 1.1306 of 
this chapter. If answered affirmatively, an environmental assessment as 
described in Sec. 1.1311 of this chapter need not be filed with the 
application.
    (h) A certification as to whether or not the applicant is, or has an 
affiliation with, a foreign carrier.
    (1) The certification shall state with specificity each foreign 
country in which the applicant is, or has an affiliation with, a foreign 
carrier. For purposes of this certification:
    (i) Affiliation is defined to include:
    (A) A greater than 25 percent ownership of capital stock, or 
controlling interest at any level, by the applicant, or by any entity 
that directly or indirectly controls or is controlled by it, or

[[Page 170]]

that is under direct or indirect common control with it, in a foreign 
carrier or in any entity that directly or indirectly controls a foreign 
carrier; or
    (B) A greater than 25 percent ownership of capital stock, or 
controlling interest at any level, in the applicant by a foreign 
carrier, or by any entity that directly or indirectly controls or is 
controlled by a foreign carrier, or that is under direct or indirect 
common control with a foreign carrier; or by two or more foreign 
carriers investing in the applicant in the same manner in circumstances 
where the foreign carriers are parties to, or the beneficiaries of, a 
contractual relation (e.g., a joint venture or market alliance) 
affecting the provision or marketing of basic international 
telecommunications services in the United States. A U.S. carrier also 
will be considered to be affiliated with a foreign carrier where the 
foreign carrier controls, is controlled by, or is under common control 
with a second foreign carrier already found to be affiliated with that 
U.S. carrier under this section.
    (ii) Foreign carrier is defined as any entity that is authorized 
within a foreign country to engage in the provision of international 
telecommunications services offered to the public in that country within 
the meaning of the International Telecommunication Regulations, see 
Final Acts of the World Administrative Telegraph and Telephone 
Conference, Melbourne, 1988 (WATTC-88), Art. 1, which includes entities 
authorized to engage in the provision of domestic telecommunications 
services if such carriers have the ability to originate or terminate 
telecommunications services to or from points outside their country.
    (2) In support of the required certification, each applicant shall 
also provide the name, address, citizenship and principal businesses of 
its ten percent or greater direct and indirect shareholders or other 
equity holders and identify any interlocking directorates.
    (3) Each applicant that proposes to acquire facilities through the 
resale of the international switched or private line services of another 
U.S. carrier shall additionally certify as to whether or not the 
applicant has an affiliation with the U.S. carrier(s) whose facilities-
based service(s) the applicant proposes to resell (either directly or 
indirectly through the resale of another reseller's service). For 
purposes of this paragraph, affiliation is defined as in paragraph 
(h)(1)(i) of this section, except that the phrase ``U.S. facilities-
based international carrier'' shall be substituted for the phrase 
``foreign carrier.''
    (4) Each applicant and carrier authorized to provide international 
communications service under this part is responsible for the continuing 
accuracy of the certifications required by paragraphs (h)(1) through (3) 
of this section. Whenever the substance of any such certification is no 
longer accurate, the applicant/carrier shall as promptly as possible and 
in any event within thirty days file with the Secretary in duplicate a 
corrected certification referencing the FCC File No. under which the 
original certification was provided. The information may be used by the 
Commission to determine whether a change in regulatory status may be 
warranted under Sec. 63.10.
    (5) Any applicant that seeks to operate as a U.S. facilities-based 
international carrier to a particular country and that is a foreign 
carrier in that country, or directly or indirectly controls a foreign 
carrier in that country, or has an affiliation within the meaning of 
paragraph (h)(1)(i)(B) of this section with a foreign carrier in that 
country shall provide the following information:
    (i) The named foreign country (i.e., the destination foreign 
country) is a Member of the World Trade Organization; or
    (ii) The applicant's affiliated foreign carrier lacks sufficient 
market power in the named foreign country to affect competition 
adversely in the U.S. market; or
    (iii) The named foreign country provides effective competitive 
opportunities to U.S. carriers to compete in that country's 
international facilities-based market. An effective competitive 
opportunities demonstration should address the following factors:

[[Page 171]]

    (A) The legal ability of U.S. carriers to enter the foreign market 
and provide facilities-based international services, in particular 
international message telephone service (IMTS);
    (B) Whether there exist reasonable and nondiscriminatory charges, 
terms and conditions for interconnection to a foreign carrier's domestic 
facilities for termination and origination of international services;
    (C) Whether competitive safeguards exist in the foreign country to 
protect against anticompetitive practices, including safeguards such as:
    (1) Existence of cost-allocation rules in the foreign country to 
prevent cross-subsidization;
    (2) Timely and nondiscriminatory disclosure of technical information 
needed to use, or interconnect with, carriers' facilities; and
    (3) Protection of carrier and customer proprietary information;
    (D) Whether there is an effective regulatory framework in the 
foreign country to develop, implement and enforce legal requirements, 
interconnection arrangements and other safeguards; and
    (E) Any other factors the applicant deems relevant to its 
demonstration.
    (6) Any applicant that proposes to resell the international switched 
or non-interconnected private line services of another U.S. carrier for 
the purpose of providing international communications services to the 
named foreign country and that is a foreign carrier in that country, or 
directly or indirectly controls a foreign carrier in that country, or 
has an affiliation within the meaning of paragraph (h)(1)(i)(B) of this 
section with a foreign carrier in the destination country shall provide 
the following information (see also paragraph (h)(7) of this section):
    (i) The named foreign country (i.e., the destination foreign 
country) is a Member of the World Trade Organization; or
    (ii) The applicant's affiliated foreign carrier lacks sufficient 
market power in the named foreign country to affect competition 
adversely in the U.S. market; or
    (iii) The named foreign country provides effective competitive 
opportunities to U.S. carriers to resell international switched or non-
interconnected private line services, respectively. An effective 
competitive opportunities demonstration should address the following 
factors:
    (A) The legal ability of U.S. carriers to enter the foreign market 
and provide resold international switched services (for switched resale 
applications) or non-interconnected private line services (for non-
interconnected private line resale applications);
    (B) Whether there exist reasonable and nondiscriminatory charges, 
terms and conditions for the provision of the relevant resale service;
    (C) Whether competitive safeguards exist in the foreign country to 
protect against anticompetitive practices, including safeguards such as:
    (1) Existence of cost-allocation rules in the foreign country to 
prevent cross-subsidization;
    (2) Timely and nondiscriminatory disclosure of technical information 
needed to use, or interconnect with, carriers' facilities; and
    (3) Protection of carrier and customer proprietary information;
    (D) Whether there is an effective regulatory framework in the 
foreign country to develop, implement and enforce legal requirements, 
interconnection arrangements and other safeguards; and
    (E) Any other factors the applicant deems relevant to its 
demonstration.
    (7) Any applicant that proposes to resell the international switched 
services of an unaffiliated U.S. carrier for the purpose of providing 
international communications services to the named foreign country and 
that is a foreign carrier in that country or has an affiliation with a 
foreign carrier in that country shall either provide in its application 
a showing that would satisfy Sec. 63.10(a)(3) or state that it will file 
the quarterly traffic reports required by Sec. 43.61(c) of this chapter.
    (8) With respect to regulatory classification under Sec. 63.10, each 
applicant that certifies that it has an affiliation with a foreign 
carrier in a named foreign country and that desires to be regulated as 
non-dominant for the provision of particular international 
communications services to that country should provide information in 
its application to demonstrate that it qualifies

[[Page 172]]

for non-dominant classification pursuant to Sec. 63.10.
    (i) Each applicant shall certify that the applicant has not agreed 
to accept special concessions directly or indirectly from any foreign 
carrier with respect to any U.S. international route where the foreign 
carrier possesses sufficient market power on the foreign end of the 
route to affect competition adversely in the U.S. market and will not 
enter into such agreements in the future. This certification shall be 
viewed as an ongoing representation to the Commission, and applicants/
carriers shall immediately inform the Commission if at any time the 
representations in their certifications are no longer true. Failure to 
so inform the Commission will be deemed a material misrepresentation to 
the Commission. For purposes of this section, ``special concession'' is 
defined in Sec. 63.14(b) and ``foreign carrier'' is defined in paragraph 
(h)(1)(ii) of this section.
    (j) A certification pursuant to Secs. 1.2001 through 1.2003 of this 
chapter that no party to the application is subject to a denial of 
Federal benefits pursuant to Section 5301 of the Anti-Drug Abuse Act of 
1988. See 21 U.S.C. 853a.
    (k) If the applicant desires streamlined processing pursuant to 
Sec. 63.12, a statement of how the application qualifies for streamlined 
processing.

    Note 1 to paragraph (h): The word ``control'' as used in this 
section is not limited to majority stock ownership, but includes actual 
working control in whatever manner exercised.
    Note 2 to paragraph (h): The term ``facilities-based carrier'' as 
used in this section means one that holds an ownership, indefeasible-
right-of-user, or leasehold interest in bare capacity in an 
international facility, regardless of whether the underlying facility is 
a common or non-common carrier submarine cable, or an INTELSAT or 
separate satellite system.
    Note 3 to paragraph (h): The assessment of ``capital stock'' 
ownership will be made under the standards developed in Commission case 
law for determining such ownership. See, e.g., Fox Television Stations, 
Inc., 10 FCC Rcd 8452 (1995). ``Capital stock'' includes all forms of 
equity ownership, including partnership interests.
    Note 4 to paragraph (h): Ownership and other interests in U.S. and 
foreign carriers will be attributed to their holders and deemed 
cognizable pursuant to the following criteria: Attribution of ownership 
interests in a carrier that are held indirectly by any party through one 
or more intervening corporations will be determined by successive 
multiplication of the ownership percentages for each link in the 
vertical ownership chain and application of the relevant attribution 
benchmark to the resulting product, except that wherever the ownership 
percentage for any link in the chain exceeds 50 percent, it shall not be 
included for purposes of this multiplication. For example, if A owns 30 
percent of company X, which owns 60 percent of company Y, which owns 26 
percent of ``carrier,'' then X's interest in ``carrier'' would be 26 
percent (the same as Y's interest because X's interest in Y exceeds 50 
percent), and A's interest in ``carrier'' would be 7.8 percent (0.30 x 
0.26). Under the 25 percent attribution benchmark, X's interest in 
``carrier'' would be cognizable, while A's interest would not be 
cognizable.

[61 FR 15729, Apr. 9, 1996, as amended at 62 FR 32965, June 17, 1997; 62 
FR 45762, Aug. 29, 1997; 62 FR 64755, Dec. 9, 1997; 63 FR 24121, May 1, 
1998]



Sec. 63.19  Special procedures for discontinuances of international services.

    (a) Any non-dominant international carrier as this term is defined 
in Sec. 63.10 that seeks to discontinue, reduce or impair service, 
including the retiring of international facilities, dismantling or 
removing of international trunk lines, shall be subject to the following 
procedures in lieu of those specified in Secs. 63.61 through 63.601:
    (1) The carrier shall notify all affected customers of the planned 
discontinuance, reduction or impairment at least 60 days prior to its 
planned action. Notice shall be in writing to each affected customer 
unless the Commission authorizes in advance, for good cause shown, 
another form of notice.
    (2) The carrier shall file with this Commission a copy of the 
notification on or after the date on which notice has been given to all 
affected customers.
    (b) Any dominant international carrier as this term is defined in 
Sec. 63.10 that seeks to retire international facilities, dismantle or 
remove international trunk lines, and the services being provided 
through these facilities are not being discontinued, reduced or 
impaired, shall only be subject to the notification requirements of 
paragraph (a) of this section. If such carrier discontinues, reduces or 
impairs service

[[Page 173]]

to a community or retires facilities that impair or reduce service to a 
community, the dominant carrier shall file an application pursuant to 
Secs. 63.62 and 63.500.

[61 FR 15732, Apr. 9, 1996]



Sec. 63.20  Copies required; fees; and filing periods for international service providers.

    (a) Unless otherwise specified the Commission shall be furnished 
with an original and five copies of applications filed for international 
facilities and services under Section 214 of the Communications Act of 
1934, as amended. Provided, however, that where applications involve 
only the supplementation of existing international facilities, and the 
issuance of a certificate is not required, an original and two copies of 
the application shall be furnished. Upon request by the Commission, 
additional copies of the application shall be furnished. Each 
application shall be accompanied by the fee prescribed in subpart G of 
part 1 of this chapter.
    (b) No application accepted for filing and subject to the provisions 
of Secs. 63.02, 63.18, 63.62 or Sec. 63.505 shall be granted by the 
Commission earlier than 28 days following issuance of public notice by 
the Commission of the acceptance for filing of such application or any 
major amendment unless said public notice specifies another time period, 
or the application qualifies for streamlined processing pursuant to 
Sec. 63.12.
    (c) No application accepted for filing and subject to the 
streamlined processing provisions of Sec. 63.12 shall be granted by the 
Commission earlier than 21 days following issuance of public notice by 
the Commission of the acceptance for filing of such application or any 
major amendment unless said public notice specifies another time period.
    (d) Any interested party may file a petition to deny an application 
within the 21 day or other time period specified in paragraphs (b) or 
(c) of this section. The petitioner shall serve a copy of such petition 
on the applicant no later than the date of filing thereof with the 
Commission. The petition shall contain specific allegations of fact 
sufficient to show that the petitioner is a party in interest and that a 
grant of the application would be prima facie inconsistent with the 
public interest, convenience and necessity. Such allegations of fact 
shall, except for those of which official notice may be taken, be 
supported by affidavit of a person or persons with personal knowledge 
thereof. The applicant may file an opposition to any petition to deny 
within 14 days after the original pleading is filed. The petitioner may 
file a reply to such opposition within seven days after the time for 
filing oppositions has expired. Allegations of facts or denials thereof 
shall similarly be supported by affidavit. These responsive pleadings 
shall be served on the applicant or petitioner, as appropriate, and 
other parties to the proceeding.

[61 FR 15732, Apr. 9, 1996]



Sec. 63.21  Conditions applicable to international Section 214 authorizations.

    International carriers authorized under Section 214 of the 
Communications Act of 1934, as amended, must follow the following 
requirements and prohibitions:
    (a) Carriers may not use their authorized facilities-based or resold 
international private lines for the provision of switched basic services 
between the United States and a WTO Member country unless and until the 
Commission has determined that the country at the foreign end of the 
private line provides equivalent resale opportunities or that settlement 
rates for at least 50 percent of the settled U.S.-billed traffic between 
the United States and that country are at or below the benchmark 
settlement rate adopted for that country in IB Docket No. 96-261 (this 
document is available at the FCC's Reference Operations Division, 
Washington, D.C. 20554, and on the FCC's World Wide Web Site at http://
www.fcc.gov). Carriers may not use their authorized facilities-based or 
resold international private lines for the provision of switched basic 
services between the United States and a non-WTO Member country unless 
and until the Commission has determined that the country at the foreign 
end of the private line provides equivalent resale opportunities and 
that settlement rates for at least 50 percent of the settled U.S.-billed 
traffic between the United States and that country are at

[[Page 174]]

or below the benchmark settlement rate adopted for that country in IB 
Docket No. 96-261. (See Sec. 63.18(e)(3)-(4).) If at any time the 
Commission finds, after an initial determination of compliance for a 
particular country, that the country no longer provides equivalent 
resale opportunities or that market distortion has occurred in the 
routing of traffic between the United States and that country, carriers 
shall comply with enforcement actions taken by the Commission. This 
condition shall not apply to a carrier's use of its authorized 
facilities-based private lines to provide service as described in 
Sec. 63.18(e)(4)(ii)(B).
    (b) Carriers must file copies of operating agreements entered into 
with their foreign correspondents within 30 days of their execution, and 
shall otherwise comply with the filing requirements contained in 
Sec. 43.51 of this chapter.
    (c) Carriers must file tariffs pursuant to Section 203 of the 
Communications Act, 47 U.S.C. 203, and part 61 of this chapter.
    (d) Carriers must file annual reports of overseas telecommunications 
traffic as required by Sec. 43.61 of this chapter.
    (e) Authorized carriers may not access or make use of specific U.S. 
customer proprietary network information that is derived from a foreign 
network unless the carrier obtains approval from that U.S. customer. In 
seeking to obtain approval, the carrier must notify the U.S. customer 
that the customer may require the carrier to disclose the information to 
unaffiliated third parties upon written request by the customer.
    (f) Authorized carriers may not receive from a foreign carrier any 
proprietary or confidential information pertaining to a competing U.S. 
carrier, obtained by the foreign carrier in the course of its normal 
business dealings, unless the competing U.S. carrier provides its 
permission in writing.
    (g) The Commission reserves the right to review a carrier's 
authorization, and, if warranted, impose additional requirements on U.S. 
international carriers in circumstances where it appears that harm to 
competition is occurring on one or more U.S. international routes.
    (h) Carriers regulated as dominant must provide the Commission with 
the following information within 30 days after conveyance of 
transmission capacity on submarine cables to other U.S. carriers:
    (1) The name of the party to whom the capacity was conveyed;
    (2) The name of the facility in which capacity was conveyed;
    (3) The amount of capacity that was conveyed; and
    (4) The price of the capacity conveyed.

[61 FR 15732, Apr. 9, 1996, as amended at 62 FR 45762, Aug. 29, 1997; 62 
FR 64758, Dec. 9, 1997]

    General Provisions Relating to All Applications Under Section 214



Sec. 63.50  Amendment of applications.

    Any application may be amended as a matter of right prior to the 
date of any final action taken by the Commission or designation for 
hearing. Amendments to applications shall be signed and submitted in the 
same manner, and with the same number of copies as was the original 
application. If a petition to deny or other formal objections have been 
filed to the application, the amendment shall be served on the parties.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20662, May 20, 1976]



Sec. 63.51  Additional information.

    The applicant shall furnish any additional information which the 
Commission may require after a preliminary examination of the 
application or request. Where an applicant fails to respond to official 
correspondence or request for additional material, the application may 
be dismissed without prejudice.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20662, May 20, 1976]



Sec. 63.52  Copies required; fees; and filing periods for domestic authorizations.

    (a) Unless otherwise specified the Commission shall be furnished 
with an original and 5 copies of applications

[[Page 175]]

filed under section 214 of the Communications Act of 1934, as amended; 
Provided, however, that where applications involve only the 
supplementation of existing domestic facilities, and the issuance of a 
certificate is not required, an original and 2 copies of the application 
shall be furnished. Upon request by the Commission additional copies of 
the application shall be furnished. Each application shall be 
accompanied by the fee prescribed in subpart G of part 1 of this 
chapter.
    (b) No application accepted for filing and subject to the provisions 
of Secs. 63.01, 63.02, 64.62 (with the exception of 63.62(c)), 63.69, or 
63.505 of the rules shall be granted by the Commission earlier than 30 
days following issuance of public notice by the Commission of the 
acceptance for filing of such application or any major amendment unless 
said public notice specifies another time period.
    (c) Any interested party may file a petition to deny an application 
within the 30-day or other time period specified in paragraph (b) of 
this section. The petitioner shall serve a copy of such petition on the 
applicant no later than the date of filing thereof with the Commission. 
The petition shall contain specific allegations of fact sufficient to 
show that the petitioner is a party in interest and that a grant of the 
application would be prima facie inconsistent with the public interest, 
convenience and necessity. Such allegations of fact shall, except for 
those of which official notice may be taken, be supported by affidavit 
of a person or persons with personal knowledge thereof. The applicant 
may file an opposition to any petition to deny, and the petitioners may 
file a reply to such opposition (see Sec. 1.45 of this chapter), and 
allegations of facts or denials thereof shall similarly be supported by 
affidavit. These responsive pleadings shall be served on the applicant 
or petitioners, as appropriate, and other parties to the proceeding.

(Sec. 303, 48 Stat. 1082, as amended; 47 U.S.C. 303)

[41 FR 20662, May 20, 1976; 41 FR 22274, June 2, 1976, as amended at 42 
FR 36459, July 15, 1977; 61 FR 10476, Mar. 14, 1996; 61 FR 59201, Nov. 
21, 1996]



Sec. 63.53  Form.

    (a) Applications under Section 214 of the Communications Act shall 
be submitted on paper not more than 21.6 cm (8.5 in) wide and not more 
than 35.6 cm (14 in) long with a left-hand margin of 4 cm (1.5 in). This 
requirement shall not apply to original documents, or admissible copies 
thereof, offered as exhibits or to specially prepared exhibits. The 
impression shall be on one side of the paper only and shall be double-
spaced, except that long quotations shall be single-spaced and indented. 
All papers, except charts and maps, shall be typewritten or prepared by 
mechanical processing methods, other than letter press, or printed. The 
foregoing shall not apply to official publications. All copies must be 
clearly legible.
    (b) Applications submitted under Section 214 of the Communications 
Act for international services may be submitted on computer diskettes 
pursuant to a filing manual compiled by the International Bureau, but a 
paper copy of the application with the original signature must accompany 
the diskette. The manual will specify the type and format of the 
computer diskettes and the reporting and procedural requirements for 
such applications.
    (c) Applications submitted under Section 214 of the Communications 
Act for international services and any related pleadings that are in a 
foreign language shall be accompanied by a certified translation in 
English.

[61 FR 15733, Apr. 9, 1996]

    Effective Date Note: At 61 FR 15733, Apr. 9, 1996, Sec. 63.53 was 
revised. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.

            Discontinuance, Reduction, Outage and Impairment



Sec. 63.60  Definitions.

    For the purposes of this part, the following definitions shall 
apply:
    (a) Discontinuance, reduction, or impairment of service includes, 
but is not limited to the following:
    (1) The closure by a carrier of a telephone exchange rendering 
interstate or foreign telephone toll service, a public toll station 
serving a community or

[[Page 176]]

part of a community, or a public coast station as defined in Sec. 80.5 
of this chapter;
    (2) The reduction in hours of service by a carrier at a telephone 
exchange rendering interstate or foreign telephone toll service, at any 
public toll station (except at a toll station at which the availability 
of service to the public during any specific hours is subject to the 
control of the agent or other persons controlling the premises on which 
such office or toll station is located and is not subject to the control 
of such carrier), or at a public coast station; the term reduction in 
hours of service does not include a shift in hours which does not result 
in any reduction in the number of hours of service.
    (3) [Reserved]
    (4) The dismantling or removal from service of any trunk line by a 
carrier which has the effect of impairing the adequacy or quality of 
service rendered to any community or part of a community;
    (5) The severance by a carrier of physical connection with another 
carrier (including connecting carriers as defined in section 3(u) of the 
Communications Act of 1934, as amended) or the termination or suspension 
of the interchange of traffic with such other carrier;
    (b) Emergency discontinuance, reduction, or impairment of service 
means any discontinuance, reduction, or impairment of the service of a 
carrier occasioned by conditions beyond the control of such carrier 
where the original service is not restored or comparable service is not 
established within a reasonable time. For the purpose of this part, a 
reasonable time shall be deemed to be a period not in excess of the 
following: 10 days in the case of discontinuance, reduction, or 
impairment of service at telegraph offices operated directly by the 
carrier; 15 days in the case of jointly-operated or agency telegraph 
offices; 10 days in the case of public coast stations; and 60 days in 
all other cases;
    (c) Public toll station means a public telephone station, located in 
a community, through which a carrier provides service to the public, and 
which is connected directly to a toll line operated by such carrier.

[28 FR 13229, Dec. 5, 1963, as amended at 45 FR 6585, Jan. 29, 1980; 51 
FR 31305, Sept. 2, 1986]



Sec. 63.61  Applicability.

    Any carrier subject to the provisions of section 214 of the 
Communications Act of 1934, as amended, except any non-dominant carrier 
as this term is defined in Sec. 61.3(u) of this chapter, proposing to 
discontinue, reduce, or impair interstate or foreign telephone or 
telegraph service to a community, or a part of a community, shall 
request authority therefor by formal application or informal request as 
specified in the pertinent sections of this part: Provided, however, 
That where service is expanded on an experimental basis for a temporary 
period of not more than 6 months, no application shall be required to 
reduce service to its status prior to such expansion but a written 
notice shall be filed with the Commission within 10 days of the 
reduction showing (a) date on which, places at which, and extent to 
which service was expanded and (b) date on which, places at which, and 
extent to which such expansion of service was discontinued:

And provided further, That a licensee of a radio station who has filed 
an application for authority to discontinue service provided by such 
station shall during the period that such application is pending before 
the Commission, continue to file appropriate applications as may be 
necessary for extension or renewal of station license in order to 
provide legal authorization for such station to continue in operation 
pending final action on the application for discontinuance of service.

[28 FR 13229, Dec. 5, 1963, as amended at 45 FR 76169, Nov. 18, 1980; 61 
FR 59201, Nov. 21, 1996]



Sec. 63.62  Type of discontinuance, reduction, or impairment of telephone or telegraph service requiring formal application.

    Authority for the following types of discontinuance, reduction, or 
impairment of service shall be requested by formal application 
containing the information required by the Commission in the appropriate 
sections to this part,

[[Page 177]]

except as provided in paragraph (c) of this section, or in emergency 
cases (as defined in Sec. 63.60(b)) as provided in Sec. 63.63:
    (a) The dismantling or removal of a trunk line (for contents of 
application see Sec. 63.500) for all domestic carriers and for dominant 
international carriers except as modified in Sec. 63.19;
    (b) The severance of physical connection or the termination or 
suspension of the interchange of traffic with another carrier (for 
contents of application, see Sec. 63.501);
    (c) [Reserved]
    (d) The closure of a public toll station where no other such toll 
station of the applicant in the community will continue service (for 
contents of application, see Sec. 63.504): Provided, however, That no 
application shall be required under this part with respect to the 
closure of a toll station located in a community where telephone toll 
service is otherwise available to the public through a telephone 
exchange connected with the toll lines of a carrier;
    (e) Any other type of discontinuance, reduction or impairment of 
telephone service not specifically provided for by other provisions of 
this part (for contents of application, see Sec. 63.505);
    (f) An application may be filed requesting authority to make a type 
of reduction in service under specified standards and conditions in lieu 
of individual applications for each instance coming within the type of 
reduction in service proposed.

[28 FR 13229, Dec. 5, 1963, as amended at 45 FR 6585, Jan. 29, 1980; 60 
FR 35509, July 10, 1995; 61 FR 15733, Apr. 9, 1996]

    Effective Date Note: At 61 FR 15733, Apr. 9, 1996, in Sec. 63.62, 
paragraph (a) was revised. This amendment contains information 
collection and recordkeeping requirements and will not become effective 
until approval has been given by the Office of Management and Budget.



Sec. 63.63  Emergency discontinuance, reduction, or impairment of service.

    (a) Application for authority for emergency discontinuance, 
reduction, or impairment of service shall be made by filing an informal 
request in quintuplicate as soon as practicable but not later than 15 
days in the case of public coast stations; or 65 days in all other 
cases, after the occurrence of the conditions which have occasioned the 
discontinuance, reduction, or impairment. The request shall make 
reference to this section and show the following:
    (1) The effective date of such discontinuance, reduction, or 
impairment, and the identification of the service area affected;
    (2) The nature and estimated duration of the conditions causing the 
discontinuance, reduction, or impairment;
    (3) The facts showing that such conditions could not reasonably have 
been foreseen by the carrier in sufficient time to prevent such 
discontinuance, reduction, or impairment;
    (4) A description of the service involved;
    (5) The nature of service which will be available or substituted;
    (6) The effect upon rates to any person in the community;
    (7) The efforts made and to be made by applicant to restore the 
original service or establish comparable service as expeditiously as 
possible.
    (b) Authority for the emergency discontinuance, reduction, or 
impairment of service for a period of 60 days shall be deemed to have 
been granted by the Commission effective as of the date of the filing of 
the request unless, on or before the 15th day after the date of filing, 
the Commission shall notify the carrier to the contrary. Renewal of such 
authority may be requested by letter or telegram, filed with the 
Commission not later than 10 days prior to the expiration of such 60-day 
period, making reference to this section and showing that such 
conditions may reasonably be expected to continue for a further period 
and what efforts the applicant has made to restore the original or 
establish comparable service. If the same or comparable service is 
reestablished before the termination of the emergency authorization, the 
carrier shall notify the Commission promptly. However, the Commission 
may, upon specific request of the carrier and upon a proper showing, 
contained in such informal request, authorize such discontinuance, 
reduction, or impairment of service for an indefinite period or 
permanently.

[28 FR 13229, Dec. 5, 1963, as amended at 45 FR 6585, Jan. 29, 1980]

[[Page 178]]



Sec. 63.65  Closure of public toll station where another toll station of applicant in the community will continue service.

    (a) Except in emergency cases (as defined in Sec. 63.60(b) and as 
provided in Sec. 63.63), authority to close a public toll station in a 
community in which another toll station of the applicant will continue 
service shall be requested by an informal request, filed in 
quintuplicate, making reference to this paragraph and showing the 
following:
    (1) Location of toll station to be closed and distance from nearest 
toll station to be retained;
    (2) Description of service area affected, including approximate 
population and character of the business of the community;
    (3) Average number of toll telephone messages sent-paid and 
received-collect for the preceding six months;
    (4) Average number of telegraph messages sent-paid and received-
collect for the preceding six months;
    (5) Statement of reasons for desiring to close the station.
    (b) Authority for closures requested under paragraph (a) of this 
section shall be deemed to have been granted by the Commission effective 
as of the 15th day following the date of filing such request unless, on 
or before the 15th day, the Commission shall notify the carrier to the 
contrary.



Sec. 63.66  Closure of or reduction of hours of service at telephone exchanges at military establishments.

    Where a carrier desires to close or reduce hours of service at a 
telephone exchange located at a military establishment because of the 
deactivation of such establishment, it may, in lieu of filing formal 
application, file in quintuplicate an informal request. Such request 
shall make reference to this section and shall set forth the class of 
office, address, date of proposed closure or reduction, description of 
service to remain or be substituted, statement as to any difference in 
charges to the public, and the reasons for the proposed closure or 
reduction. Authority for such closure or reduction shall be deemed to 
have been granted by the Commission, effective as of the 15th day 
following the date of filing of such request, unless, on or before the 
15th day, the Commission shall notify the carrier to the contrary.

[45 FR 6585, Jan. 29, 1980]



Sec. 63.71  Special procedures for discontinuance, reduction or impairment of service by domestic non-dominant carriers.

    Any non-dominant carrier as this term is defined in Sec. 61.15(a) of 
this chapter and who seeks to discontinue, reduce or impair service 
shall be subject to the following procedures in lieu of those specified 
in Secs. 63.61 through 63.62 and 63.64 through 63.601:
    (a) The carrier shall notify all affected customers of the planned 
discontinuance, reduction or impairment. Notice shall be in writing to 
each affected customer unless the Commission authorizes in advance, for 
good cause shown, another form of notice. Notice shall include the 
following:
    (1) Name and address of carrier;
    (2) Date of planned service discontinuance, reduction or impairment;
    (3) Points or geographic areas of service affected;
    (4) Brief description of type of service affected; and
    (5) The following statement:

    The FCC will normally authorize this proposed discontinuance of 
service (or reduction or impairment) unless it is shown that customers 
would be unable to receive service or a reasonable substitute from 
another carrier. If you wish to object, you should file your comments 
within 15 days after receipt of this notification. Address them to the 
Federal Communications Commission, Washington, DC 20554, referencing the 
Sec. 63.71 Application of (carrier's name). Comments should include 
specific information about the impact of this proposed discontinuance 
(or reduction or impairment) upon you or your company, including any 
inability to acquire reasonable sustitute service.

    (b) The carrier shall file with this Commission, on or after the 
date on which notice has been given to all affected customers an 
application which shall contain the following:
    (1) Caption--``Section 63.71 Application'';
    (2) Information listed in Sec. 63.71(a) (1) through (4) above;
    (3) Brief description of the dates and methods of notice to all 
affected customers; and

[[Page 179]]

    (4) Any other information the Commission may require.
    (c) The application to discontinue, reduce or impair service shall 
be automatically granted on the 31st day after its filing with the 
Commission without any Commission notification to the applicant unless 
the Commission has notified the applicant that the grant will not be 
automatically effective.

[45 FR 76169, Nov. 18, 1980]



Sec. 63.90  Publication and posting of notices.

