[Federal Register Volume 64, Number 191 (Monday, October 4, 1999)]
[Proposed Rules]
[Pages 53648-53655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25703]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54, 61, and 69
[CC Docket Nos. 96-262; 94-1; 99-249; 96-45; FCC 99-235]
Access Charge Reform, Price Cap Performance Review for Local
Exchange Carriers, Low-Volume Long Distance Users, and Federal-State
Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document seeks comment on whether the Commission should
adopt, in its entirety, a proposal submitted by the Coalition for
Affordable Local and Long Distance Services (CALLS), as requested by
the CALLS members. The CALLS proposal is an integrated interstate
universal service and interstate access reform plan covering price cap
incumbent local exchange carriers. The document also solicits comment
on whether there are any aspects of the proposal that the Commission
should incorporate into any of the Commission's concurrent proceedings,
in the event we do not adopt the CALLS proposal in its entirety. In
addition, the document invites commenting parties to propose
alternative plans to that submitted by CALLS.
DATES: Comments are due on or before October 29, 1999. Reply comments
are due on or before November 19, 1999.
ADDRESSES: Federal Communications Commission, Secretary, Room TW-A325,
445 12th Street SW, Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Richard Lerner, Deputy Division Chief,
Common Carrier Bureau, Competitive Pricing Division, (202) 418-1520.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's NPRM
adopted September 14, 1999, and released September 15, 1999. The plan
as submitted by CALLS is attached as Appendix A. The full text of this
NPRM, as well as the complete files for the relevant dockets, is
available for inspection and copying during the weekday hours of 9:00
a.m. to 4:30 p.m. in the Commission's Reference Center, Room CY-A257,
445 12th St., SW, Washington, DC, (202) 418-0270, or copies may be
purchased from the Commission's duplicating contractor, ITS, Inc., 1231
20th St., NW, Washington, DC 20036, (202) 857-3800. The complete text
of the NPRM also may be obtained through the Internet, at http://
www.fcc.gov/Bureaus/Common__Carrier/Notices/1999/fcc99235.doc.
Synopsis of Notice of Proposed Rulemaking
1. This NPRM seeks comment on an integrated proposal submitted by
CALLS. The CALLS proposal is an interstate universal service and
interstate access reform plan covering incumbent price cap local
exchange carriers (LECs). The proposal was developed through
negotiations among those local exchange carriers and interexchange
carriers who are coalition members. It is designed to be implemented
over a five-year period beginning in January of 2000 and would apply to
those carriers who voluntarily elect to participate. CALLS requests
that the Commission adopt the plan without modification as an
integrated package. CALLS believes this plan will promote comparable
and affordable universal service, reduce long distance bills, and
promote competition in rural and residential markets.
2. The NPRM seeks comment on the CALLS proposal to revise the
current system of common line charges by combining existing carrier and
subscriber line charges into one flat-rated subscriber line charge, and
permitting deaveraging of those charges subject to specific conditions.
In addition, the NPRM invites parties to comment on the proposal by the
CALLS members to establish a portable universal service fund that
provides explicit support to replace support currently implicit in
interstate access charges. The NPRM solicits further comment on the
CALLS proposal to establish a ``social contract'' under which traffic-
sensitive switched access rates are reduced annually until they reach
an agreed level; once that level is reached, rates for all access
elements are frozen until July 1, 2004. Finally, as part of the
Commission's continuing efforts to reform regulation of universal
service and interstate access charges to accelerate the development of
competition in all telecommunications markets, commenting parties are
invited to submit alternative plans to that proposed by CALLS.
3. Because some of the issues addressed by the CALLS Proposal
involve matters that are already the subject of pending Commission and
court proceedings (62 FR 31868, June 11, 1997), the Commission
initiates this rulemaking to determine whether it should adopt the
CALLS proposal in its entirety, as requested by the CALLS members, or
whether certain elements of the proposal should be incorporated into
any of the Commission's concurrent efforts to reform interstate access
charges and universal service.
A. Ex Parte Presentations
4. This NPRM is a permit-but-disclose proceeding and is subject to
the permit-but-disclose requirements under 47 CFR 1206(b), as revised.
Persons making oral ex parte presentations are reminded that memoranda
summarizing the presentation must contain a summary of the substance of
the presentation and not merely a listing of the subjects discussed.
More than a one or two sentence description of the views and arguments
presented is generally required. Other rules pertaining to oral and
written presentations are set forth in section 1.1206(b), as well.
B. Initial Regulatory Flexibility Act Analysis
5. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IFRA) of the possible significant economic impact on small entities by
the proposals in this NPRM. See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601
et seq., has been amended by the Contract with America Advancement Act
of 1996, Public Law No. 104-121, 110 Stat. 847 (1996) (CWAA). Title II
of the CWAA is the Small Business Regulatory Enforcement Fairness Act
of 1996 (SBREFA). Written public comments are requested on the IFRA.
Comments must be identified as responses to the IFRA and must be filed
in accordance with the same filing deadlines as comments on the rest of
this NPRM. Parties should address the extent to which the CALLS
proposal would affect large and small price cap incumbent local
exchange carriers differently, and how small business entities,
including small price cap incumbent local exchange carriers, would be
affected. The Office of Public Affairs, Reference Operations Division,
will send a copy of the NPRM, including this IFRA, to the Chief Counsel
for Advocacy of the Small Business Administration. See 5 U.S.C. 603(a).
In addition, the NPRM and IFRA (or summaries thereof) will be published
in the Federal Register.
