[Federal Register Volume 60, Number 114 (Wednesday, June 14, 1995)]
[Proposed Rules]
[Pages 31274-31277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14509]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 69
[CC Docket No. 95-72; FCC95-212]
End User Common Line Charges
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This Notice of Proposed Rulemaking seeks comment on the
application of End User Common Line Charges, hereinafter referred to as
[[Page 31275]]
Subscriber Line Charges (SLCs), to local loops used with Integrated
Services Digital Network (ISDN) and other services that permit the
provision of multiple voice-grade-equivalent channels to a customer
over a single facility. This proceeding was instituted to give the
Commission an opportunity to reexamine existing rules and make changes
in light of new technologies and services.
DATES: Comments are to be filed on or before June 29, 1995, and replies
are to be filed on or before July 14, 1995.
FOR FURTHER INFORMATION CONTACT: Claudia Pabo, (202) 418-1595, Common
Carrier Bureau, Policy and Program Planning Division.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking in CC Docket No. 95-72, adopted May 24,
1995 and released May 30, 1995.
The complete text of this Notice of Proposed Rulemaking is
available for inspection and copying during normal business hours in
the FCC Reference Center, Room 239, 1919 M St. NW., Washington, D.C.
20554, and may be purchased from the Commission's copy contractor,
International Transcription Service, Inc., at (202) 857-3800, 1919 M
Street NW., room 246, Washington, D.C. 20554.
Synopsis of Notice of Proposed Rulemaking
I. Introduction
1. In this Notice of Proposed Rulemaking, we seek comment on the
application of End User Common Line Charges, hereinafter referred to as
Subscriber Line Charges (SLCs), to local loops used with Integrated
Services Digital Network (ISDN) and other services that permit the
provision of multiple voice-grade-equivalent channels to a customer
over a single facility. We believe that the question of SLCs for ISDN
and similar services must be considered in the broader context of
competitive developments in the interstate access market, and the
resulting pressure to reduce unnecessary support flows in order to
ensure fair competition and preserve universal service.
II. Background
A. ISDN and Other Derived Channel Technology and Services
2. ISDN permits digital transmission over ordinary local loops and
T-1 facilities through the use of advanced central office equipment and
customer premises equipment (CPE). Currently, LECs offer two basic
types of ISDN service. Basic Rate Interface (BRI) Service allows a
subscriber to obtain two voice-grade-equivalent channels and a
signalling/data channel over an ordinary local loop, which is generally
provided over a single twisted pair of copper wires. Primary Rate
Interface (PRI) Service allows subscribers to obtain 23 voice-grade-
equivalent channels and one signalling/data channel over a single T-1
facility with two pairs of twisted copper wires.
3. There are services in addition to ISDN that use derived channel
technology to provide multiple channels over a single facility. The
LECs also use derived channel technologies within their networks to
provide customers with individual local loops, as opposed to BRI or PRI
ISDN. In such situations, the end user would not be aware that the LEC
was using this technology to provide their local loop.
B. Subscriber Line Charges
4. In the 1983 Access Charge Order, 48 FR 10319, March 11, 1983,
the Commission adopted rules prescribing a comprehensive system of
tariffed access charges for the recovery of LEC costs associated with
the origination and termination of interstate calls. The access charge
rules called for recovery of a major portion of the local loop costs
assigned to the interstate jurisdiction through SLCs. The remainder of
local loop costs are recovered from interexchange carriers (IXCs)
through the per minute CCL charge. The CCL charges paid by the IXCs are
reflected in the charges paid by interstate toll users.
5. Multiline business SLCs are currently capped at $6.00 per line
per month. Residential and single line business SLCs are capped at
$3.50 per line per month. The basic interstate toll rate decreased
approximately 34% between 1984 and the end of 1992, much of this due to
the shift in the recovery of common line costs from CCL rates to SLCs
and the resulting stimulation in demand.
C. Recent Decisions on SLCs for ISDN
6. The Commission first addressed the application of SLCs to ISDN
and other technologies that permit the provision of multiple voice
grade channels over a two- or four-wire facility in 1992 when the
Common Carrier Bureau adopted an order concluding the local exchange
carriers must apply a SLC to each derived channel even when the
channels were provided over a single facility. The Commission
subsequently affirmed the Bureau's order. At the same time, the
Commission recognized that this question involved policy issues best
considered in the context of a rulemaking proceeding.
