[Federal Register Volume 60, Number 194 (Friday, October 6, 1995)]
[Rules and Regulations]
[Pages 52345-52346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24884]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 61
[CC Docket No. 94-1; FCC 95-394]
Price Cap Performance Review for Local Exchange Carriers;
Treatment of Video Dialtone Services Under Price Cap Regulation
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: On October 20, 1994, the Commission adopted a Memorandum
Opinion and Order concluding that the basic video dialtone offerings of
local exchange carriers (LECs) would be subject to the existing price
cap rules. In that the order, the Commission stated it would initiate a
rulemaking proceeding on whether to create a separate price cap basket
for LEC video dialtone service. On February 7, 1995 the Commission
issued a notice of proposed rulemaking in this docket seeking comment
on whether to establish a separate price cap basket for LEC video
dialtone service. The Report and Order adopted today establishes a
separate price cap basket for video dialtone.
EFFECTIVE DATE: February 5, 1996.
FOR FURTHER INFORMATION CONTACT: Claudia Pabo, Policy and Program
Planning Division, Common Carrier Bureau, (202) 418-1595 or Cheryl Lynn
Schneider, Tariff Division, Common Carrier Bureau, (202) 418-1530.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Report and Order adopted September 14, 1995 and released September 21,
1995. The full text of the Commission's decision is available for
public inspection and copying during normal business hours in the FCC
Public Reference Room (Room 230), 1919 M St., NW., Washington, DC. The
complete text of this decision may also be purchased from the
Commission's copy contractor, International Transcription Service,
Suite 140, 2100 M Street, NW., Washington, DC 20037.
Regulatory Flexibility Analysis
We determined that section 605(b) of the Regulatory Flexibility Act
of 1980, 5 U.S.C. 605(b), does not apply to the rule amendments adopted
in this Order because they do not have a significant economic impact on
a substantial number of small entities, as defined by section 301(3) of
the Regulatory Flexibility Act. Carriers subject to price cap
regulation for local exchange access services affected by the rule
amendments adopted in this Order generally are large corporations or
affiliates of such corporations.
Paperwork Reduction Analysis
Public burden for the collection of information is estimated to
average 203 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and competing and reviewing the collection
of information. Send comments regarding this burden estimate or any
other aspect of the collection of information, including suggestions
for reducing the burden, to the Federal Communications Commission,
Records Management Branch, Paperwork Reduction Project (3060-0298),
Washington, DC 20554 and to the Office of Management and Budget,
Paperwork Reduction Project (3060-0298), Washington, DC 20503.
Summary of Report and Order
In this Order, the Commission adopts new rules regarding the price
cap treatment of video dialtone common carrier service provided by
local exchange carriers (LECs). The Order amends the Commission's rules
to require that basic video dialtone offerings of price cap LECs must
be included in a new, separate price cap basket. The video dialtone
basket may not include any other ``broadband'' services. The Order also
establishes an initial productivity or ``X-Factor'' for the video
dialtone basket of zero.
The initial rates to be included in the video dialtone basket will
be based upon the price cap new services test, as applied to video
dialtone services. Consistent with this approach, the Commission will
incorporate video dialtone rates into the new price cap basket in the
first annual price cap tariff filing following the calendar year in
which the new service is first offered, which may occur anywhere from
six to eighteen months from the introduction of service. Moreover, as
it has done with other price cap baskets, the Commission will assign an
initial value of 100 to the PCI and the actual price index (API) for
video dialtone service prior to adjustment for inflation and
productivity, corresponding to the rates in effect just prior to the
effective date of the annual filing in which rates for video dialtone
service are included in the new basket.
The Commission decided not to divide the video dialtone basket into
separate subcategories at this time. Video dialtone is a nascent
service for which LECs have just begun to file tariffs, and the
Commission expects that the LECs will employ a variety of architectures
to deliver their offerings which could lead to varying rate structures
for video dialtone services. Thus, it would be difficult to create a
stable set of service categories within the new video dialtone basket
at this time.
The Order imposes a lower banding limit on the video dialtone
basket in addition to the protection provided by the new services test.
Accordingly, LEC tariff filings reducing prices in excess of 15 percent
per year relative to the PCI will not carry a presumption of
lawfulness. Consistent with existing procedures, filings to implement
rates below this level must be made on 45 days' notice, and be
accompanied by a showing that the rates exceed average variable costs
consistent with the cost
[[Page 52346]]
support requirements specified in Sec. 61.49(d) of the Commission's
rules.
The Commission also decided to exclude video dialtone costs and
revenues from the calculation of a LEC's earnings from other regulated
interstate services for purposes of sharing and the low-end adjustment
once video dialtone costs are no longer de minimis. Under this plan,
price cap LECs will be allowed to include video dialtone costs and
revenues with those from other baskets for purposes of sharing and low-
end adjustment calculations so long as their video dialtone costs are
below a specified threshold. Once a LEC's costs rise above a de minimis
level, however, the Commission will require the LEC to exclude video
dialtone costs and revenues from its interstate rate of return
calculations for sharing and the low-end adjustment.
Ordering Clause
Accordingly, it is ordered that, pursuant to authority contained in
sections 4(i), 4(j), 201-205, 215, 218, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 201-
205, 215, 218, 303(r), 403, and section 553 of Title 5, United States
Code, part 61 of the Commission's rules, 47 CFR part 61, is amended as
set forth below effective February 5, 1996.
List of Subjects in 47 CFR Part 61
Communications common carriers, Reporting and recordkeeping
requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule changes
Part 61 of Title 47 of the CFR is amended as follows:
PART 61--TARIFFS
1. The authority citation for Part 61 continues to read as follows:
Authority: Secs. 4(i), 4(j), 201-205, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j),
201-205, 303(r), 403, unless otherwise noted.
2. Section 61.42 is amended by adding a new paragraph (d)(5) to
read as follows:
Sec. 61.42 Price cap baskets and service categories.
* * * * *
(d) * * *
(5) To the extent that a local exchange carrier specified in
Secs. 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.
* * * * *
3. Section 61.45 is amended by revising paragraphs (b) introductory
text and (h) and adding new paragraph (b)(3) to read follows:
Sec. 61.45 Adjustments to the PCI for Local Exchange Carriers.
* * * * *
(b) Adjustments to local exchange carrier PCIs for the baskets
designated in Secs. 61.42(d) (2), (3), (4), and (5), shall be made
pursuant to the formula set forth in Secs. 61.44 (b), and as further
explained in Secs. 61.44 (e), (f), (g), and (h).
* * * *
(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%.
* * * * *
(h) To the extent a local exchange carrier elects the higher
productivity factor, the election must be made in all baskets, except
the video dialtone services basket, as designated in Sec. 61.42(d)(5).
4. Section 61.47 is amended by adding a new paragraph (g)(6) to
read as follows:
Sec. 61.47 Adjustments to the SBI; pricing bands.
* * * * *
(g) * * *
(6) Local exchange carriers subject to price cap regulation as that
term is defined in Sec. 61.3 shall use the methodology set forth in
paragraphs (a) through (d) of this section to calculate a lower pricing
band for the basket described in Sec. 61.42(d)(5). The annual pricing
flexibility for this basket, as reflected in the API, shall be limited
to an annual decrease of fifteen percent, relative to the percentage
change in the PCI for that basket, measured from the last day of the
preceding tariff year.
* * * * *
6. Section 61.48 is amended by adding paragraph (j) to read as
follows:
Sec. 61.48 Transition rules for price cap formula calculations.
* * * * *
(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.
[FR Doc. 95-24884 Filed 10-5-95; 8:45 am]
BILLING CODE 6712-01-M