[[Page 53649]]
6. Need for, and Objectives of, the Proposed Rules. The CALLS
members offer the proposal as a comprehensive solution to the members'
access charge, universal service, and price cap concerns. The CALLS
plan would revise the current system of common line charges by
combining existing carrier and subscriber charges into one flat-rated
subscriber line charge (SLC), and would provide for limited deaveraging
of those charges under specific conditions. The CALLS plan also would
establish a portable universal service fund that provides explicit
support to replace support currently implicit in interstate access
charges. In addition, the CALLS plan would establish a ``social
compact'' under which traffic-sensitive switches access rates are
reduced annually until they reach an agreed level. CALLS believes this
plan will promote comparable and affordable universal service, reduce
long distance bills, and promote competition in rural and residential
telecommunications markets.
7. Legal Basis. This rulemaking action is supported by 47 U.S.C.
154(i), 154(j), 201-205, 254, and 403.
8. Description and Estimate of the Number of Small Entities to
Which the NPRM Will Apply. The RFA directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted. The
RFA generally defines the term ``small entity'' as having the same
meaning as the term ``small business''. See 5 U.S.C. 601(3)
(incorporating by reference the definition of ``small business
concern'' in 15 U.S.C. 632). In addition, the term ``small business''
has the same meaning as the term ``small business concern'' under the
Small Business Act. A small business concern is one which: (1) Is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) meets any additional criteria established by the
Small Business Administration. The Small Business Administration has
defined a small business for Standard Industrial Classification (SIC)
category 4813 (Telephone Communications, Except Radiotelephone) to be a
small entity that has no more than 1,500 employees. See 13 CFR 121.201.
9. Total Number of Telephone Companies Affected. The Commission has
included small incumbent LECs in this present RFA analysis. As noted
above, a ``small business'' under RFA is one that, inter alia, meets
the pertinent small business size standard (e.g., a telephone
communications business having 1,500 or fewer employees), and ``is not
dominant in its field of operation.'' The SBA's Office of Advocacy
contends that, for RFA purposes, small incumbent LECs are not dominant
in their field of operation because any such dominance is not
``national'' in scope. The Commission has therefore included small
incumbent LECs in this RFA analysis, although it emphasizes that this
RFA action has no effect on FCC analyses and determinations in other,
non-RFA contexts.
10. Price Cap Local Exchange Carriers. This rulemaking applies only
to price cap LECs. The Commission does not have data specifying the
number of these carriers that are either dominant in their field of
operations, are not independently owned and operated, or have more than
1,500 employees, and thus is unable at this time to estimate with
greater precision the number of price cap LECs that would qualify as
small business concerns under the SBA's definition. However, there are
only 13 price cap LECs, and we know that these are mostly non-small
entities. Consequently, we estimate that significantly fewer than 13
providers of local exchange service are small entities or small price
cap LECs that may be affected by these proposals.
11. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements. It is not clear whether, on balance, the
proposals made by CALLS would increase or decrease price cap incumbent
local exchange carriers' administrative burdens. Some of the rate
structure reforms proposed by CALLS may require additional filings, and
some of the CALLS proposals may reduce some administrative burdens. For
example, if the CALLS proposal to eliminate the presubscribed
interexchange carrier charge is adopted, the Commission expects that
this would decrease some administrative burdens for price cap incumbent
local exchange carriers. Some of the rate structure reforms proposed by
CALLS may have a neutral affect in terms of administrative burdens. For
example, CALLS proposes that implicit subsidies now collected by price
cap incumbent local exchange carriers from interexchange carriers
through access charges would be collected as explicit subsidies from
the Universal Service Fund Administrator. If this proposal is adopted,
the administrative burden for the price cap incumbent local exchange
carrier is expected to remain the same.
12. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered. The proposals made
by CALLS could have varying positive or negative impacts on price cap
incumbent local exchange carriers, including any such small carriers.
The alternative to consideration of adopting the CALLS proposal at this
time would be to continue in effect the existing access charge and
universal service fund rules. We seek comment on the economic impact on
small entities of the CALLS proposal and urge that the parties support
their comments with specific evidence and analysis.
13. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules. None.
C. Deadlines and Instructions for Filing Comments
14. Pursuant to 47 CFR 1.415 and 1.419, interested parties may file
comments on or before October 29, 1999 and reply comments on or before
November 19, 1999. Comments may be filed using the Commission's
Electronic Comment Filing System (ECFS) or by filing paper copies. See
Electronic Filing Documents in Rulemaking Proceedings, 63 FR 24,121
(1998).
15. Comments filed through the ECFS can be sent as an electronic
file via the Internet to <http://www.fcc.gov.e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed.
Because four docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each of the four docket or rulemaking numbers
referenced in the caption. In completing the transmittal screen,
commenters should include their full name, Postal Service mailing
address, and the applicable docket or rulemaking number. Parties may
also submit an electronic comment by Internet e-mail. To get filing
instructions for e-mail comments, commenters should send an e-mail to
[email protected], and should include the following words in the body of the
message, ``get form StudyArea =
PriceCapCMTRevenue FilingEntity x
(BFPStudyArea BFPFilingEntity)
LinesStudyArea
Nothing in this definition precludes a price cap LEC from
continuing to average rates across filing entities containing
multiple study areas, where permitted under existing rules.
2.1.1.3. Zone Average Revenue Per Line. Zone Average CMT Revenue
Per Line is the Price Cap CMT Revenue Per Line calculated for a
particular state-defined zone used for deaveraging of UNE loop
prices. The Zone Average Revenue Per Line is computed according to
the following formula:
ZoneAverageRevenuePerLine = 25%
(LoopZonePrice + PortPrice) + U
Where:
U (Uniform Revenue Per Line Adjustment) =
((PriceCapCMTRevenuePerLineStudyArea(s) x Base Period
LinesStudyArea(s) - (25% Sum of (LinesUNEZone
x Loop&Port PriceUNEZone x 12) for each zone)))
Base Period LinesStudy Area(s) 12
Loop&Port PriceUNE Zone = the UNE rates for unbundled
loop and switch ports in that UNE zone.(As stated in paragraph 5,
nothing in this proposal supercedes, prejudices or otherwise implies
a result of the UNE Remand proceeding.)