    (a) Immediately upon the filing of an application or informal 
request (except a request under Sec. 63.71) for authority to close or 
otherwise discontinue the operation, or reduce the hours of service at a 
telephone exchange (except an exchange located at a military 
establishment), the applicant shall post a public notice at least 51 cm 
by 61 cm (20 inches by 24 inches), with letter of commensurate size, in 
a conspicuous place in the exchange affected, and also in the window of 
any such exchange having window space fronting on a public street at 
street level. Such notice shall be posted at least 14 days and shall 
contain the following information, as may be applicable:
    (1) Date of first posting of notice;
    (2) Name of applicant;
    (3) A statement that application has been made to the Federal 
Communications Commission;
    (4) Date when application was filed in the Commission;
    (5) A description of the discontinuance, reduction, or impairment of 
service for which authority is sought including the address or other 
appropriate identification of the exchange or station involved;
    (6) If applicant proposes to reduce hours of service, a description 
of present and proposed hours of service;
    (7) A complete description of the substitute service, if any, to be 
provided if the application is granted.
    (8) A statement that any member of the public desiring to protest or 
support the application may communicate in writing with the Federal 
Communications Commission, Washington, DC 20554, on or before a 
specified date which shall be 20 days from the date of first posting of 
the notice.
    (b) Immediately upon the filing of an application or informal 
request of the nature described in paragraph (a) of this section, the 
applicant shall also cause to be published a notice of not less than 10 
column centimeters (4 column inches) in size containing information 
similar to that specified in paragraph (a), at least once during each of 
2 consecutive weeks, in some newspaper of general circulation in the 
community or part of the community affected.
    (c) Immediately upon the filing of an application or informal 
request or upon the filing of a formal application to close a public 
toll station (except a toll station located at a military 
establishment), applicant shall post a public notice at least A3 (29.7 
cm x 42.0 cm) or 11 in x 17 in (27.9 cm x 43.2 cm) in size as provided 
in paragraph (a) of this section or, in lieu thereof, applicant shall 
cause to be published a newspaper notice as provided in paragraph (b) of 
this section.
    (d) Immediately upon the filing of any application or informal 
request for authority to discontinue, reduce, or impair service, or any 
notice of resumption of service under Sec. 63.63(b), the applicant shall 
give written notice of the filing together with a copy of such 
application to the State Commission (as defined in section 3(t) of the 
Communications Act of 1934, as amended) of each State in which any 
discontinuance, reduction or impairment is proposed.
    (e) When the posting, publication, and notification as required in 
paragraphs (a), (b), (c) and (d) of this section have been completed, 
applicant shall report such fact to the Commission, stating the name of 
the newspaper in which publication was made, the name of the Commissions 
notified, and the dates of posting, publication, and notification.

[45 FR 6585, Jan. 29, 1980, as amended at 45 FR 76169, Nov. 18, 1980; 58 
FR 44907, Aug. 25, 1993; 60 FR 35510, July 10, 1995]



Sec. 63.100  Notification of service outage.

    (a) As used in this section:
    (1) Outage is defined as a significant degradation in the ability of 
a customer to establish and maintain a channel of communications as a 
result

[[Page 180]]

of failure or degradation in the performance of a carrier's network.
    (2) Customer is defined as a user purchasing telecommunications 
service from a common carrier.
    (3) Special offices and facilities are defined as major airports, 
major military installations, key government facilities, and nuclear 
power plants. 911 special facilities are addressed separately in 
paragraph (a)(4) of this section.
    (4) An outage which potentially affects a 911 special facility is 
defined as a significant service degradation, switch or transport, where 
rerouting to the same or an alternative answering location was not 
implemented, and involves one or more of the following situations:
    (i) Isolation of one or more Public Service Answering Points (PSAPs) 
for 24 hours or more, if the isolated PSAPs collectively serve less than 
30,000 or more access lines, based on the carrier's database of lines 
served by each PSAP; or
    (ii) Loss of call processing capabilities in the E911 tandem(s), for 
30 minutes or more, regardless of the number of customers affected; or
    (iii) Isolation of one or more PSAP(s), for 30 or more minutes, if 
the isolated PSAPs collectively serve 30,000 or more access lines, based 
on the carrier's database of lines served by each PSAP; or
    (iv) Isolation of an end office switch or host/remote cluster, for 
30 minutes or more, if the switches collectively serve, 30,000 or more 
access lines.
    (5) Major airports are defined as those airports described by the 
Federal Aviation Administration as large or medium hubs. The member 
agencies of the National Communications System (NCS) will determine 
which of their locations are ``major military installations'' and ``key 
government facilities.''
    (6) An outage which ``potentially affects'' a major airport is 
defined as an outage that disrupts 50% or more of the air traffic 
control links or other FAA communications links to any major airport, 
any outage that has caused an Air Route Traffic Control Center (ARTCC) 
or major airport to lose it radar, any ARTCC or major airport outage 
that has received any media attention of which the carrier's reporting 
personnel are aware, any outage that causes a loss of both primary and 
backup facilities at any ARTCC or major airport, and any outage to an 
ARTCC or major airport that is deemed important by the FAA as indicated 
by FAA inquiry to the carrier management personnel.
    (7) A mission-affecting outage is defined as an outage that is 
deemed critical to national security/emergency preparedness (NS/EP) 
operations of the affected facility by the National Communications 
System member agency operating the affected facility.
    (b) Any local exchange or interexchange common carrier or 
competitive access provider that operates transmission or switching 
facilities and provides access service or interstate or international 
telecommunications service, that experiences an outage which potentially 
affects 50,000 or more of its customers on any facilities which it owns, 
operates or leases, must notify the Commission if such outage continues 
for 30 or more minutes. Satellite carriers and cellular carriers are 
exempt from this reporting requirement. Notification must be served on 
the Commission's Duty Officer, on duty 24 hours a day in the FCC's 
Communications and Crisis Management Center in Washington, DC. 
Notification may be served on the Commission's Watch Officer on duty at 
the FCC's Columbia Operations Center in Columbia, MD, or at such other 
facility designated by the Commission by regulation or (at the time of 
the emergency) by public announcement only if there is a telephone 
outage or similar emergency in Washington, DC. The notification must be 
by facsimile or other record means delivered within 120 minutes of the 
carrier's first knowledge that the service outage potentially affects 
50,000 or more customers, if the outage continues for 30 or more 
minutes. Notification shall identify a contact person who can provide 
further information, the telephone number at which the contact person 
can be reached, and what information is known at the time about the 
service outage including: the date and estimated time (local time at the 
location of the outage) of commencement of the outage; the geographic 
area affected;

[[Page 181]]

the estimated number of customers affected; the types of services 
affected (e.g. interexchange, local, cellular); the duration of the 
outage, i.e. time elapsed from the estimated commencement of the outage 
until restoration of full service; the estimated number of blocked calls 
during the outage; the apparent or known cause of the incident, 
including the name and type of equipment involved and the specific part 
of the network affected; methods used to restore service; and the steps 
taken to prevent recurrences of the outage. When specifying the types of 
services affected by any reportable outage, carriers must indicate when 
911 service was disrupted and rerouting to alternative answering 
locations was not implemented. The report shall be captioned Initial 
Service Disruption Report. Lack of any of the above information shall 
not delay the filing of this report. Not later than thirty days after 
the outage, the carrier shall file with the Chief, Office of Engineering 
and Technology, a Final Service Disruption Report providing all 
available information on the service outage, including any information 
not contained in its Initial Service Disruption Report and detailing 
specifically the root cause of the outage and listing and evaluating the 
effectiveness and application in the immediate case of any best 
practices or industry standards identified by the Network Reliability 
Council to eliminate or ameliorate outages of the reported type.
    (c) Any local exchange or interexchange common carrier or 
competitive access provider that operates transmission or switching 
facilities and provides access service or interstate or international 
telecommunications service, that experiences an outage which potentially 
affects at least 30,000 and less than 50,000 of its customers on any 
facilities which it owns, operates or leases, must notify the Commission 
if such outage continues for 30 or more minutes. Satellite carriers and 
cellular carriers are exempt from this reporting requirement. 
Notification must be served on the Commission's Duty Officer, on duty 24 
hours a day in the FCC's Communications and Crisis Management Center in 
Washington, DC. Notification may be served on the Commission's Watch 
Officer on duty at the FCC's Columbia Operations Center in Columbia, MD, 
or at such other facility designated by the Commission by regulation or 
(at the time of the emergency) by public announcement only if there is a 
telephone outage or similar emergency in Washington, DC. The 
notification must be by facsimile or other record means delivered within 
3 days of the carrier's first knowledge that the service outage 
potentially affects at least 30,000 but less than 50,000 customers, if 
the outage continues for 30 or more minutes. Notification shall identify 
the carrier and a contact person who can provide further information, 
the telephone number at which the contact person can be reached, and 
what information is known at the time about the service outage 
including: the date and estimated time (local time at the location of 
the outage) of commencement of the outage; the geographic area affected; 
the estimated number of customers affected; the types of services 
affected (e.g. interexchange, local, cellular); the duration of the 
outage, i.e. time elapsed from the estimated commencement of the outage 
until restoration of full service; the estimated number of blocked calls 
during the outage; the apparent or known cause of the incident, 
including the name and type of equipment involved and the specific part 
of the network affected; methods used to restore service; and the steps 
taken to prevent recurrences of the outage. When specifying the types of 
services affected by any reportable outage, carriers must indicate when 
911 service was disrupted and rerouting to alternative answering 
locations was not implemented. The report shall be captioned Initial 
Service Disruption Report. Lack of any of the above information shall 
not delay the filing of this report. Not later than thirty days after 
the outage, the carrier shall file with the Chief, Office of Engineering 
and Technology, a Final Service Disruption Report providing all 
available information on the service outage, including any information 
not contained in its Initial Service Disruption Report and detailing 
specifically the root cause of the outage and listing and evaluating the 
effectiveness and application in the

[[Page 182]]

immediate case of any best practices or industry standards identified by 
the Network Reliability Council to eliminate or ameliorate outages of 
the reported type.
    (d) Any local exchange or interexchange carrier or competitive 
access provider that operates transmission or switching facilities and 
provides access service or interstate or international 
telecommunications service that experiences a fire-related incident in 
any facilities which it owns, operates or leases that impacts 1000 or 
more service lines must notify the Commission if the incident continues 
for a period of 30 minutes or longer. Satellite carriers and cellular 
carriers are exempt from this reporting requirement. Notification must 
be served on the Commission's Duty Officer, on duty 24 hours a day in 
the FCC's Communications and Crisis Management Center in Washington, DC. 
Notification may be served on the Commission's Watch Officer on duty in 
the FCC's Columbia Operations Center in Columbia, MD, or at such other 
facility designated by the Commission by regulation or (at the time of 
the emergency) by public announcement only if there is a telephone 
outage or similar emergency in Washington, DC. The notification must be 
by facsimile or other recorded means delivered within 3 days of the 
carrier's first knowledge that the incident is fire-related, impacting 
1000 or more lines for thirty or more minutes. Notification shall 
identify the carrier and a contact person who can provide further 
information, the telephone number at which the contact person can be 
reached, and what information is known at the time about the service 
outage including: the date and estimated time (local time at the 
location of the outage) of commencement of the outage; the geographic 
area affected; the estimated number of customers affected; the types of 
services affected (e.g. interexchange, local cellular); the duration of 
the outage, i.e. time elapsed from the estimated commencement of the 
outage until restoration of full service; the estimated number of 
blocked calls during the outage; the apparent or known cause of the 
incident, including the name and type of equipment involved and the 
specific part of the network affected; methods used to restore service; 
and the steps taken to prevent recurrences of the outage. When 
specifying the types of services affected by any reportable outage, 
carriers must indicate when 911 service was disrupted and rerouting to 
alternative answering locations was not implemented. The report shall be 
captioned Initial Service Disruption Report. Lack of any of the above 
information shall not delay the filing of this report. Not later than 
thirty days after the outage, the carrier shall file with the Chief, 
Office of Engineering and Technology, a Final Service Disruption Report 
providing all available information on the service outage, including any 
information not contained in its Initial Service Disruption Report and 
detailing specifically the root cause of the outage and listing and 
evaluating the effectiveness and application in the immediate case of 
any best practices or industry standards identified by the Network 
Reliability Council to eliminate or ameliorate outages of the reported 
type.
    (e) Any local exchange or interexchange common carrier or 
competitive access provider that operates transmission or switching 
facilities and provides access service or interstate or international 
telecommunications service, that experiences an outage on any facilities 
which it owns, operates or leases which potentially affects special 
offices and facilities must notify the Commission if such outage 
continues for 30 or more minutes regardless of the number of customers 
affected. Satellite carriers and cellular carriers are exempt from this 
reporting requirement. Notification must be served on the Commission's 
Duty Officer, on duty 24 hours a day in the FCC's Communications and 
Crisis Management Center in Washington, DC. Notification may be served 
on the Commission's Watch Officer on duty at the Columbia Operations 
Center in Columbia, MD, or at such other facility designated by the 
Commission by regulation or (at the time of the emergency) by public 
announcement only if there is a telephone outage or similar emergency in 
Washington, DC. The notification must be by facsimile or other

[[Page 183]]

record means delivered within 120 minutes of the carrier's first 
knowledge that the service outage potentially affects a special 
facility, if the outage continues for 30 or more minutes. Notification 
shall identify a contact person who can provide further information, the 
telephone number at which the contact person can be reached, and what 
information is known at the time about the service outage including: the 
date and estimated time (local time at the location of the outage) of 
commencement of the outage; the geographic area affected; the estimated 
number of customers affected; the types of services affected (e.g. 911 
emergency services, major airports); the duration of the outage, i.e. 
time elapsed from the estimated commencement of the outage until 
restoration of full service; the estimated number of blocked calls 
during the outage; the apparent or known cause of the incident, 
including the name and type of equipment involved and the specific part 
of the network affected; methods used to restore service; and the steps 
taken to prevent recurrences of the outage. When specifying the types of 
services affected by any reportable outage, carriers must indicate when 
911 service was disrupted and rerouting to alternative answering 
locations was not implemented. The report shall be captioned Initial 
Service Disruption Report. Lack of any of the above information shall 
not delay the filing of this report. Not later than thirty days after 
the outage, the carrier shall file with the Chief, Office of Engineering 
and Technology, a Final Service Disruption Report providing all 
available information on the service outage, including any information 
not contained in its Initial Service Disruption Report and detailing 
specifically the root cause of the outage and listing and evaluating the 
effectiveness and application in the immediate case of any best 
practices or industry standards identified by the Network Reliability 
Council to eliminate or ameliorate outages of the reported type. Under 
this rule, carriers are not required to report outages affecting nuclear 
power plants, major military installations and key government facilities 
to the Commission. Report at these facilities will be made according to 
the following procedures:
    (1) When there is a mission-affecting outage, the affected facility 
will report the outage to the National Communications System (NCS) and 
call the service provider in order to determine if the outage is 
expected to last 30 minutes. If the outage is not expected to, and does 
not, last 30 minutes, it will not be reported to the FCC. If it is 
expected to last 30 minutes or does last 30 minutes, the NCS, on the 
advice of the affected special facility, will either:
    (i) Forward a report of the outage to the Commission, supplying the 
information for initial reports affecting special facilities specified 
in this section of the Commission's Rules;
    (ii) Forward a report of the outage to the Commission, designating 
the outage as one affecting ``special facilities,'' but reporting it at 
a level of detail that precludes identification of the particular 
facility involved; or
    (iii) Hold the report at the NCS due to the critical nature of the 
application.
    (2) If there is to be a report to the Commission, a written or oral 
report will be given by the NCS within 120 minutes of an outage to the 
Commission's Duty Officer, on duty 24 hours a day in the FCC's 
Communications and Crisis Management Center in Washington, DC. 
Notification may be served on the Commission's Watch Officer on duty at 
the FCC's Columbia Operations Center in Columbia, MD, or at such other 
facility designated by the Commission by regulation or (at the time of 
the emergency) by public announcement only if there is a telephone 
outage or similar emergency in Washington, DC. If the report is oral, it 
is to be followed by a written report the next business day. Those 
carriers whose service failures are in any way responsible for the 
outage must consult with NCS upon its request for information.
    (3) If there is to be a report to the Commission, the service 
provider will provide a written report to the NCS, supplying the 
information for final reports for special facilities required by this 
section of the Commission's rules. The service provider's final report 
to the NCS will be filed within 28 days after the outage, allowing the 
NCS to

[[Page 184]]

then file the report with the Commission within 30 days after the 
outage. If the outage is reportable as described in paragraph (e)(2) of 
this section, and the NCS determines that the final report can be 
presented to the Commission without jeopardizing matters of national 
security or emergency preparedness, the NCS will forward the report as 
provided in either paragraphs (e)(1)(i) or (e)(1)(ii) of this section to 
the Commission.
    (f) If an outage is determined to have affected a 911 facility so as 
to be reportable as a special facilities outage, the carrier whose duty 
it is to report the outage to the FCC shall as soon as possible by 
telephone or other electronic means notify any official who has been 
designated by the management of the affected 911 facility as the 
official to be contacted by the carrier in case of a telecommunications 
outage at that facility. The carrier shall convey all available 
information to the designated official that will be useful to the 
management of the affected facility in mitigating the affects of the 
outage on callers to that facility.
    (g) In the case of LEC end offices, carriers will use the number of 
lines terminating at the office for determining whether the criteria for 
reporting an outage has been reached. In the case of IXC or LEC tandem 
facilities, carriers must, if technically possible, use real-time 
blocked calls to determine whether criteria for reporting an outage have 
been reached. Carriers must report IXC and LEC tandem outages where more 
than 150,000 calls are blocked during a period of 30 or more minutes for 
purposes of complying with the required 50,000 potentially affected 
customers threshold and must report such outages where more than 90,000 
calls are blocked during a period of 30 or more minutes for purposes of 
complying with the 30,000 potentially affected customers threshold. 
Carriers may use historical data to estimate blocked calls when required 
real-time blocked call counts are not possible. When using historical 
data, carriers must report incidents where more than 50,000 calls are 
blocked during a period of 30 or more minutes for purposes of complying 
with the required 50,000 potentially affected customers threshold and 
must report incidents where more than 30,000 calls are blocked during a 
period of 30 or more minutes for purposes of complying with the 30,000 
potentially affected customers threshold.
    (h)(1) Any local exchange or interexchange common carrier or 
competitive access provider that operates transmission or switching 
facilities and provides access services or interstate or international 
telecommunications services, the experiences an outage on any facilities 
that it owns, operates or leases that potentially affects 911 services 
must notify the Commission within the applicable period shown in the 
chart in this paragraph (h)(1) if such outage meets one of the following 
conditions, as defined in paragraph (a)(4) of this section:

----------------------------------------------------------------------------------------------------------------
              Condition                    Lines affected             Duration                   Period
----------------------------------------------------------------------------------------------------------------
Loss of E911 Tandem capability......  No limit...............  30 minutes or more....  120 minutes.
Isolation of PSAP(s)................  Under 30,000 access      24 hours or more......  120 minutes.
                                       lines served.
Isolation of PSAP(s)................  50,000 or more access    30 minutes or more....  120 minutes.
                                       lines served.
Isolation of PSAP(s)................  30,000 to 50,000 access  30 minutes or more....  3 days.
                                       lines served.
Isolation of EO switch, host/remotes  50,000 or more access    30 minutes or more....  120 minutes.
 from 911.                             lines served.
Isolation of EO switch, host/remotes  30,000 to 50,000 access  30 minutes or more....  3 days.
 from 911.                             lines served.
----------------------------------------------------------------------------------------------------------------

    (2) Satellite carriers and cellular carriers are exempted from the 
reporting requirement in this paragraph (h). Notification must be served 
on the Commission's Duty Officer, on duty 24 hours a day in the FCC's 
Communicaitons and Crisis Management Center in Washington, DC. 
Notification may be erved on the Commission's Watch Officer on duty at 
the Columbia Operations Center in COlumbia, MD, or at such other 
facility designated by the Commission by regulation or (at the time of 
thee emergency) by public announcement only if there

[[Page 185]]

is a telephone outage or similar emergency in Washington, DC. The 
notification must be by facsimile or other record means delivered within 
the notification period indicated above from the time of the carrier's 
first knowledge that the service outage ``potentially affects a 911 
special facility'' as described in paragraph (a)(4) of this section and 
summarized in the chart in paragraph (h)(1) of this section and the 
service outage has continued for the duration indicated in paragraph 
(a)(4) of this section and summarized in the chart in paragraph (h)(1) 
of this section. Notification shall identify a contact person who can 
provide further information, the telephone number at which the contact 
person can be reached, and the information known at the time 
notification is made about the service outage including: the date and 
estimated time (local time at the location of the outage) of 
commencement of the outage; the geographic area affected; the estimated 
number of customers affected; the types of services affected; the 
duration of the outage, i.e. time elapsed from the estimated 
commencement of the outage until restoration of full service; the 
estimated number of blocked calls during the outage; the apparent or 
known cause of the incident, including the name and type of equipment 
involved and the specific part of the network affected; methods used to 
restore service; and the steps taken to prevent recurrences of the 
outage. The report shall be captioned Initial Service Disruption Report. 
Lack of any of the information in this paragraph (h)(2) shall not delay 
the filing of this report. Not later than thirty days after the outage, 
the carrier shall file with the Chief, Office of Engineering and 
Technology, a Final Service Disruption Report providing all available 
information on the service outage, including any information not 
contained in its Initial Service Disruption Report and detailing 
specifically the root cause of the outage and listing and evaluating the 
effectiveness and application in the immediate case of any best 
practices or industry standards identified by the Network Reliability 
Council to eliminate or ameliorate outages of the reported type.

[59 FR 40266, Aug. 8, 1994, as amended at 60 FR 57196, Nov. 14, 1995; 62 
FR 39452, July 23, 1997; 63 FR 37499, July 13, 1998]

                   Contents of Applications; Examples



Sec. 63.500  Contents of applications to dismantle or remove a trunk line.

    The application shall contain:
    (a) The name and address of each applicant;
    (b) The name, title, and post office address of the officer to whom 
correspondence concerning the application is to be addressed;
    (c) Nature of proposed discontinuance, reduction, or impairment;
    (d) Identification of community or part of community involved and 
date on which applicant desires to make proposed discontinuance, 
reduction, or impairment effective; if for a temporary period only, 
indicate the approximate period for which authorization is desired;
    (e) Proposed new tariff listing, if any, and difference, if any, 
between present charges to the public and charges for the service to be 
substituted;
    (f) Description of the service area affected including population 
and general character of business of the community;
    (g) Name of any other carrier or carriers providing telegraph or 
telephone service to the community;
    (h) Statement of the reasons for proposed discontinuance, reduction, 
or impairment;
    (i) Statement of the factors showing that neither present nor future 
public convenience and necessity would be adversely affected by the 
granting of the application;
    (j) Description of any previous discontinuance, reduction, or 
impairment of service to the community affected by the application, 
which has been made by the applicant during the 12 months preceding 
filing of application, and statement of any present plans for future 
discontinuance, reduction, or impairment of service to such community;
    (k) A map or sketch showing:

[[Page 186]]

    (1) Routes of line proposed to be removed from service and of 
alternate lines, if any, to be retained;
    (2) Type and ownership of structures (open wire, aerial cable, 
underground cable, carrier systems, etc.);
    (3) Cities and towns along routes with approximate population of 
each, and route kilometers between the principal points;
    (4) Location of important operating centers and repeater or relay 
points;
    (5) State boundary lines through which the facilities extend;
    (l) A wire chart showing, for both the line proposed to be removed 
and the alternate lines to be retained, the regular and normal 
assignment of each wire, its method of operation, the number of channels 
and normal assignment of each;
    (m) The number of wires or cables to be removed and the kind, size, 
and length of each;
    (n) A complete statement showing how the traffic load on the line 
proposed to be removed will be diverted to other lines and the adequacy 
of such other lines to handle the increased load.

[28 FR 13229, Dec. 5, 1963, as amended at 58 FR 44907, Aug. 25, 1993]



Sec. 63.501  Contents of applications to sever physical connection or to terminate or suspend interchange of traffic with another carrier.

    The application shall contain:
    (a) The name and address of each applicant;
    (b) The name, title, and post office address of the officer to whom 
correspondence concerning the application is to be addressed;
    (c) Nature of the proposed change;
    (d) Identification of community or part of community involved and 
date on which applicant desires to make proposed discontinuance, 
reduction, or impairment effective; if for a temporary period only, 
indicate the approximate period for which authorization is desired;
    (e) Proposed new tariff listing, if any, and differences, if any, 
between present charges to the public and charges for the service to be 
substituted;
    (f) Description of the service area affected including population 
and general character of business of the community;
    (g) Name of any other carrier or carriers providing telegraph or 
telephone service to the community;
    (h) Statement of the reasons for proposed discontinuance, reduction, 
or impairment;
    (i) Statement of the factors showing that neither present nor future 
public convenience and necessity would be adversely affected by the 
granting of the application;
    (j) Description of any previous discontinuance, reduction, or 
impairment of service to the community affected by the application, 
which has been made by the applicant during the 12 months preceding 
filing of application, and statement of any present plans for future 
discontinuance, reduction, or impairment of service to such community;
    (k) Name of other carrier;
    (l) Points served through such physical connection or interchange;
    (m) Description of the service involved;
    (n) Statement as to how points served by means of such physical 
connection or interchange will be served thereafter;
    (o) Amount of traffic interchanged for each month during preceding 
6-month period;
    (p) Statement as to whether severance of physical connection or 
termination or suspension of interchange of traffic is being made with 
consent of other carrier.



Sec. 63.504  Contents of applications to close a public toll station 
where no other such toll station of the applicant in the community 

will continue service and where telephone toll service is not 
otherwise available to the public through a telephone exchange 
connected with the toll lines of a carrier.

    The application shall contain:
    (a) The name and address of each applicant;
    (b) The name, title, and post office address of the officer to whom 
correspondence concerning the application is to be addressed;
    (c) Nature of proposed discontinuance, reduction, or impairment;

[[Page 187]]

    (d) Identification of community or part of community involved and 
date on which applicant desires to make proposed discontinuance, 
reduction, or impairment effective; if for a temporary period only, 
indicate the approximate period for which authorization is desired;
    (e) Proposed new tariff listing, if any, and difference, if any, 
between present charges to the public and charges for the service to be 
substituted, if any;
    (f) Description of the service area affected including population 
and general character of business of the community;
    (g) Name of other carrier or carriers, if any, which will provide 
toll station service in the community;
    (h) Statement of the reasons for proposed discontinuance, reduction, 
or impairment;
    (i) Statement of the factors showing that neither present nor future 
public convenience and necessity would be adversely affected by the 
granting of the application;
    (j) Description of any previous discontinuance, reduction, or 
impairment of service to the community affected by the application, 
which has been made by the applicant during the 12 months preceding 
filing of application, and statement of any present plans for future 
discontinuance, reduction, or impairment of service to such community;
    (k) Description of the service involved, including a statement of 
the number of toll telephone messages or telegraph messages sent-paid 
and received-collect, and the revenues from such traffic, in connection 
with the service proposed to be discontinued for each of the past 6 
months; and, if the volume of such traffic handled in the area has 
decreased during recent years, the reasons therefor.



Sec. 63.505  Contents of applications for any type of discontinuance, reduction, or impairment of telephone service not specifically provided for in this part.

    The application shall contain:
    (a) The name and address of each applicant;
    (b) The name, title, and post office address of the officer to whom 
correspondence concerning the application is to be addressed;
    (c) Nature of proposed discontinuance, reduction, or impairment;
    (d) Identification of community or part of community involved and 
date on which applicant desires to make proposed discontinuance, 
reduction or impairment effective, if for a temporary period only, 
indicate the approximate period for which authorization is desired;
    (e) Proposed new tariff listing, if any, and difference, if any, 
between present charges to the public and charges for the service to be 
substituted;
    (f) Description of the service area affected including population 
and general character of business of the community;
    (g) Name of any other carrier or carriers providing telephone 
service to the community;
    (h) Statement of the reasons for proposed discontinuance, reduction, 
or impairment;
    (i) Statement of the factors showing that neither present nor future 
public convenience and necessity would be adversely affected by the 
granting of the application;
    (j) Description of any previous discontinuance, reduction, or 
impairment of service to the community affected by the application, 
which has been made by the applicant during the 12 months preceding 
filing of application, and statement of any present plans for future 
discontinuance, reduction, or impairment of service to such community;
    (k) Description of the service involved, including:
    (1) Existing telephone service by the applicant available to the 
community or part thereof involved;
    (2) Telephone service (available from applicant or others) which 
would remain in the community or part thereof involved in the event the 
application is granted;
    (l) A statement of the number of toll messages sent-paid and 
received-collect and the revenues from such traffic in connection with 
the service proposed to be discontinued, reduced, or impaired for each 
of the past 6 months;

[[Page 188]]

and, if the volume of such traffic handled in the area has decreased 
during recent years, the reasons therefor.

[45 FR 6586, Jan. 29, 1980]



Sec. 63.601  Contents of applications for authority to reduce the hours of service of public coast stations under the conditions specified in Sec. 63.70.

                        F.C.C. File No. T-D-----

                                            Month -------- Year --------
          ______________________________________________________________
                                               (Name of applicant)      
          ______________________________________________________________
                                            (Address of applicant)      

    In the matter of Proposed Reduction in Hours of Service of a Public 
Coast Station Pursuant to Sec. 63.70 of the Commission's rules.

Data regarding public coast station_____________________________________

                                                (Call and address)      
Present hours:
  Monday through Friday_________________________________________________
  Saturday______________________________________________________________
  Sunday________________________________________________________________
Proposed hours:
  Monday through Friday_________________________________________________
  Saturday______________________________________________________________
  Sunday________________________________________________________________
Proposed effective time and date of change

Average number of messages handled for month of ------------, 19--

  during total hours to be deleted______________________________________

  during maximum hour to be deleted_____________________________________

    Data regarding substitute service to be provided by other public 
coast stations available and capable of providing service to the 
community affected, or in the marine area served by the public coast 
station involved:

------------------------------------------------------------------------
                                                    Hours of service
                                              --------------------------
     Station call and location       Operated   Monday
                                        by       thru   Saturday  Sunday
                                                Friday
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------

    Request for Designation as a Recognized Private Operating Agency



Sec. 63.701  Contents of application.

    Except as otherwise provided in this part, any party requesting 
designation as a recognized private operating agency within the meaning 
of the International Telecommunication Convention shall request such 
designation by filing an original and two copies of an application 
stating the nature of the services to be provided and a statement in the 
applicant's own words but which makes clear that the applicant is aware 
that it is obligated under Article 44 of the Convention to obey the 
mandatory provisions thereof, and all regulations promulgated 
thereunder, and a pledge that it will engage in no conduct or operations 
which otherwise obey the Convention and regulations in all respects. The 
applicant should also include a statement that it is aware that failure 
to comply will result in an order from the Federal Communications 
Commission to cease and desist from future violations of an ITU 
regulation and may result in revocation of its recognized private 
operating agency status by the United States Department of State. Such 
statement must include the following information where applicable:
    (a) The name and address of each applicant;
    (b) The Government, State, or Territory under the laws of which each 
corporate applicant is organized;
    (c) The name, title and post office address of the officer of a 
corporate applicant, or representative of a non-corporate applicant, to 
whom correspondence concerning the application is to be addressed;
    (d) A statement of the ownership of a non-corporate applicant, or 
the ownership of the stock of a corporate applicant, including an 
indication whether the applicant or its stock is owned directly or 
indirectly by an alien;
    (e) A copy of each corporate applicant's articant's articles of 
incorporation (or its equivalent) and of its corporate bylaws;
    (f) A statement whether the applicant is a carrier subject to 
section 214 of the Communications Act, an operator of broadcast or other 
radio facilities, licensed under title III of the Act, capable of 
causing harmful interference with the radio transmissions of other 
countries, or a non-carrier provider of services classed as ``enhanced'' 
under Sec. 64.702(a);

[[Page 189]]

    (g) A statement that the services for which designated as a 
recognized private operating agency is sought will be extended to a 
point outside the United States or are capable of causing harmful 
interference of other radio transmission and a statement of the nature 
of the services to be provided;
    (h) A statement setting forth the points between which the services 
are to be provided; and
    (i) A statement as to whether covered services are provided by 
facilities owned by the applicant, by facilities leased from another 
entity, or other arrangement and a description of the arrangement.

[51 FR 18448, May 20, 1986]



Sec. 63.702  Form.

    Application under Sec. 63.701 shall be submitted in the form 
specified in Sec. 63.53 for applications under section 214 of the 
Communications Act.

[51 FR 18448, May 20, 1986]



PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS--Table of Contents




                    Subpart A--Traffic Damage Claims

Sec.
64.1  Traffic damage claims.

     Subpart B--Restrictions on Indecent Telephone Message Services

64.201  Restrictions on indecent telephone message services.

     Subpart C--Furnishing of Facilities to Foreign Governments for 
                      International Communications

64.301  Furnishing of facilities to foreign governments for 
          international communications.

   Subpart D--Procedures for Handling Priority Services in Emergencies

64.401  Policies and procedures for provisioning and restoring certain 
          telecommunications services in emergencies.

       Subpart E--Use of Recording Devices by Telephone Companies

64.501  Recording of telephone conversations with telephone companies.

   Subpart F--Telecommunications Relay Services and Related Customer 
            Premises Equipment for Persons With Disabilities

64.601  Definitions.
64.602  Jurisdiction.
64.603  Provision of services.
64.604  Mandatory minimum standards.
64.605  State certification.
64.606  Furnishing related customer premises equipment.
64.607  Provision of hearing aid compatible telephones by exchange 
          carriers.
64.608  Enforcement of related customer premises equipment rules.

    Subpart G--Furnishing of Enhanced Services and Customer-Premises 
Equipment by Communications Common Carriers; Telephone Operator Services

64.702  Furnishing of enhanced services and customer-premises equipment.
64.703  Consumer information.
64.704  Call blocking prohibited.
64.705  Restrictions on charges related to the provision of operator 
          services.
64.706  Minimum standards for the routing and handling of emergency 
          telephone calls.
64.707  Public dissemination of information by providers of operator 
          services.
64.708  Definitions.
64.709  Informational tariffs.
64.710  Operator services for prison inmate phones.

  Subpart H--Extension of Unsecured Credit for Interstate and Foreign 
        Communications Services to Candidates for Federal Office

64.801  Purpose.
64.802  Applicability.
64.803  Definitions.
64.804  Rules governing the extension of unsecured credit to candidates 
          or persons on behalf of such candidates for Federal office for 
          interstate and foreign common carrier communication services.