D. Competition
7. The interstate access market has changed since the Commission
adopted the access charge rules at issue here. Alternative service
providers such as Teleport, which is owned by a group of large cable
companies, and MFS have deployed fiber optic networks in core business
areas of many large cities, providing interstate access services, and,
in some areas, local exchange service as well. Cable television
companies, in addition to those with an ownership interest in Teleport,
have also entered the local telephone and/or interstate access market
in certain areas, and have expressed an intention to enter the
telephone market on a broader basis. Interexchange carriers, such as
MCI and AT&T, have also entered the market or announced an intention to
do so. In addition, the Commission has required expanded
interconnection for the provision of special access service and
switched transport. New York State has also required LECs to unbundle
their local loops in order to permit the competitive provision of local
exchange service, and a number of other states are considering similar
measures.
8. The developments tend to bring pressure to bear on support flows
in the current access charge structure. LEC rates that significantly
exceed cost will tend to attract new entrants who may be able to offer
service at lower rates. As a result, it may be necessary to reduce
support flows that are not specifically tailored to produce social
benefits.
III. Discussion
A. Overview
9. In this proceeding, we seek comment on the proper application of
SLCs to BRI and PRI ISDN service provided to residential and business
customers as well as to other services that permit the provision of
multiple derived channels over a single facility.
B. Analytical Framework
10. We believe that several basic principles should guide our
resolution of these issues. While these considerations are sometimes in
potential conflict with one another, we believe that they all must be
considered to assure a sound, principled resolution of the issues
before us in this proceeding.
11. This rulemaking proceeding gives the Commission an opportunity
to reexamine existing rules, and make changes in light of new
technologies and services. We must be careful to
[[Page 31276]]
avoid erecting regulatory barriers to the development of beneficial new
technologies. This is particularly important when these services and
technologies can facilitate access to the benefits of the National
Information Infrastructure. At the same time, we should not amend our
rules to favor new technologies and services simply because they are
new. Any difference in the regulatory treatment of new technologies and
services must have a sound basis in public policy.
12. We also believe that it is desirable to avoid measures that
could reduce the level of nontraffic sensitive (NTS) local loop costs
now recovered through flat charges. Any reduction in SLC revenues will
tend to increase interstate toll rates because lower SLC revenues will
cause LECs to seek to recover additional revenues through the per
minute CCL charge. We also believe that policies that would appear to
reduce dramatically SLC charges to large business customers, but not to
residential customers, must be carefully examined.
13. Resolution of the issues in this proceeding should also take
into account competitive developments in the interstate access market,
and the accompanying need to identify and reduce unnecessary support
flows. In light of competitive developments in the interstate access
market, rule changes that could result in lower SLC revenues and higher
CCL rates, thus potentially increasing support flows, must be carefully
examined. Increasingly, IXCs and large business customers have
alternatives to use of LEC facilities and can avoid support flows
inherent in the current access charge rate structure, including the CCL
charge. In the long run, inefficient bypass of the LEC networks by high
volume toll customers could threaten to undermine the support flows
that foster universal service.
C. Options
1. Overview
14. There are potentially many ways that the number of SLCs for
ISDN and similar derived channel services could be computed. At one
extreme, we might require customers to pay one SLC for each physical
facility serving a given customer, such as a standard local loop or T-1
facility. At the other extreme, we could maintain the current rule
under which an SLC is applied to each derived communications channel.
15. There are also intermediate options. For example, the number of
SLCs to be applied to ISDN facilities could be based on a ratio of the
average LEC cost of providing a derived channel service, such as a BRI
or PRI ISDN connection, to the average cost of providing an ordinary
local loop or
T-1 connection, including the line or trunk card costs in both cases.
Under this option, a PRI customer would, for example, pay six SLCs if
the average LEC cost of providing an ISDN T-1 connection, including
line cards, is six times the average cost of providing an ordinary T-1
facility. It would also be possible to apply one SLC for every two
derived channels, an option that would reduce by 50 percent the SLC
revenues that would be generated under the current requirement that one
SLC be assessed for each derived channel.
16. Another set of options would focus on the increasingly
competitive interstate access market in determining how to compute the
SLC to be paid by customers of derived channel services. One
possibility is to combine a reduction in the currently required level
of SLC charges for derived channel services with a small increase in
the per-channel SLC for all local loops. Another option involves giving
the LECs some flexibility in setting SLC rates for derived channel
services, but modifying the price cap rules so that any reduction in
SLC flat rate recovery does not increase the CCL rate.
2. The Per-Facility Approach
17. Under this approach, customers pay a single SLC per derived
channel service connection. Thus, under this option, both BRI and PRI
ISDN customers would pay a single SLC. Under a variation on this
option, an ISDN BRI customer with one copper pair would pay a single
SLC, and a PRI customer with two copper pairs would pay two SLCs.