2.1.2. Primary Residential and Single Line Business Charges.
2.1.2.1. Presubscribed Interexchange Carrier Charge. Beginning
on January 1, 2000, eliminate the primary residential line and
single line business Presubscribed Interexchange Carrier Charge.
2.1.2.2. Subscriber Line Charge.
2.1.2.2.1. Averaged Subscriber Line Charge. Beginning on January
1, 2000, the maximum averaged Subscriber Line Charge for primary
residential and single line business lines in a given entity will be
Average Price Cap CMT Revenue per Line up to a nominal cap of $5.50.
($5.50 is equivalent to the current primary residential SLC, PICC-
related account fees charged to the vast majority of presubscribed
residential long distance subscribers, and the 50 cent increase in
the PICC cap for primary residential and single line business
subscribers scheduled to go into effect on July 1, 2000.) Beginning
on January 1, 2001, in lieu of what would have been scheduled annual
increases in the cap on the primary residential line and single line
business Presubscribed Interexchange Carrier Charge of $0.50, plus
inflation, increase the nominal cap on primary residential and
single line business Subscriber Line Charges according to the
following schedule:
On January 1, 2001, to $6.25;
On July 1, 2002, to $6.75;
On July 1, 2003, to $7.00 per line.
2.1.2.2.2. Zone Deaveraged Subscriber Line Charge.
2.1.2.2.2.1. Maximum Charge. The maximum zone deaveraged SLC
that may be charged in any zone is the lesser of the highest Zone
Average Revenue Per Line within the study area, or a nominal cap,
which as of January 1, 2000 is $5.50 per line per month. Beginning
on January 1, 2001, increase the nominal cap on primary residential
and single line business Subscriber Line Charges according to the
following schedule:
On January 1, 2001, to $6.25;
On July 1, 2002, to $6.75;
On July 1, 2003, to $7.00 per line.
2.1.2.2.2.2. Minimum Charge. See paragraph 2.1.5.6.2.
2.1.2.3. Lifeline. Increase minimum federal Lifeline support
effective January 1, 2000, and coincident with changes in nominal
SLC caps thereafter, so that all of the Subscriber Line Charge
continues to be waived for Lifeline customers, with carriers
reimbursed from the Universal Service Fund. In subsequent years,
increase minimum federal Lifeline support in the same amount as
increases in the primary residential Subscriber Line Charge.
2.1.3. Non-Primary Residential Lines.
2.1.3.1. Presubscribed Interexchange Carrier Charges. Beginning
on January 1, 2000, eliminate the PICC for Non-Primary Residential
lines.
2.1.3.2. Subscriber Line Charges.
2.1.3.2.1. Averaged Subscriber Line Charges. Beginning on
January 1, 2000, the maximum averaged Subscriber Line Charge for
non-primary residential lines in a given entity will be the lesser
of:
(a) $7.00 or
(b) The greater of:
(1) The rate as of December 31, 1999 less amounts of SLC
reduction pursuant to paragraph 2.1.6, or
(2) Average Price Cap CMT Revenue Per Line.
2.1.3.2.2. Zone Deaveraged Subscriber Line Charge.
2.1.3.2.2.1. Maximum Charge. The maximum Zone Deaveraged Non-
Primary Residential Subscriber Line Charge will be the lesser of
$7.00 per line per month or the highest Zone Average Revenue Per
Line for any zone in the study area.
2.1.3.2.2.2. Minimum Charge. See paragraph 2.1.5.6.2.
2.1.3.2.3. Elimination of Distinction between Primary and Non-
Primary Residential Lines. Once the charges for primary and non-
primary residential lines are equal within a zone or study area, the
ILEC may eliminate the distinction between primary and non-primary
lines within that zone or study area.
2.1.4. Multiline Business Lines.
2.1.4.1. Presubscribed Interexchange Carrier Charges.
Beginning on January 1, 2000, the cap on the Multiline Business
PICC is reduced to $4.00 per line. Multiline Business PICCs remain
assessed to the interexchange carrier. This charge will be
eliminated over time in most areas pursuant to paragraph 2.1.6.
2.1.4.2. Subscriber Line Charges.
2.1.4.2.1. Averaged Subscriber Line Charges. Beginning on
January 1, 2000, and in the absence of voluntary reductions, the
averaged Subscriber Line Charge for multiline business lines in a
given entity that has not deaveraged SLCs will be the lesser of:
(a) $9.20 or
(b) The greater of:
(1) The rate as of December 31, 1999, less amounts of SLC
reductions pursuant to paragraph 2.1.6 or
(2) Average Price Cap CMT Per Line.
Except when the incumbent LEC reduces the rate through voluntary
reductions, the averaged multiline business SLC initially will be
frozen until the entity's multiline business PICC and CCL are
eliminated.
2.1.4.2.2. Zone Deaveraged Subscriber Line Charge.
2.1.4.2.2.1. Maximum Charge. The maximum Zone Deaveraged
Multiline Business Subscriber Line Charge will be the lesser of
$9.20 per line per month or the highest Zone Average Revenue Per
Line for any zone in the study area.
2.1.4.2.2.2. Minimum Charge. See paragraph 2.1.5.6.2.
2.1.5. Limitations on Deaveraging of Subscriber Line Charges.
Except as otherwise noted, these limitations apply both to
deaveraging pursuant to 2.1.6(4) and to deaveraging through
voluntary reductions.