                     Subpart I--Allocation of Costs

64.901  Allocation of costs.
64.902  Transactions with affiliates.
64.903  Cost allocation manuals.
64.904  Independent audits.

  Subpart J--International Settlements Policy and Modification Requests

64.1001  International settlements policy and modification requests.
64.1002  Alternative settlement arrangements.

[[Page 190]]

                Subpart K--Changing Long Distance Service

64.1100  Verification of orders for long distance service generated by 
          telemarketing.
64.1150  Letter of agency form and content.

            Subpart L--Restrictions on Telephone Solicitation

64.1200  Delivery restrictions.
64.1201  Restrictions on billing name and address disclosure.

                Subpart M--Provision of Payphone Service

64.1300  Payphone compensation obligation.
64,1310  Payphone compensation procedures.
64.1320  Payphone compensation verification and reports.
64.1330  State review of payphone entry and exit regulations and public 
          interest payphones.
64.1340  Right to negotiate.

                   Subpart N--Expanded Interconnection

64.1401  Expanded interconnection.
64.1402  Rights and responsibilities of interconnectors.

    Subpart O--Interstate Pay-Per-Call and Other Information Services

64.1501  Definitions.
64.1502  Limitations on the provision of pay-per-call services.
64.1503  Termination of pay-per-call and other information programs.
64.1504  Restrictions on the use of toll-free numbers.
64.1505  Restrictions on collect telephone calls.
64.1506  Number designation.
64.1507  Prohibition on disconnection or interruption of service for 
          failure to remit pay-per-call and similar service charges.
64.1508  Blocking access to 900 service.
64.1509  Disclosure and dissemination of pay-per-call information.
64.1510  Billing and collection of pay-per-call and similar service 
          charges.
64.1511  Forgiveness of charges and refunds.
64.1512  Involuntary blocking of pay-per-call services.
64.1513  Verification of charitable status.
64.1514  Generation of signalling tones.
64.1515  Recovery of costs.

           Subpart P--Calling Party Telephone Number; Privacy

64.1600  Definitions.
64.1601  Delivery requirements and privacy restrictions.
64.1602  Restrictions on use and sale of telephone subscriber 
          information provided pursuant to automatic number 
          identification or charge number services.
64.1603  Customer notification.
64.1604  Effective date.

  Subpart Q--Implementation of Section 273(d)(5) of the Communications 
          Act: Dispute Resolution Regarding Equipment Standards

64.1700  Purpose and scope.
64.1701  Definitions.
64.1702  Procedures.
64.1703  Dispute resolution default process.
64.1704  Frivolous disputes/penalties.

        Subpart R--Geographic Rate Averaging and Rate Integration

64.1801  Geographic rate averaging and rate integration.

 Subpart S--Nondominant Interexchange Carrier Certifications Regarding 
       Geographic Rate Averaging and Rate Integration Requirements

64.1900  Nondominant interexchange carrier certifications regarding 
          geographic rate averaging and rate integration requirements.

  Subpart T--Separate Affiliate Requirements for Incumbent Independent 
  Local Exchange Carriers That Provide In-Region, Interstate Domestic 
Interexchange Services or In-Region International Interexchange Services

64.1901  Basis and purpose.
64.1902  Terms and definitions.
64.1903  Obligations of all incumbent independent local exchange 
          carriers.

           Subpart U--Customer Proprietary Network Information

64.2001  Basis and purpose.
64.2003  Definitions.
64.2005  Use of customer proprietary network information without 
          customer approval.
64.2007  Notice and approval required for use of customer proprietary 
          network information.
64.2009  Safeguards required for use of customer proprietary network 
          information.

Appendix A to Part 64--Telecommunications Service Priority (TSP) System 
          for National Security Emergency Preparedness (NSEP)

    Authority:  47 U.S.C. 10, 201, 218, 226, 228, 332, unless otherwise 
noted.

[[Page 191]]


    Source: 28 FR 13239, Dec. 5, 1963, unless otherwise noted.



                    Subpart A--Traffic Damage Claims



Sec. 64.1  Traffic damage claims.

    (a) Each carrier engaged in furnishing radio-telegraph, wire-
telegraph, or ocean-cable service shall maintain separate files for each 
damage claim of a traffic nature filed with the carrier, showing the 
name, address, and nature of business of the claimant, the basis for the 
claim, disposition made, and all correspondence, reports, and records 
pertaining thereto. Such files shall be preserved in accordance with 
existing rules of the Commission (part 42 of this chapter) and at points 
(one or more) to be specifically designated by each carrier.
    (b) The aforementioned carriers shall make no payment as a result of 
any traffic damage claim if the amount of the payment would be in excess 
of the total amount collected by the carrier on the message or messages 
from which the claim arose unless such claim be presented to the carrier 
in writing signed by the claimant and setting forth the reason for the 
claim.



     Subpart B--Restrictions on Indecent Telephone Message Services



Sec. 64.201  Restrictions on indecent telephone message services.

    (a) It is a defense to prosecution for the provision of indecent 
communications under section 223(b)(2) of the Communications Act of 
1934, as amended (the Act), 47 U.S.C. 223(b)(2), that the defendant has 
taken the action set forth in paragraph (a)(1) of this section and, in 
addition, has complied with the following: Taken one of the actions set 
forth in paragraphs (a)(2), (3), or (4) of this section to restrict 
access to prohibited communications to persons eighteen years of age or 
older, and has additionally complied with paragraph (a)(5) of this 
section, where applicable:
    (1) Has notified the common carrier identified in section 223(c)(1) 
of the Act, in writing, that he or she is providing the kind of service 
described in section 223(b)(2) of the Act.
    (2) Requires payment by credit card before transmission of the 
message; or
    (3) Requires an authorized access or identification code before 
transmission of the message, and where the defendant has:
    (i) Issued the code by mailing it to the applicant after reasonably 
ascertaining through receipt of a written application that the applicant 
is not under eighteen years of age; and
    (ii) Established a procedure to cancel immediately the code of any 
person upon written, telephonic or other notice to the defendant's 
business office that such code has been lost, stolen, or used by a 
person or persons under the age of eighteen, or that such code is no 
longer desired; or
    (4) Scrambles the message using any technique that renders the audio 
unintelligible and incomprehensible to the calling party unless that 
party uses a descrambler; and,
    (5) Where the defendant is a message sponsor subscriber to mass 
announcement services tariffed at this Commission and such defendant 
prior to the transmission of the message has requested in writing to the 
carrier providing the public announcement service that calls to this 
message service be subject to billing notification as an adult telephone 
message service.
    (b) A common carrier within the District of Columbia or within any 
State, or in interstate or foreign commerce, shall not, to the extent 
technically feasible, provide access to a communication described in 
section 223(b) of the Act from the telephone of any subscriber who has 
not previously requested in writing the carrier to provide access to 
such communication if the carrier collects from subscribers an 
identifiable charge for such communication that the carrier remits, in 
whole or in part, to the provider of such communication.

[52 FR 17761, May 12, 1987, as amended at 55 FR 28916, July 16, 1990]

[[Page 192]]



     Subpart C--Furnishing of Facilities to Foreign Governments for 
                      International Communications



Sec. 64.301  Furnishing of facilities to foreign governments for international communications.

    Common carriers by wire and radio shall, in accordance with section 
201 of the Communications Act, furnish services and facilities for 
communications to any foreign government upon reasonable demand 
therefor: Provided, however, That, if a foreign government fails or 
refuses, upon reasonable demand, to furnish particular services and 
facilities to the United States Government for communications between 
the territory of that government and the United States or any other 
point, such carriers shall, to the extent specifically ordered by the 
Commission, deny equivalent services or facilities in the United States 
to such foreign government for communications between the United States 
and the territory of that foreign government or any other point.

(Secs. 201, 214, 303, 308, 48 Stat. 1075, 1082, 1085; 47 U.S.C. 201, 
214, 303, 308)

[28 FR 13242, Dec. 5, 1963]



   Subpart D--Procedures for Handling Priority Services in Emergencies



Sec. 64.401  Policies and procedures for provisioning and restoring certain telecommunications services in emergencies.

    The communications common carrier shall maintain and provision and, 
if disrupted, restore facilities and services in accordance with 
policies and procedures set forth in the appendix to this part.

[53 FR 47536, Nov. 23, 1988]



       Subpart E--Use of Recording Devices by Telephone Companies



Sec. 64.501  Recording of telephone conversations with telephone companies.

    No telephone common carrier, subject in whole or in part to the 
Communications Act of 1934, as amended, may use any recording device in 
connection with any interstate or foreign telephone conversation between 
any member of the public, on the one hand, and any officer, agent or 
other person acting for or employed by any such telephone common 
carrier, on the other hand, except under the following conditions:
    (a) Where such use shall be preceded by verbal or written consent of 
all parties to the telephone conversation, or
    (b) Where such use shall be preceded by verbal notification which is 
recorded at the beginning, and as part of the call, by the recording 
party, or
    (c) Where such use shall be accompanied by an automatic tone warning 
device, which will automatically produce a distinct signal that is 
repeated at regular intervals during the course of the telephone 
conversation when the recording device is in use. Provided That:
    (1) The characteristics of the warning tone shall be the same as 
those specified in the Orders of this Commission adopted by it in ``Use 
of Recording Devices in Connection With Telephone Service,'' Docket 
6787, 11 FCC 1033 (1947); 12 FCC 1005 (November 26, 1947); 12 FCC 1008 
(May 20, 1948).
    (d) That the characteristics of the warning tone shall be the same 
as those specified in the Orders of this Commission adopted by it in 
``Use of Recording Devices in Connection With Telephone Service,'' 
Docket 6787; 11 F.C.C. 1033 (1947); 12 F.C.C. 1005 (November 26, 1947); 
12 F.C.C. 1008 (May 20, 1948);
    (e) That no recording device shall be used unless it can be 
physically connected to and disconnected from the telephone line or 
switched on and off.

(Secs. 2, 3, 4, 5, 301, 303, 307, 308, 309, 315, 317; 48 Stat., as 
amended, 1064, 1065, 1066, 1068,

[[Page 193]]

1081, 1082, 1083, 1084, 1085, 1089; 47 U.S.C. 152, 153, 154, 155, 301, 
303, 307, 308, 309, 315, 317)

[32 FR 11275, Aug. 3, 1967, as amended at 46 FR 29480, June 2, 1981; 52 
FR 3654, Feb. 5, 1987]



   Subpart F--Telecommunications Relay Services and Related Customer 
            Premises Equipment for Persons With Disabilities

    Source: 56 FR 36731, Aug. 1, 1991, unless otherwise noted.



Sec. 64.601  Definitions.

    As used in this subpart, the following definitions apply:
    (1) American Sign Language (ASL). A visual language based on hand 
shape, position, movement, and orientation of the hands in relation to 
each other and the body.
    (2) ASCII. An acronym for American Standard Code for Information 
Interexchange which employs an eight bit code and can operate at any 
standard transmission baud rate including 300, 1200, 2400, and higher.
    (3) Baudot. A seven bit code, only five of which are information 
bits. Baudot is used by some text telephones to communicate with each 
other at a 45.5 baud rate.
    (4) Common carrier or carrier. Any common carrier engaged in 
interstate communication by wire or radio as defined in section 3(h) of 
the Communications Act of 1934, as amended (the Act), and any common 
carrier engaged in intrastate communication by wire or radio, 
notwithstanding sections 2(b) and 221(b) of the Act.
    (5) Communications assistant (CA). A person who transliterates 
conversation from text to voice and from voice to text between two end 
users of TRS. CA supersedes the term ``TDD operator.''
    (6) Hearing carry over (HCO). A reduced form of TRS where the person 
with the speech disability is able to listen to the other end user and, 
in reply, the CA speaks the text as typed by the person with the speech 
disability. The CA does not type any conversation.
    (7) Telecommunications relay services (TRS). Telephone transmission 
services that provide the ability for an individual who has a hearing or 
speech disability to engage in communication by wire or radio with a 
hearing individual in a manner that is functionally equivalent to the 
ability of an individual who does not have a hearing or speech 
disability to communicate using voice communication services by wire or 
radio. Such term includes services that enable two-way communication 
between an individual who uses a text telephone or other nonvoice 
terminal device and an individual who does not use such a device. TRS 
supersedes the terms ``dual party relay system,'' ``message relay 
services,'' and ``TDD Relay.''
    (8) Text telephone (TT). A machine that employs graphic 
communication in the transmission of coded signals through a wire or 
radio communication system. TT supersedes the term ``TDD'' or 
``telecommunications device for the deaf.''
    (9) Voice carry over (VCO). A reduced form of TRS where the person 
with the hearing disability is able to speak directly to the other end 
user. The CA types the response back to the person with the hearing 
disability. The CA does not voice the conversation.



Sec. 64.602  Jurisdiction.

    Any violation of this subpart by any common carrier engaged in 
intrastate communication shall be subject to the same remedies, 
penalties, and procedures as are applicable to a violation of the Act by 
a common carrier engaged in interstate communication.



Sec. 64.603  Provision of services.

    Each common carrier providing telephone voice transmission services 
shall provide, not later than July 26, 1993, in compliance with the 
regulations prescribed herein, throughout the area in which it offers 
services, telecommunications relay services, individually, through 
designees, through a competitively selected vendor, or in concert with 
other carriers. A common carrier shall be considered to be in compliance 
with these regulations:
    (a) With respect to intrastate telecommunications relay services in 
any state that does not have a certified program under Sec. 64.605 and 
with respect to interstate telecommunications relay services, if such 
common carrier (or other entity through which the carrier

[[Page 194]]

is providing such relay services) is in compliance with Sec. 64.604; or
    (b) With respect to intrastate telecommunications relay services in 
any state that has a certified program under Sec. 64.605 for such state, 
if such common carrier (or other entity through which the carrier is 
providing such relay services) is in compliance with the program 
certified under Sec. 64.605 for such state.



Sec. 64.604  Mandatory minimum standards.

    (a) Operational standards--(1) Communications assistant (CA). TRS 
providers are responsible for requiring that CAs be sufficiently trained 
to effectively meet the specialized communications needs of individuals 
with hearing and speech disabilities; and that CAs have competent skills 
in typing, grammar, spelling, interpretation of typewritten ASL, and 
familiarity with hearing and speech disability cultures, languages and 
etiquette.
    (2) Confidentiality and conversation content. Except as authorized 
by section 705 of the Communications Act, 47 U.S.C. 605, CAs are 
prohibited from disclosing the content of any relayed conversation 
regardless of content and from keeping records of the content of any 
conversation beyond the duration of a call, even if to do so would be 
inconsistent with state or local law. CAs are prohibited from 
intentionally altering a relayed conversation and, to the extent that it 
is not inconsistent with federal, state or local law regarding use of 
telephone company facilities for illegal purposes, must relay all 
conversation verbatim unless the relay user specifically requests 
summarization.
    (3) Types of calls. Consistent with the obligations of common 
carrier operators, CAs are prohibited from refusing single or sequential 
calls or limiting the length of calls utilizing relay services. TRS 
shall be capable of handling any type of call normally provided by 
common carriers and the burden of proving the infeasibility of handling 
any type of call will be placed on the carriers. Providers of TRS are 
permitted to decline to complete a call because credit authorization is 
denied. CAs shall handle emergency calls in the same manner as they 
handle any other TRS calls.
    (b) Technical standards--(1) ASCII and Baudot. TRS shall be capable 
of communicating with ASCII and Baudot format, at any speed generally in 
use.
    (2) Speed of answer. TRS shall include adequate staffing to provide 
callers with efficient access under projected calling volumes, so that 
the probability of a busy response due to CA unavailability shall be 
functionally equivalent to what a voice caller would experience in 
attempting to reach a party through the voice telephone network. TRS 
shall, except during network failure, answer 85% of all calls within 10 
seconds and no more than 30 seconds shall elapse between receipt of 
dialing information and the dialing of the requested number.
    (3) Equal access to interexchange carriers. TRS users shall have 
access to their chosen interexchange carrier through the TRS, and to all 
other operator services, to the same extent that such access is provided 
to voice users.
    (4) TRS facilities. TRS shall operate every day, 24 hours a day. TRS 
shall have redundancy features functionally equivalent to the equipment 
in normal central offices, including uninterruptible power for emergency 
use. TRS shall transmit conversations between TT and voice callers in 
real time. Adequate network facilities shall be used in conjunction with 
TRS so that under projected calling volume the probability of a busy 
response due to loop trunk congestion shall be functionally equivalent 
to what a voice caller would experience in attempting to reach a party 
through the voice telephone network.
    (5) Technology. No regulation set forth in this subpart is intended 
to discourage or impair the development of improved technology that 
fosters the availability of telecommunications to person with 
disabilities. VCO and HCO technology are required to be standard 
features of TRS.
    (c) Functional standards--(1) Enforcement. Subject to Sec. 64.603, 
the Commission shall resolve any complaint alleging a violation of this 
section within 180 days after the complaint is filed.

[[Page 195]]

    (2) Public access to information. Carriers, through publication in 
their directories, periodic billing inserts, placement of TRS 
instructions in telephone directories, through directory assistance 
services, and incorporation of TT numbers in telephone directories, 
shall assure that callers in their service areas are aware of the 
availability and use of TRS.
    (3) Rates. TRS users shall pay rates no greater than the rates paid 
for functionally equivalent voice communication services with respect to 
such factors as the duration of the call, the time of day, and the 
distance from the point of origination to the point of termination.
    (4) Jurisdictional separation of costs--(i) General. Where 
appropriate, costs of providing TRS shall be separated in accordance 
with the jurisdictional separation procedures and standards set forth in 
the Commission's regulations adopted pursuant to section 410 of the 
Communications Act of 1934, as amended.
    (ii) Cost recovery. Costs caused by interstate TRS shall be 
recovered from all subscribers for every interstate service, utilizing a 
shared-funding cost recovery mechanism. Costs caused by intrastate TRS 
shall be recovered from the intrastate jurisdiction. In a state that has 
a certified program under Sec. 64.605, the state agency providing TRS 
shall, through the state's regulatory agency, permit a common carrier to 
recover costs incurred in providing TRS by a method consistent with the 
requirements of this section.
    (iii) Telecommunications Relay Services Fund. Effective July 26, 
1993, an Interstate Cost Recovery Plan, hereinafter referred to as the 
TRS Fund, shall be administered by an entity selected by the Commission 
(administrator). The initial administrator, for an interim period, will 
be the National Exchange Carrier Association, Inc.
    (A) Contributions. Every carrier providing interstate 
telecommunications services shall contribute to the TRS Fund on the 
basis of its relative share of gross interstate revenues as described 
herein. Contributions shall be made by all carriers who provide 
interstate services, including, but not limited to, cellular telephone 
and paging, mobile radio, operator services, personal communications 
service (PCS), access (including subscriber line charges), alternative 
access and special access, packet-switched, WATS, 800, 900, message 
telephone service (MTS), private line, telex, telegraph, video, 
satellite, intraLATA, international and resale services.
    (B) Contribution computations. Contributors' contribution to the TRS 
fund shall be the product of their subject revenues for the prior 
calendar year and a contribution factor determined annually by the 
Commission. The contribution factor shall be based on the ratio between 
expected TRS Fund expenses to total interstate revenues. In the event 
that contributions exceed TRS payments and administrative costs, the 
contribution factor for the following year will be adjusted by an 
appropriate amount, taking into consideration projected cost and usage 
changes. In the event that contributions are inadequate, the fund 
administrator may request authority from the Commission to borrow funds 
commercially, with such debt secured by future years contributions. Each 
subject carrier must contribute at least $100 per year. Service 
providers whose annual contributions total less than $1,200 must pay the 
entire contribution at the beginning of the contribution period. Service 
providers whose contributions total $1,200 or more may divide their 
contributions into equal monthly payments. Contributions shall be 
calculated and filed in accordance with a ``TRS Fund Worksheet,'' which 
shall be published in the Federal Register. The worksheet sets forth 
information that must be provided by the contributor, the formula for 
computing the contribution, the manner of payment, and due dates for 
payments. The worksheet shall be certified to by an officer of the 
contributor, and subject to verification by the Commission or the 
administrator at the discretion of the Commission. Contributors' 
statements in the worksheet shall be subject to the provisions of 
section 220 of the Communications Act of 1934, as amended. The fund 
administrator may bill contributors a

[[Page 196]]

separate assessment for reasonable administrative expenses and interest 
resulting from improper filing or overdue contributions.
    (C) Data collection from TRS Providers. TRS providers shall provide 
the administrator with true and adequate data necessary to determine TRS 
fund revenue requirements and payments. TRS providers shall provide the 
administrator with the following: total TRS minutes of use, total 
interstate TRS minutes of use, total TRS operating expenses and total 
TRS investment in general accordance with part 32 of the Communications 
Act, and other historical or projected information reasonably requested 
by the administrator for purposes of computing payments and revenue 
requirements. The administrator and the Commission shall have the 
authority to examine, verify and audit data received from TRS providers 
as necessary to assure the accuracy and integrity of fund payments.
    (D) The TRS Fund will be subject to a yearly audit performed by an 
independent certified accounting firm or the Commission, or both.
    (E) Payments to TRS Providers. TRS Fund payments shall be 
distributed to TRS providers based on formulas approved or modified by 
the Commission. The administrator shall file schedules of payment 
formulas with the Commission. Such formulas shall be designed to 
compensate TRS providers for reasonable costs of providing interstate 
TRS, and shall be subject to Commission approval. Such formulas shall be 
based on total monthly interstate TRS minutes of use. TRS minutes of use 
for purposes of interstate cost recovery under the TRS Fund are defined 
as the minutes of use for completed interstate TRS calls placed through 
the TRS center beginning after call set-up and concluding after the last 
message call unit. In addition to the data required under paragraph 
(c)(4)(iii)(C) of this section, all TRS providers, including providers 
who are not interexchange carriers, local exchange carriers, or 
certified state relay providers, must submit reports of interstate TRS 
minutes of use to the administrator in order to receive payments. The 
administrator shall establish procedures to verify payment claims, and 
may suspend or delay payments to a TRS provider if the TRS provider 
fails to provide adequate verification of payment upon reasonable 
request, or if directed by the Commission to do so. TRS Fund 
administrator shall make payments only to eligible TRS providers 
operating pursuant to the mandatory minimum standards as required in 
Sec. 64.604, and after disbursements to the administrator for reasonable 
expenses incurred by it in connection with TRS Fund administration. TRS 
providers receiving payments shall file a form prescribed by the 
administrator. The administrator shall fashion a form that is consistent 
with Parts 32 and 36 procedures reasonably tailored to meet the needs of 
TRS providers. The Commission shall have authority to audit providers 
and have access to all data, including carrier specific data, collected 
by the fund administrator. The fund administrator shall have authority 
to audit TRS providers reporting data to the administrator.
    (F) TRS providers eligible for receiving payments from the TRS Fund 
are:
    (1) TRS facilities operated under contract with and/or by certified 
state TRS programs pursuant to Sec. 64.605; or
    (2) TRS facilities owned by or operated under contract with a common 
carrier providing interstate services operated pursuant to Sec. 64.604; 
or
    (3) Interstate common carriers offering TRS pursuant to Sec. 64.604.
    (G) Any eligible TRS provider as defined in paragraph (c)(4)(iii) 
(F) of this section shall notify the administrator of its intent to 
participate in the TRS Fund thirty (30) days prior to submitting reports 
of TRS interstate minutes of use in order to receive payment settlements 
for interstate TRS, and failure to file may exclude the TRS provider 
from eligibility for the year.
    (H) Administrator reporting, monitoring, and filing requirements. 
The administrator shall perform all filing and reporting functions 
required under paragraphs (c)(4)(iii) (A) through (J), of this section. 
Beginning in 1994, TRS payment formulas and revenue requirements shall 
be filed with the Commission on October 1 of each year, to be effective 
for a one-year period beginning the following January 1. The 
administrator shall report annually to the

[[Page 197]]

Commission an itemization of monthly administrative costs which shall 
consist of all expenses, receipts, and payments associated with the 
administration of TRS Fund. The administrator is required to keep the 
TRS Fund separate from all other funds administered by the 
administrator, shall file a cost allocation manual (CAM), and shall 
provide the Commission full access to all data collected pursuant to the 
administration of the TRS Fund. The administrator shall establish a non-
paid, voluntary advisory committee of persons from the hearing and 
speech disability community, TRS users (voice and text telephone), 
interstate service providers, state representatives, and TRS providers, 
which will meet at reasonable intervals (at least semi-annually (in 
order to monitor TRS cost recovery matters. Each group shall select its 
own representative to the committee. The administrator's annual report 
shall include a discussion of advisory committee deliberations.
    (I) Information filed with the administrator. The administrator 
shall keep all data obtained from contributors and TRS providers 
confidential and shall not disclose such data in company-specific form 
unless directed to do so by the Commission. The administrator shall not 
use such data except for purposes of administering the TRS Fund, 
calculating the regulatory fees of interstate common carriers, and 
aggregating such fee payments for submission to the Commission. The 
Commission shall have access to all data reported to the administrator, 
and authority to audit TRS providers.
    (J) The administrator's performance and this plan shall be reviewed 
by the Commission after two years.
    (K) All parties providing services or contributions or receiving 
payments under this section are subject to the enforcement provisions 
specified in the Communications Act, the Americans with Disabilities 
Act, and the Commission's rules.
    (5) Complaints--(i) Referral of complaint. If a complaint to the 
Commission alleges a violation of this subpart with respect to 
intrastate TRS within a state and certification of the program of such 
state under Sec. 64.605 is in effect, the Commission shall refer such 
complaint to such state expeditiously.
    (ii) Jurisdiction of Commission. After referring a complaint to a 
state under paragraph (c)(5)(i) of this section, or if a complaint is 
filed directly with a state, the Commission shall exercise jurisdiction 
over such complaint only if:
    (A) Final action under such state program has not been taken within:
    (1) 180 days after the complaint is filed with such state; or
    (2) A shorter period as prescribed by the regulations of such state; 
or
    (B) The Commission determines that such state program is no longer 
qualified for certification under Sec. 64.605.
    (iii) Complaint procedures--(A) Content. A complaint shall be in 
writing, addressed to the Federal Communications Commission, Common 
Carrier Bureau, TRS Complaints, Washington, DC 20554, or addressed to 
the appropriate state office, and shall contain:
    (1) The name and address of the complainant,
    (2) The name and address of the defendant against whom the complaint 
is made,
    (3) A complete statement of the facts, including supporting data, 
where available, showing that such defendant did or omitted to do 
anything in contravention of this subpart, and
    (4) The relief sought.
    (B) Amended complaints. An amended complaint setting forth 
transactions, occurrences or events which have happened since the filing 
of the original complaint and which relate to the original cause of 
action may be filed with the Commission.
    (C) Number of copies. An original and two copies of all pleadings 
shall be filed.
    (D) Service--(1) Except where a complaint is referred to a state 
pursuant to Sec. 64.604(c)(5)(i), or where a complaint is filed directly 
with a state, the Commission will serve on the named party a copy of any 
complaint or amended complaint filed with it, together with a notice of 
the filing of the complaint. Such notice shall call upon the defendant 
to satisfy or answer the complaint in writing within the time specified 
in said notice of complaint.

[[Page 198]]

    (2) All subsequent pleadings and briefs shall be served by the 
filing party on all other parties to the proceeding in accordance with 
the requirements of Sec. 1.47 of this chapter. Proof of such service 
shall also be made in accordance with the requirements of said section.
    (E) Answers to complaints and amended complaints. Any party upon 
whom a copy of a complaint or amended complaint is served under this 
subpart shall serve an answer within the time specified by the 
Commission in its notice of complaint. The answer shall advise the 
parties and the Commission fully and completely of the nature of the 
defense and shall respond specifically to all material allegations of 
the complaint. In cases involving allegations of harm, the answer shall 
indicate what action has been taken or is proposed to be taken to stop 
the occurrence of such harm. Collateral or immaterial issues shall be 
avoided in answers and every effort should be made to narrow the issues. 
Matters alleged as affirmative defenses shall be separately stated and 
numbered. Any defendant failing to file and serve an answer within the 
time and in the manner prescribed may be deemed in default.
    (F) Replies to answers or amended answers. Within 10 days after 
service of an answer or an amended answer, a complainant may file and 
serve a reply which shall be responsive to matters contained in such 
answer or amended answer and shall not contain new matter. Failure to 
reply will not be deemed an admission of any allegation contained in 
such answer or amended answer.
    (G) Defective pleadings. Any pleading filed in a complaint 
proceeding that is not in substantial conformity with the requirements 
of the applicable rules in this subpart may be dismissed.

[56 FR 36731, Aug. 1, 1991, as amended at 58 FR 12176, Mar. 3, 1993; 58 
FR 39673, July 26, 1993; 61 FR 36642, July 12, 1996]



Sec. 64.605  State certification.

    (a) State documentation. Any state, through its office of the 
governor or other delegated executive office empowered to provide TRS, 
desiring to establish a state program under this section shall submit, 
not later than October 1, 1992, documentation to the Commission 
addressed to the Federal Communications Commission, Chief, Common 
Carrier Bureau, TRS Certification Program, Washington, DC 20554, and 
captioned ``TRS State Certification Application.'' All documentation 
shall be submitted in narrative form, shall clearly describe the state 
program for implementing intrastate TRS, and the procedures and remedies 
for enforcing any requirements imposed by the state program. The 
Commission shall give public notice of states filing for certification 
including notification in the Federal Register.
    (b) Requirements for certification. After review of state 
documentation, the Commission shall certify, by letter, or order, the 
state program if the Commission determines that the state certification 
documentation:
    (1) Establishes that the state program meets or exceeds all 
operational, technical, and functional minimum standards contained in 
Sec. 64.604;
    (2) Establishes that the state program makes available adequate 
procedures and remedies for enforcing the requirements of the state 
program; and
    (3) Where a state program exceeds the mandatory minimum standards 
contained in Sec. 64.604, the state establishes that its program in no 
way conflicts with federal law.
    (c) Certification period. State certification shall remain in effect 
for five years. One year prior to expiration of certification, a state 
may apply for renewal of its certification by filing documentation as 
prescribed by paragraphs (a) and (b) of this section.
    (d) Method of funding. Except as provided in Sec. 64.604, the 
Commission shall not refuse to certify a state program based solely on 
the method such state will implement for funding intrastate TRS, but 
funding mechanisms, if labeled, shall be labeled in a manner that 
promote national understanding of TRS and do not offend the public.
    (e) Suspension or revocation of certification. The Commission may 
suspend or revoke such certification if, after notice and opportunity 
for hearing, the Commission determines that such certification is no 
longer warranted. In a

[[Page 199]]

state whose program has been suspended or revoked, the Commission shall 
take such steps as may be necessary, consistent with this subpart, to 
ensure continuity of TRS.



Sec. 64.606  Furnishing related customer premises equipment.

    (a) Any communications common carrier may provide, under tariff, 
customer premises equipment (other than hearing aid compatible 
telephones as defined in part 68 of this chapter, needed by persons with 
hearing, speech, vision or mobility disabilities. Such equipment may be 
provided to persons with those disabilities or to associations or 
institutions who require such equipment regularly to communicate with 
persons with disabilities. Examples of such equipment include, but are 
not limited to, artificial larynxes, bone conductor receivers and TTs.
    (b) Any carrier which provides telecommunications devices for 
persons with hearing and/or speech disabilities, whether or not pursuant 
to tariff, shall respond to any inquiry concerning:
    (1) The availability (including general price levels) of TTs using 
ASCII, Baudot, or both formats; and
    (2) The compatibility of any TT with other such devices and 
computers.



Sec. 64.607  Provision of hearing aid compatible telephones by exchange carriers.

    In the absence of alternative suppliers in an exchange area, an 
exchange carrier must provide a hearing aid compatible telephone, as 
defined in Sec. 68.316 of this chapter, and provide related installation 
and maintenance services for such telephones on a detariffed basis to 
any customer with a hearing disability who requests such equipment or 
services.

[61 FR 42185, Aug. 14, 1996]



Sec. 64.608  Enforcement of related customer premises equipment rules.

    Enforcement of Secs. 64.606 and 64.607 is delegated to those state 
public utility or public service commissions which adopt those sections 
and provide for their enforcement. Subpart G--Furnishing of Enhanced 
Services and Customer-Premises Equipment by Communications Common 
Carriers



    Subpart G--Furnishing of Enhanced Services and Customer-Premises 
Equipment by Communications Common Carriers; Telephone Operator Services



Sec. 64.702  Furnishing of enhanced services and customer-premises equipment.

    (a) For the purpose of this subpart, the term enhanced service shall 
refer to services, offered over common carrier transmission facilities 
used in interstate communications, which employ computer processing 
applications that act on the format, content, code, protocol or similar 
aspects of the subscriber's transmitted information; provide the 
subscriber additional, different, or restructured information; or 
involve subscriber interaction with stored information. Enhanced 
services are not regulated under title II of the Act.
    (b) Communications common carriers subject, in whole or in part, to 
the Communications Act may directly provide enhanced services and 
customer-premises equipment; provided, however, that the Commission may 
prohibit any such common carrier from engaging directly or indirectly in 
furnishing enhanced services or customer-premises equipment to others 
except as provided for in paragraph (c) of this section, or as otherwise 
authorized by the Commission.
    (c) A communications common carrier prohibited by the Commission 
pursuant to paragraph (b) of this section from engaging in the 
furnishing of enhanced services or customer-premises equipment may, 
subject to other provisions of law, have a controlling or lesser 
interest in, or be under common control with, a separate corporate 
entity that furnishes enhanced services or customer-premises equipment 
to others provided the following conditions are met:
    (1) Each such separate corporation shall obtain all transmission 
facilities necessary for the provision of enhanced services pursuant to 
tariff, and may not own any network or local distribution transmission 
facilities or equipment.

