[Federal Register Volume 63, Number 138 (Monday, July 20, 1998)]
[Proposed Rules]
[Pages 38774-38783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19266]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 69
[CC Docket No. 98-77; FCC 98-101]
Access Charge Reform for Incumbent Local Exchange Carriers
Subject to Rate-of-Return Regulation
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: By this Notice of Proposed Rulemaking (NPRM), the Commission
commences a proceeding to reform access charge rules applicable to
incumbent local exchange carriers (LECs) subject to rate-of-return
regulation. The NPRM seeks comment on proposals to establish a
transition to access charges that more closely reflect economic costs,
with a goal of making our system of interstate access charges
compatible with a competitive paradigm. Specifically, the Commission
seeks comment on proposals to revise the switched access rate structure
for rate-of-return LECs. The Commission also solicits comments on some
additional issues relating to the regulation of interstate access
services of rate-of-return LECs.
DATES: Comments are due on or before August 17, 1998, and reply
comments are due on or before September 17, 1998. Written comments and
reply comments by the public on the proposed information collections
are due August 17 and September 17, 1998, respectively.
ADDRESSES: Federal Communications Commission, Secretary, Room 222, 1919
M Street N.W., Washington, DC 20554. In addition to filing comments
with the
[[Page 38775]]
Commission's Secretary, a copy of any comments on the proposed
information collections contained herein should be submitted to Judy
Boley, Federal Communications Commission, Room 234, 1919 M Street N.W.,
Washington, DC 20554, or via the Internet to jboley@fcc.gov, and to
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street N.W.,
Washington, DC 20503, or via the Internet to fain__t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: Douglas L. Slotten, Common Carrier
Bureau, Competitive Pricing Division, at (202) 418-1572. For additional
information concerning information collections, contact Judy Boley at
(202) 418-0214, or via the Internet at jboley@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's NPRM
in the matter of Access Charge Reform for Incumbent Local Exchange
Carriers Subject to Rate-of-Return Regulation, CC Docket 98-77, adopted
May 26, 1998, and released June 4, 1998. The complete text of this NPRM
is available for inspection and copying during normal business hours in
the Commission's Reference Center, Room 239, 1919 M Street N.W.,
Washington, DC. In addition, the NPRM is available through the Internet
at http://www.fcc.gov/Bureaus/Common__Carrier/Notices/1998/fcc98101.wp.
The complete text may be purchased from the Commission's duplicating
contractor, International Transcription Service, Inc. (ITS, Inc.), at
1231 20th Street N.W., Washington, DC 20036 (202-857-3800).
Paperwork Reduction Act
This NPRM contains either proposed or modified information
collections. As part of our continuing effort to reduce paperwork
burdens, we invite the general public and OMB to take this opportunity
to comment on any additional information collections contained in this
NPRM, not previously approved by OMB, as required by the Paperwork
Reduction Act of 1995, Pubic Law 104-13. Public and agency comments and
reply comments are due August 17 and September 17, 1998, respectively.
Written comments by the Office of Management and Budget on the proposed
information collections are due September 18, 1998. Comments should
address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Control No.: None.
Title: Access Charge Reform for Incumbent Local Exchange Carriers
Subject to Rate-of-Return Regulation--CC Docket No. 98-77.
Form No.: N/A.
Respondents: Business or other for-profit entities.
Type of Review: New collection.
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Number of Estimated time per response
Proposed collection respondents (annual) Total annual burden
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Cost Study for Local Switching Port 155 400 Hours........................ 62,000 Hours.
Costs.
Tariff Filing...................... 51 200 Hours........................ 10,200 Hours.
New Services Requirement........... 10 10 Hours......................... 100 Hours.
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Frequency of Response: One-time requirement, on occasion.
Total Annual Burden: 72,300 Hours.
Estimated Costs Per Respondent: $600 per respondent.
Needs and Uses: The Commission commences a proceeding to reform
access charge rules applicable to incumbent local exchange carriers
(LECs) subject to rate-of-return regulation. We propose to require
rate-of-return LECs to conduct cost studies to determine the
geographically-averaged portion of local switching costs that is
attributable to the line-side ports and to dedicated trunk-side ports,
to be filed with the tariffs implementing these changes. The Commission
also proposes to allow rate-of-return carriers to file a petition for
new services based on a public interest standard. The information will
be used to determine whether the incumbent LECs should receive the
regulatory relief proposed in the NPRM. The information collections are
necessary to implement the Telecommunications Act of 1996.