2.1.5.1. All Geographic Deaveraging According to UNE zones. All
geographic deaveraging of SLCs by customer class must be done
according to UNE zones. If a state has not created geographically
deaveraged UNE rates for loops, the incumbent LEC may not deaverage
its SLCs in that state. (As stated in paragraph 5, nothing in this
proposal supercedes, prejudices or otherwise implies a result of the
UNE Remand proceeding.) (footnote omitted.)
2.1.5.2. No More Than 4 Zones for Interstate Pricing and
Interstate Universal
[[Page 53652]]
Service Purposes Without FCC Approval. Solely for the purposes of
determining interstate subscriber line charges and the interstate
universal service funding described in Section 2.2, an ILEC may not
have more than four geographic SLC/USF zones absent a review by the
FCC. Where an ILEC has more than four state-created UNE zones and
the FCC has not approved use of additional zones, the ILEC will
determine, at its discretion, which state-created UNE zones to
consolidate so that it has no more than four zones for the purpose
of determining interstate subscriber line charges and interstate
universal service funding.
2.1.5.3. Relationship Between Multiline Business, Non-Primary
Residential And Primary Residential And Single Line Business SLCs
Within A UNE Zone. Within a given UNE zone, the multiline business
SLC may not be lower than the SLC for non-primary residential lines,
and the non-primary residential line SLC may not be lower than the
primary residential and single line business SLC.
2.1.5.4. Relationship Between SLCs for the Same Customer Class
in Different UNE Zones in a Study Area. For any given customer class
(i.e. Primary Residential and Single Line Business, Non-Primary
Residential, or Multiline Business) and any given zone, the Zone
Deaveraged SLC in that zone must be greater than or equal to the
Zone Deaveraged SLC in the zone with the next lower Zone Average
Revenue Per Line. (That is, Zone 4 SLCs must be greater than or
equal to Zone 3 SLCs, which must be greater than or equal to Zone 2
SLCs, which must be greater than or equal to Zone 1 SLCs, where Zone
1 is the zone with the lowest Zone Average Revenue Per Line, and
Zone 4 (if there is one) is the zone with the highest Zone Average
Revenue Per Line).
2.1.5.5. Revenues From all Zones Cannot Exceed Revenues from
Averaged SLCs.
The parties have discussed two alternate ways of implementing a
restriction that precludes incumbent LEC from increasing permitted
Price Cap CMT revenues through deaveraging. The parties will present
their respective views to the FCC as to the appropriateness of each
alternative.
Alternative 1--Filing Entity
The sum of revenues per month that would be generated from all
deaveraged SLCs in all SLC deaveraging zones within a filing entity
plus revenues per month from all SLC, multiline business PICC and
CCL charges from study areas within that filing entity that have not
geographically deaveraged SLCs plus the sum of all Study Area Access
Universal Service Support in all study areas within the filing
entity, divided by the number of lines cannot exceed Average Price
Cap CMT Revenue Per Line for the filing entity.
Alternative 2--Study Area and Filing Entity
The sum of all revenues per month that would be generated from
all deaveraged SLCs in all zones within a study area plus Study Area
Access Universal Service Support for that study area divided by the
number of lines in that study area cannot exceed Average Price Cap
CMT Revenue Per Line for that study area. In addition, the sum of
revenues per month that would be generated from all deaveraged SLCs
in all SLC deaveraging zones within a filing entity plus revenues
per month from all SLC, multiline business PICC and CCL charges from
study areas within that filing entity that have not geographically
deaveraged SLCs plus the sum of all Study Area Access Universal
Service Support in all study areas within the filing entity, divided
by the number of lines cannot exceed Average Price Cap CMT Revenue
Per Line for the filing entity.
2.1.5.6. Limitations Applicable Only To Zone SLC Deaveraging
Pursuant To Paragraph 2.1.6, or Through Increases in Other Zone
Deaveraged SLCs.
2.1.5.6.1. Elimination of PICC and CCL Prior to SLC Deaveraging.
Except where an incumbent LEC deaverages through voluntary
reductions, before an incumbent LEC may begin geographically
deaveraging its SLC rates, its Originating and Terminating CCL and
Multiline Business PICC rates must equal $0.00. Deaveraging through
voluntary reductions may be undertaken without regard to the levels
of the CCL or Multiline Business PICCs.
2.1.5.6.2. Minimum Charge. Except where the incumbent LEC
chooses to lower the deaveraged SLC through voluntary reductions,
the minimum Zone Deaveraged Subscriber Line Charge in any zone in a
study area is at least the lowest Zone Average Revenue Per Line for
any zone in that study area. The parties do not agree as to whether
the Minimum Charge should also be adjusted to reflect a portion of
those Study Area Above Cap Revenues not offset by Study Area
Universal Service Support, and the parties will advocate their
respective positions to the Commission. The parties do not agree as
to whether limits on deaveraging through voluntary reductions are
necessary, and will advocate their respective positions to the
Commission.
2.1.5.6.3. Voluntary Reduction. A ``Voluntary Reduction'' is one
in which the incumbent LEC reduces prices other than through offset
of net increase in subscriber line charge revenues or universal
service revenues pursuant to paragraph 2.1.6, or through increases
in other zone deaveraged Subscriber Line Charges.
2.1.6. Phased Elimination of Carrier Common Line and Multiline
Business Presubscribed Interexchange Carrier Charges, and SLC
Deaveraging. Each year, the net increase in maximum permitted
Subscriber Line Charge revenues (calculated by summing across all
line classes in a study area the products of the maximum permitted
Averaged Subscriber Line Charge for each class times the number of
lines in each class times 12, and subtracting the sum across all
line classes in a study area the products of the maximum permitted
Averaged Subscriber Line Charge during the base period for each
class times the number of lines in each class times 12) from changes
specified in paragraph 2, and any universal service revenues
received pursuant to paragraph 2.2, will be offset by reducing
charges as follows, in order of priority:
(1) Terminating CCL Charges until the Terminating CCL rate is
$0.00; then
(2) Originating CCL Charges until the Originating CCL rate is
$0.00; then
(3) Multiline Business PICC until the Multiline Business PICC
rate is $0.00; then
(4) Subscriber Line Charges, which may be deaveraged pursuant to
paragraph 2.1.5, above.