[[Page 200]]

    (2) Each such separate corporation shall operate independently in 
the furnishing of enhanced services and customer-premises equipment. It 
shall maintain its own books of account, have separate officers, utilize 
separate operating, marketing, installation, and maintenance personnel, 
and utilize separate computer facilities in the provision of enhanced 
services.
    (3) Each such separate corporation which provides customer-premises 
equipment or enhanced services shall deal with any affiliated 
manufacturing entity only on an arm's length basis.
    (4) Any research or development performed on a joint or separate 
basis for the subsidiary must be done on a compensatory basis. Except 
for generic software within equipment, manufactured by an affiliate, 
that is sold ``off the shelf'' to any interested purchaser, the separate 
corporation must develop its own software, or contract with non-
affiliated vendors.
    (5) All transactions between the separate corporation and the 
carrier or its affiliates which involve the transfer, either direct or 
by accounting or other record entries, of money, personnel, resources, 
other assets or anything of value, shall be reduced to writing. A copy 
of any contract, agreement, or other arrangement entered into between 
such entities shall be filed with the Commission within 30 days after 
the contract, agreement, or other arrangement is made. This provision 
shall not apply to any transaction governed by the provision of an 
effective state or federal tariff.
    (d) A carrier subject to the proscription set forth in paragraph (c) 
of this section:
    (1) Shall not engage in the sale or promotion of enhanced services 
or customer-premises equipment, on behalf of the separate corporation, 
or sell, lease or otherwise make available to the separate corporation 
any capacity or computer system component on its computer system or 
systems which are used in any way for the provision of its common 
carrier communications services. (This does not apply to communications 
services offered the separate subsidiary pursuant to tariff);
    (2) Shall disclose to the public all information relating to network 
design and technical standards and information affecting changes to the 
telecommunications network which would affect either intercarrier 
interconnection or the manner in which customer-premises equipment is 
attached to the interstate network prior to implementation and with 
reasonable advance notification. When such information is disclosed to 
the separate corporation it shall be disclosed and be available to any 
member of the public on the same terms and conditions;
    (3) [Reserved]
    (4) Must obtain Commission approval as to the manner in which the 
separate corporation is to be capitalized, prior to obtaining any 
interest in the separate corporation or transferring any assets, and 
must obtain Commission approval of any modification to a Commission 
approved capitalization plan.
    (e) Except as otherwise ordered by the Commission, after March 1, 
1982, the carrier provision of customer-premises equipment used in 
conjunction with the interstate telecommunications network shall be 
separate and distinct from provision of common carrier communications 
services and not offered on a tariffed basis.

(Secs. 4, 201-205, 403, 404, 410; 48 Stat., as amended, 1066, 1070-1072, 
1094, 1098; (47 U.S.C. 154, 201-205, 403, 404, 410))

[45 FR 31364, May 13, 1980, as amended at 46 FR 6008, Jan. 21, 1981; 63 
FR 20338, Apr. 24, 1998]



Sec. 64.703  Consumer information.

    (a) Each provider of operator services shall:
    (1) Identify itself, audibly and distinctly, to the consumer at the 
beginning of each telephone call and before the consumer incurs any 
charge for the call;
    (2) Permit the consumer to terminate the telephone call at no charge 
before the call is connected;
    (3) Disclose immediately to the consumer, upon request and at no 
charge to the consumer--
    (i) A quotation of its rates or charges for the call;
    (ii) The methods by which such rates or charges will be collected; 
and
    (iii) The methods by which complaints concerning such rates, 
charges,

[[Page 201]]

or collection practices will be resolved; and
    (4) Disclose, audibly and distinctly to the consumer, at no charge 
and before connecting any interstate, domestic, interexchange non-access 
code operator service call, how to obtain the total cost of the call, 
including any aggregator surcharge, or the maximum possible total cost 
of the call, including any aggregator surcharge, before providing 
further oral advice to the consumer on how to proceed to make the call. 
The oral disclosure required in this subsection shall instruct consumers 
that they may obtain applicable rate and surcharge quotations either, at 
the option of the provider of operator services, by dialing no more than 
two digits or by remaining on the line.
    (b) Each aggregator shall post on or near the telephone instrument, 
in plain view of consumers:
    (1) The name, address, and toll-free telephone number of the 
provider of operator services;
    (2) Except for CMRS aggregators, a written disclosure that the rates 
for all operator-assisted calls are available on request, and that 
consumers have a right to obtain access to the intestate common carrier 
of their choice and may contact their preferred interstate common 
carriers for information on accessing that carrier's service using that 
telephone;
    (3) In the case of a pay telephone, the local coin rate for the pay 
telephone location; and
    (4) The name and address of the Enforcement Division of the Common 
Carrier Bureau of the Commission (FCC, Enforcement Division, CCB, Mail 
Stop 1600A2, Washington, DC 20554), to which the consumer may direct 
complaints regarding operator services.
    (c) Additional requirements for first 3 years. In addition to 
meeting the requirements of paragraph (a) of this section, each 
presubscribed provider of operator services shall, until January 15, 
1994, identify itself audibly and distinctly to the consumer, not only 
as required in paragraph (a)(1) of this section, but also for a second 
time before connecting the call and before the consumer incurs any 
charge.
    (d) Effect of state law or regulation. The requirements of paragraph 
(b) of this section shall not apply to an aggregator in any case in 
which State law or State regulation requires the aggregator to take 
actions that are substantially the same as those required in paragraph 
(b) of this section.
    (e) Each provider of operator services shall ensure, by contract or 
tariff, that each aggregator for which such provider is the 
presubscribed provider of operator services is in compliance with the 
requirements of paragraph (b) of this section.

[56 FR 18523, Apr. 23, 1991, as amended at 61 FR 14981, Apr. 4, 1996; 61 
FR 52323, Oct. 7, 1996; 63 FR 11617, Mar. 10, 1998; 63 FR 43041, Aug. 
11, 1998]

    Effective Date Note:  At 63 FR 11617, Mar. 10, 1998, Sec. 64.703 was 
amended by removing the word ``and'' at the end of paragraph (a)(2), 
removing the period at the end of paragraph (a)(3)(iii) and adding in 
its place ``; and'', and by adding paragraph (a)(4), effective Oct. 1, 
1999.



Sec. 64.704  Call blocking prohibited.

    (a) Each aggregator shall ensure that each of its telephones 
presubscribed to a provider of operator services allows the consumer to 
use ``800'' and ``950'' access code numbers to obtain access to the 
provider of operator services desired by the consumer.
    (b) Each provider of operator services shall:
    (1) Ensure, by contract or tariff, that each aggregator for which 
such provider is the presubscribed provider of operator services is in 
compliance with the requirements of paragraphs (a) and (c) of this 
section; and
    (2) Withhold payment (on a location-by-location basis) of any 
compensation, including commissions, to aggregators if such provider 
reasonably believes that the aggregator is blocking access to interstate 
common carriers in violation of paragraphs (a) or (c) of this section.
    (c) Each aggregator shall, by the earliest applicable date set forth 
in this paragraph, ensure that any of its equipment presubscribed to a 
provider of operator services allows the consumer to use equal access 
codes to obtain access to the consumer's desired provider of operator 
services.
    (1) Each pay telephone shall, within six (6) months of the effective 
date of

[[Page 202]]

this paragraph, allow the consumer to use equal access codes to obtain 
access to the consumer's desired provider of operator services.
    (2) All equipment that is technologically capable of identifying the 
dialing of an equal access code followed by any sequence of numbers that 
will result in billing to the originating telephone and that is 
technologically capable of blocking access through such dialing 
sequences without blocking access through other dialing sequences 
involving equal access codes, shall, within six (6) months of the 
effective date of this paragraph or upon installation, whichever is 
sooner, allow the consumer to use equal access codes to obtain access to 
the consumer's desired provider of operator services.
    (3) All equipment or software that is manufactured or imported on or 
after April 17, 1992, and installed by any aggregator shall, immediately 
upon installation by the aggregator, allow the consumer to use equal 
access codes to obtain access to the consumer's desired provider of 
operator services.
    (4) All equipment that can be modified at a cost of no more than 
$15.00 per line to be technologically capable of identifying the dialing 
of an equal access code followed by any sequence of numbers that will 
result in billing to the originating telephone and to be technologically 
capable of blocking access through such dialing sequences without 
blocking access through other dialing sequences involving equal access 
codes, shall, within eighteen (18) months of the effective date of this 
paragraph, allow the consumer to use equal access codes to obtain access 
to the consumer's desired provider of operator services.
    (5) All equipment not included in paragraphs (c)(1), (c)(2), (c)(3), 
or (c)(4) of this section shall, no later than April 17, 1997, allow the 
consumer to use equal access codes to obtain access to the consumer's 
desired provider of operator services.
    (6) This paragraph does not apply to the use by consumers of equal 
access code dialing sequences that result in billing to the originating 
telephone.
    (d) All providers of operator services, except those employing a 
store-and-forward device that serves only consumers at the location of 
the device, shall establish an ``800'' or ``950'' access code number 
within six (6) months of the effective date of this paragraph.
    (e) The requirements of this section shall not apply to CMRS 
aggregators and providers of CMRS operator services.

[56 FR 18523, Apr. 23, 1991, as amended at 56 FR 40799, Aug. 16, 1991; 
57 FR 34260, Aug. 4, 1992; 63 FR 43041, Aug. 11, 1998]



Sec. 64.705  Restrictions on charges related to the provision of operator services.

    (a) A provider of operator services shall:
    (1) Not bill for unanswered telephone calls in areas where equal 
access is available;
    (2) Not knowingly bill for unanswered telephone calls where equal 
access is not available;
    (3) Not engage in call splashing, unless the consumer requests to be 
transferred to another provider of operator services, the consumer is 
informed prior to incurring any charges that the rates for the call may 
not reflect the rates from the actual originating location of the call, 
and the consumer then consents to be transferred;
    (4) Except as provided in paragraph (a)(3) of this section, not bill 
for a call that does not reflect the location of the origination of the 
call; and
    (5) Ensure, by contract or tariff, that each aggregator for which 
such provider is the presubscribed provider of operator services is in 
compliance with the requirements of paragraph (b) of this section.
    (b) An aggregator shall ensure that no charge by the aggregator to 
the consumer for using an ``800'' or ``950'' access code number, or any 
other access code number, is greater than the amount the aggregator 
charges for calls placed using the presubscribed provider of operator 
services.
    (c) The requirements of paragraphs (a)(5) and (b) of this section 
shall not apply to CMRS aggregators and providers of CMRS operator 
services.

[56 FR 18523, Apr. 23, 1991, as amended at 63 FR 43041, Aug. 11, 1998]

[[Page 203]]



Sec. 64.706  Minimum standards for the routing and handling of emergency telephone calls.

    Upon receipt of any emergency telephone call, providers of operator 
services and aggregators shall ensure immediate connection of the call 
to the appropriate emergency service of the reported location of the 
emergency, if known, and, if not known, of the originating location of 
the call.

[61 FR 14981, Apr. 4, 1996]



Sec. 64.707  Public dissemination of information by providers of operator services.

    Providers of operator services shall regularly publish and make 
available at no cost to inquiring consumers written materials that 
describe any recent changes in operator services and in the choices 
available to consumers in that market.

[56 FR 18524, Apr. 23, 1991]



Sec. 64.708  Definitions.

    As used in Secs. 64.703 through 64.707 of this part and Sec. 68.318 
of this chapter (47 CFR 64.703-64.707, 68.318):
    (a) Access code means a sequence of numbers that, when dialed, 
connect the caller to the provider of operator services associated with 
that sequence;
    (b) Aggregator means any person that, in the ordinary course of its 
operations, makes telephones available to the public or to transient 
users of its premises, for interstate telephone calls using a provider 
of operator services;
    (c) Call splashing means the transfer of a telephone call from one 
provider of operator services to another such provider in such a manner 
that the subsequent provider is unable or unwilling to determine the 
location of the origination of the call and, because of such inability 
or unwillingness, is prevented from billing the call on the basis of 
such location;
    (d) CMRS aggregator means an aggregator that, in the ordinary course 
of its operations, makes telephones available to the public or to 
transient users of its premises for interstate telephone calls using a 
provider of CMRS operator services;
    (e) CMRS operator services means operator services provided by means 
of a commercial mobile radio service as defined in section 20.3 of this 
chapter.
    (f) Consumer means a person initiating any interstate telephone call 
using operator services. In collect calling arrangements handled by a 
provider of operator services, both the party on the originating end of 
the call and the party on the terminating end of the call are consumers 
under this definition.
    (g) Equal access has the meaning given that term in Appendix B of 
the Modification of Final Judgment entered by the United States District 
Court on August 24, 1982, in United States v. Western Electric, Civil 
Action No. 82-0192 (D.D.C. 1982), as amended by the Court in its orders 
issued prior to October 17, 1990;
    (h) Equal access code means an access code that allows the public to 
obtain an equal access connection to the carrier associated with that 
code;
    (i) Operator services means any interstate telecommunications 
service initiated from an aggregator location that includes, as a 
component, any automatic or live assistance to a consumer to arrange for 
billing or completion, or both, of an interstate telephone call through 
a method other than:
    (1) Automatic completion with billing to the telephone from which 
the call originated; or
    (2) Completion through an access code used by the consumer, with 
billing to an account previously established with the carrier by the 
consumer;
    (j) Presubscribed provider of operator services means the interstate 
provider of operator services to which the consumer is connected when 
the consumer places a call using a provider of operator services without 
dialing an access code;
    (k) Provider of CMRS operator services means a provider of operator 
services that provides CMRS operator services;
    (l) Provider of operator services means any common carrier that 
provides operator services or any other person determined by the 
Commission to be providing operator services.

[56 FR 18524, Apr. 23, 1991; 56 FR 25721, June 5, 1991, as amended at 61 
FR 14981, Apr. 4, 1996; 63 FR 43041, Aug. 11, 1998]

[[Page 204]]



Sec. 64.709  Informational tariffs.

    (a) Informational tariffs filed pursuant to 47 U.S.C. 226(h)(1)(A) 
shall contain specific rates expressed in dollars and cents for each 
interstate operator service of the carrier and shall also contain 
applicable per call aggregator surcharges or other per call fees, if 
any, collected from consumers by the carrier or any other entity.
    (b) Per call fees, if any, billed on behalf of aggregators or 
others, shall be specified in informational tariffs in dollars and 
cents.
    (c) In order to remove all doubt as to their proper application, all 
informational tariffs must contain clear and explicit explanatory 
statements regarding the rates, i.e., the tariffed price per unit of 
service, and the regulations governing the offering of service in that 
tariff.
    (d) Informational tariffs shall be accompanied by a cover letter, 
addressed to the Secretary of the Commission, explaining the purpose of 
the filing.
    (1) The original of the cover letter shall be submitted to the 
Secretary without attachments, along with FCC Form 159, and the 
appropriate fee to the Mellon Bank, Pittsburgh, Pennsylvania.
    (2) Copies of the cover letter and the attachments shall be 
submitted to the Secretary's Office, the Commission's contractor for 
public records duplication, and the Chief, Tariff and Price Analysis 
Branch, Competitive Pricing Division.
    (e) Any changes to the tariff shall be submitted under a new cover 
letter with a complete copy of the tariff, including changes.
    (1) Changes to a tariff shall be explained in the cover letter but 
need not be symbolized on the tariff pages.
    (2) Revised tariffs shall be filled pursuant to the procedures 
specified in this section.

[63 FR 11617, Mar. 10, 1998; 63 FR 15316, Mar. 31, 1998]



Sec. 64.710  Operator services for prison inmate phones.

    (a) Each provider of inmate operator services shall:
    (1) Identify itself, audibly and distinctly, to the consumer before 
connecting any interstate, domestic, interexchange telephone call and 
disclose immediately thereafter how the consumer may obtain rate 
quotations, by dialing no more than two digits or remaining on the line, 
for the first minute of the call and for additional minutes, before 
providing further oral advice to the consumer how to proceed to make the 
call;
    (2) Permit the consumer to terminate the telephone call at no charge 
before the call is connected; and
    (3) Disclose immediately to the consumer, upon request and at no 
charge to the consumer--
    (i) The methods by which its rates or charges for the call will be 
collected; and
    (ii) The methods by which complaints concerning such rates, charges 
or collection practices will be resolved.
    (b) As used in this subpart:
    (1) Consumer means the party to be billed for any interstate, 
domestic, interexchange call from an inmate telephone;
    (2) Inmate telephone means a telephone instrument set aside by 
authorities of a prison or other correctional institution for use by 
inmates.
    (3) Inmate operator services means any interstate telecommunications 
service initiated from an inmate telephone that includes, as a 
component, any automatic or live assistance to a consumer to arrange for 
billing or completion, or both, of an interstate telephone call through 
a method other than:
    (i) Automatic completion with billing to the telephone from which 
the call originated; or
    (ii) Completion through an access code used by the consumer, with 
billing to an account previously established with the carrier by the 
consumer;
    (4) Provider of inmate operator services means any common carrier 
that provides outbound interstate, domestic, interexchange operator 
services from inmate telephones.

[63 FR 11617, Mar. 10, 1998]

    Effective Date Note:  At 63 FR 11617, Mar. 10, 1998, Sec. 64.710 was 
added, effective Oct. 1, 1999.

[[Page 205]]



  Subpart H--Extension of Unsecured Credit for Interstate and Foreign 
        Communications Services to Candidates for Federal Office

    Authority: Secs. 4, 201, 202, 203, 218, 219, 48 Stat. 1066, 1070, 
1077; 47 U.S.C. 154, 201, 202, 203, 218, 219; sec. 401, 86 Stat. 19; 2 
U.S.C. 451.

    Source: 37 FR 9393, May 10, 1972, unless otherwise noted.



Sec. 64.801  Purpose.

    Pursuant to section 401 of the Federal Election Campaign Act of 
1971, Public Law 92-225, these rules prescribe the general terms and 
conditions for the extension of unsecured credit by a communication 
common carrier to a candidate or person on behalf of such candidate for 
Federal office.



Sec. 64.802  Applicability.

    These rules shall apply to each communication common carrier subject 
to the whole or part of the Communications Act of 1934, as amended.



Sec. 64.803  Definitions.

    For the purposes of this subpart:
    (a) Candidate means an individual who seeks nomination for election, 
or election, to Federal office, whether or not such individual is 
elected, and an individual shall be deemed to seek nomination for 
election, or election, if he has (1) taken the action necessary under 
the law of a State to qualify himself for nomination for election, or 
election, to Federal office, or (2) received contributions or made 
expenditures, or has given his consent for any other person to receive 
contributions or make expenditures, with a view to bringing about his 
nomination for election, or election, to such office.
    (b) Election means (1) a general, special, primary, or runoff 
election, (2) a convention or caucus of a political party held to 
nominate a candidate, (3) a primary election held for the selection of 
delegates to a national nominating convention of a political party, and 
(4) a primary election held for the expression of a preference for the 
nomination of persons for election to the office of President.
    (c) Federal office means the office of President or Vice President 
of the United States: or of Senator or Representative in, or Delegate or 
Resident Commissioner to, the Congress of the United States.
    (d) Person means an individual, partnership, committee, association, 
corporation, labor organization, and any other organization or group of 
persons.
    (e) Unsecured credit means the furnishing of service without 
maintaining on a continuing basis advance payment, deposit, or other 
security, that is designed to assure payment of the estimated amount of 
service for each future 2 months period, with revised estimates to be 
made on at least a monthly basis.



Sec. 64.804  Rules governing the extension of unsecured credit to candidates or persons on behalf of such candidates for Federal office for interstate and 
          foreign common carrier communication services.

    (a) There is no obligation upon a carrier to extend unsecured credit 
for interstate and foreign communication services to a candidate or 
person on behalf of such candidate for Federal office. However, if the 
carrier chooses to extend such unsecured credit, it shall comply with 
the requirements set forth in paragraphs (b) through (g) of this 
section.
    (b) If a carrier decides to extend unsecured credit to any candidate 
for Federal office or any person on behalf of such candidate, then 
unsecured credit shall be extended on substantially equal terms and 
conditions to all candidates and all persons on behalf of all candidates 
for the same office, with due regard for differences in the estimated 
quantity of service to be furnished each such candidate or person.
    (c) Before extending unsecured credit, a carrier shall obtain a 
signed written application for service which shall identify the 
applicant and the candidate and state whether or not the candidate 
assumes responsibility for the charges, and which shall also expressly 
state as follows:
    (1) That service is being requested by the applicant or applicants 
and that the person or persons making the application will be 
individually, jointly

[[Page 206]]

and severally liable for the payment of all charges; and
    (2) That the applicant(s) understands that the carrier will (under 
the provisions of paragraph (d) of this section) discontinue service 
upon written notice if any amount due is not paid upon demand.
    (d) If charges for services rendered are not paid to the carrier 
within 15 days from rendition of a bill therefor, the carrier shall 
forthwith at the end of the 15-day period serve written notice on the 
applicant of intent to discontinue service within 7 days of date of such 
notice for nonpayment and shall discontinue service at the end of the 7-
day period unless all such sums due are paid in full within such 7-day 
period.
    (e) Each carrier shall take appropriate action at law to collect any 
unpaid balance on an account for interstate and foreign communication 
services rendered to a candidate or person on behalf of such candidate 
prior to the expiration of the statute of limitations under section 
415(a) of the Communications Act of 1934, as amended.
    (f) The records of each account, involving the extension by a 
carrier of unsecured credit to a candidate or person on behalf of such 
candidate for common carrier communications services shall be maintained 
by the carrier so as to show separately, for interstate and foreign 
communication services all charges, credits, adjustments, and security, 
if any, and balance receivable.
    (g) On or before January 31, 1973, and on corresponding dates of 
each year thereafter, each carrier which had operating revenues in the 
preceding year in excess of $1 million shall file with the Commission a 
report by account of any amount due and unpaid, as of the end of the 
month prior to the reporting date, for interstate and foreign 
communications services to a candidate or person on behalf of such 
candidate when such amount results from the extension of unsecured 
credit. Each report shall include the following information:
    (1) Name of candidate.
    (2) Name and address of person or persons applying for service.
    (3) Balance due carrier.
    (4) Reason for nonpayment.
    (5) Payment arrangements, if any.
    (6) Date service discontinued.
    (7) Date, nature and status of any action taken at law in compliance 
with paragraph (e) of this section.

[37 FR 9393, May 10, 1972, as amended at 62 FR 5166, Feb. 4, 1997]



                     Subpart I--Allocation of Costs



Sec. 64.901  Allocation of costs.

    (a) Carriers required to separate their regulated costs from 
nonregulated costs shall use the attributable cost method of cost 
allocation for such purpose.
    (b) In assigning or allocating costs to regulated and nonregulated 
activities, carriers shall follow the principles described herein.
    (1) Tariffed services provided to a nonregulated activity will be 
charged to the nonregulated activity at the tariffed rates and credited 
to the regulated revenue account for that service.
    (2) Costs shall be directly assigned to either regulated or 
nonregulated activities whenever possible.
    (3) Costs which cannot be directly assigned to either regulated or 
nonregulated activities will be described as common costs. Common costs 
shall be grouped into homogeneous cost categories designed to facilitate 
the proper allocation of costs between a carrier's regulated and 
nonregulated activities. Each cost category shall be allocated between 
regulated and nonregulated activities in accordance with the following 
hierarchy:
    (i) Whenever possible, common cost categories are to be allocated 
based upon direct analysis of the origin of the cost themselves.
    (ii) When direct analysis is not possible, common cost categories 
shall be allocated based upon an indirect, cost-causative linkage to 
another cost category (or group of cost categories) for which a direct 
assignment or allocation is available.
    (iii) When neither direct nor indirect measures of cost allocation 
can be found, the cost category shall be allocated based upon a general 
allocator computed by using the ratio of all expenses directly assigned 
or attributed to regulated and nonregulated activities.

[[Page 207]]

    (4) The allocation of central office equipment and outside plant 
investment costs between regulated and nonregulated activities shall be 
based upon the relative regulated and nonregulated usage of the 
investment during the calendar year when nonregulated usage is greatest 
in comparison to regulated usage during the three calendar years 
beginning with the calendar year during which the investment usage 
forecast is filed.
    (c) A telecommunications carrier may not use services that are not 
competitive to subsidize services subject to competition. Services 
included in the definition of universal service shall bear no more than 
a reasonable share of the joint and common costs of facilities used to 
provide those services.

[52 FR 6560, Mar. 4, 1987, as amended at 52 FR 39534, Oct. 22, 1987; 54 
FR 49762, Dec. 1, 1989; 62 FR 45588, Aug. 28, 1997]



Sec. 64.902  Transactions with affiliates.

    Except for carriers which employ average schedules in lieu of 
determining their costs, all carriers subject to Sec. 64.901 are also 
subject to the provisions of Sec. 32.27 of this chapter concerning 
transactions with affiliates.

[55 FR 30461, July 26, 1990]



Sec. 64.903  Cost allocation manuals.

    (a) Each local exchange carrier with annual operating revenues that 
equal or exceed the indexed revenue threshold, as defined in Sec. 32.900 
of this chapter, shall file with the Commission within 90 days after 
publication of that threshold in the Federal Register, a manual 
containing the following information regarding its allocation of costs 
between regulated and unregulated activities:
    (1) A description of each of the carrier's nonregulated activities;
    (2) A list of all the activities to which the carrier now accords 
incidental accounting treatment and the justification therefor;
    (3) A chart showing all of the carrier's corporate affiliates;
    (4) A statement identifying each affiliate that engages in or will 
engage in transactions with the carrier and describing the nature, terms 
and frequency of each transaction;
    (5) A cost apportionment table showing, for each account containing 
costs incurred in providing regulated services, the cost pools with that 
account, the procedures used to place costs into each cost pool, and the 
method used to apportion the costs within each cost pool between 
regulated and nonregulated activities; and
    (6) A description of the time reporting procedures that the carrier 
uses, including the methods or studies designed to measure and allocate 
non-productive time.
    (b) Each carrier shall ensure that the information contained in its 
cost allocation manual is accurate. Carriers must update their cost 
allocation manuals at least annually, except that changes to the cost 
apportionment table and to the description of time reporting procedures 
must be filed at least 15 days before the carrier plans to implement the 
changes. Annual cost allocation manual updates shall be filed on or 
before the last working day of each calendar year.Proposed changes in 
the description of time reporting procedures, the statement concerning 
affiliate transactions, and the cost apportionment table must be 
accompanied by a statement quantifying the impact of each change on 
regulated operations. Changes in the description of time reporting 
procedures and the statement concerning affiliate transactions must be 
quantified in $100,000 increments at the account level. Changes in cost 
apportionment tables must be quantified in $100,000 increments at the 
cost pool level. The Chief, Common Carrier Bureau may suspend any such 
charges for a period not to exceed 180 days, and may thereafter allow 
the change to become effective or prescribe a different procedure.
    (c) The Commission may by order require any other communications 
common carrier to file and maintain a cost allocation manual as provided 
in this section.

[57 FR 4375, Feb. 5, 1992, as amended at 59 FR 46358, Sept. 8, 1994; 61 
FR 50246, Sept. 25, 1996; 62 FR 39779, July 24, 1997]



Sec. 64.904  Independent audits.

    (a) Each local exchange carrier required to file a cost allocation 
manual, by virtue of having annual operating

[[Page 208]]

revenues that equal or exceed the indexed revenue threshold for a given 
year or by order of the Commission, shall have an audit performed by an 
independent auditor on an annual basis, with the initial audit performed 
in the calendar year after the carrier is first required to file a cost 
allocation manual. The audit shall provide a positive opinion on whether 
the applicable data shown in the carrier's annual report required by 
Sec. 43.21(e)(2) of this chapter present fairly, in all material 
respects, the information of the carrier required to be set forth 
therein in accordance with the carrier's cost allocation manual, the 
Commission's Joint Cost orders issued in conjunction with CC Docket No. 
86-111 and the Commission's rules and regulations including Secs. 32.23 
and 32.27 of this chapter, 64.901, and 64.903 in force as of the date of 
the auditor's report. The audit shall be conducted in accordance with 
generally accepted auditing standards, except as otherwise directed by 
the Chief, Common Carrier Bureau.
    (b) The report of the independent auditor shall be filed at the time 
that the local exchange carrier files the annual report required by 
Sec. 43.21(f)(2) of this chapter.

[57 FR 4375, Feb. 5, 1992, as amended at 62 FR 39779, July 24, 1997]



  Subpart J--International Settlements Policy and Modification Requests



Sec. 64.1001  International settlements policy and modification requests.

    (a) The procedures set forth in this rule are subject to Commission 
policies on international operating agreements in CC Dkt. No. 90-337.
    (b) If the accounting rate referred to in Sec. 43.51(e)(1) of this 
chapter is lower than the accounting rate in effect in the operating 
agreement of another carrier providing service to or from the same 
foreign point, and there is no modification in the other terms and 
conditions referred to in Sec. 43.51(e)(1) of this chapter, the carrier 
must file a notification letter under paragraph (e) of this section.
    (c) If the amendment referred to in Sec. 43.51(e)(2) of this chapter 
is a simple reduction in the accounting rate, and there is no 
modification in the other terms and conditions referred to in 
Sec. 43.51(e)(2) of this chapter, the carrier must file a notification 
letter under paragraph (e) of this section.
    (d) If the operating agreement or amendment referred to in 
Secs. 43.51(e)(1) and (e)(2) of this chapter is not subject to 
notification under paragraphs (b) and (c) of this section, the carrier 
must file a modification request under paragraph (f) of this section.
    (e) A notification letter must contain the following information:
    (1) The applicable international service;
    (2) The name of the foreign telecommunications administration;
    (3) The present accounting rate (including any surcharges);
    (4) The new accounting rate (including any surcharges);
    (5) The effective date (see paragraph (h) of this section);
    (6) A statement that the accounting rate will be divided 50-50; and
    (7) A statement that there has been no other modification in the 
operating agreement with the foreign correspondent regarding the 
exchange of services, interchange or routing of traffic and matters 
concerning rates, accounting rates, division of tolls, allocation of 
return traffic, or the basis of settlement of traffic balances.
    (f) A modification request must contain the following information:
    (1) The applicable international service;
    (2) The name of the foreign telecommunications administration;
    (3) The present accounting rate (including any surcharges);
    (4) The new accounting rate (including any surcharges);
    (5) The effective date;
    (6) The division of the accounting rate;
    (7) An explanation of the proposed modification(s) in the operating 
agreement with the foreign correspondent.
    (g) Notification letters and modification requests must contain 
notarized statements that the filing carrier:
    (1) Has not bargained for, nor has knowledge of, exclusive 
availability of the new accounting rate;

[[Page 209]]

    (2) Has not bargained for, nor has any indication that it will 
receive, more than its proportionate share of return traffic; and
    (3) Has informed the foreign administration that U.S. policy 
requires that competing U.S. carriers have access to accounting rates 
negotiated by the filing carrier with the foreign administration on a 
nondiscriminatory basis.
    (h) The operating agreement or amendment subject to a notification 
letter is effective on the date the carrier files the notification 
letter; provided that the notification letter specifies an effective 
date for the modification that is later than the filing date; provided 
further that, if the purpose of the amendment is to match an accounting 
rate reduction specified in a notification letter previously filed by 
another carrier for the same point, the filing carrier may specify in 
the amendment and notification letter a retroactive effective date 
identical to that on which the previously-filed reduction became 
effective.
    (i) If a carrier files a notification letter for an operating 
agreement or amendment that should have been filed as a modification 
request, the Bureau will return the notification letter to the filing 
carrier and the Bureau will notify the carrier that, before it can 
implement the proposed modification, it must file a modification request 
under paragraph (f) of this section.
    (j) An operating agreement or amendment filed under a modification 
request cannot become effective until the modification request has been 
granted under paragraph (l) of this section.
    (k) On the same day the notification letter or modification request 
is filed, carriers must serve a copy of the notification letter or 
modification request on all carriers providing the same or similar 
service to the foreign administration identified in the filing.
    (l) All modification requests will be subject to a twenty-one (21) 
day pleading period for objections or comments, commencing the date 
after the request is filed. If the modification request is not complete 
when filed, the carrier will be notified that additional information is 
to be submitted, and a new 21 day pleading period will begin when the 
additional information is filed. The modification request will be deemed 
granted as of the twenty-second (22nd) day without any formal staff 
action being taken: provided
    (1) No objections have been filed, and
    (2) The International Bureau has not notified the carrier that grant 
of the modification request may not serve the public interest and that 
implementation of the proposed modification must await formal staff 
action on the modification request. If objections or comments are filed, 
the carrier requesting the modification request may file a response 
pursuant to Sec. 1.45 of this chapter. Modification requests that are 
formally opposed must await formal action by the International Bureau 
before the proposed modification can be implemented.