3. Intermediate Options
18. An option that may represent a potential middle ground between
the per facility and the per derived channel approaches would be to
charge SLCs based on a ratio of the average LEC cost of providing a
derived channel service, including line or trunk cards, to the average
LEC cost of providing an ordinary local loop or T-1 facility. Under
this approach, a PRI customer, for example, would pay six SLCs if the
LEC cost of providing an ISDN T-1 connection, including line or trunk
cards, is six times the cost of providing an ordinary T-1 facility.
This approach also includes the cost of the line cards in developing
the cost relationship between ISDN connections and non-ISDN connections
even though line cards are treated as switching, not local loop
facilities for jurisdictional separations and Part 69 cost allocation
purposes.
19. Reducing SLCs for derived channel connections to 50 percent of
the level required by the current rules is another intermediate option
between the per-facility and per-derived channel approaches. Under this
approach, the LECs would charge one SLC for every two derived channels.
4. The Per-Derived Channel Approach
20. The existing rules require that the LECs charge a SLC for each
derived channel in the case of ISDN and other similar services.
5. Additional Options
21. There are also several other options that combine reductions in
the number of SLCs that our current rules impose on derived channel
services with measures to ensure that this does not increase per minute
CCL charges, putting upward pressure on interstate toll rates. One such
option would be to permit the LECs to impose a reduced number of SLCs
for derived channel services, accompanied by a small increase in SLC
rates. For example, the current caps on SLCs could be increased by $.25
per month for all subscribers. A second approach would be to permit,
but not require, the LECs to apply fewer SLCs for derived channel
services than the current rules require, but to adjust the price cap
rule to prevent a reduction in SLC revenues from causing an increase in
CCL rates.
6. Request for Comments
22. We ask interested parties to comment on the analytical
framework and options for defining the SLCs that subscribers to ISDN
and other derived channel services must pay. We also seek comment on
our analysis of the various options described in this Notice.
Commenting parties are urged to suggest additional or different policy
goals as part of the analytical framework for evaluating options as
well as to present additional options for the Commission's
consideration. We also seek comment on whether any new rules for the
application of SLCs for ISDN and similar derived channel services
should apply to all local loops provisioned by the telephone company
through the use of derived channel technology, regardless of whether
the use of derived channel technology in the provisioning of the loop
is apparent to the subscriber or not.
23. In addition, we note that it would be helpful if interested
parties provide us with specific information concerning the perceived
elasticity of demand for ISDN services, the various ISDN service
[[Page 31277]]
options available in the marketplace, the total intrastate charges for
each of these service options, as well as the advantages and
disadvantages of alternative service and equipment configurations that
offer communications capabilities comparable to those of ISDN.
Moreover, certain of the options for applying SLCs under our part 69
access charge rules described above would use a definition of the term
``line'' that differs from the current separations definition in Part
36.\1\ We seek comment on whether we should initiate the process of
considering conforming separations changes through a referral to a
Joint Board in the event that we adopt such an approach. In light of
competitive developments in the interstate access market, interested
parties may also wish to take this opportunity to comment more
generally on the need for additional changes to the way carriers can
recover the interstate assignment of local loop costs and local
switching or other costs that the parties view as NTS.
\1\See para. 11 supra.
IV. Ex Parte Presentations
24. This proceeding is a non-restricted notice and comment
rulemaking. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided that they are disclosed as provided in
the Commission's rules.
V. Regulatory Flexibility Analysis
25. We certify that the Regulatory Flexibility Act is not
applicable to the rule changes we are proposing in this proceeding. The
Secretary shall send a copy of the Notice to the Chief Counsel for
Advocacy of the Small Business Administration in accordance with
Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
VI. Comment Filing Dates
26. Interested parties may file comments with the Office of the
Secretary, Federal Communications Commission, Washington, D.C. 20554 on
or before June 29, 1995, and reply comments on or before July 14, 1995.
Parties are to provide a copy of any filings in this proceeding to
Peggy Reitzel of the Policy and Program Planning Division, Common
Carrier Bureau, Room 544, 1919 M Street, N.W., Washington, D.C. 20554.
Parties are also to file one copy of any documents in this docket with
the Commission's copy contractor, International Transcription Services,
Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037.
VII. Ordering Clauses
27. Accordingly, it is ordered That, pursuant to the authority
contained in Sections 1, 4, and 201-205 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154, & 201-205, a Notice of Proposed
Rulemaking is Hereby Adopted.
List of Subjects in 47 CFR Part 69
Communications common carriers, Reporting and record keeping
requirements, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-14509 Filed 6-13-95; 8:45 am]
BILLING CODE 6712-01-M