(Note: This is the existing order of offsets, once the residential
(primary and non-primary) and single line business PICCs are
stricken.)
2.2. New Universal Service for Areas Served by Price Cap
Incumbent LECs.
2.2.1 Implicit Support in Interstate Access Charges by Price Cap
LECs. The total amount of universal service funding that is targeted
to offset implicit support in interstate access charge rates
(``Access USF'') for areas served by price cap incumbent LECs is
$650 million per year. (New federal universal service support to
replace implicit support in interstate access charges by price cap
LECs does not include support calculated under FCC Rules 54.301 (DEM
Weighting), 54.303 (Long Term Support), or 36.601 et seq. (Part 36
Universal Service Fund), or support expressly designated by the FCC
to offset costs allocated to the intrastate jurisdiction.) This size
for Access USF assumes a final nominal residential and single line
business SLC cap of $7.00, and a final nominal multiline business
SLC cap of $9.20 for multiline businesses. Changes in the level of
these caps would change the appropriate level of universal service
funding. It also assumes that all price cap LECs are included. It
also assumes that the new program will cover the areas currently
served by all price cap LECs, except those offered for sale before
January 1, 2000, and sold to a non-price cap company. If any such
area does not participate in the program, either because the price
cap LEC does not participate, or because the area is offered for
sale after January 1, 2000, and sold to a non-price cap company,
then the funding estimated for that area pursuant to paragraph
2.2.3.1.1 will not be collected or distributed as part of this plan
for price cap LECs.
2.2.2. Minimum Access USF StudyArea. For each study area, the
minimum amount of Access USF support that study area would receive
is calculated as follows:
MinimumAccessUSFStudyArea =
PriceCapCMTRevenuesStudyArea - (($7.00 x Residential &
SingleLineBusinessLinesStudyArea x 12) + ($9.20 x
MultilineBusinessLinesStudyArea x 12), )
Where:
PriceCapCMTRevenueStudyArea=
PriceCapCMTRevenueFilingEntity x
(BFPStudyArea BFPFilingEntity)
2.2.3. Calculation of Access USF Per Line.
2.2.3.1. Terms.
2.2.3.1.1. Zone Above SLC Cap Revenues. For each zone, the above
cap revenues for that zone are calculated according to the following
formula:
[[Page 53653]]
ZoneAboveSLCCapRevenues =
((ZoneAverageRevenuePerLine- $7.00) x Residential&
SingleLineBusinessLinesStudyArea x 12) +
((ZoneAverageRevenuePerLine - $9.20) x
MultilineBusinessLinesStudyArea x 12)
The zones used for determining universal service will be the same
zones that would be used for any SLC deaveraging, as described in
paragraph 2.1.5.2. Where an ILEC has consolidated zones pursuant to
paragraph 2.1.5.2, the consolidated zone is used for determining
universal service.
(a) For the purposes of distributing Access USF, Zone Average
Revenue Per Line should be calculated pursuant to paragraph 2.1.1.3,
except that Loop&Port PriceUNE Zone could either be (1)
the cost projected by an FCC-approved cost model, or (2) the rates
for unbundled UNE loops and switch ports in that UNE zone. Parties
differ as to the relative merits of using proxy cost model outputs
or state-established UNE rates for this calculation, and will
present their respective views.
(b) In states that have not established UNE zones, support will
be determined on a study area basis, as described in paragraph
2.2.3.3. For purposes of calculating Access USF support for study
areas in states that have not established UNE zones, an interim
estimate of Zone Above SLC Cap Revenues will be calculated by using
the FCC Proxy Cost Model or other substitute method if no model is
available. In order to develop this estimate, zones will be
established by assigning the lowest cost one third of lines to Zone
1, the highest cost one third of lines to Zone 3 and the remaining
lines to Zone 2.
2.2.3.1.2. Study Area Above Cap Revenues. For each study area,
Study Area Above Cap Revenues is calculated by summing the Zone
Above SLC Cap Revenues for all zones in the study area.
2.2.3.1.3. Nationwide Total Above Cap Revenues. Nationwide Total
Above Cap Revenues is the sum of all Study Area Above Cap Revenues
nationwide for all price cap incumbent LEC study areas.
2.2.3.2. Study Area Access USF Support. Each study area's Access
USF support is calculated according to the following steps:
Step 1: Calculate Preliminary Access USF Support
Preliminary Access USF Support is calculated according to the
following formula:
UniversalServiceSupport = Sum of Above Cap Revenues x ($650
million Total Nationwide Above Cap Revenues)
Step 2: Calculate the Minimum Support Requirement
If the Minimum Access USFStudy Area (See paragraph
2.2.2.) exceeds the Preliminary Study Area Universal Service Support
(``PSAUSS'') then the Minimum Support Requirement for that study
area is calculated using the following process:
A. For each study area, calculate the Study Area Minimum Delta.
Study Area Minimum Delta = Minimum Access USFStudy Area--
Preliminary Study Area Universal Service Support.
B. Nationwide, calculate the Total National Minimum Delta, which
equals the sum of all Study Area Minimum Deltas.
C. (1) If the Total National Minimum Delta is less than or equal
to $75 million then the Minimum Adjustment Amount is:
Minimum Adjustment Amount = Phase In Percentage x Minimum Delta.