[56 FR 25372, June 4, 1991, as amended at 58 FR 4354, Jan. 14, 1993; 60 
FR 5333, Jan. 27, 1995; 62 FR 5541, Feb. 6, 1997; 62 FR 64758, Dec. 9, 
1997]



Sec. 64.1002  Alternative settlement arrangements.

    (a) A communications common carrier engaged in providing switched 
voice, telex, telegraph, or packet switched service between the United 
States and a foreign point may seek approval to enter into an operating 
agreement with a foreign telecommunications administration containing an 
alternative settlement arrangement that does not comply with the 
requirements of Sec. 43.51(e)(1) and Sec. 63.14 of this chapter and 
Sec. 64.1001 by filing a petition for declaratory ruling in compliance 
with the requirements of this section.
    (b) A petition for declaratory ruling must contain the following:
    (1) Information to demonstrate that:
    (i) The alternative settlement arrangement is on a route between the 
United States and a World Trade Organization Member; or
    (ii) For an alternative settlement arrangement on a route between 
the United States and a non-World Trade Organization Member:
    (A) The Commission has made a previous determination that the 
effective competitive opportunities test in Sec. 63.18(h)(5)(iii) of 
this chapter has been satisfied on the route covered by the alternative 
settlement arrangement; or

[[Page 210]]

    (B) The effective competitive opportunities test in 
Sec. 63.18(h)(5)(iii) of this chapter is satisfied on the route covered 
by the alternative settlement arrangement; or
    (iii) The alternative settlement arrangement is otherwise in the 
public interest.
    (2) A certification as to whether the alternative settlement 
arrangement affects more than 25 percent of the outbound traffic or 25 
percent of the inbound traffic on the route to which the alternative 
settlement arrangement applies.
    (3) A certification as to whether the parties to the alternative 
settlement arrangement are affiliated, as defined in Sec. 63.18(h)(1)(i) 
of this chapter, or involved in a non-equity joint venture affecting the 
provision of basic services on the route to which the alternative 
settlement arrangement applies.
    (4) A copy of the alternative settlement arrangement if it affects 
more than 25 percent of the outbound traffic or 25 percent of the 
inbound traffic on the route to which the alternative settlement 
arrangement applies, or if it is between parties that are affiliated, as 
defined in Sec. 63.18(h)(1)(i) of this chapter, or that are involved in 
a non-equity joint venture affecting the provision of basic services on 
the route to which the alternative settlement arrangement applies.
    (5) A summary of the terms and conditions of the alternative 
settlement arrangement if it does not come within the scope of paragraph 
(b)(4) of this section. However, upon request by the International 
Bureau, a full copy of such alternative settlement arrangement must be 
forwarded promptly to the International Bureau.
    (c) If the petition for declaratory ruling contains a certification 
under paragraph (b)(1)(i) of this section that the proposed alternative 
settlement arrangement is for service on a route between the United 
States and a World Trade Organization Member, a party may oppose the 
petition under paragraph (f) of this section with a showing that the 
participating carrier on the foreign end of the route does not have 
multiple (more than one) international facilities-based competitors. In 
such a case, the petitioning party may make a showing under paragraph 
(b)(1)(iii) of this section, pursuant to paragraph (g) of this section.
    (d) An alternative settlement arrangement filed for approval under 
this section cannot become effective until the petition for declaratory 
ruling required by paragraph (a) of this section has been granted under 
paragraph (f) of this section.
    (e) On the same day the petition for declaratory ruling has been 
filed, the filing carrier must serve a copy of the petition on all 
carriers providing the same or similar service with the foreign carrier 
identified in the petition.
    (f) All petitions for declaratory ruling shall be subject to a 21-
day pleading period for objections or comments, commencing the day after 
the date of public notice listing the petition as accepted for filing. A 
petition for declaratory ruling shall be deemed granted as of the 28th 
day without any formal staff action provided that:
    (1) The petition is not formally opposed by a pleading meeting the 
following criteria:
    (i) The caption and text of the pleading make it unmistakably clear 
that the pleading is intended to be a formal opposition;
    (ii) The pleading is served upon the other parties to the 
proceeding; and
    (iii) the pleading is filed within the time period prescribed; or
    (2) The International Bureau has not notified the filing carrier 
that grant of the petition may not serve the public interest and that 
implementation of the proposed alternative settlement arrangement must 
await formal staff action on the petition.
    (g) If objections or comments are filed, the petitioning carrier may 
file a response pursuant to Sec. 1.45 of this chapter. Petitions that 
are formally opposed must await formal action by the International 
Bureau before the proposed alternative settlement arrangement may be 
implemented.

[62 FR 64758, Dec. 9, 1997]

[[Page 211]]



                Subpart K--Changing Long Distance Service



Sec. 64.1100  Verification of orders for long distance service generated by telemarketing.

    No IXC shall submit to a LEC a primary interexchange carrier (PIC) 
change order generated by telemarketing unless and until the order has 
first been confirmed in accordance with the following procedures:
    (a) The IXC has obtained the customer's written authorization in a 
form that meets the requirements of Sec. 64.1150; or
    (b) The IXC has obtained the customer's electronic authorization, 
placed from the telephone number(s) on which the PIC is to be changed, 
to submit the order that confirms the information described in paragraph 
(a) of this section to confirm the authorization. IXCs electing to 
confirm sales electronically shall establish one or more toll-free 
telephone numbers exclusively for that purpose. Calls to the number(s) 
will connect a customer to a voice response unit, or similar mechanism, 
that records the required information regarding the PIC change, 
including automatically recording the originating ANI; or
    (c) An appropriately qualified and independent third party operating 
in a location physically separate from the telemarketing representative 
has obtained the customer's oral authorization to submit the PIC change 
order that confirms and includes appropriate verification data (e.g., 
the customer's date of birth or social security number); or
    (d) Within three business days of the customer's request for a PIC 
change, the IXC must send each new customer an information package by 
first class mail containing at least the following information 
concerning the requested change:
    (1) The information is being sent to confirm a telemarketing order 
placed by the customer within the previous week;
    (2) The name of the customer's current IXC;
    (3) The name of the newly requested IXC;
    (4) A description of any terms, conditions, or charges that will be 
incurred;
    (5) The name of the person ordering the change;
    (6) The name, address, and telephone number of both the customer and 
the soliciting IXC;
    (7) A postpaid postcard which the customer can use to deny, cancel 
or confirm a service order;
    (8) A clear statement that if the customer does not return the 
postcard the customer's long distance service will be switched within 14 
days after the date the information package was mailed to [name of 
soliciting carrier];
    (9) The name, address, and telephone number of a contact point at 
the Commission for consumer complaints; and
    (10) IXCs must wait 14 days after the form is mailed to customers 
before submitting their PIC change orders to LECs. If customers have 
cancelled their orders during the waiting period, IXCs, of course, 
cannot submit the customer's orders to LECs.

[57 FR 4740, Feb. 7, 1992, as amended at 60 FR 35853, July 12, 1995; 62 
FR 43481, Aug. 14, 1997; 62 FR 48787, Sept. 17, 1997]



Sec. 64.1150  Letter of agency form and content.

    (a) An interchange carrier shall obtain any necessary written 
authorization from a subscriber for a primary interexchange carrier 
change by using a letter of agency as specified in this section. Any 
letter of agency that does not conform with this section is invalid.
    (b) The letter of agency shall be a separate document (an easily 
separable document containing only the authorizing language described in 
paragraph (e) of this section) whose sole purpose is to authorize an 
interexchange carrier to initiate a primary interexchange carrier 
change. The letter of agency must be signed and dated by the subscriber 
to the telephone line(s) requesting the primary interexchange carrier 
change.
    (c) The letter of agency shall not be combined with inducements of 
any kind on the same document.
    (d) Notwithstanding paragraphs (b) and (c) of this section, the 
letter of agency may be combined with checks that contain only the 
required letter of

[[Page 212]]

agency language prescribed in paragraph (e) of this section and the 
necessary information to make the check a negotiable instrument. The 
letter of agency check shall not contain any promotional language or 
material. The letter of agency check shall contain, in easily readable, 
bold-face type on the front of the check, a notice that the consumer is 
authorizing a primary interexchange carrier change by signing the check. 
The letter of agency language also shall be placed near the signature 
line on the back of the check.
    (e) At a minimum, the letter of agency must be printed with a type 
of sufficient size and readable type to be clearly legible and must 
contain clear and unambiguous language that confirms:
    (1) The subscriber's billing name and address and each telephone 
number to be covered by the primary interexchange carrier change order;
    (2) The decision to change the primary interexchange carrier from 
the current interexchange carrier to the prospective interexchange 
carrier;
    (3) That the subscriber designates the interexchange carrier to act 
as the subscriber's agent for the primary interexchange carrier change;
    (4) That the subscriber understands that only one interexchange 
carrier may be designated as the subscriber's interstate or interLATA 
primary interexchange carrier for any one telephone number. To the 
extent that a jurisdiction allows the selection of additional primary 
interexchange carriers (e.g., for intrastate, intraLATA or international 
calling), the letter of agency must contain separate statements 
regarding those choices. Any carrier designated as a primary 
interexchange carrier must be the carrier directly setting the rates for 
the subscriber. One interexchange carrier can be both a subscriber's 
interstate or interLATA primary interexchange carrier and a subscriber's 
intrastate or intraLATA primary interexchange carrier; and
    (5) That the subscriber understands that any primary interexchange 
carrier selection the subscriber chooses may involve a charge to the 
subscriber for changing the subscriber's primary interexchange carrier.
    (f) Letters of agency shall not suggest or require that a subscriber 
take some action in order to retain the subscriber's current 
interexchange carrier.
    (g) If any portion of aletter of agency is translated into another 
language, then all portions of the letter of agency must be translated 
into that language. Every letter of agency must be translated into the 
same language as any promotional materials, oral descriptions or 
instructions provided with the letter of agency.

[60 FR 35853, July 12, 1995, as amended at 62 FR 43481, Aug. 14, 1997]



            Subpart L--Restrictions on Telephone Solicitation



Sec. 64.1200  Delivery restrictions.

    (a) No person may:
    (1) Initiate any telephone call (other than a call made for 
emergency purposes or made with the prior express consent of the called 
party) using an automatic telephone dialing system or an artificial or 
prerecorded voice,
    (i) To any emergency telephone line, including any 911 line and any 
emergency line of a hospital, medical physician or service office, 
health care facility, poison control center, or fire protection or law 
enforcement agency;
    (ii) To the telephone line of any guest room or patient room of a 
hospital, health care facility, elderly home, or similar establishment; 
or
    (iii) To any telephone number assigned to a paging service, cellular 
telephone service, specialized mobile radio service, or other radio 
common carrier service, or any service for which the called party is 
charged for the call;
    (2) Initiate any telephone call to any residential telephone line 
using an artificial or prerecorded voice to deliver a message without 
the prior express consent of the called party, unless the call is 
initiated for emergency purposes or is exempted by Sec. 64.1200(c) of 
this section.
    (3) Use a telephone facsimile machine, computer, or other device to 
send an unsolicited advertisement to a telephone facsimile machine.
    (4) Use an automatic telephone dialing system in such a way that two 
or more telephone lines of a multi-line business are engaged 
simultaneously.

[[Page 213]]

    (b) For the purpose of Sec. 64.1200(a) of this section, the term 
emergency purposes means calls made necessary in any situation affecting 
the health and safety of consumers.
    (c) The term telephone call in Sec. 64.1200(a)(2) of this section 
shall not include a call or message by, or on behalf of, a caller:
    (1) That is not made for a commercial purpose,
    (2) That is made for a commercial purpose but does not include the 
transmission of any unsolicited advertisement,
    (3) To any person with whom the caller has an established business 
relationship at the time the call is made, or
    (4) Which is a tax-exempt nonprofit organization.
    (d) All artificial or prerecorded telephone messages delivered by an 
automatic telephone dialing system shall:
    (1) At the beginning of the message, state clearly the identity of 
the business, individual, or other entity initiating the call, and
    (2) During or after the message, state clearly the telephone number 
(other than that of the autodialer or prerecorded message player which 
placed the call) or address of such business, other entity, or 
individual.
    (e) No person or entity shall initiate any telephone solicitation to 
a residential telephone subscriber:
    (1) Before the hour of 8 a.m. or after 9 p.m. (local time at the 
called party's location), and
    (2) Unless such person or entity has instituted procedures for 
maintaining a list of persons who do not wish to receive telephone 
solicitations made by or on behalf of that person or entity. The 
procedures instituted must meet the following minimum standards:
    (i) Written policy. Persons or entities making telephone 
solicitations must have a written policy, available upon demand, for 
maintaining a do-not-call list.
    (ii) Training of personnel engaged in telephone solicitation. 
Personnel engaged in any aspect of telephone solicitation must be 
informed and trained in the existence and use of the do-not-call list.
    (iii) Recording, disclosure of do-not-call requests. If a person or 
entity making a telephone solicitation (or on whose behalf a 
solicitation is made) receives a request from a residential telephone 
subscriber not to receive calls from that person or entity, the person 
or entity must record the request and place the subscriber's name and 
telephone number on the do-not-call list at the time the request is 
made. If such requests are recorded or maintained by a party other than 
the person or entity on whose behalf the solicitation is made, the 
person or entity on whose behalf the solicitation is made will be liable 
for any failures to honor the do-not-call request. In order to protect 
the consumer's privacy, persons or entities must obtain a consumer's 
prior express consent to share or forward the consumer's request not to 
be called to a party other than the person or entity on whose behalf a 
solicitation is made or an affiliated entity.
    (iv) Identification of telephone solicitor. A person or entity 
making a telephone solicitation must provide the called party with the 
name of the individual caller, the name of the person or entity on whose 
behalf the call is being made, and a telephone number or address at 
which the person or entity may be contacted. If a person or entity makes 
a solicitation using an artificial or prerecorded voice message 
transmitted by an autodialer, the person or entity must provide a 
telephone number other than that of the autodialer or prerecorded 
message player which placed the call. The telephone number provided may 
not be a 900 number or any other number for which charges exceed local 
or long distance transmission charges.
    (v) Affiliated persons or entities. In the absence of a specific 
request by the subscriber to the contrary, a residential subscriber's 
do-not-call request shall apply to the particular business entity making 
the call (or on whose behalf a call is made), and will not apply to 
affiliated entities unless the consumer reasonably would expect them to 
be included given the identification of the caller and the product being 
advertised.

[[Page 214]]

    (vi) Maintenance of do-not-call lists. A person or entity making 
telephone solicitations must maintain a record of a caller's request not 
to receive future telephone solicitations. A do not call request must be 
honored for 10 years from the time the request is made.
    (f) As used in this section:
    (1) The terms automatic telephone dialing system and autodialer mean 
equipment which has the capacity to store or produce telephone numbers 
to be called using a random or sequential number generator and to dial 
such numbers.
    (2) The term telephone facsimile machine means equipment which has 
the capacity to transcribe text or images, or both, from paper into an 
electronic signal and to transmit that signal over a regular telephone 
line, or to transcribe text or images (or both) from an electronic 
signal received over a regular telephone line onto paper.
    (3) The term telephone solicitation means the initiation of a 
telephone call or message for the purpose of encouraging the purchase or 
rental of, or investment in, property, goods, or services, which is 
transmitted to any person, but such term does not include a call or 
message:
    (i) To any person with that person's prior express invitation or 
permission;
    (ii) To any person with whom the caller has an established business 
relationship; or
    (iii) By or on behalf of a tax-exempt nonprofit organization.
    (4) The term established business relationship means a prior or 
existing relationship formed by a voluntary two-way communication 
between a person or entity and a residential subscriber with or without 
an exchange of consideration, on the basis of an inquiry, application, 
purchase or transaction by the residential subscriber regarding products 
or services offered by such person or entity, which relationship has not 
been previously terminated by either party.
    (5) The term unsolicited advertisement means any material 
advertising the commercial availability or quality of any property, 
goods, or services which is transmitted to any person without that 
person's prior express invitation or permission.

[57 FR 48335, Oct. 23, 1992; 57 FR 53293, Nov. 9, 1992, as amended at 60 
FR 42069, Aug. 15, 1995]



Sec. 64.1201  Restrictions on billing name and address disclosure.

    (a) As used in this section:
    (1) The term billing name and address means the name and address 
provided to a local exchange company by each of its local exchange 
customers to which the local exchange company directs bills for its 
services.
    (2) The term ``telecommunications service provider'' means 
interexchange carriers, operator service providers, enhanced service 
providers, and any other provider of interstate telecommunications 
services.
    (3) The term authorized billing agent means a third party hired by a 
telecommunications service provider to perform billing and collection 
services for the telecommunications service provider.
    (4) The term bulk basis means billing name and address information 
for all the local exchange service subscribers of a local exchange 
carrier.
    (5) The term LEC joint use card means a calling card bearing an 
account number assigned by a local exchange carrier, used for the 
services of the local exchange carrier and a designated interexchange 
carrier, and validated by access to data maintained by the local 
exchange carrier.
    (b) No local exchange carrier providing billing name and address 
shall disclose billing name and address information to any party other 
than a telecommunications service provider or an authorized billing and 
collection agent of a telecommunications service provider.
    (c)(1) No telecommunications service provider or authorized billing 
and collection agent of a telecommunications service provider shall use 
billing name and address information for any purpose other than the 
following:
    (i) Billing customers for using telecommunications services of that 
service provider and collecting amounts due;
    (ii) Any purpose associated with the ``equal access'' requirement of 
United

[[Page 215]]

States v. AT&T 552 F.Supp. 131 (D.D.C. 1982); and
    (iii) Verification of service orders of new customers, 
identification of customers who have moved to a new address, fraud 
prevention, and similar nonmarketing purposes.
    (2) In no case shall any telecommunications service provider or 
authorized billing and collection agent of a telecommunications service 
provider disclose the billing name and address information of any 
subscriber to any third party, except that a telecommunications service 
provider may disclose billing name and address information to its 
authorized billing and collection agent.
    (d) [Reserved]
    (e)(1) All local exchange carriers providing billing name and 
address information shall notify their subscribers that:
    (i) The subscriber's billing name and address will be disclosed, 
pursuant to Policies and Rules Concerning Local Exchange Carrier 
Validation and Billing Information for Joint Use Calling Cards, CC 
Docket No. 91-115, FCC 93-254, adopted May 13, 1993, whenever the 
subscriber uses a LEC joint use card to pay for services obtained from 
the telecommunications service provider, and
    (ii) The subscriber's billing name and address will be disclosed, 
pursuant to Policies and Rules Concerning Local Exchange Carrier 
Validation and Billing Information for Joint Use Calling Cards, CC 
Docket No. 91-115, FCC 93-254, adopted May 13, 1993, whenever the 
subscriber accepts a third party or collect call to a telephone station 
provided by the LEC to the subscriber.
    (2) In addition to the notification specified in paragraph (e)(1) of 
this section, all local exchange carriers providing billing name and 
address information shall notify their subscribers with unlisted or 
nonpublished telephone numbers that:
    (i) Customers have a right to request that their BNA not be 
disclosed, and that customers may prevent BNA disclosure for third party 
and collect calls as well as calling card calls;
    (ii) LECs will presume that unlisted and nonpublished end users 
consent to disclosure and use of their BNA if customers do not 
affirmatively request that their BNA not be disclosed; and
    (iii) The presumption in favor of consent for disclosure will begin 
30 days after customers receive notice.
    (3) No local exchange carrier shall disclose the billing name and 
address information associated with any calling card call made by any 
subscriber who has affirmatively withheld consent for disclosure of BNA 
information, or for any third party or collect call charged to any 
subscriber who has affirmatively withheld consent for disclosure of BNA 
information.

[53 FR 36145, July 6, 1993, as amended at 58 FR 65671, Dec. 16, 1993; 61 
FR 8880, Mar. 6, 1996]



                Subpart M--Provision of Payphone Service



Sec. 64.1300  Payphone compensation obligation.

    (a) Except as provided herein, every carrier to whom a completed 
call from a payphone is routed shall compensate the payphone service 
provider for the call at a rate agreed upon by the parties by contract.
    (b) The compensation obligation set forth herein shall not apply to 
calls to emergency numbers, calls by hearing disabled persons to a 
telecommunications relay service or local calls for which the caller has 
made the required coin deposit.
    (c) In the absence of an agreement as required by paragraph (a) of 
this section, the carrier is obligated to compensate the payphone 
service provider at a per-call rate equal to its local coin rate less 
$0.066 at the payphone in question.
    (d) For the initial two-year period during which carriers are 
required to pay per-call compensation, in the absence of an agreement as 
required by paragraph (a) of this section, the carrier is obligated to 
compensate the payphone service provider at a per-call rate of $0.284. 
After this initial two-year period of per-call compensation, paragraph 
(c) of this section will apply.

[61 FR 52324, Oct. 7, 1996, as amended at 62 FR 58686, Oct. 30, 1997]

[[Page 216]]



Sec. 64.1310  Payphone compensation payment procedures.

    (a) It is the responsibility of each carrier to whom a compensable 
call from a payphone is routed to track, or arrange for the tracking of, 
each such call so that it may accurately compute the compensation 
required by Section 64.1300(a).
    (b) Carriers and payphone service providers shall establish 
arrangements for the billing and collection of compensation for calls 
subject to Section 64.1300(a).
    (c) Local Exchange Carriers must provide to carriers required to pay 
compensation pursuant to Section 64.1300(a) a list of payphone numbers 
in their service areas. The list must be provided on a quarterly basis. 
Local Exchange Carriers must verify disputed numbers in a timely manner, 
and must maintain verification data for 18 months after close of the 
compensation period.
    (d) Local Exchange Carriers must respond to all carrier requests for 
payphone number verification in connection with the compensation 
requirements herein, even if such verification is a negative response.
    (e) A payphone service provider that seeks compensation for 
payphones that are not included on the Local Exchange Carrier's list 
satisfies its obligation to provide alternative reasonable verification 
to a payor carrier if it provides to that carrier:
    (1) A notarized affidavit attesting that each of the payphones for 
which the payphone service provider seeks compensation is a payphone 
that was in working order as of the last day of the compensation period; 
and
    (2) Corroborating evidence that each such payphone is owned by the 
payphone service provider seeking compensation and was in working order 
on the last day of the compensation period. Corroborating evidence shall 
include, at a minimum, the telephone bill for the last month of the 
billing quarter indicating use of a line screening service.

[61 FR 52324, Oct. 7, 1996]



Sec. 64.1320   Payphone compensation verification and reports.

    (a) Carriers subject to payment of compensation pursuant to Section 
64.1300(a) shall conduct an annual verification of calls routed to them 
that are subject to such compensation and file a report with the Chief, 
Common Carrier Bureau within 90 days of the end of the calendar year, 
provided, however, that such verification and report shall not be 
required for calls received after December 31, 1998.
    (b) The annual verification required in this section shall list the 
total amount of compensation paid to payphone service providers for 
intrastate, interstate and international calls, the number of 
compensable calls received by the carrier and the number of payees.

[61 FR 52324, Oct. 7, 1996]



Sec. 64.1330  State review of payphone entry and exit regulations and public interest payphones.

    (a) Each state must review and remove any of its regulations 
applicable to payphones and payphone service providers that impose 
market entry or exit requirements.
    (b) Each state must ensure that access to dialtone, emergency calls, 
and telecommunications relay service calls for the hearing disabled is 
available from all payphones at no charge to the caller.
    (c) Each state must review its rules and policies to determine 
whether it has provided for public interest payphones consistent with 
applicable Commission guidelines, evaluate whether it needs to take 
measures to ensure that such payphones will continue to exist in light 
of the Commission's implementation of Section 276 of the Communications 
Act, and administer and fund such programs so that such payphones are 
supported fairly and equitably. This review must be completed by 
September 20, 1998.

[61 FR 52323, Oct. 7, 1996]



Sec. 64.1340  Right to negotiate.

    Unless prohibited by Commission order, payphone service providers 
have the right to negotiate with the location provider on the location 
provider's

[[Page 217]]

selecting and contracting with, and, subject to the terms of any 
agreement with the location provider, to select and contract with, the 
carriers that carry interLATA and intraLATA calls from their payphones.

 [61 FR 52323, Oct. 7, 1996]



                   Subpart N--Expanded Interconnection



Sec. 64.1401  Expanded interconnection.

    (a) Every local exchange carrier that is classified as a Class A 
company under Sec. 32.11 of this chapter and that is not a National 
Exchange Carrier Association interstate tariff participant, as provided 
in part 69, subpart G of this chapter, shall offer expanded 
interconnection for interstate special access services at their central 
offices that are classified as end offices or serving wire centers, and 
at other rating points used for interstate special access.
    (b) The local exchange carriers specified in paragraph (a) of this 
section shall offer expanded interconnection for interstate switched 
transport services:
    (1) In their central offices that are classified as end offices or 
serving wire centers, as well as at all tandem offices housed in 
buildings containing such carriers' end offices or serving wire centers 
for which interstate switched transport expanded interconnection has 
been tariffed;
    (2) Upon bona fide request, in tandem offices housed in buildings 
not containing such carriers' end offices or serving wire centers, or in 
buildings containing the carriers' end offices or serving wire centers 
for which interstate switched transport expanded interconnection has not 
been tariffed; and
    (3) Upon bona fide request, at remote nodes/switches that serve as 
rating points for interstate switched transport and that are capable of 
routing outgoing interexchange access traffic to interconnectors and in 
which interconnectors can route terminating traffic to such carriers. No 
such carrier is required to enhance remote nodes/switches or to build 
additional space to accommodate interstate switched transport expanded 
interconnection at these locations.
    (c) The local exchange carriers specified in paragraph (a) of this 
section shall offer expanded interconnection for interstate special 
access and switched transport services through virtual collocation, 
except that they may offer physical collocation, instead of virtual 
collocation, in specific central offices, as a service subject to non-
streamlined communications common carrier regulation under Title II of 
the Communications Act (47 U.S.C. 201-228).
    (d) For the purposes of this subpart, physical collocation means an 
offering that enables interconnectors:
    (1) To place their own equipment needed to terminate basic 
transmission facilities, including optical terminating equipment and 
multiplexers, within or upon the local exchange carrier's central office 
buildings;
    (2) To use such equipment to connect interconnectors' fiber optic 
systems or microwave radio transmission facilities (where reasonably 
feasible) with the local exchange carrier's equipment and facilities 
used to provide interstate special access services;
    (3) To enter the local exchange carrier's central office buildings, 
subject to reasonable terms and conditions, to install, maintain, and 
repair the equipment described in paragraph (d)(1) of this section; and
    (4) To obtain reasonable amounts of space in central offices for the 
equipment described in paragraph (d)(1) of this section, allocated on a 
first-come, first-served basis.
    (e) For purposes of this subpart, virtual collocation means an 
offering that enables interconnectors:
    (1) To designate or specify equipment needed to terminate basic 
transmission facilities, including optical terminating equipment and 
multiplexers, to be located within or upon the local exchange carrier's 
buildings, and dedicated to such interconnectors' use,
    (2) To use such equipment to connect interconnectors' fiber optic 
systems or microwave radio transmission facilities (where reasonably 
feasible) with the local exchange carrier's equipment and facilities 
used to provide interstate special and switched access services, and

[[Page 218]]

    (3) To monitor and control their communications channels terminating 
in such equipment.
    (f) Under both physical collocation offering and virtual collocation 
offerings for expanded interconnection of fiber optic facilities, local 
exchange carriers shall provide:
    (1) An interconnection point or points at which the fiber optic 
cable carrying an interconnectors' circuits can enter each local 
exchange carrier location, provided that the local exchange carrier 
shall designate interconnection points as close as reasonably possible 
to each location; and
    (2) At least two such interconnection points at any local exchange 
carrier location at which there are at least two entry points for the 
local exchange carrier's cable facilities, and space is available for 
new facilities in at least two of those entry points.
    (g) The local exchange carriers specified in paragraph (a) of this 
section shall offer signalling for tandem switching, as defined in 
Sec. 69.2(vv) of this chapter, at central offices that are classified as 
equal office end offices or serving wire centers, or at signal transfer 
points if such information is offered via common channel signalling.

[57 FR 54331, Nov. 18, 1992, as amended at 58 FR 48762, Sept. 17, 1993; 
59 FR 32930, June 27, 1994; 59 FR 38930, Aug. 1, 1994]



Sec. 64.1402  Rights and responsibilities of interconnectors.

    (a) For the purposes of this subpart, an interconnector means a 
party taking expanded interconnection offerings. Any party shall be 
eligible to be an interconnector.
    (b) Interconnectors shall have the right, under expanded 
interconnection, to interconnect their fiber optic systems and, where 
reasonably feasible, their microwave transmission facilities.
    (c) Interconnectors shall not be allowed to use interstate special 
access expanded interconnection offerings to connect their transmission 
facilities with the local exchange carrier's interstate switched 
services until that local exchange carrier's tariffs implementing 
expanded interconnection for switched transport have become effective.

[57 FR 54331, Nov. 18, 1992, as amended at 61 FR 43160, Aug. 21, 1996]



    Subpart O--Interstate Pay-Per-Call and Other Information Services

    Source: 58 FR 44773, Aug. 25, 1993, unless otherwise noted.



Sec. 64.1501  Definitions.

    For purposes of this subpart, the following definitions shall apply:
    (a) Pay-per-call service means any service:
    (1) In which any person provides or purports to provide:
    (i) Audio information or audio entertainment produced or packaged by 
such person;
    (ii) Access to simultaneous voice conversation services; or
    (iii) Any service, including the provision of a product, the charges 
for which are assessed on the basis of the completion of the call;
    (2) For which the caller pays a per-call or per-time-interval charge 
that is greater than, or in addition to, the charge for transmission of 
the call; and
    (3) Which is accessed through use of a 900 number;
    (4) Provided, however, such term does not include directory services 
provided by a common carrier or its affiliate or by a local exchange 
carrier or its affiliate, or any service for which users are assessed 
charges only after entering into a presubscription or comparable 
arrangement with the provider of such service.
    (b) Presubscription or comparable arrangement means a contractual 
agreement in which:
    (1) The service provider clearly and conspicuously discloses to the 
consumer all material terms and conditions associated with the use of 
the service, including the service provider's name and address, a 
business telephone number which the consumer may use to obtain 
additional information or to register a complaint, and the rates for the 
service;
    (2) The service provider agrees to notify the consumer of any future 
rate changes;

[[Page 219]]

    (3) The consumer agrees to use the service on the terms and 
conditions disclosed by the service provider; and
    (4) The service provider requires the use of an identification 
number or other means to prevent unauthorized access to the service by 
nonsubscribers;
    (5) Provided, however, that disclosure of a credit, prepaid account, 
debit, charge, or calling card number, along with authorization to bill 
that number, made during the course of a call to an information service 
shall constitute a presubscription or comparable arrangement if an 
introductory message containing the information specified in 
Sec. 64.1504(c)(2) is provided prior to, and independent of, assessment 
of any charges. No other action taken by a consumer during the course of 
a call to an information service, for which charges are assessed, can 
create a presubscription or comparable arrangement.
    (6) Provided, that a presubscription arrangement to obtain 
information services provided by means of a toll-free number shall 
conform to the requirements of Sec. 64.1504(c).
    (c) Calling card means an identifying number or code unique to the 
individual, that is issued to the individual by a common carrier and 
enables the individual to be charged by means of a phone bill for 
charges incurred independent of where the call originates.

[61 FR 39087, July 26, 1996]



Sec. 64.1502  Limitations on the provision of pay-per-call services.

    Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call service shall require, by contract or tariff, 
that such provider comply with the provisions of this subpart and of 
titles II and III of the Telephone Disclosure and Dispute Resolution Act 
(Pub. L. No. 102-556) (TDDRA) and the regulations prescribed by the 
Federal Trade Commission pursuant to those titles.



Sec. 64.1503  Termination of pay-per-call and other information programs.

    (a) Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call service shall specify by contract or tariff that 
pay-per-call programs not in compliance with Sec. 64.1502 shall be 
terminated following written notice to the information provider. The 
information provider shall be afforded a period of no less than seven 
and no more than 14 days during which a program may be brought into 
compliance. Programs not in compliance at the expiration of such period 
shall be terminated immediately.
    (b) Any common carrier providing transmission or billing and 
collection services to a provider of interstate information service 
through any 800 telephone number, or other telephone number advertised 
or widely understood to be toll-free, shall promptly investigate any 
complaint that such service is not provided in accordance with 
Sec. 64.1504 or Sec. 64.1510(c), and, if the carrier reasonably 
determines that the complaint is valid, may terminate the provision of 
service to an information provider unless the provider supplies evidence 
of a written agreement that meets the requirements of this 
Sec. 64.1504(c)(1).

[61 FR 39087, July 26, 1996]



Sec. 64.1504  Restrictions on the use of toll-free numbers.