(2) If the Total National Minimum Delta is greater than $75
million, then the Minimum Adjustment Amount is:
Minimum Adjustment Amount = (Phase In Percentage) x (Minimum
Delta) x ($75 million Total National Minimum Delta)
The Phase In Percentage is:
50% on January 1, 2000
5% on January 1, 2001
100% on July 1, 2002
For those study areas with a Minimum Adjustment Amount, the
Minimum Support Requirement is:
Minimum Support Requirement = Preliminary Study Area Universal
Service Support + Minimum Adjustment Amount.
Step 3: Determine the Study Area Universal Service Support
For study areas with a Minimum Support Requirement, Study Area
Universal Service Support equals Minimum Support Requirement.
For study areas with no Minimum Support Requirements:
(1) Determine the Total National Minimum Support Requirement
(TNMSR), which equals the sum of all Minimum Support Requirements.
(2) Study Area Universal Service Support is determined as
follows:
Study Area Universal Service Support = PSAUSS x ($650
million-TNMSR
Nationwide Sum of PSAUSS for Study Areas where MSR is $0)
The above calculations ensure that the Total Interstate Implicit
Support Fund does not exceed $650 million while the Study Area
Minimum Support Requirements are phased in as the Primary
Residential and Single Line Business Subscriber Line Charge
increases to $7.00.
2.2.3.3. No Access USF Above The Minimum Support Requirement For
A Study Area That Has No Zone Deaveraged Prices For UNE Loops.
Notwithstanding the calculations in paragraph 2.2.3.2, in any study
area for which the incumbent LEC has not established zone deaveraged
UNE loop prices approved by the state, the incumbent LEC will
receive no Access USF Support unless the study area has a Minimum
Support Requirement, in which case the Study Area Universal Service
Support shall equal the Minimum Support Requirement. If an incumbent
LEC establishes deaveraged UNE loop prices after January 1, 2000,
then beginning with the subsequent quarter after it implements
deaveraged UNE loop rates, that entity will receive the amount of
Access USF support previously calculated pursuant to paragraph
2.2.3.2 using the methodology described in paragraph 2.2.3.1.1(b).
When Access USF support is subsequently recalculated to redistribute
Access USF among Price Cap ILEC service territories, support for
that entity will be calculated pursuant to paragraph 2.2.3.1.1.(a).
(As stated in paragraph 5, nothing in this proposal supercedes,
prejudices or otherwise implies a result of the UNE Remand
proceeding.)
2.2.4. Determination of Portable Access USF Support Per Line.
Portable Access USF Support Per Line is the amount of new interstate
universal service funding to replace implicit support in interstate
access that an eligible telecommunications carrier receives for
serving a customer. This support is portable between eligible
telecommunications carriers as customers change service providers.
2.2.4.1. Portable Access USF Support Per Line When Deaveraged
UNE Loop Rates Have Not Been Established. When Deaveraged UNE Loop
Rates have not been established in a study area, the Portable Access
USF Support Per Line for that study area is Study Area Universal
Service Support divided by total lines in the study area.
2.2.4.2. Portable Access USF Support Per Line When Deaveraged
UNE Loop Rates Have Been Established.
The parties have discussed two alternate ways to allocate
universal service support to zones and line-types within those
zones. The parties will present their respective views to the FCC as
to the appropriateness of each alternative means of allocating
universal service support to lines within a study area.
Alternative 1
Proportionate Allocation. Within each study area, determine the
percentage proportion of Study Area Universal Service Support to
Study Area Above Cap Revenues. Within each zone and customer class
(i.e. residential/single line business and multiline business for
each zone), total universal service support for that zone and
customer class is that same proportion of the Above Cap Revenues for
that zone and customer class. That is:
Universal ServiceCustomerClassByZone =
AboveCapRevenuesCustomerClassbyZone x
(StudyAreaUniversalServiceSupport
StudyAreaAboveCapRevenues)
Portable Universal Service Support Per Line in any given zone
and customer class is Universal Service
CustomerClassByZone divided by the total number of lines
of the customer class within that zone.
Alternative 2
Highest Cost Zone First. The funding in each study area will be
made portable for lines in the highest cost zone first, and will
``cascade'' to lines in lower cost zones to the extent that
sufficient funding is available. Beginning with the zone with the
highest Zone Average Revenue Per Line, funding will be applied in
the following order of priority:
(1) To all lines in the highest zone, to eliminate the amount
per line by which Zone Average Revenue Per Line exceeds the higher
of $9.20 or the Average Revenue Per Line in the next highest zone;
(2) If the Zone Average Revenue Per Line in the next highest
zone is greater than $9.20, then to all lines in both zones to
eliminate the amount per line by which Zone Average Revenue per Line
exceeds $9.20;
[[Page 53654]]
(3) To all residential and single line business lines in the
highest zone, to eliminate the amount per line that Zone Average
Revenue Per Line for these lines exceeds the higher of $7.00 or
Average Revenue Per Line in the next highest zone;
(4) If the Zone Average Revenue per Line in the next highest
zone is greater than $7.00, then to all residential and single line
business lines in both zones to eliminate the amount per line by
which Zone Average Revenue Per Line exceeds $7.00.
This ``cascade'' process will continue until all of the
available funding has been assigned to lines by zone and by customer
class; it may extend in similar fashion to additional zones, to the
extent that their Zone Average Revenue per Line exceeds the $9.20
and $7.00 caps, and available funding permits. The per-line amount
assigned to each multiline business line in a given zone would then
be portable among eligible telecommunications carriers, as would the
per-line amount assigned to each residence line and each single line
business line in that zone.
2.2.5. Commencement of New Access USF Support. Universal service
distributed pursuant to this section will begin once administrative
mechanisms have been established to transfer support among eligible
telecommunications carriers in the shortest interval possible given
reasonable operational considerations. The parties agree that a
three-month lag may be reasonable, provided that an ILEC's
entitlement to receive Access USF for service to that customer stops
when service stops, and that there are true-ups.