    A common carrier shall prohibit by tariff or contract the use of any 
800 telephone number, or other telephone number advertised or widely 
understood to be toll-free, in a manner that would result in:
    (a) The calling party or the subscriber to the originating line 
being assessed, by virtue of completing the call, a charge for a call;
    (b) The calling party being connected to a pay-per-call service;
    (c) The calling party being charged for information conveyed during 
the call unless:
    (1) The calling party has a written agreement (including an 
agreement transmitted through electronic medium) that specifies the 
material terms and conditions under which the information is offered and 
includes:
    (i) The rate at which charges are assessed for the information;
    (ii) The information provider's name;
    (iii) The information provider's business address;
    (iv) The information provider's regular business telephone number;

[[Page 220]]

    (v) The information provider's agreement to notify the subscriber at 
least one billing cycle in advance of all future changes in the rates 
charged for the information;
    (vi) The subscriber's choice of payment method, which may be by 
direct remit, debit, prepaid account, phone bill, or credit or calling 
card and, if a subscriber elects to pay by means of phone bill, a clear 
explanation that the subscriber will be assessed for calls made to the 
information service from the subscriber's phone line;
    (vii) A unique personal identification number or other subscriber-
specific identifier that must be used to obtain access to the 
information service and instructions on its use, and, in addition, 
assures that any charges for services accessed by use of the 
subscriber's personal identification number or subscriber-specific 
identifier be assessed to subscriber's source of payment elected 
pursuant to paragraph (c)(1)(vi) of this section; or
    (2) The calling party is charged for the information by means of a 
credit, prepaid, debit, charge, or calling card and the information 
service provider includes in response to each call an introductory 
message that:
    (i) Clearly states that there is a charge for the call;
    (ii) Clearly states the service's total cost per minute and any 
other fees for the service or for any service to which the caller may be 
transferred;
    (iii) Explains that the charges must be billed on either a credit, 
prepaid, debit, charge, or calling card;
    (iv) Asks the caller for the card number;
    (v) Clearly states that charges for the call begin at the end of the 
introductory message; and
    (vi) Clearly states that the caller can hang at or before the end of 
the introductory message without incurring any charge whatsoever.
    (d) The calling party being called back collect for the provision of 
audio or data information services, simultaneous voice conversation 
services, or products; and
    (e) The calling party being assessed by virtue of the caller being 
asked to connect or otherwise transfer to a pay-per-call service, a 
charge for the call.
    (f) Provided, however, that:
    (1) Notwithstanding paragraph (c)(1) of this section, a written 
agreement that meets the requirements of that paragraph is not required 
for:
    (i) Calls utilizing telecommunications devices for the deaf;
    (ii) Directory services provided by a common carrier or its 
affiliate or by a local exchange carrier or its affiliate; or
    (iii) Any purchase of goods or of services that are not information 
services.
    (2) The requirements of paragraph (c)(2) of this section shall not 
apply to calls from repeat callers using a bypass mechanism to avoid 
listening to the introductory message: Provided, That information 
providers shall disable such a bypass mechanism after the institution of 
any price increase for a period of time determined to be sufficient by 
the Federal Trade Commission to give callers adequate and sufficient 
notice of a price increase.

[61 FR 39087, July 26, 1996]



Sec. 64.1505  Restrictions on collect telephone calls.

    (a) No common carrier shall provide interstate transmission or 
billing and collection services to an entity offering any service within 
the scope of Sec. 64.1501(a)(1) that is billed to a subscriber on a 
collect basis at a per-call or per-time-interval charge that is greater 
than, or in addition to, the charge for transmission of the call.
    (b) No common carrier shall provide interstate transmission services 
for any collect information services billed to a subscriber at a 
tariffed rate unless the called party has taken affirmative action 
clearly indicating that it accepts the charges for the collect service.



Sec. 64.1506  Number designation.

    Any interstate service described in Sec. 64.1501(a)(1)-(2), and not 
subject to the exclusions contained in Sec. 64.1501(a)(4), shall be 
offered only through telephone numbers beginning with a 900 service 
access code.

[59 FR 46770, Sept. 12, 1994]

[[Page 221]]



Sec. 64.1507  Prohibition on disconnection or interruption of service for failure to remit pay-per-call and similar service charges.

    No common carrier shall disconnect or interrupt in any manner, or 
order the disconnection or interruption of, a telephone subscriber's 
local exchange or long distance telephone service as a result of that 
subscriber's failure to pay:
    (a) Charges for interstate pay-per-call service;
    (b) Charges for interstate information services provided pursuant to 
a presubscription or comparable arrangement; or
    (c) Charges for interstate information services provided on a 
collect basis which have been disputed by the subscriber.

[58 FR 44773, Aug. 25, 1993, as amended at 59 FR 46770, Sept. 12, 1994]



Sec. 64.1508  Blocking access to 900 service.

    (a) Local exchange carriers must offer to their subscribers, where 
technically feasible, an option to block access to services offered on 
the 900 service access code. Blocking is to be offered at no charge, on 
a one-time basis, to:
    (1) All telephone subscribers during the period from November 1, 
1993 through December 31, 1993; and
    (2) Any subscriber who subscribes to a new telephone number for a 
period of 60 days after the new number is effective.
    (b) For blocking requests not within the one-time option or outside 
the time frames specified in paragraph (a) of this section, and for 
unblocking requests, local exchange carriers may charge a reasonable 
one-time fee. Requests by subscribers to remove 900 services blocking 
must be in writing.
    (c) The terms and conditions under which subscribers may obtain 900 
services blocking are to be included in tariffs filed with this 
Commission.



Sec. 64.1509  Disclosure and dissemination of pay-per-call information.

    (a) Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call services shall make readily available, at no 
charge, to Federal and State agencies and all other interested persons:
    (1) A list of the telephone numbers for each of the pay-per-call 
services it carries;
    (2) A short description of each such service;
    (3) A statement of the total cost or the cost per minute and any 
other fees for each such service; and
    (4) A statement of the pay-per-call service provider's name, 
business address, and business telephone number.
    (b) Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call services and offering billing and collection 
services to such provider shall:
    (1) Establish a local or toll-free telephone number to answer 
questions and provide information on subscribers' rights and obligations 
with regard to their use of pay-per-call services and to provide to 
callers the name and mailing address of any provider of pay-per-call 
services offered by that carrier; and
    (2) Provide to all its telephone subscribers, either directly or 
through contract with any local exchange carrier providing billing and 
collection services to that carrier, a disclosure statement setting 
forth all rights and obligations of the subscriber and the carrier with 
respect to the use and payment of pay-per-call services. Such statement 
must include the prohibition against disconnection of basic 
communications services for failure to pay pay-per-call charges 
established by Sec. 64.1507, the right of a subscriber to obtain 
blocking in accordance with Sec. 64.1508, the right of a subscriber not 
to be billed for pay-per-call services not offered in compliance with 
federal laws and regulations established by Sec. 64.1510(a)(1), and the 
possibility that a subscriber's access to 900 services may be 
involuntarily blocked pursuant to Sec. 64.1512 for failure to pay 
legitimate pay-per-call charges. Disclosure statements must be forwarded 
to:
    (i) All telephone subscribers no later than 60 days after these 
regulations take effect;
    (ii) All new telephone subscribers no later than 60 days after 
service is established;

[[Page 222]]

    (iii) All telephone subscribers requesting service at a new location 
no later than 60 days after service is established; and
    (iv) Thereafter, to all subscribers at least once per calendar year, 
at intervals of not less than 6 months nor more than 18 months.

[58 FR 44773, Aug. 25, 1993, as amended at 61 FR 55582, Oct. 28, 1996]



Sec. 64.1510  Billing and collection of pay-per-call and similar service charges.

    (a) Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call services and offering billing and collection 
services to such provider shall:
    (1) Ensure that a subscriber is not billed for interstate pay-per-
call services that such carrier knows or reasonably should know were 
provided in violation of the regulations set forth in this subpart or 
prescribed by the Federal Trade Commission pursuant to titles II or III 
of the TDDRA or any other federal law;
    (2) In any billing to telephone subscribers that includes charges 
for any interstate pay-per-call service:
    (i) Include a statement indicating that:
    (A) Such charges are for non-communications services;
    (B) Neither local nor long distances services can be disconnected 
for non-payment although an information provider may employ private 
entities to seek to collect such charges;
    (C) 900 number blocking is available upon request; and
    (D) Access to pay-per-call services may be involuntarily blocked for 
failure to pay legitimate charges;
    (ii) Display any charges for pay-per-call services in a part of the 
bill that is identified as not being related to local and long distance 
telephone charges;
    (iii) Specify, for each pay-per-call charge made, the type of 
service, the amount of the charge, and the date, time, and, for calls 
billed on a time-sensitive basis, the duration of the call; and
    (iv) Identify the local or toll-free number established in 
accordance with Sec. 64.1509(b)(1).
    (b) Any common carrier offering billing and collection services to 
an entity providing interstate information services on a collect basis 
shall, to the extent possible, display the billing information in the 
manner described in paragraphs (a)(2)(i), (A), (B), (D) and (a)(2)(ii) 
of this section.
    (c) If a subscriber elects, pursuant to Sec. 64.1504(c)(1)(vi), to 
pay by means of a phone bill for any information service provided by 
through any 800 telephone number, or other telephone number advertised 
or widely understood to be toll-free, the phone bill shall:
    (1) Include, in prominent type, the following disclaimer: ``Common 
carriers may not disconnect local or long distance telephone service for 
failure to pay disputed charges for information services;'' and
    (2) Clearly list the 800 or other toll-free number dialed.

[58 FR 44773, Aug. 25, 1993, as amended at 59 FR 46771, Sept. 12, 1994; 
61 FR 39088, July 26, 1996]



Sec. 64.1511  Forgiveness of charges and refunds.

    (a) Any carrier assigning a telephone number to a provider of 
interstate pay-per-call services or providing transmission for 
interstate information services provided pursuant to a presubscription 
or comparable arrangement or on a collect basis, and providing billing 
and collection for such services, shall establish procedures for the 
handling of subscriber complaints regarding charges for those services. 
A billing carrier is afforded discretion to set standards for 
determining when a subscriber's complaint warrants forgiveness, refund 
or credit of interstate pay-per-call or information services charges 
provided that such charges must be forgiven, refunded, or credited when 
a subscriber has complained about such charges and either this 
Commission, the Federal Trade Commission, or a court of competent 
jurisdiction has found or the carrier has determined, upon 
investigation, that the service has been offered in violation of federal 
law or the regulations that are either set forth in this subpart or 
prescribed by the Federal Trade Commission pursuant to titles II or III 
of the TDDRA. Carriers shall observe the record retention requirements 
set forth

[[Page 223]]

in Sec. 42.6 of this chapter except that relevant records shall be 
retained by carriers beyond the requirements of part 42 of this chapter 
when a complaint is pending at the time the specified retention period 
expires.
    (b) Any carrier assigning a telephone number to a provider of 
interstate pay-per-call services but not providing billing and 
collection services for such services, shall, by tariff or contract, 
require that the provider and/or its billing and collection agents have 
in place procedures whereby, upon complaint, pay-per-call charges may be 
forgiven, refunded, or credited, provided that such charges must be 
forgiven, refunded, or credited when a subscriber has complained about 
such charges and either this Commission, the Federal Trade Commission, 
or a court of competent jurisdiction has found or the carrier has 
determined, upon investigation, that the service has been offered in 
violation of federal law or the regulations that are either set forth in 
this subpart or prescribed by the Federal Trade Commission pursuant to 
titles II or III of the TDDRA.

[58 FR 44773, Aug. 25, 1993, as amended at 59 FR 46771, Sept. 12, 1994]



Sec. 64.1512  Involuntary blocking of pay-per-call services.

    Nothing in this subpart shall preclude a common carrier or 
information provider from blocking or ordering the blocking of its 
interstate pay-per-call programs from numbers assigned to subscribers 
who have incurred, but not paid, legitimate pay-per-call charges, except 
that a subscriber who has filed a complaint regarding a particular pay-
per-call program pursuant to procedures established by the Federal Trade 
Commission under title III of the TDDRA shall not be involuntarily 
blocked from access to that program while such a complaint is pending. 
This restriction is not intended to preclude involuntary blocking when a 
carrier or IP has decided in one instance to sustain charges against a 
subscriber but that subscriber files additional separate complaints.



Sec. 64.1513  Verification of charitable status.

    Any common carrier assigning a telephone number to a provider of 
interstate pay-per-call services that the carrier knows or reasonably 
should know is engaged in soliciting charitable contributions shall 
obtain verification that the entity or individual for whom contributions 
are solicited has been granted tax exempt status by the Internal Revenue 
Service.



Sec. 64.1514  Generation of signalling tones.

    No common carrier shall assign a telephone number for any pay-per-
call service that employs broadcast advertising which generates the 
audible tones necessary to complete a call to a pay-per-call service.



Sec. 64.1515  Recovery of costs.

    No common carrier shall recover its cost of complying with the 
provisions of this subpart from local or long distance ratepayers.



           Subpart P--Calling Party Telephone Number; Privacy

    Source: 59 FR 18319, Apr. 18, 1994, unless otherwise noted.



Sec. 64.1600  Definitions.

    (a) Aggregate information. The term ``aggregate information'' means 
collective data that relate to a group or category of services or 
customers, from which individual customer identities or characteristics 
have been removed.
    (b) ANI. The term ``ANI'' (automatic number identification) refers 
to the delivery of the calling party's billing number by a local 
exchange carrier to any interconnecting carrier for billing or routing 
purposes, and to the subsequent delivery of such number to end users.
    (c) Calling party number. The term ``Calling Party Number'' refers 
to the subscriber line number or the directory number contained in the 
calling party number parameter of the call set-up message associated 
with an interstate call on a Signaling System 7 network.

[[Page 224]]

    (d) Charge number. The term ``charge number'' refers to the delivery 
of the calling party's billing number in a Signaling System 7 
environment by a local exchange carrier to any interconnecting carrier 
for billing or routing purposes, and to the subsequent delivery of such 
number to end users.
    (e) Privacy indicator. The term ``Privacy Indicator'' refers to 
information, contained in the calling party number parameter of the call 
set-up message associated with an interstate call on an Signaling System 
7 network, that indicates whether the calling party authorizes 
presentation of the calling party number to the called party.
    (f) Signaling System 7. The term ``Signaling System 7'' (SS7) refers 
to a carrier to carrier out-of-band signaling network used for call 
routing, billing and management.

[60 FR 29490, June 5, 1995]



Sec. 64.1601  Delivery requirements and privacy restrictions.

    (a) Delivery. Except as provided in paragraph (d) of this section, 
common carriers using Signaling System 7 and offering or subscribing to 
any service based on Signaling System 7 functionality are required to 
transmit the calling party number (CPN) associated with an interstate 
call to interconnecting carriers.
    (b) Privacy. Except as provided in paragraph (d) of this section, 
originating carriers using Signaling System 7 and offering or 
subscribing to any service based on Signaling System 7 functionality 
will recognize *67 dialed as the first three digits of a call (or 1167 
for rotary or pulse dialing phones) as a caller's request that the CPN 
not be passed on an interstate call. Such carriers providing line 
blocking services will recognize *82 as a caller's request that the CPN 
be passed on an interstate call. No common carrier subscribing to or 
offering any service that delivers CPN may override the privacy 
indicator associated with an interstate call. Carriers must arrange 
their CPN-based services, and billing practices, in such a manner that 
when a caller requests that the CPN not be passed, a carrier may not 
reveal that caller's number or name, nor may the carrier use the number 
or name to allow the called party to contact the calling party. The 
terminating carrier must act in accordance with the privacy indicator 
unless the call is made to a called party that subscribes to an ANI or 
charge number based service and the call is paid for by the called 
party.
    (c) Charges. No common carrier subscribing to or offering any 
service that delivers calling party number may
    (1) Impose on the calling party charges associated with per call 
blocking of the calling party's telephone number, or
    (2) Impose charges upon connecting carriers for the delivery of the 
calling party number parameter or its associated privacy indicator.
    (d) Exemptions. Section 64.1601(a) and (b) shall not apply when:
    (1) A call originates from a payphone.
    (2) A local exchange carrier with Signaling System 7 capability does 
not have the software to provide *67 or *82 functionalities. Such 
carriers are prohibited from passing CPN.
    (3) A Private Branch Exchange or Centrex system does not pass end 
user CPN. Centrex systems that rely on *6 or *8 for a function other 
than CPN blocking or unblocking, respectively, are also exempt if they 
employ alternative means of blocking or unblocking.
    (4) CPN delivery--
    (i) Is used solely in connection with calls within the same limited 
system, including (but not limited to) a Centrex system, virtual private 
network, or Private Branch Exchange;
    (ii) Is used on a public agency's emergency telephone line or in 
conjunction with 911 emergency services, or on any entity's emergency 
assistance poison control telephone line; or
    (iii) Is provided in connection with legally authorized call tracing 
or trapping procedures specifically requested by a law enforcement 
agency.

[60 FR 29490, June 5, 1995; 60 FR 54449, Oct. 24, 1995, as amended at 62 
FR 34015, June 24, 1997]



Sec. 64.1602  Restrictions on use and sale of telephone subscriber information provided pursuant to automatic number identification or charge number services.

    (a) Any common carrier providing Automatic Number Identification or

[[Page 225]]

charge number services on interstate calls to any person shall provide 
such services under a contract or tariff containing telephone subscriber 
information requirements that comply with this subpart. Such 
requirements shall:
    (1) Permit such person to use the telephone number and billing 
information for billing and collection, routing, screening, and 
completion of the originating telephone subscriber's call or 
transaction, or for services directly related to the originating 
telephone subscriber's call or transaction;
    (2) Prohibit such person from reusing or selling the telephone 
number or billing information without first
    (i) Notifying the originating telephone subscriber and,
    (ii) Obtaining the affirmative consent of such subscriber for such 
reuse or sale; and,
    (3) Prohibit such person from disclosing, except as permitted by 
paragraphs (a) (1) and (2) of this section, any information derived from 
the automatic number identification or charge number service for any 
purpose other than
    (i) Performing the services or transactions that are the subject of 
the originating telephone subscriber's call,
    (ii) Ensuring network performance security, and the effectiveness of 
call delivery,
    (iii) Compiling, using, and disclosing aggregate information, and
    (iv) Complying with applicable law or legal process.
    (b) The requirements imposed under paragraph (a) of the section 
shall not prevent a person to whom automatic number identification or 
charge number services are provided from using
    (1) The telephone number and billing information provided pursuant 
to such service, and
    (2) Any information derived from the automatic number identification 
or charge number service, or from the analysis of the characteristics of 
a telecommunications transmission, to offer a product or service that is 
directly related to the products or services previously acquired by that 
customer from such person. Use of such information is subject to the 
requirements of 47 CFR 64.1200 and 64.1504(c).

[60 FR 29490, June 5, 1995]



Sec. 64.1603  Customer notification.

    Any common carrier participating in the offering of services 
providing calling party number, ANI, or charge number on interstate 
calls must notify its subscribers, individually or in conjunction with 
other carriers, that their telephone numbers may be identified to a 
called party. Such notification must be made not later than December 1, 
1995, and at such times thereafter as to ensure notice to subscribers. 
The notification must be effective in informing subscribers how to 
maintain privacy by dialing *67 (or 1167 for rotary or pulse-dialing 
phones) on interstate calls. The notice shall inform subscribers whether 
dialing *82 (or 1182 for rotary or pulse-dialing phones) on interstate 
calls is necessary to present calling party number to called parties. 
For ANI or charge number services for which such privacy is not 
provided, the notification shall inform subscribers of the restrictions 
on the reuse or sale of subscriber information.

[60 FR 29491, June 5, 1995; 60 FR 54449, Oct. 24, 1995]



Sec. 64.1604  Effective date.

    The provisions of Secs. 64.1600 and 64.1602 are effective April 12, 
1995. The provisions of Secs. 64.1601 and 64.1603 are effective December 
1, 1995, except Secs. 64.1601 and 64.1603 do not apply to public 
payphones and partylines until January 1, 1997.

[60 FR 29491, June 5, 1995; 60 FR 54449, Oct. 24, 1995]



Subpart Q--Implementation of Section 273(d)(5) of the Communiations Act: 
            Dispute Resolution Regarding Equipment Standards

    Source: 61 FR 24903, May 17, 1996, unless otherwise noted.



Sec. 64.1700  Purpose and scope.

    The purpose of this subpart is to implement the Telecommunications 
Act of 1996 which amended the Communications Act by creating section 
273(d)(5), 47 U.S.C. 273(d)(5). Section 273(d) sets forth procedures to 
be followed by non-

[[Page 226]]

accredited standards development organizations when these organizations 
set industry-wide standards and generic requirements for 
telecommunications equipment or customer premises equipment. The 
statutory procedures allow outside parties to fund and participate in 
setting the organization's standards and require the organization and 
the parties to develop a process for resolving any technical disputes. 
In cases where all parties cannot agree to a mutually satisfactory 
dispute resolution process, section 273(d)(5) requires the Commission to 
prescribe a dispute resolution process.



Sec. 64.1701  Definitions.

    For purposes of this subpart, the terms accredited standards 
development organization, funding party, generic requirement, and 
industry-wide have the same meaning as found in 47 U.S.C. 273.



Sec. 64.1702  Procedures.

    If a non-accredited standards development organization (NASDO) and 
the funding parties are unable to agree unanimously on a dispute 
resolution process prior to publishing a text for comment pursuant to 47 
U.S.C. 273(d)(4)(A)(v), a funding party may use the default dispute 
resolution process set forth in section 64.1703.



Sec. 64.1703  Dispute resolution default process.

    (a) Tri-Partite Panel. Technical disputes governed by this section 
shall be resolved in accordance with the recommendation of a three-
person panel, subject to a vote of the funding parties in accordance 
with paragraph (b) of this section. Persons who participated in the 
generic requirements or standards development process are eligible to 
serve on the panel. The panel shall be selected and operate as follows:
    (1) Within two (2) days of the filing of a dispute with the NASDO 
invoking the dispute resolution default process, both the funding party 
seeking dispute resolution and the NASDO shall select a representative 
to sit on the panel;
    (2) Within four (4) days of their selection, the two panelists shall 
select a neutral third panel member to create a tri-partite panel;
    (3) The tri-partite panel shall, at a minimum, review the proposed 
text of the NASDO and any explanatory material provided to the funding 
parties by the NASDO, the comments and any alternative text provided by 
the funding party seeking dispute resolution, any relevant standards 
which have been established or which are under development by an 
accredited-standards development organization, and any comments 
submitted by other funding parties;
    (4) Any party in interest submitting information to the panel for 
consideration (including the NASDO, the party seeking dispute resolution 
and the other funding parties) shall be asked by the panel whether there 
is knowledge of patents, the use of which may be essential to the 
standard or generic requirement being considered. The fact that the 
question was asked along with any affirmative responses shall be 
recorded, and considered, in the panel's recommendation; and
    (5) The tri-partite panel shall, within fifteen (15) days after 
being established, decide by a majority vote, the issue or issues raised 
by the party seeking dispute resolution and produce a report of their 
decision to the funding parties. The tri-partite panel must adopt one of 
the five options listed below:
    (i) The NASDO's proposal on the issue under consideration;
    (ii) The position of the party seeking dispute resolution on the 
issue under consideration;
    (iii) A standard developed by an accredited standards development 
organization that addresses the issue under consideration;
    (iv) A finding that the issue is not ripe for decision due to 
insufficient technical evidence to support the soundness of any one 
proposal over any other proposal; or
    (v) Any other resolution that is consistent with the standard 
described in section 64.1703(a)(6).
    (6) The tri-partite panel must choose, from the five options 
outlined above, the option that they believe provides the most 
technically sound solution and base its recommendation upon the 
substantive evidence presented to the panel. The panel is not precluded 
from

[[Page 227]]

taking into account complexity of implementation and other practical 
considerations in deciding which option is most technically sound. 
Neither of the disputants (i.e., the NASDO and the funding party which 
invokes the dispute resolution process) will be permitted to participate 
in any decision to reject the mediation panel's recommendation.
    (b) The tri-partite panel's recommendation(s) must be included in 
the final industry-wide standard or industry-wide generic requirement, 
unless three-fourths of the funding parties who vote decide within 
thirty (30) days of the filing of the dispute to reject the 
recommendation and accept one of the options specified in paragraphs 
(a)(5) (i) through (v) of this section. Each funding party shall have 
one vote.
    (c) All costs sustained by the tri-partite panel will be 
incorporated into the cost of producing the industry-wide standard or 
industry-wide generic requirement.



Sec. 64.1704  Frivolous disputes/penalties.

    (a) No person shall willfully refer a dispute to the dispute 
resolution process under this subpart unless to the best of his 
knowledge, information and belief there is good ground to support the 
dispute and the dispute is not interposed for delay.
    (b) Any person who fails to comply with the requirements in 
paragraph (a) of this section, may be subject to forfeiture pursuant to 
section 503(b) of the Communications Act, 47 U.S.C. 503(b).



        Subpart R--Geographic Rate Averaging and Rate Integration

    Authority: 47 U.S.C. Secs. 151, 154(i), 201-205, 214(e), 215 and 
254(g).



Sec. 64.1801  Geographic rate averaging and rate integration.

    (a) The rates charged by providers of interexchange 
telecommunications services to subscribers in rural and high-cost areas 
shall be no higher than the rates charged by each such provider to its 
subscribers in urban areas.
    (b) A provider of interstate interexchange telecommunications 
services shall provide such services to its subscribers in each U.S. 
state at rates no higher than the rates charged to its subscribers in 
any other state.

[61 FR 42564, Aug. 16, 1996]



 Subpart S--Nondominant Interexchange Carrier Certifications Regarding 
       Geographic Rate Averaging and Rate Integration Requirements



Sec. 64.1900  Nondominant interexchange carrier certifications regarding geographic rate averaging and rate integration requirements.

    (a) A nondominant provider of interexchange telecommunications 
services, which provides detariffed interstate, domestic, interexchange 
services, shall file with the Commission, on an annual basis, a 
certification that it is providing such services in compliance with its 
geographic rate averaging and rate integration obligations pursuant to 
section 254(g) of the Communications Act of 1934, as amended.
    (b) The certification filed pursuant to paragraph (a) of this 
section shall be signed by an officer of the company under oath.

[61 FR 59366, Nov. 22, 1996]



  Subpart T--Separate Affiliate Requirements for Incumbent Independent 
  Local Exchange Carriers That Provide In-Region, Interstate Domestic 
Interexchange Services or In-Region International Interexchange Services

    Source:  62 FR 36017, July 3, 1997, unless otherwise noted.



Sec. 64.1901  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended.
    (b) Purpose. The purpose of these rules is to regulate the provision 
of in-region, interstate, domestic, interexchange services and in-region 
international interexchange services by incumbent independent local 
exchange carriers.

[[Page 228]]



Sec. 64.1902  Terms and definitions.

    Terms used in this part have the following meanings:
    Books of Account. Books of account refer to the financial accounting 
system a company uses to record, in monetary terms the basic 
transactions of a company. These books of account reflect the company's 
assets, liabilities, and equity, and the revenues and expenses from 
operations. Each company has its own separate books of account.
    Incumbent Independent Local Exchange Carrier (Incumbent Independent 
LEC). The term incumbent independent local exchange carrier means, with 
respect to an area, the independent local exchange carrier that:
    (1) On February 8, 1996, provided telephone exchange service in such 
area; and
    (2)(i) On February 8, 1996, was deemed to be a member of the 
exchange carrier association pursuant to Sec. 69.601(b) of this title; 
or
    (ii) Is a person or entity that, on or after February 8, 1996, 
became a successor or assign of a member described in paragraph (2) (i) 
of this definition. The Commission may also, by rule, treat an 
independent local exchange carrier as an incumbent independent local 
exchange carrier pursuant to section 251(h)(2) of the Communications Act 
of 1934, as amended.
    Independent Local Exchange Carrier (Independent LEC). Independent 
local exchange carriers are local exchange carriers, including GTE, 
other than the BOCs.
    Independent Local Exchange Carrier Affiliate (Independent LEC 
Affiliate). An independent local exchange carrier affiliate is a carrier 
that is owned (in whole or in part) or controlled by, or under common 
ownership (in whole or in part) or control with, an independent local 
exchange carrier.
    In-Region Service. In-region service means telecommunications 
service originating in an independent local exchange carrier's local 
service areas or 800 service, private line service, or their equivalents 
that:
    (1) Terminate in the independent LEC's local exchange areas; and
    (2) Allow the called party to determine the interexchange carrier, 
even if the service originates outside the independent LEC's local 
exchange areas.
    Local Exchange Carrier. The term local exchange carrier means any 
person that is engaged in the provision of telephone exchange service or 
exchange access. Such term does not include a person insofar as such 
person is engaged in the provision of a commercial mobile service under 
section 332(c), except to the extent that the Commission finds that such 
service should be included in the definition of that term.



Sec. 64.1903  Obligations of all incumbent independent local exchange carriers.

    (a) Except as provided in paragraph (c) of this section, an 
incumbent independent LEC providing in-region, interstate, interexchange 
services or in-region international interexchange services shall provide 
such services through an affiliate that satisfies the following 
requirements:
    (1) The affiliate shall maintain separate books of account from its 
affiliated exchange companies. Nothing in this section requires the 
affiliate to maintain separate books of account that comply with Part 32 
of this title;
    (2) The affiliate shall not jointly own transmission or switching 
facilities with its affiliated exchange companies. Nothing in this 
section prohibits an affiliate from sharing personnel or other resources 
or assets with an affiliated exchange company; and
    (3) The affiliate shall acquire any services from its affiliated 
exchange companies for which the affiliated exchange companies are 
required to file a tariff at tariffed rates, terms, and conditions. 
Nothing in this section shall prohibit the affiliate from acquiring any 
unbundled network elements or exchange services for the provision of a 
telecommunications service from its affiliated exchange companies, 
subject to the same terms and conditions as provided in an agreement 
approved under section 252 of the Communications Act of 1934, as 
amended.
    (b) The affiliate required in paragraph (a) of this section shall be 
a separate legal entity from its affiliated exchange companies. The 
affiliate may be staffed by personnel of its affiliated exchange 
companies, housed in existing

[[Page 229]]

offices of its affiliated exchange companies, and use its affiliated 
exchange companies' marketing and other services, subject to paragraph 
(a)(3) of this section.
    (c) An incumbent independent LEC that is providing in-region, 
interstate, domestic interexchange services or in-region international 
interexchange services prior to April 18, 1997, but is not providing 
such services through an affiliate that satisfies paragraph (a) of this 
section as of April 18, 1997, shall comply with the requirements of this 
section no later than April 18, 1998.

    Effective Date Note:  At 63 FR 16696, Apr. 6, 1998, Sec. 64.1903(c) 
was stayed until 60 days after the release of the Commission's order on 
reconsideration in CC Docket Nos. 96-149 and 96-61.



           Subpart U--Customer Proprietary Network Information

    Source:  63 FR 20338, Apr. 24, 1998, unless otherwise noted.



Sec. 64.2001  Basis and purpose.

    (a) Basis. The rules in this subpart are issued pursuant to the 
Communications Act of 1934, as amended.
    (b) Purpose. The purpose of the rules in this subpart is to 
implement section 222 of the Communications Act of 1934, as amended, 47 
U.S.C. 222.



Sec. 64.2003  Definitions.

    Terms used in this subpart have the following meanings:
    (a) Affiliate. An affiliate is an entity that directly or indirectly 
owns or controls, is owned or controlled by, or is under common 
ownership or control with, another entity.
    (b) Customer. A customer of a telecommunications carrier is a person 
or entity to which the telecommunications carrier is currently providing 
service.
    (c) Customer proprietary network information (CPNI).
    (1) Customer proprietary network information (CPNI) is:
    (i) Information that relates to the quantity, technical 
configuration, type, destination, and amount of use of a 
telecommunications service subscribed to by any customer of a 
telecommunications carrier, and that is made available to the carrier by 
the customer solely by virtue of the customer-carrier relationship; and
    (ii) Information contained in the bills pertaining to telephone 
exchange service or telephone toll service received by a customer of a 
carrier.
    (2) Customer proprietary network information does not include 
subscriber list information.
    (d) Customer premises equipment (CPE). Customer premises equipment 
(CPE) is equipment employed on the premises of a person (other than a 
carrier) to originate, route, or terminate telecommunications.
    (e) Information service. Information service is the offering of a 
capability for generating, acquiring, storing, transforming, processing, 
retrieving, utilizing, or making available information via 
telecommunications, and includes electronic publishing, but does not 
include any use of any such capability for the management, control, or 
operation of a telecommunications system or the management of a 
telecommunications service.
    (f) Local exchange carrier (LEC). A local exchange carrier (LEC) is 
any person that is engaged in the provision of telephone exchange 
service or exchange access. For purposes of this subpart, such term does 
not include a person insofar as such person is engaged in the provision 
of commercial mobile service under 47 U.S.C. 332(c).
    (g) Subscriber list information (SLI). Subscriber list information 
(SLI) is any information:
    (1) Identifying the listed names of subscribers of a carrier and 
such subscribers' telephone numbers, addresses, or primary advertising 
classifications (as such classifications are assigned at the time of the 
establishment of such service), or any combination of such listed names, 
numbers, addresses, or classifications; and
    (2) That the carrier or an affiliate has published, caused to be 
published, or accepted for publication in any directory format.
    (h) Telecommunications carrier. A telecommunications carrier is any 
provider of telecommunications services, except that such term does not 
include aggregators of telecommunications

[[Page 230]]

services (as defined in 47 U.S.C. 226(a)(2)).



Sec. 64.2005  Use of customer proprietary network information without customer approval.