2.2.6. Recalculation of Access USF Amounts. Access USF support
for each ILEC service territory will be recalculated on July 1,
2000, and January 1, 2001, and thereafter as determined by the USF
Administrator.
3. Reducing Traffic Sensitive Interstate Access Rates.
3.1. Target Traffic Sensitive Interstate Access Charge Rate.
3.1.1. Bell Companies and GTE. For Bell Companies and GTE, the
Target Rate for traffic sensitive interstate access charges (defined
as the average revenue per switched access minute for the sum of
Local Switching (less amounts transferred to CMT), Local Switching
Trunk Ports, Signaling Transfer Point Port Termination, switched
Direct Trunk Transport, signaling for switched Direct Trunk
Transport, entrance facilities for switched access traffic, Tandem
Switched Transport, the residual and service-related Transport
Interconnection Charges, Information Surcharge, and Signaling for
Tandem Switching) is calculated by tariff filing entity and is
$0.0055 per minute for each tariff filing entity. For Bell Atlantic,
the former NYNEX telephone companies may be treated as a separate
tariff filing entity.
3.1.2. All Other Price Cap ILECs. For all other price cap ILECs,
the Target Rate for traffic sensitive interstate access charges
(defined as the average revenue per switched access minute for the
sum of Local Switching, Local Switching Trunk Ports, Signaling
Transfer Point Port Termination, switched Direct Trunk Transport,
signaling for switched Direct Trunk Transport, entrance facilities
for switched access traffic, Tandem Switched Transport, the residual
and service-related Transport Interconnection Charges, Information
Surcharge, and Signaling for Tandem Switching) is calculated by
tariff filing entity and is $0.0065 per minute.
3.2. Local Switching Restructuring. In any study area in which,
on December 31, 1999, the average traffic sensitive access charge is
greater than the Target Rate, 25% of Local Switching revenues
(calculated using base period demand) will be moved to the CMT
Basket, except that less than 25% of Local Switching revenues will
be moved to the CMT Basket if moving 25% would reduce the average
traffic sensitive access charge below the Target Rate. If moving 25%
of Local Switching would reduce average traffic sensitive access
charges below the Target rate, then the amount of Local Switching
moved to the CMT Basket is the amount necessary to reach the Target
Rate.
3.3. Interstate X-Factor Levels and Targeting of X-Factor
Reductions Effective January 1, 2000. The basic regime set up under
this section is that all the price cap reductions flowing from an X-
factor of 6.5% are initially targeted to reduce traffic sensitive
charges until those charges reach the Target Rate ($0.0055 per
minute by tariff filing entity for Bell Companies and GTE, and
$0.0065 per minute by tariff filing entity for other price cap
ILECs). When the filing entity's average traffic sensitive switched
interstate access charge reaches the Target Rate, then the X-factor
becomes equal to GDP-PI. All X-factor targeting is done at the
tariff filing entity level, not at a holding company level.
Beginning July 1, 2001 (i.e. after one full year's X-factor
reduction), an ILEC may choose not to target X-factor reductions
from special access to reduce switched access rates.
3.3.1 The interstate X-factor will be 6.5% until a Tariff
Entity's average traffic sensitive access charge equals the Tariff
Entity's Target Rate. The average traffic sensitive charge will be
calculated by taking the sum of revenues for Local Switching, Local
Switching Trunk Ports, Signaling Transfer Point Port Termination,
switched Direct Trunk Transport, signaling for switched Direct Trunk
Transport, entrance facilities for switched access traffic, Tandem
Switched Transport, the residual and service-related Transport
Interconnection Charges, Information Surcharge, and Signaling for
Tandem Switching, and dividing that sum of revenues by total
switched access minutes of use. If a new element is created from an
existing switched access rate element (such as creating a call set-
up charge out of the existing local switching rate) the revenues
anticipated from that element will be included in the calculation of
the average traffic sensitive access charge. The X-factor of 6.5%
will be applied only to the extent necessary to reduce the Tariff
Entity's average traffic sensitive access charges to the Target
Rate. Once the Tariff Entity's average traffic sensitive access
charges reach the Target Rate, the X-factor will be GDP-PI.
3.3.2 Until a Tariff Entity's average traffic sensitive
interstate access charge equals the Target Rate, the aggregate
reductions within a given tariff filing entity from application of
the X-factor adjustment in the price cap formula across all of that
entity's interstate price cap baskets (less special access
reductions, if any, the ILEC chooses to apply beginning July 1, 2001
to reduce special access rates, up to the amount of reductions
special access would get through an untargeted application of the X-
factor adjustment) will be targeted to reduce the following rates
for that tariff filing entity, in order of priority:
(1) To the residual per minute Transport Interconnection Charge,
until that rate is $0.00; then
(2) To the Information Surcharge, until that rate is $0.00; then
(3) To the Local Switching charge and Switched Transport charges
until the Tariff Entity's average traffic sensitive interstate
access charge equals the Target Rate. In making these reductions to
Local Switching rates, the percentage of total X-factor reductions
directed to Local Switching rates must be greater than or equal to
the percentage that local switching revenues represent of the sum of
revenues for Local Switching, Local Switching Trunk Ports, Signaling
Transfer Point Port Termination, switched Direct Trunk Transport,
signaling for switched Direct Trunk Transport, entrance facilities
for switched access traffic, Tandem Switched Transport, and
Signaling for Tandem Switching (i.e., Local Switching gets at least
its proportionate share of reductions).
Once the Tariff Entity's average traffic sensitive interstate
access charge equals the Target Rate, no further reductions will be
mandated (i.e. if applying the full X-factor reduction for a given
year would reduce average traffic sensitive interstate access
charges below the Target Rate, the amount of X-factor reduction
applied that year will be the amount necessary to reach the Target
Rate).