    (a) Any telecommunications carrier may use, disclose, or permit 
access to CPNI for the purpose of providing or marketing service 
offerings among the categories of service (i.e., local, interexchange, 
and CMRS) already subscribed to by the customer from the same carrier, 
without customer approval.
    (1) If a telecommunications carrier provides different categories of 
service, and a customer subscribes to more than one category of service 
offered by the carrier, the carrier is permitted to share CPNI among the 
carrier's affiliated entities that provide a service offering to the 
customer.
    (2) If a telecommunications carrier provides different categories of 
service, but a customer does not subscribe to more than one offering by 
the carrier, the carrier is not permitted to share CPNI among the 
carrier's affiliated entities.
    (b) A telecommunications carrier may not use, disclose, or permit 
access to CPNI to market to a customer service offerings that are within 
a category of service to which the customer does not already subscribe 
to from that carrier, unless the carrier has customer approval to do so, 
except as described in paragraph (c) of this section.
    (1) A telecommunications carrier may not use, disclose, or permit 
access to CPNI derived from its provision of local service, 
interexchange service, or CMRS, without customer approval, for the 
provision of CPE and information services, including call answering, 
voice mail or messaging, voice storage and retrieval services, fax store 
and forward, and Internet access services. For example, a carrier may 
not use its local exchange service CPNI to identify customers for the 
purpose of marketing to those customers related CPE or voice mail 
service.
    (2) A telecommunications carrier may not use, disclose or permit 
access to CPNI to identify or track customers that call competing 
service providers. For example, a local exchange carrier may not use 
local service CPNI to track all customers that call local service 
competitors.
    (3) A telecommunications carrier may not use, disclose or permit 
access to a former customer's CPNI to regain the business of the 
customer who has switched to another service provider.
    (c) A telecommunications carrier may use, disclose, or permit access 
to CPNI, without customer approval, as described in this paragraph (c).
    (1) A telecommunications carrier may use, disclose, or permit access 
to CPNI, without customer approval, in its provision of inside wiring 
installation, maintenance, and repair services.
    (2) CMRS providers may use, disclose, or permit access to CPNI for 
the purpose of conducting research on the health effects of CMRS.
    (3) LECs and CMRS providers may use CPNI, without customer approval, 
to market services formerly known as adjunct-to-basic services, such as, 
but not limited to, speed dialing, computer-provided directory 
assistance, call monitoring, call tracing, call blocking, call return, 
repeat dialing, call tracking, call waiting, caller I.D., call 
forwarding, and certain centrex features.



Sec. 64.2007  Notice and approval required for use of customer proprietary network information.

    (a) A telecommunications carrier must obtain customer approval to 
use, disclose, or permit access to CPNI to market to a customer service 
to which the customer does not already subscribe to from that carrier.
    (b) A telecommunications carrier may obtain approval through 
written, oral or electronic methods.
    (c) A telecommunications carrier relying on oral approval must bear 
the burden of demonstrating that such approval has been given in 
compliance with the Commission's rules in this part.
    (d) Approval obtained by a telecommunications carrier for the use of 
CPNI outside of the customer's total service relationship with the 
carrier must remain in effect until the customer revokes or limits such 
approval.
    (e) A telecommunications carrier must maintain records of 
notification

[[Page 231]]

and approval, whether oral, written or electronic, for at least one 
year.
    (f) Prior to any solicitation for customer approval, a 
telecommunications carrier must provide a one-time notification to the 
customer of the customer's right to restrict use of, disclosure of, and 
access to that customer's CPNI.
    (1) A telecommunications carrier may provide notification through 
oral or written methods.
    (2) Customer notification must provide sufficient information to 
enable the customer to make an informed decision as to whether to permit 
a carrier to use, disclose or permit access to, the customer's CPNI.
    (i) The notification must state that the customer has a right, and 
the carrier a duty, under federal law, to protect the confidentiality of 
CPNI.
    (ii) The notification must specify the types of information that 
constitute CPNI and the specific entities that will receive the CPNI, 
describe the purposes for which CPNI will be used, and inform the 
customer of his or her right to disapprove those uses, and deny or 
withdraw access to CPNI at any time.
    (iii) The notification must advise the customer of the precise steps 
the customer must take in order to grant or deny access to CPNI, and 
must clearly state that a denial of approval will not affect the 
provision of any services to which the customer subscribes.
    (iv) The notification must be comprehensible and not be misleading.
    (v) If written notification is provided, the notice must be clearly 
legible, use sufficiently large type, and be placed in an area so as to 
be readily apparent to a customer.
    (vi) If any portion of a notification is translated into another 
language, then all portions of the notification must be translated into 
that language.
    (vii) A carrier may state in the notification that the customer's 
approval to use CPNI may enhance the carrier's ability to offer products 
and services tailored to the customer's needs. A carrier also may state 
in the notification that it may be compelled to disclose CPNI to any 
person upon affirmative written request by the customer.
    (viii) A carrier may not include in the notification any statement 
attempting to encourage a customer to freeze third party access to CPNI.
    (ix) The notification must state that any approval, or denial of 
approval for the use of CPNI outside of the service to which the 
customer already subscribes to from that carrier is valid until the 
customer affirmatively revokes or limits such approval or denial.
    (3) A telecommunications carrier's solicitation for approval must be 
proximate to the notification of a customer's CPNI rights.
    (4) A telecommunications carrier's solicitation for approval, if 
written, must not be on a document separate from the notification, even 
if such document is included within the same envelope or package.



Sec. 64.2009  Safeguards required for use of customer proprietary network information.

    (a) Telecommunications carriers must develop and implement software 
that indicates within the first few lines of the first screen of a 
customer's service record the CPNI approval status and reference the 
customer's existing service subscription.
    (b) Telecommunications carriers must train their personnel as to 
when they are and are not authorized to use CPNI, and carriers must have 
an express disciplinary process in place.
    (c) Telecommunications carriers must maintain an electronic audit 
mechanism that tracks access to customer accounts, including when a 
customer's record is opened, by whom, and for what purpose. Carriers 
must maintain these contact histories for a minimum period of one year.
    (d) Telecommunications carriers must establish a supervisory review 
process regarding carrier compliance with the rules in this subpart for 
outbound marketing situations and maintain records of carrier compliance 
for a minimum period of one year. Specifically, sales personnel must 
obtain supervisory approval of any proposed outbound marketing request.
    (e) A telecommunications carrier must have a corporate officer, as 
an agent of the carrier, sign a compliance certificate on an annual 
basis that the officer has personal knowledge that the carrier is in 
compliance with the rules

[[Page 232]]

in this subpart. A statement explaining how the carrier is in compliance 
with the rules in this subpart must accompany the certificate.

Appendix A to Part 64--Telecommunications Service Priority (TSP) System 
           for National Security Emergency Preparedness (NSEP)

                        1. Purpose and Authority

    a. This appendix establishes policies and procedures and assigns 
responsibilities for the National Security Emergency Preparedness (NSEP) 
Telecommunications Service Priority (TSP) System. The NSEP TSP System 
authorizes priority treatment to certain domestic telecommunications 
services (including portions of U.S. international telecommunication 
services provided by U.S. service vendors) for which provisioning or 
restoration priority (RP) levels are requested, assigned, and approved 
in accordance with this appendix.
    b. This appendix is issued pursuant to sections 1, 4(i), 201 through 
205 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 154(i), 201 through 205 and 303(r). These sections grant to the 
Federal Communications Commission (FCC) the authority over the 
assignment and approval of priorities for provisioning and restoration 
of common carrier-provided telecommunications services. Under section 
706 of the Communications Act, this authority may be superseded, and 
expanded to include non-common carrier telecommunication services, by 
the war emergency powers of the President of the United States. This 
appendix provides the Commission's Order to telecommunication service 
vendors and users to comply with policies and procedures establishing 
the NSEP TSP System, until such policies and procedures are superseded 
by the President's war emergency powers. This appendix is intended to be 
read in conjunction with regulations and procedures that the Executive 
Office of the President issues (1) to implement responsibilities 
assigned in section 6(b) of this appendix, or (2) for use in the event 
this appendix is superseded by the President's war emergency powers.
    c. Together, this appendix and the regulations and procedures issued 
by the Executive Office of the President establish one uniform system of 
priorities for provisioning and restoration of NSEP telecommunication 
services both before and after invocation of the President's war 
emergency powers. In order that government and industry resources may be 
used effectively under all conditions, a single set of rules, 
regulations, and procedures is necessary, and they must be applied on a 
day-to-day basis to all NSEP services so that the priorities they 
establish can be implemented at once when the need arises.
    * In sections 2(a)(2) and 2(b)(2) of Executive Order No. 12472, 
``Assignment of National Security and Emergency Preparedness 
Telecommunications Functions'' April 3, 1984 (49 FR 13471 (1984)), the 
President assigned to the Director, Office of Science and Technology 
Policy, certain NSEP telecommunication resource management 
responsibilities. The term ``Executive Office of the President'' as used 
in this appendix refers to the official or organization designated by 
the President to act on his behalf.

                     2. Applicability and Revocation

    a. This appendix applies to NSEP telecommunications services:
    (1) For which initial or revised priority level assignments are 
requested pursuant to section 8 of this appendix.
    (2) Which were assigned restoration priorities under the provision 
of FCC Order 80-581; 81 FCC 2d 441 (1980); 47 CFR part 64, appendix A, 
``Priority System for the Restoration of Common Carrier Provided 
Intercity Private Line Services''; and are being resubmitted for 
priority level assignments pursuant to section 10 of this appendix. 
(Such services will retain assigned restoration priorities until a 
resubmission for a TSP assignment is completed or until the existing RP 
rules are terminated.)
    b. FCC Order 80-581 will continue to apply to all other intercity, 
private line circuits assigned restoration priorities thereunder until 
the fully operating capability date of this appendix, 30 months after 
the initial operating capability date referred to in subsection d of 
this section.
    c. In addition, FCC Order, ``Precedence System for Public 
Correspondence Services Provided by the Communications Common Carriers'' 
(34 FR 17292 (1969)); (47 CFR part 64, appendix B), is revoked as of the 
effective date of this appendix.
    d. The initial operating capability (IOC) date for NSEP TSP will be 
nine months after release in the Federal Register of the FCC's order 
following review of procedures submitted by the Executive Office of the 
President. On this IOC date requests for priority assignments generally 
will be accepted only by the Executive Office of the President.

                             3. Definitions

    As used in this part:
    a. Assignment means the designation of priority level(s) for a 
defined NSEP telecommunications service for a specified time period.
    b. Audit means a quality assurance review in response to identified 
problems.
    c. Government refers to the Federal government or any foreign, 
state, county, municipal or other local government agency or 
organization. Specific qualifications will be

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supplied whenever reference to a particular level of government is 
intended (e.g., ``Federal government'', ``state government''). ``Foreign 
government'' means any sovereign empire, kingdom, state, or independent 
political community, including foreign diplomatic and consular 
establishments and coalitions or associations of governments (e.g., 
North Atlantic Treaty Organization (NATO), Southeast Asian Treaty 
Organization (SEATO), Organization of American States (OAS), and 
government agencies or organization (e.g., Pan American Union, 
International Postal Union, and International Monetary Fund)).
    d. National Communications System (NCS) refers to that organization 
established by the President in Executive Order No. 12472, ``Assignment 
of National Security and Emergency Preparedness Telecommunications 
Functions,'' April 3, 1984, 49 FR 13471 (1984).
    e. National Coordinating Center (NCC) refers to the joint 
telecommunications industry-Federal government operation established by 
the National Communications System to assist in the initiation, 
coordination, restoration, and reconstitution of NSEP telecommunication 
services or facilities.
    f. National Security Emergency Preparedness (NSEP) 
telecommunications services, or ``NSEP services,'' means 
telecommunication services which are used to maintain a state of 
readiness or to respond to and manage any event or crisis (local, 
national, or international), which causes or could cause injury or harm 
to the population, damage to or loss of property, or degrades or 
threatens the NSEP posture of the United States. These services fall 
into two specific categories, Emergency NSEP and Essential NSEP, and are 
assigned priority levels pursuant to section 9 of this appendix.
    g. NSEP treatment refers to the provisioning of a telecommunication 
service before others based on the provisioning priority level assigned 
by the Executive Office of the President.
    h. Priority action means assignment, revision, revocation, or 
revalidation by the Executive Office of the President of a priority 
level associated with an NSEP telecommunications service.
    i. Priority level means the level that may be assigned to an NSEP 
telecommunications service specifying the order in which provisioning or 
restoration of the service is to occur relative to other NSEP and/or 
non-NSEP telecommunication services. Priority levels authorized by this 
appendix are designated (highest to lowest) ``E,'' ``1,'' ``2,'' ``3,'' 
``4,'' and ``5,'' for provisioning and ``1,'' ``2,'' ``3,'' ``4,'' and 
``5,'' for restoration.
    j. Priority level assignment means the priority level(s) designated 
for the provisioning and/or restoration of a particular NSEP 
telecommunications service under section 9 of this appendix.
    k. Private NSEP telecommunications services include non-common 
carrier telecommunications services including private line, virtual 
private line, and private switched network services.
    l. Provisioning means the act of supplying telecommunications 
service to a user, including all associated transmission, wiring and 
equipment. As used herein, ``provisioning'' and ``initiation'' are 
synonymous and include altering the state of an existing priority 
service or capability.
    m. Public switched NSEP telecommunications services include those 
NSEP telecommunications services utilizing public switched networks. 
Such services may include both interexchange and intraexchange network 
facilities (e.g., switching systems, interoffice trunks and subscriber 
loops).
    n. Reconciliation means the comparison of NSEP service information 
and the resolution of identified discrepancies.
    o. Restoration means the repair or returning to service of one or 
more telecommunication services that have experienced a service outage 
or are unusable for any reason, including a damaged or impaired 
telecommunications facility. Such repair or returning to service may be 
done by patching, rerouting, substitution of component parts or 
pathways, and other means, as determined necessary by a service vendor.
    p. Revalidation means the rejustification by a service user of a 
priority level assignment. This may result in extension by the Executive 
Office of the President of the expiration date associated with the 
priority level assignment.
    q. Revision means the change of priority level assignment for an 
NSEP telecommunications service. This includes any extension of an 
existing priority level assignment to an expanded NSEP service.
    r. Revocation means the elimination of a priority level assignment 
when it is no longer valid. All priority level assignments for an NSEP 
service are revoked upon service termination.
    s. Service identification refers to the information uniquely 
identifying an NSEP telecommunications service to the service vendor 
and/or service user.
    t. Service user refers to any individual or organization (including 
a service vendor) supported by a telecommunications service for which a 
priority level has been requested or assigned pursuant to section 8 or 9 
of this appendix.
    u. Service vendor refers to any person, association, partnership, 
corporation, organization, or other entity (including common carriers 
and government organizations) that offers to supply any 
telecommunications equipment, facilities, or services (including 
customer premises equipment and wiring) or

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combination thereof. The term includes resale carriers, prime 
contractors, subcontractors, and interconnecting carriers.
    v. Spare circuits or services refers to those not being used or 
contracted for by any customer.
    w. Telecommunication services means the transmission, emission, or 
reception of signals, signs, writing, images, sounds, or intelligence of 
any nature, by wire, cable, satellite, fiber optics, laser, radio, 
visual or other electronic, electric, electromagnetic, or acoustically 
coupled means, or any combination thereof. The term can include 
necessary telecommunication facilities.
    x. Telecommunications Service Priority (TSP) system user refers to 
any individual, organization, or activity that interacts with the NSEP 
TSP System.

                                4. Scope

    a. Domestic NSEP services. The NSEP TSP System and procedures 
established by this appendix authorize priority treatment to the 
following domestic telecommunication services (including portions of 
U.S. international telecommunication services provided by U.S. vendors) 
for which provisioning or restoration priority levels are requested, 
assigned, and approved in accordance with this appendix:
    (1) Common carrier services which are:
    (a) Interstate or foreign telecommunications services,
    (b) Intrastate telecommunication services inseparable from 
interstate or foreign telecommunications services, and instrastate 
telecommunication services to which priority levels are assigned 
pursuant to section 9 of this appendix.

    Note: Initially, the NSEP TSP System's applicability to public 
switched services is limited to (a) provisioning of such services (e.g., 
business, centrex, cellular, foreign exchange, Wide Area Telephone 
Service (WATS) and other services that the selected vendor is able to 
provision) and (b) restoration of services that the selected vendor is 
able to restore.
    (2) Services which are provided by government and/or non-common 
carriers and are interconnected to common carrier services assigned a 
priority level pursuant to section 9 of this appendix.
    b. Control services and orderwires. The NSEP TSP System and 
procedures established by this appendix are not applicable to authorize 
priority treatment to control services or orderwires owned by a service 
vendor and needed for provisioning, restoration, or maintenance of other 
services owned by that service vendor. Such control services and 
orderwires shall have priority provisioning and restoration over all 
other telecommunication services (including NSEP services) and shall be 
exempt from preemption. However, the NSEP TSP System and procedures 
established by this appendix are applicable to control services or 
orderwires leased by a service vendor.
    c. Other services. The NSEP TSP System may apply, at the discretion 
of and upon special arrangements by the NSEP TSP System users involved, 
to authorize priority treatment to the following telecommunication 
services:
    (1) Government or non-common carrier services which are not 
connected to common carrier provided services assigned a priority level 
pursuant to section 9 of this appendix.
    (2) Portions of U.S. international services which are provided by 
foreign correspondents. (U.S. telecommunication service vendors are 
encouraged to ensure that relevant operating arrangements are consistent 
to the maximum extent practicable with the NSEP TSP System. If such 
arrangements do not exist, U.S. telecommunication service vendors should 
handle service provisioning and/or restoration in accordance with any 
system acceptable to their foreign correspondents which comes closest to 
meeting the procedures established in this appendix.)

                                5. Policy

    The NSEP TSP System is the regulatory, administrative, and 
operational system authorizing and providing for priority treatment, 
i.e., provisioning and restoration, of NSEP telecommunication services. 
As such, it establishes the framework for telecommunication service 
vendors to provision, restore, or otherwise act on a priority basis to 
ensure effective NSEP telecommunication services. The NSEP TSP System 
allows the assignment of priority levels to any NSEP service across 
three time periods, or stress conditions: Peacetime/Crisis/
Mobilizations, Attack/War, and Post-Attack/Recovery. Although priority 
levels normally will be assigned by the Executive Office of the 
President and retained by service vendors only for the current time 
period, they may be preassigned for the other two time periods at the 
request of service users who are able to identify and justify in 
advance, their wartime or post-attack NSEP telecommunication 
requirements. Absent such preassigned priority levels for the Attack/War 
and Post-Attack/Recovery periods, priority level assignments for the 
Peacetime/Crisis/Mobilization period will remain in effect. At all 
times, priority level assignments will be subject to revision by the FCC 
or (on an interim basis) the Executive Office of the President, based 
upon changing NSEP needs. No other system of telecommunication service 
priorities which conflicts with the NSEP TSP System is authorized.

                           6. Responsibilities

    a. The FCC will:

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    (1) Provide regulatory oversight of implementation of the NSEP TSP 
System.
    (2) Enforce NSEP TSP System rules and regulations, which are 
contained in this appendix.
    (3) Act as final authority for approval, revision, or disapproval of 
priority actions by the Executive Office of the President and adjudicate 
disputes regarding either priority actions or denials of requests for 
priority actions by the Executive Office of the President, until 
superseded by the President's war emergency powers under section 706 of 
the Communications Act.
    (4) Function (on a discretionary basis) as a sponsoring Federal 
organization. (See section 6(c) below.)
    b. The Executive Office of the President will:
    (1) During exercise of the President's war emergency powers under 
section 706 of the Communications Act, act as the final approval 
authority for priority actions or denials of requests for priority 
actions, adjudicating any disputes.
    (2) Until the exercise of the President's war emergency powers, 
administer the NSEP TSP System which includes:
    (a) Receiving, processing, and evaluating requests for priority 
actions from service users, or sponsoring Federal government 
organizations on behalf of service users (e.g., Department of State or 
Defense on behalf of foreign governments, Federal Emergency Management 
Agency on behalf of state and local governments, and any Federal 
organization on behalf of private industry entities). Action on such 
requests will be completed within 30 days of receipt.
    (b) Assigning, revising, revalidating, or revoking priority levels 
as necessary or upon request of service users concerned, and denying 
requests for priority actions as necessary, using the categories and 
criteria specified in section 12 of this appendix. Action on such 
requests will be completed within 30 days of receipt.
    (c) Maintaining data on priority level assignments.
    (d) Periodically forwarding to the FCC lists of priority actions by 
the Executive Office of the President for review and approval.
    (e) Periodically initiating reconciliation.
    (f) Testing and evaluating the NSEP TSP System for effectiveness.
    (g) Conducting audits as necessary. Any Telecommunications Service 
Priority (TSP) System user may request the Executive Office of the 
President to conduct an audit.
    (h) Issuing, subject to review by the FCC, regulations and 
procedures supplemental to and consistent with this appendix regarding 
operation and use of the NSEP TSP System.
    (i) Serving as a centralized point-of-contact for collecting and 
disseminating to all interested parties (consistent with requirements 
for treatment of classified and proprietary material) information 
concerning use and abuse of the NSEP TSP System.
    (j) Establishing and assisting a TSP System Oversight Committee to 
identify and review any problems developing in the system and recommend 
actions to correct them or prevent recurrence. In addition to 
representatives of the Executive Office of the President, 
representatives from private industry (including telecommunication 
service vendors), state and local governments, the FCC, and other 
organizations may be appointed to that Committee.
    (k) Reporting at least quarterly to the FCC and TSP System Oversight 
Committee, together with any recommendations for action, the operational 
status of and trends in the NSEP TSP System, including:
    (i) Numbers of requests processed for the various priority actions, 
and the priority levels assigned.
    (ii) Relative percentages of services assigned to each priority 
level under each NSEP category and subcategory.
    (iii) Any apparent serious misassignment or abuse of priority level 
assignments.
    (iv) Any existing or developing problem.
    (l) Submitting semi-annually to the FCC and TSP System Oversight 
Committee a summary report identifying the time and event associated 
with each invocation of NSEP treatment under section 9(c) of this 
appendix, whether the NSEP service requirement was adequately handled, 
and whether any additional charges were incurred. These reports will be 
due by April 30th for the preceding July through December and by October 
31 for the preceding January through June time periods.
    (m) All reports submitted to the FCC should be directed to Chief, 
Domestic Services Branch, Common Carrier Bureau, Washington, DC 20554.
    (3) Function (on a discretionary basis) as a sponsoring Federal 
organization. (See section 6(c) below.)
    c. Sponsoring Federal organizations will:
    (1) Review and decide whether to sponsor foreign, state, and local 
government and private industry (including telecommunication service 
vendors) requests for priority actions. Federal organizations will 
forward sponsored requests with recommendations for disposition to the 
Executive Office of the President. Recommendations will be based on the 
categories and criteria in section 12 of this appendix.
    (2) Forward notification of priority actions or denials of requests 
for priority actions from the Executive Office of the President to the 
requesting foreign, state, and local government and private industry 
entities.
    (3) Cooperate with the Executive Office of the President during 
reconciliation, revalidation, and audits.
    (4) Comply with any regulations and procedures supplemental to and 
consistent with

[[Page 236]]

this appendix which are issued by the Executive Office of the President.
    d. Service users will:
    (1) Identify services requiring priority level assignments and 
request and justify priority level assignments in accordance with this 
appendix and any supplemental regulations and procedures issued by the 
Executive Office of the President that are consistent with this 
appendix.
    (2) Request and justify revalidation of all priority level 
assignments at least every three years.
    (3) For services assigned priority levels, ensure (through 
contractual means or otherwise) availability of customer premises 
equipment and wiring necessary for end-to-end service operation by the 
service due date, and continued operation; and, for such services in the 
Emergency NSEP category, by the time that vendors are prepared to 
provide the services. Additionally, designate the organization 
responsible for the service on an end-to-end basis.
    (4) Be prepared to accept services assigned priority levels by the 
service due dates or, for services in the Emergency NSEP category, when 
they are available.
    (5) Pay vendors any authorized costs associated with services that 
are assigned priority levels.
    (6) Report to vendors any failed or unusable services that are 
assigned priority levels.
    (7) Designate a 24-hour point-of-contact for matters concerning each 
request for priority action and apprise the Executive Office of the 
President thereof.
    (8) Upon termination of services that are assigned priority levels, 
or circumstances warranting revisions in priority level assignment 
(e.g., expansion of service), request and justify revocation or 
revision.
    (9) When NSEP treatment is invoked under section 9(c) of this 
appendix, within 90 days following provisioning of the service involved, 
forward to the National Coordinating Center (see section 3(e) of this 
appendix) complete information identifying the time and event associated 
with the invocation and regarding whether the NSEP service requirement 
was adequately handled and whether any additional charges were incurred.
    (10) Cooperate with the Executive Office of the President during 
reconciliation, revalidation, and audits.
    (11) Comply with any regulations and procedures supplemental to and 
consistent with this appendix that are issued by the Executive Office of 
the President.
    e. Non-federal service users, in addition to responsibilities 
prescribed above in section 6(d), will obtain a sponsoring Federal 
organization for all requests for priority actions. If unable to find a 
sponsoring Federal organization, a non-federal service user may submit 
its request, which must include documentation of attempts made to obtain 
a sponsor and reasons given by the sponsor for its refusal, directly to 
the Executive Office of the President.
    f. Service vendors will:
    (1) When NSEP treatment is invoked by service users, provision NSEP 
telecommunication services before non-NSEP services, based on priority 
level assignments made by the Executive Office of the President. 
Provisioning will require service vendors to:
    (a) Allocate resources to ensure best efforts to provide NSEP 
services by the time required. When limited resources constrain response 
capability, vendors will address conflicts for resources by:
    (i) Providing NSEP services in order of provisioning priority level 
assignment (i.e., ``E'', ``1'', ``2'', ``3'', ``4'', or ``5'');
    (ii) Providing Emergency NSEP services (i.e., those assigned 
provisioning priority level ``E'') in order of receipt of the service 
requests;
    (iii) Providing Essential NSEP services (i.e., those assigned 
priority levels ``1'', ``2'', ``3'', ``4'', or ``5'') that have the same 
provisioning priority level in order of service due dates; and
    (iv) Referring any conflicts which cannot be resolved (to the mutual 
satisfaction of servicer vendors and users) to the Executive Office of 
the President for resolution.
    (b) Comply with NSEP service requests by:
    (i) Allocating resources necessary to provide Emergency NSEP 
services as soon as possible, dispatching outside normal business hours 
when necessary;
    (ii) Ensuring best efforts to meet requested service dates for 
Essential NSEP services, negotiating a mutually (customer and vendor) 
acceptable service due date when the requested service due date cannot 
be met; and
    (iii) Seeking National Coordinating Center (NCC) assistance as 
authorized under the NCC Charter (see section 1.3, NCC Charter, dated 
October 9, 1985).
    (2) Restore NSEP telecommunications services which suffer outage, or 
are reported as unusable or otherwise in need of restoration, before 
non-NSEP services, based on restoration priority level assignments. 
(Note: For broadband or multiple service facilities, restoration is 
permitted even though it might result in restoration of services 
assigned no or lower priority levels along with, or sometimes ahead of, 
some higher priority level services.) Restoration will require service 
vendors to restore NSEP services in order of restoration priority level 
assignment (i.e., ``1'', ``2'', ``3'', ``4'', or ``5'') by:
    (a) Allocating available resources to restore NSEP services as 
quickly as practicable, dispatching outside normal business hours to 
restore services assigned priority levels ``1'', ``2'', and ``3'' when 
necessary, and services assigned priority level ``4'' and ``5''

[[Page 237]]

when the next business day is more than 24 hours away;
    (b) Restoring NSEP services assigned the same restoration priority 
level based upon which can be first restored. (However, restoration 
actions in progress should not normally be interrupted to restore 
another NSEP service assigned the same restoration priority level);
    (c) Patching and/or rerouting NSEP services assigned restoration 
priority levels from ``1'' through ``5,'' when use of patching and/or 
rerouting will hasten restoration;
    (d) Seeking National Coordinating Center (NCC) assistance authorized 
under the NCC Charter; and
    (e) Referring any conflicts which cannot be resolved (to the mutual 
satisfaction of service vendors and users) to the Executive Office of 
the President for resolution.
    (3) Respond to provisioning requests of customers and/or other 
service vendors, and to restoration priority level assignments when an 
NSEP service suffers an outage or is reported as unusable, by:
    (a) Ensuring that vendor personnel understand their responsibilities 
to handle NSEP provisioning requests and to restore NSEP service; and
    (b) Providing a 24-hour point-of-contact for receiving provisioning 
requests for Emergency NSEP services and reports of NSEP service outages 
or unusability.
    (c) Seek verification from an authorized entity if legitimacy of a 
priority level assignment or provisioning request for an NSEP service is 
in doubt. However, processing of Emergency NSEP service requests will 
not be delayed for verification purposes.
    (4) Cooperate with other service vendors involved in provisioning or 
restoring a portion of an NSEP service by honoring provisioning or 
restoration priority level assignments, or requests for assistance to 
provision or restore NSEP services, as detailed in sections 6(f)(1), 
(2), and (3) above.
    (5) All service vendors, including resale carriers, are required to 
ensure that service vendors supplying underlying facilities are provided 
information necessary to implement priority treatment of facilities that 
support NSEP services.
    (6) Preempt, when necessary, existing services to provide an NSEP 
service as authorized in section 7 of this appendix.
    (7) Assist in ensuring that priority level assignments of NSEP 
services are accurately identified ``end-to-end'' by:
    (a) Seeking verification from an authorized Federal government 
entity if the legitimacy of the restoration priority level assignment is 
in doubt;
    (b) Providing to subcontractors and/or interconnecting carriers the 
restoration priority level assigned to a service;
    (c) Supplying, to the Executive Office of the President, when acting 
as a prime contractor to a service user, confirmation information 
regarding NSEP service completion for that portion of the service they 
have contracted to supply;
    (d) Supplying, to the Executive Office of the President, NSEP 
service information for the purpose of reconciliation.
    (e) Cooperating with the Executive Office of the President during 
reconciliation.
    (f) Periodically initiating reconciliation with their subcontractors 
and arranging for subsequent subcontractors to cooperate in the 
reconciliation process.
    (8) Receive compensation for costs authorized through tariffs or 
contracts by:
    (a) Provisions contained in properly filed state or Federal tariffs; 
or
    (b) Provisions of properly negotiated contracts where the carrier is 
not required to file tariffs.
    (9) Provision or restore only the portions of services for which 
they have agreed to be responsible (i.e., have contracted to supply), 
unless the President's war emergency powers under section 706 of the 
Communications Act are in effect.
    (10) Cooperate withe the Executive Office of the President during 
audits.
    (11) Comply with any regulations or procedures supplemental to and 
consistent with this appendix that are issued by the Executive Office of 
the President and reviewed by the FCC.
    (12) Insure that at all times a reasonable number of public switched 
network services are made available for public use.
    (13) Not disclose information concerning NSEP services they provide 
to those not having a need-to-know or might use the information for 
competitive advantage.

                   7. Preemption of Existing Services

    When necessary to provision or restore NSEP services, service 
vendors may preempt services they provide as specified below. ``User'' 
as used in this Section means any user of a telecommunications service, 
including both NSEP and non-NSEP services. Prior consent by a preempted 
user is not required.
    a. The sequence in which existing services may be preempted to 
provision NSEP services assigned a provisioning priority level ``E'' or 
restore NSEP services assigned a restoration priority level from ``1'' 
through ``5'':
    (1) Non-NSEP services: If suitable spare services are not available, 
then, based on the considerations in this appendix and the service 
vendor's best judgment, non-NSEP services will be preempted. After 
ensuring a sufficient number of public switched services are available 
for public use, based on the service vendor's best judgment, such 
services may be used to satisfy a requirement for provisioning or 
restoring NSEP services.

[[Page 238]]

    (2) NSEP services: If no suitable spare or non-NSEP services are 
available, then existing NSEP services may be preempted to provision or 
restore NSEP services with higher priority level assignments. When this 
is necessary, NSEP services will be selected for preemption in the 
inverse order of priority level assignment.
    (3) Service vendors who are preempting services will ensure their 
best effort to notify the service user of the preempted service and 
state the reason for and estimated duration of the preemption.
    b. Service vendors may, based on their best judgment, determine the 
sequence in which existing services may be preempted to provision NSEP 
services assigned a provisioning priority of ``1'' through ``5''. 
Preemption is not subject to the consent of the user whose service will 
be preempted.
    8. Requests for Priority Assignments.
    All service users are required to submit requests for priority 
actions through the Executive Office of the President in the format and 
following the procedures prescribed by that Office.

     9. Assignment, Approval, Use, and Invocation of Priority Levels

    a. Assignment and approval of priority levels. Priority level 
assignments will be based upon the categories and criteria specified in 
section 12 of this appendix. A priority level assignment made by the 
Executive Office of the President will serve as that Office's 
recommendation to the FCC. Until the President's war emergency powers 
are invoked, priority level assignments must be approved by the FCC. 
However, service vendors are ordered to implement any priority level 
assignments that are pending FCC approval.
    After invocation of the President's war emergency powers, these 
requirements may be superseded by other procedures issued by the 
Executive Office of the President.
    b. Use of Priority Level Assignments.
    (1) All provisioning and restoration priority level assignments for 
services in the Emergency NSEP category will be included in initial 
service orders to vendors. Provisioning priority level assignments for 
Essential NSEP services, however, will not usually be included in 
initial service orders to vendors. NSEP treatment for Essential NSEP 
services will be invoked and provisioning priority level assignments 
will be conveyed to service vendors only if the vendors cannot meet 
needed service dates through the normal provisioning process.
    (2) Any revision or revocation of either provisioning or restoration 
priority level assignments will also be transmitted to vendors.
    (3) Service vendors shall accept priority levels and/or revisions 
only after assignment by the Executive Office of the President.