In calculating aggregate X-factor reductions, the Price Cap
formula should be applied against the entire common line basket,
without removing amounts received through the new interstate
universal service support pursuant to paragraph 2.2.
3.3.3. CMT Adjustments After Reaching Target Rate. Once the CCL
and PICC are eliminated and the primary residential and single line
business SLC reaches the Average Price Cap CMT Revenues Per Line,
the X-factor for the CMT Basket will equal GDP-PI as long as GDP-PI
is less than or equal to 6.5 percent and greater than 0 percent. If
GDP-PI is greater than 6.5% and an entity has eliminated its CCL and
multiline business PICC charges, the X-factor for common line will
equal 6.5%, and all SLC rates and nominal caps on SLC rates will be
increased by the difference between GDP-PI and the X-factor. If GDP-
PI is less than 0, the X-factor for common line will be 0.
3.3.4. Exogenous Adjustments. After January 1, 2000, exogenous
adjustments will be applied only to services other than those
constituting traffic sensitive interstate access charges.
3.3.5. Annual Filings After Reaching Target Rate. With each
annual filing, the Average Traffic Sensitive Rate will be
recalculated
[[Page 53655]]
and set at the new base period level. Due to changes in base period
demand and inclusion of new services for that Annual Tariff filing,
the absolute level of a Tariff Entity's Average Traffic Sensitive
Charge may change. The resulting new Average Traffic Sensitive
Charge level will be what that Tariff Entity will measured against
during that base period.
4. Other Changes to Interstate Access Charge Rate Levels.
4.1. Changes to the Interstate X-factor. No company will
advocate changes to the interstate X-factor other than as outlined
in paragraph 3.
4.2. Prospective Interstate Adjustments. The companies agree
that Paragraphs 2-3 are a just, reasonable and fair means of moving
usage sensitive interstate access rates to a point achieved by the
above mechanisms. Therefore, other adjustments, such as changes in
the interstate X-factor, changes in interstate access rates for
price cap ILECs based on results of present or future Continuing
Property Records audits, changes in interstate access rates for
price cap ILECs based on changes in the Prescribed Rate of Return,
and changes in the rate structure for Common Line, Traffic Sensitive
(Local Switching, Local Switching Trunk Ports, Signaling Transfer
Point Port Termination, switched Direct Trunk Transport, signaling
for switched Direct Trunk Transport, entrance facilities for
switched access traffic, Tandem Switched Transport, the residual and
service-related Transport Interconnection Charges, Information
Surcharge, and Signaling for Tandem Switching) and Other (all other
interstate access charges not included in Common Line or Traffic
Sensitive, as defined here) charges by price cap ILECs, are
unnecessary.
4.3. Retrospective Interstate Adjustments. The companies also
agree not to initiate legal or regulatory action to adjust price cap
determined rates for interstate access charges billed for access
minutes prior to January 1, 2000, although a payee would not be
precluded from accepting any refund the FCC ordered to be made and a
payor will not object to or resist such a refund on the basis of
this paragraph.
4.4. Lower Formula Adjustments. The Lower Formula Adjustment to
interstate access rates is eliminated until January 1, 2005.
4.5. Term of Agreements. These agreements in paragraph 4 will
run until January 1, 2005.
5. Pricing Flexibility/Non-Dominant Classification/Price Cap
Forbearance With Respect To Specific Services/UNE Remand. Except as
specifically addressed, the companies are not agreeing as to current
or future proposals for pricing flexibility, non-dominant
classification of specific services, or price cap forbearance with
respect to specific services. The companies agree that the
Commission should establish guidelines no later than October 1,
1999, for granting appropriate incumbent LEC pricing flexibility for
interstate access services. Nothing in this proposal supercedes,
prejudices or otherwise implies a result of the UNE Remand
proceeding. Parties will continue to argue for their respective
positions in these other proceedings.
6. Long Distance Rates and SLC Changes. This interstate access
and universal service plan is in the public interest because the
interstate access reductions the plan produces will result in lower
long distance bills while the SLC and universal service revenues the
plan produces will help to protect and enhance universal service and
the local exchange infrastructure. The IXC signatories commit to
meet with the FCC to review the effects of the interstate access
reductions under the plan on long distance customers, and the
incumbent LEC signatories commit to meet with the FCC to review
effects of the SLC increases and SLC deaveraging under the plan on
local customers.
7. Non-Signatory Price Cap LECs. The signatories agree that this
proposal, without modification, is a fair and reasonable compromise
plan to resolve issues relating to access and universal service for
price cap LECs. Accordingly, signatories agree on behalf of
themselves and their current affiliates as of August 1, 1999 to
participate in the proposal if it is approved by the FCC.
The signatories agree that non-signatory price cap LECs are not
bound by the terms of this plan and that the access rules that will
apply solely to non-signatory price cap LECs will be determined by
the FCC. All companies, whether signatories or not, would remain
free to advocate for whatever changes, if any, are appropriate to
the current price cap rules that would apply only to non-signatory
price cap LECs.
At their option, price cap LECs that are non-signatories to the
proposal at the time of its submission may chose to become
signatories to the proposal prior to its implementation following an
FCC Order. Additionally, if a non-signatory price cap LEC
experiences a change of control during the first six months of the
year 2000, that LEC may become a signatory to the proposal before
the July 1, 2000 annual filing becomes effective, provided that such
a LEC incorporates all provisions of the proposal scheduled to be
implemented during the first six months of 2000 no later than the
July 1, 2000 annual filing effective date.
[FR Doc. 99-25703 Filed 10-1-99; 8:45 am]
BILLING CODE 6712-01-P