    Note: Service vendors acting as prime contractors will accept 
assigned NSEP priority levels only when they are accompanied by the 
Executive Office of the President designated service identification, 
i.e., TSP Authorization Code. However, service vendors are authorized to 
accept priority levels and/or revisions from users and contracting 
activities before assignment by the Executive Office of the President 
when service vendor, user, and contracting activities are unable to 
communicate with either the Executive Office of the President or the 
FCC. Processing of Emergency NSEP service requests will not be delayed 
for verification purposes.

    c. Invocation of NSEP treatment. To invoke NSEP treatment for the 
priority provisioning of an NSEP telecommunications service, an 
authorized Federal official either within, or acting on behalf of, the 
service user's organization must make a written or oral declaration to 
concerned service vendor(s) and the Executive Office of the President 
that NSEP treatment is being invoked. Authorized Federal officials 
include the head or director of a Federal agency, commander of a 
unified/specified military command, chief of a military service, or 
commander of a major military command; the delegates of any of the 
foregoing; or any other officials as specified in supplemental 
regulations or procedures issued by the Executive Office of the 
President. The authority to invoke NSEP treatment may be delegated only 
to a general or flag officer of a military service, civilian employee of 
equivalent grade (e.g., Senior Executive Service member), Federal 
Coordinating Officer or Federal Emergency Communications Coordinator/
Manager, or any other such officials specified in supplemental 
regulations or procedures issued by the Executive Office of the 
President. Delegates must be designated as such in writing, and written 
or oral invocations must be accomplished, in accordance with 
supplemental regulations or procedures issued by the Executive Office of 
the President.

 10. Resubmission of Circuits Presently Assigned Restoration Priorities

    All circuits assigned restoration priorities must be reviewed for 
eligibility for initial restoration priority level assignment under the 
provisions of this appendix. Circuits currently assigned restoration 
priorities, and for which restoration priority level assignments are 
requested under section 8 of this appendix, will be resubmitted to the 
Executive Office of the President. To resubmit such circuits, service 
users will comply with applicable provisions of section 6(d) of this 
appendix.

[[Page 239]]

                               11. Appeal

    Service users or sponsoring Federal organizations may appeal any 
priority level assignment, denial, revision, revocation, approval, or 
disapproval to the Executive Office of the President within 30 days of 
notification to the service user. The appellant must use the form or 
format required by the Executive Office of the President and must serve 
the FCC with a copy of its appeal. The Executive Office of the President 
will act on the appeal within 90 days of receipt. Service users and 
sponsoring Federal organizations may only then appeal directly to the 
FCC. Such FCC appeal must be filed within 30 days of notification of the 
Executive Office of the President's decision on appeal. Additionally, 
the Executive Office of the President may appeal any FCC revisions, 
approvals, or disapprovals to the FCC. All appeals to the FCC must be 
submitted using the form or format required. The party filing its appeal 
with the FCC must include factual details supporting its claim and must 
serve a copy on the Executive Office of the President and any other 
party directly involved. Such party may file a response within 20 days, 
and replies may be filed within 10 days thereafter. The Commission will 
not issue public notices of such submissions. The Commission will 
provide notice of its decision to the parties of record. Any appeals to 
the Executive Office of the President that include a claim of new 
information that has not been presented before for consideration may be 
submitted at any time.

      12. NSEP TSP System Categories, Criteria, and Priority Levels

    a. General. NSEP TSP System categories and criteria, and permissible 
priority level assignments, are defined and explained below.
    (1) The Essential NSEP category has four subcategories: National 
Security Leadership; National Security Posture and U.S. Population 
Attack Warning; Public Health, Safety, and Maintenance of Law and Order; 
and Public Welfare and Maintenance of National Economic Posture. Each 
subcategory has its own criteria. Criteria are also shown for the 
Emergency NSEP category, which has no sub-categories.
    (2) Priority levels of ``1,'' ``2,'' ``3,'' ``4,'' and ``5'' may be 
assigned for provisioning and/or restoration of Essential NSEP 
telecommunication services. However, for Emergency NSEP 
telecommunications services, a priority level ``E'' is assigned for 
provisioning. A restoration priority level from ``1'' through ``5'' may 
be assigned if an Emergency NSEP service also qualifies for such a 
restoration priority level under the Essential NSEP category.
    (3) The NSEP TSP System allows the assignment of priority levels to 
any NSEP telecommunications service across three time periods, or stress 
conditions: Peacetime/Crisis/Mobilization, Attack/War, and Post-Attack/
Recovery. Priority levels will normally be assigned only for the first 
time period. These assigned priority levels will apply through the onset 
of any attack, but it is expected that they would later be revised by 
surviving authorized telecommunication resource managers within the 
Executive Office of the President based upon specific facts and 
circumstances arising during the Attack/War and Post-Attack/Recovery 
time periods.
    (4) Service users may, for their own internal use, assign 
subpriorities to their services assigned priority levels. Receipt of and 
response to any such subpriorities is optional for service vendors.
    (5) The following paragraphs provide a detailed explanation of the 
categories, subcategories, criteria, and priority level assignments, 
beginning with the Emergency NSEP category.
    b. Emergency NSEP. Telecommunications services in the Emergency NSEP 
category are those new services so critical as to be required to be 
provisioned at the earliest possible time, without regard to the costs 
of obtaining them.
    (1) Criteria. To qualify under the Emergency NSEP category, the 
service must meet criteria directly supporting or resulting from at 
least one of the following NSEP functions:
    (a) Federal government activity responding to a Presidentially 
declared disaster or emergency as defined in the Disaster Relief Act (42 
U.S.C. 5122).
    (b) State or local government activity responding to a 
Presidentially declared disaster or emergency.
    (c) Response to a state of crisis declared by the National Command 
Authorities (e.g., exercise of Presidential war emergency powers under 
section 706 of the Communications Act.)
    (d) Efforts to protect endangered U.S. personnel or property.
    (e) Response to an enemy or terrorist action, civil disturbance, 
natural disaster, or any other unpredictable occurrence that has damaged 
facilities whose uninterrupted operation is critical to NSEP or the 
management of other ongoing crises.
    (f) Certification by the head or director of a Federal agency, 
commander of a unified/specified command, chief of a military service, 
or commander of a major military command, that the telecommunications 
service is so critical to protection of life and property or to NSEP 
that it must be provided immediately.
    (g) A request from an official authorized pursuant to the Foreign 
Intelligence Surveillance Act (50 U.S.C. 1801 et seq. and 18 U.S.C. 
2511, 2518, 2519).
    (2) Priority Level Assignment.

[[Page 240]]

    (a) Services qualifying under the Emergency NSEP category are 
assigned priority level ``E'' for provisioning.
    (b) After 30 days, assignments of provisioning priority level ``E'' 
for Emergency NSEP services are automatically revoked unless extended 
for another 30-day period. A notice of any such revocation will be sent 
to service vendors.
    (c) For restoration, Emergency NSEP services may be assigned 
priority levels under the provisions applicable to Essential NSEP 
services (see section 12(c)). Emergency NSEP services not otherwise 
qualifying for restoration priority level assignment as Essential NSEP 
may be assigned a restoration priority level ``5'' for a 30-day period. 
Such 30-day restoration priority level assignments will be revoked 
automatically unless extended for another 30-day period. A notice of any 
such revocation will be sent to service vendors.
    c. Essential NSEP. Telecommunication services in the Essential NSEP 
category are those required to be provisioned by due dates specified by 
service users, or restored promptly, normally without regard to 
associated overtime or expediting costs. They may be assigned priority 
level of ``1,'' ``2,'' ``3,'' ``4,'' or ``5'' for both provisioning and 
restoration, depending upon the nature and urgency of the supported 
function, the impact of lack of service or of service interruption upon 
the supported function, and, for priority access to public switched 
services, the user's level of responsibility. Priority level assignments 
will be valid for no more than three years unless revalidated. To be 
categorized as Essential NSEP, a telecommunications service must qualify 
under one of the four following subcategories: National Security 
Leadership; National Security Posture and U.S. Population Attack 
Warning; Public Health, Safety and Maintenance of Law and Order; or 
Public Welfare and Maintenance of National Economic Posture. (Note.--
Under emergency circumstances, Essential NSEP telecommunication services 
may be recategorized as Emergency NSEP and assigned a priority level 
``E'' for provisioning.)
    (1) National security leadership. This subcategory will be strictly 
limited to only those telecommunication services essential to national 
survival if nuclear attack threatens or occurs, and critical orderwire 
and control services necessary to ensure the rapid and efficient 
provisioning or restoration of other NSEP telecommunication services. 
Services in this subcategory are those for which a service interruption 
of even a few minutes would have serious adverse impact upon the 
supported NSEP function.
    (a) Criteria. To qualify under this subcategory, a service must be 
at least one of the following:
    (i) Critical orderwire, or control service, supporting other NSEP 
functions.
    (ii) Presidential communications service critical to continuity of 
government and national leadership during crisis situations.
    (iii) National Command Authority communications service for military 
command and control critical to national survival.
    (iv) Intelligence communications service critical to warning of 
potentially catastrophic attack.
    (v) Communications service supporting the conduct of diplomatic 
negotiations critical to arresting or limiting hostilities.
    (b) Priority level assignment. Services under this subcategory will 
normally be assigned priority level ``1'' for provisioning and 
restoration during the Peace/Crisis/Mobilization time period.
    (2) National security posture and U.S. population attack warning. 
This subcategory covers those minimum additional telecommunication 
services essential to maintaining an optimum defense, diplomatic, or 
continuity-of-government postures before, during, and after crises 
situations. Such situations are those ranging from national emergencies 
to international crises, including nuclear attack. Services in this 
subcategory are those for which a service interruption ranging from a 
few minutes to one day would have serious adverse impact upon the 
supported NSEP function.
    (a) Criteria. To qualify under this subcategory, a service must 
support at least one of the following NSEP functions:
    (i) Threat assessment and attack warning.
    (ii) Conduct of diplomacy.
    (iii) Collection, processing, and dissemination of intelligence.
    (iv) Command and control of military forces.
    (v) Military mobilization.
    (vi) Continuity of Federal government before, during, and after 
crises situations.
    (vii) Continuity of state and local government functions supporting 
the Federal government during and after national emergencies.
    (viii) Recovery of critical national functions after crises 
situations.
    (ix) National space operations.
    (b) Priority level assignment. Services under this subcategory will 
normally be assigned priority level ``2,'' ``3,'' ``4,'' or ``5'' for 
provisioning and restoration during Peacetime/Crisis/Mobilization.
    (3) Public health, safety, and maintenance of law and order. This 
subcategory covers the minimum number of telecommunication services 
necessary for giving civil alert to the U.S. population and maintaining 
law and order and the health and safety of the U.S. population in times 
of any national, regional, or serious local emergency. These services 
are those for which a service interruption ranging from a few minutes to 
one day would have serious adverse impact upon the supported NSEP 
functions.

[[Page 241]]

    (a) Criteria. To qualify under this subcategory, a service must 
support at least one of the following NSEP functions:
    (i) Population warning (other than attack warning).
    (ii) Law enforcement.
    (iii) Continuity of critical state and local government functions 
(other than support of the Federal government during and after national 
emergencies).
    (vi) Hospitals and distributions of medical supplies.
    (v) Critical logistic functions and public utility services.
    (vi) Civil air traffic control.
    (vii) Military assistance to civil authorities.
    (viii) Defense and protection of critical industrial facilities.
    (ix) Critical weather services.
    (x) Transportation to accomplish the foregoing NSEP functions.
    (b) Priority level assignment. Service under this subcategory will 
normally be assigned priority levels ``3,'' ``4,'' or ``5'' for 
provisioning and restoration during Peacetime/Crisis/Mobilization.
    (4) Public welfare and maintenance of national economic posture. 
This subcategory covers the minimum number of telecommunications 
services necessary for maintaining the public welfare and national 
economic posture during any national or regional emergency. These 
services are those for which a service interruption ranging from a few 
minutes to one day would have serious adverse impact upon the supported 
NSEP function.
    (a) Criteria. To qualify under this subcategory, a service must 
support at least one of the following NSEP functions:
    (i) Distribution of food and other essential supplies.
    (ii) Maintenance of national monetary, credit, and financial 
systems.
    (iii) Maintenance of price, wage, rent, and salary stabilization, 
and consumer rationing programs.
    (iv) Control of production and distribution of strategic materials 
and energy supplies.
    (v) Prevention and control of environmental hazards or damage.
    (vi) Transportation to accomplish the foregoing NSEP functions.
    (b) Priority level assignment. Services under this subcategory will 
normally be assigned priority levels ``4'' or ``5'' for provisioning and 
restoration during Peacetime/Crisis/Mobilization.
    d. Limitations. Priority levels will be assigned only to the minimum 
number of telecommunication services required to support an NSEP 
function. Priority levels will not normally be assigned to backup 
services on a continuing basis, absent additional justification, e.g., a 
service user specifies a requirement for physically diverse routing or 
contracts for additional continuity-of-service features. The Executive 
Office of the President may also establish limitations upon the relative 
numbers of services which may be assigned any restoration priority 
level. These limitations will not take precedence over laws or executive 
orders. Such limitations shall not be exceeded absent waiver by the 
Executive Office of the President.
    e. Non-NSEP services. Telecommunication services in the non-NSEP 
category will be those which do not meet the criteria for either 
Emergency NSEP or Essential NSEP.

[53 FR 47536, Nov. 23, 1988; 54 FR 152, Jan. 4, 1989; 54 FR 1471, Jan. 
13, 1989]



PART 65--INTERSTATE RATE OF RETURN PRESCRIPTION PROCEDURES AND METHODOLOGIES--Table of Contents




                           Subpart A--General

Sec.
65.1  Application of part 65.

                          Subpart B--Procedures

65.100  Participation and acceptance of service designation.
65.101  Initiation of unitary rate of return prescription proceedings.
65.102  Petitions for exclusion from unitary treatment and for 
          individual treatment in determining authorized return for 
          interstate exchange access service.
65.103  Procedures for filing rate of return submissions.
65.104  Page limitations for rate of return submissions.
65.105  Discovery.

                      Subpart C--Exchange Carriers

65.300  Calculations of the components and weights of the cost of 
          capital.
65.301  Cost of equity.
65.302  Cost of debt.
65.303  Cost of preferred stock.
65.304  Capital structure.
65.305  Calculation of the weighted average cost of capital.
65.306  Calculation accuracy.
65.450  Net income.

                    Subpart D--Interexchange Carriers

65.500  Net income.

                    Subpart E--Rate of Return Reports

65.600  Rate of return reports.

              Subpart F--Maximum Allowable Rates of Return

65.700  Determining the maximum allowable rate of return.

[[Page 242]]

65.701  Period of review.
65.702  Measurement of interstate service earnings.

                          Subpart G--Rate Base

65.800  Rate base.
65.810  Definitions.
65.820  Included items.
65.830  Deducted items.

    Authority: Secs. 4, 201, 202, 203, 205, 218, 403, 48 Stat., 1066, 
1072, 1077, 1094, as amended, 47 U.S.C. 151, 154, 201, 202, 203, 204, 
205, 218, 219, 220, 403.



                           Subpart A--General



Sec. 65.1  Application of part 65.

    (a) This part establishes procedures and methodologies for 
Commission prescription of an authorized unitary interstate exchange 
access rate of return and individual rates of return for the interstate 
exchange access rates of certain carriers pursuant to Sec. 65.102. This 
part shall apply to those interstate services of local exchange carriers 
as the Commission shall designate by rule or order, except that all 
local exchange carriers shall provide to the Commission that information 
which the Commission requests for purposes of conducting prescription 
proceedings pursuant to this part.
    (b) Local exchange carriers subject to Secs. 61.41 through 61.49 of 
this chapter are exempt from the requirements of this part with the 
following exceptions:
    (1) Except as otherwise required by Commission order, carriers 
subject to Secs. 61.41 through 61.49 of this chapter shall employ the 
rate of return value calculated for interstate access services in 
complying with any applicable rules under parts 36 and 69 that require a 
return component;
    (2) Carriers subject to Secs. 61.41 through 61.49 of this chapter 
shall be subject to Sec. 65.600(d);
    (3) Carriers subject to Secs. 61.41 through 61.49 of this chapter 
shall continue to comply with the prescribed rate of return when 
offering any services specified in Sec. 61.42(f) of this chapter unless 
the Commission otherwise directs; and
    (4) Carriers subject to Secs. 61.41 through 61.49 of this chapter 
shall comply with Commission information requests made pursuant to 
Sec. 65.1(a).

[60 FR 28543, June 1, 1995]



                          Subpart B--Procedures



Sec. 65.100  Participation and acceptance of service designation.

    (a) All interstate exchange access carriers, their customers, and 
any member of the public may participate in rate of return proceedings 
to determine the authorized unitary interstate exchange access or 
individual interstate exchange access rates of return authorized 
pursuant to Sec. 65.102.
    (b) Participants shall state in their initial pleading in a 
prescription proceeding whether they wish to receive service of 
documents and other material filed in the proceeding. Participants that 
wish to receive service by hand on the filing dates when so required by 
this part 65 shall specify in their initial pleading in a prescription 
proceeding, as specified in Sec. 65.103 (b) and (c), an agent for 
acceptance of service by hand in the District of Columbia. The 
participant may elect in its pleading to receive service by mail or upon 
an agent at another location. When such an election is made, other 
participants need not complete service on the filing date, and requests 
for extension of time due to delays in completion of service will not be 
entertained.

[60 FR 28544, June 1, 1995]



Sec. 65.101  Initiation of unitary rate of return prescription proceedings.

    (a) Whenever the Commission determines that the monthly average 
yields on ten (10) year United States Treasury securities remain, for a 
consecutive six (6) month period, at least 150 basis points above or 
below the average of the monthly average yields in effect for the 
consecutive six (6) month period immediately prior to the effective date 
of the current prescription, the Commission shall issue a notice 
inquiring whether a rate of return prescription according to this part 
should commence. This notice shall state:
    (1) The deadlines for filing initial and reply comments regarding 
the notice;
    (2) The cost of debt, cost of preferred stock, and capital structure 
computed in accordance with Secs. 65.302, 65.303, and 65.304; and
    (3) Such other information as the Commission may deem proper.

[[Page 243]]

    (b) Based on the information submitted in response to the notice 
described in Sec. 65.101(a), and on any other information specifically 
identified, the Commission may issue a notice initiating a prescription 
proceeding pursuant to this part.
    (c) The Chief, Common Carrier Bureau, may issue the notice described 
in Sec. 65.101(a).

[60 FR 28544, June 1, 1995]



Sec. 65.102  Petitions for exclusion from unitary treatment and for individual treatment in determining authorized return for interstate exchange access 
          service.

    (a) Exclusion from unitary treatment will be granted for a period of 
two years if the cost of capital for interstate exchange service is so 
low as to be confiscatory because it is outside the zone of 
reasonableness for the individual carrier's required rate of return for 
interstate exchange access services.
    (b) A petition for exclusion from unitary treatment and for 
individual treatment must plead with particularity the exceptional facts 
and circumstances that justify individual treatment. The showing shall 
include a demonstration that the exceptional facts and circumstances are 
not of transitory effect, such that exclusion for a period of a least 
two years is justified.
    (c) A petition for exclusion from unitary treatment and for 
individual treatment may be filed at any time. When a petition is filed 
at a time other than that specified in Sec. 65.103(b)(2), the petitioner 
must provide compelling evidence that its need for individual treatment 
is not simply the result of short-term fluctuations in the cost of 
capital or similar events.

[60 FR 28544, June 1, 1995]



Sec. 65.103  Procedures for filing rate of return submissions.

    (a) Rate of return submissions listed in Sec. 65.103 (b)(1) and (c) 
may include any relevant information, subject to the page limitations of 
Sec. 65.104. The Chief, Common Carrier Bureau, may require from carriers 
providing interstate services, and from other participants submitting 
rate of return submissions, data, studies or other information that are 
reasonably calculated to lead to a full and fair record.
    (b) In proceedings to prescribe an authorized unitary rate of return 
on interstate access services, interested parties may file direct case 
submissions, responses, and rebuttals. Direct case submissions shall be 
filed within sixty (60) calendar days following the effective date of a 
Commission notice initiating a rate of return proceeding pursuant to 
Sec. 65.101(b). Rate of return submissions responsive to the direct case 
submissions shall be filed within sixty (60) calendar days after the 
deadline for filing direct case submissions. Rebuttal submissions shall 
be field within twenty-one (21) calendar days after the deadline for 
filing responsive submissions.
    (c) Petitions for exclusion from unitary treatment and for 
individual treatment may be filed on the same date as the deadline for 
filing responsive rate of return submissions. Oppositions shall be filed 
within 35 calendar days thereafter. Rebuttal submissions shall be filed 
within 21 calendar days after the deadline for filing responsive 
submissions.
    (d) An original and 4 copies of all rate of return submissions shall 
be filed with the Secretary.
    (e) The filing party shall serve a copy of each rate of return 
submission, other than an initial submission, on all participants who 
have filed a designation of service notice pursuant to Sec. 65.100(b).

[60 FR 28544, June 1, 1995]



Sec. 65.104  Page limitations for rate of return submissions.

    Rate of return submissions, including all argument, attachments, 
appendices, supplements, and supporting materials, such as testimony, 
data and documents, but excluding tables of contents and summaries of 
argument, shall be subject to the following double spaced typewritten 
page limits:
    (a) The direct case submission of any participant shall not exceed 
70 pages in length.
    (b) The responsive submission of any participant shall not exceed 70 
pages in length.

[[Page 244]]

    (c) The rebuttal submission of any participant shall not exceed 50 
pages in length.
    (d) Petitions for exclusion from unitary treatment shall not exceed 
70 pages in length. Oppositions to petitions for exclusion shall not 
exceed 50 pages in length. Rebuttals shall not exceed 35 pages in 
length.

[60 FR 28544, June 1, 1995]



Sec. 65.105  Discovery.

    (a) Participants shall file with each rate of return submission 
copies of all information, including studies, financial analysts' 
reports, and any other documents relied upon by participants or their 
experts in the preparation of their submission. Information filed 
pursuant to this paragraph for which protection from disclosure is 
sought shall be filed subject to protective orders which shall be duly 
granted by the Chief, Common Carrier Bureau, for good cause shown.
    (b) Participants may file written interrogatories and requests for 
documents directed to any rate of return submission and not otherwise 
filed pursuant to Sec. 65.105(a). The permissible scope of examination 
is that participants may be examined upon any matter, not privileged, 
that will demonstrably lead to the production of material, relevant, 
decisionally significant evidence.
    (c) Discovery requests pursuant to Sec. 65.105(b), including written 
interrogatories, shall be filed within 14 calendar days after the filing 
of the rate of return submission to which the request is directed. 
Discovery requests that are not opposed shall be complied with within 14 
calendar days of the request date.
    (d) Oppositions to discovery requests made pursuant to 
Sec. 65.105(b), including written interrogatories, shall be filed within 
7 calendar days after requests are filed. The Chief, Common Carrier 
Bureau, shall rule upon any such opposition. Except as stayed by the 
Commission or a Court, any required response to a discovery request that 
is opposed shall be provided within 14 calendar days after release of 
the ruling of the Chief, Common Carrier Bureau.
    (e) An original and 4 copies of all information described in 
Sec. 65.105(a) and all requests, oppositions, and responses made 
pursuant to Sec. 65.105 (a), (b) and (d) shall be filed with the 
Secretary.
    (f) Service of requests, oppositions, and responses made pursuant to 
Sec. 65.105 (b) and (d) shall be made upon all participants who have 
filed a designation of service notice pursuant to Sec. 65.100(b). 
Service of requests upon participants who have filed designation of 
service notices pursuant to Sec. 65.100(b) shall be made by hand on the 
filing dates thereof.

[60 FR 28544, June 1, 1995]



                      Subpart C--Exchange Carriers



Sec. 65.300  Calculations of the components and weights of the cost of capital.

    (a) Sections 65.301 through 65.303 specify the calculations that are 
to be performed in computing cost of debt, cost of preferred stock, and 
financial structure weights for prescription proceedings. The 
calculations shall determine, where applicable, a composite cost of 
debt, a composite cost of preferred stock, and a composite financial 
structure for all local exchange carriers with annual revenues in excess 
of $100 million. The calculations shall be based on data reported to the 
Commission in FCC Report 43-02. (See 47 CFR 43.21). The results of the 
calculations shall be used in the represcription proceeding to which 
they relate unless the record in that proceeding shows that their use 
would be unreasonable.
    (b) Excluded from cost of capital calculations made pursuant to 
Sec. 65.300 shall be those sources of financing that are not investor 
supplied, or that are otherwise subtracted from a carrier's rate base 
pursuant to Commission orders governing the calculation of net rate base 
amounts in tariff filings that are made pursuant to section 203 of the 
Communications Act of 1934, 47 U.S.C. 203, or that were treated as 
``zero cost'' sources of financing in section 450 and subpart G of this 
part 65. Specifically excluded are: accounts payable, accrued taxes, 
accrued interest, dividends payable, deferred credits and operating 
reserves, deferred taxes and deferred tax credits.

[60 FR 28545, June 1, 1995]

[[Page 245]]



Sec. 65.301  Cost of equity.

    The cost of equity shall be determined in represcription proceedings 
after giving full consideration to the evidence in the record, including 
such evidence as the Commission may officially notice.

[60 FR 28545, June 1, 1995]



Sec. 65.302  Cost of debt.

    The formula for determining the cost of debt is equal to:
    [GRAPHIC] [TIFF OMITTED] TR01JN95.000
    
Where:
    ``Total Annual Interest Expense'' is the total interest expense for 
the most recent two years for all local exchange carriers with annual 
revenues of $100 million or more.
    ``Average Outstanding Debt'' is the average of the total debt for 
the most recent two years for all local exchange carriers with annual 
revenues of $100 million or more.

[60 FR 28545, June 1, 1995]



Sec. 65.303  Cost of preferred stock.

    The formula for determining the cost of preferred stock is:
    [GRAPHIC] [TIFF OMITTED] TR01JN95.001
    
Where:
    ``Total Annual Preferred Dividends'' is the total dividends on 
preferred stock for the most recent two years for all local exchange 
carriers with annual revenues of $100 million or more. ``Proceeds from 
the Issuance of Preferred Stock'' is the average of the total net 
proceeds from the issuance of preferred stock for the most recent two 
years for all local exchange carriers with annual revenues of $100 
million or more.

[60 FR 28545, June 1, 1995]



Sec. 65.304  Capital structure.

    The proportion of each cost of capital component in the capital 
structure is equal to:
    Proportion in the capital structure =
    [GRAPHIC] [TIFF OMITTED] TR01JN95.002
    
Where:
    ``Book Value of particular component'' is the total of the book 
values of that component for all local exchange carriers with annual 
revenues of $100 million or more.
    ``Book Value of Debt+Book Value of Preferred Stock+Book Value of 
Equity'' is the total of the book values of all the components for all 
local exchange carriers with annual revenues of $100 million or more.
    The total of all proportions shall equal 1.00.

[60 FR 28545, June 1, 1995]

[[Page 246]]



Sec. 65.305  Calculation of the weighted average cost of capital.

    (a) The composite weighted average cost of capital is the sum of the 
cost of debt, the cost of preferred stock, and the cost of equity, each 
weighted by its proportion in the capital structure of the telephone 
companies.
    (b) Unless the Commission determines to the contrary in a 
prescription proceeding, the composite weighted average cost of debt and 
cost of preferred stock is the composite weight computed in accordance 
with Sec. 65.304 multiplied by the composite cost of the component 
computed in accordance with Sec. 65.301 or Sec. 65.302, as applicable. 
The composite weighted average cost of equity will be determined in each 
prescription proceeding.

[60 FR 28546, June 1, 1995]



Sec. 65.306  Calculation accuracy.

    In a prescription proceeding, the final determinations of the cost 
of equity, cost of debt, cost of preferred stock and their capital 
structure weights shall be accurate to two decimal places.

[60 FR 28546, June 1, 1995]



Sec. 65.450  Net income.

    (a) Net income shall consist of all revenues derived from the 
provision of interstate telecommunications services regulated by this 
Commission less expenses recognized by the Commission as necessary to 
the provision of these services. The calculation of expenses entering 
into the determination of net income shall include the interstate 
portion of plant specific operations (Accounts 6110-6441), plant 
nonspecific operations (Accounts 6510-6565), customer operations 
(Accounts 6610-6623), corporate operations (Accounts 6710-6790), other 
operating income and expense accounts (Accounts 7100-7160), and 
operating taxes (Accounts 7200-7250), except to the extent this 
Commission specifically provides to the contrary.
    (b) Gains and losses related to the disposition of plant in service 
items, shall be handled as follows:
    (1) Gains related to property sold to others and leased back under 
capital leases for use in telecommunications services shall be recorded 
in Account 4360 (Other Deferred Credits) and credited to Account 6563 
(Amortization Expense--Tangible) over the amortization period 
established for the capital lease;
    (2) Gains or losses related to the disposition of land and other 
nondepreciable items recorded in Account 7150 (Gains and Losses 
Resulting from the Sale of Land and Artworks) shall be included in net 
income for ratemaking purposes, but adjusted to reflect the relative 
amount of time such property was used in regulated operations and 
included in the rate base; and
    (3) Proceeds related to the disposition of property depreciated on a 
group basis and used jointly in regulated and nonregulated activities, 
including sale-leaseback arrangements for property depreciated on a 
group basis, shall be credited to the related reserves and attributed to 
regulated and nonregulated in proportion to the accumulated regulated 
and nonregulated depreciation for that group.
    (c) Gains or losses related to the disposition of property that was 
never included in the rate base shall not be considered for ratemaking 
purposes.
    (d) Except for the allowance for funds used during construction, 
reasonable charitable deductions and interest related to customer 
deposits, the amounts recorded as nonoperating income and expenses and 
taxes (Accounts 7300-7450) and interest and related items (Accounts 
7500-7540) and extraordinary items (Accounts 7600-7640) shall not be 
included unless this Commission specifically determines that particular 
items recorded in those accounts shall be included.

[53 FR 1029, Jan. 15, 1988, as amended at 60 FR 12139, Mar. 6, 1995]



                    Subpart D--Interexchange Carriers



Sec. 65.500  Net income.

    The net income methodology specified in Sec. 65.450 shall be 
utilized by all interexchange carriers that are so designated by 
Commission order.

[60 FR 28546, June 1, 1995]

[[Page 247]]



                    Subpart E--Rate of Return Reports



Sec. 65.600  Rate of return reports.

    (a) Subpart E shall apply to those interstate communications common 
carriers and exchange carriers that are so designated by Commission 
order.
    (b) Each local exchange carrier or group of affiliated carriers 
which is not subject to Secs. 61.41 through 61.49 of this chapter and 
which has filed individual access tariffs during the preceding 
enforcement period shall file with the Commission within three (3) 
months after the end of each calendar year, an annual rate of return 
monitoring report which shall be the enforcement period report. Reports 
shall be filed on the appropriate report form prescribed by the 
Commission (see Sec. 1.795 of this chapter) and shall provide full and 
specific answers to all questions propounded and information requested 
in the currently effective report form. The number of copies to be filed 
shall be specified in the applicable report form. At least one copy of 
the report shall be signed on the signature page by the responsible 
officer. A copy of each report shall be retained in the principal office 
of the respondent and shall be filed in such a manner as to be readily 
available for reference and inspection. Final adjustments to the 
enforcement period report shall be made by September 30 of the year 
following the enforcement period to ensure that any refunds can be 
properly reflected in an annual access filing.
    (c) Each interexchange carrier subject to Secs. 61.41 through 61.49 
shall file with the Commission, within three (3) months after the end of 
each calendar year, the total interstate rate of return for that year 
for all interstate services subject to regulation by the Commission. 
Each such filing shall include a report of the total revenues, total 
expenses and taxes, operating income, and the rate base. A copy of the 
filing shall be retained in the principal office of the respondent and 
shall be filed in such manner as to be readily available for reference 
and inspection.
    (d)(1) Each local exchange carrier or group of affiliated carriers 
subject to Secs. 61.41 through 61.49 of this chapter shall file with the 
Commission within three (3) months after the end of each calendar year a 
report of its total interstate rate of return for that year. Such 
filings shall include a report of the total revenues, total expenses and 
taxes, operating income, and the rate base. Reports shall be filed on 
the appropriate form prescribed by the Commission (see Sec. 1.795 of 
this chapter) and shall provide full and specific answers to all 
questions propounded and information requested in the currently 
effective form. The number of copies to be filed shall be specified in 
the applicable report form. At least one copy of the report shall be 
retained in the principal office of the respondent and shall be filed in 
such manner as to be readily available for reference and inspection.
    (2) Each local exchange carrier or group of affiliated carriers 
subject to Secs. 61.41 through 61.49 of this chapter shall file with the 
Commission within fifteen (15) months after the end of each calendar 
year a report reflecting any corrections or modifications to the report 
filed pursuant to paragraph (d)(1) of this section. Reports shall be 
filed on the app