Synopsis of Notice of Proposed Rulemaking
1. Access reform is one of a series of actions that collectively
are intended to foster and accelerate the introduction of efficient
competition in all telecommunications markets, pursuant to the mandate
of the 1996 Telecommunications Act (1996 Act). In the Access Charge
Reform Order, we set in motion the forces of competition and
deregulation in local telecommunications markets served by incumbent
LECs subject to price cap regulation. Access Charge Reform, CC Docket
No. 96-262, First Report and Order, 12 FCC Rcd 15982 (1997), 62 FR
31868 (June 11, 1997) (Access Charge Reform Order); Order on
Reconsideration, 12 FCC Rcd 10119 (1997), 62 FR 40460 (July 29, 1997);
appeal pending sub nom. Southwestern Bell Tel. Co. v. FCC, No. 97-2618
(and consolidated cases) (8th Cir. argued Jan. 15, 1998); Second Order
on Reconsideration, 12 FCC Rcd 16606 (1997), 62 FR 56121 (October 29,
1997) (Second Reconsideration Order). The 1996 Act, however, expressly
provides that ``Consumers in all regions of the Nation . . . should
have access to telecommunications and information services . . . that
are reasonably comparable to those services provided in urban areas and
that are available at rates that are reasonably comparable to rates
charged for similar services in urban areas.'' 47 U.S.C. 254(b)(3).
With this NPRM, we commence a further proceeding on access reform to
mobilize the same forces to serve the interests of consumers located in
those rural and suburban areas that are served by incumbent LECs
subject to rate-of-return regulation. The first step in this reform
process is to enable these rate-of-return LECs to assess interstate
access charges that are more consistent with principles of cost-
causation and economic efficiency.
2. With this NPRM, we continue the process of reforming the access
charge rate structure for rate-of-return LECs that was begun in the
Access Charge Reform Order with the modifications to the transport rate
structure, the reallocation of costs in the transport interconnection
charge (TIC), and the amendments reflecting the changes necessary to
implement universal service reform. In doing so, we intend to build on
the analysis of the access charge rate structure developed in the
Access Charge Reform Order. While rate-of-return LEC costs generally
may be higher than price cap LEC costs due to longer loops or lower
economies of
[[Page 38776]]
scale, the two groups of carriers incur costs in the same manner, and
similar economic principles should apply. Subject to receiving evidence
showing that differences exist between price cap LECs and rate-of-
return LECs that require different rules to achieve the goal of
fostering an efficient, competitive marketplace, we propose to amend
the access charge rules for rate-of-return LECs in a manner similar to
that adopted for price cap LECs.
3. We recognize that differences in the circumstances of rate-of-
return and price cap LECs may require different approaches to reform,
including a different transition to more economically efficient, cost-
based interstate access charges. We seek to ensure that, at the end of
the transition, all Americans enjoy the benefits of competition. By
varying the transitional mechanisms, we can ensure that the process of
getting to those benefits is as smooth as possible.
In this NPRM we propose to reform the access charge rate structure
of rate-of-return LECs. We address many of the most fundamental
economic inefficiencies in the current structure and will lay a
foundation on which to develop further initiatives for rate-of-return
LECs, including the rural LECs, most of whom are subject to rate-of-
return regulation. In a subsequent phase of this proceeding, we intend
to address the very difficult question of when, and how much,
additional pricing flexibility should be afforded to rate-of-return
LECs. We also intend to address, in a future proceeding, alternative
forms of regulation for LECs currently subject to rate-of-return
regulation. Such alternative regulatory structures could offer
incentives to rate-of-return LECs that are able to become more
efficient.
5. The Access Charge Reform Order, including subsequent
reconsideration and waiver orders, and the Universal Service Order,
made the modifications necessary to implement the revisions to the
universal service support mechanisms adopted in the Universal Service
Order. Federal-State Joint Board on Universal Service, CC Docket No.
96-45, First Report and Order, 12 FCC Rcd 8776 (1997), 62 FR 32862
(June 17, 1997) (Universal Service Order). This NPRM is not intended to
address contentions that some additional costs or services should
receive universal service support; those matters will be resolved in
the Universal Service proceeding. We note that the Commission has
determined that there shall be no change in the existing high cost
support mechanisms for rural LECs until January 1, 2001, at the
earliest. This means that, in the interim, the amount of universal
service support for rural LECs will be maintained initially at existing
levels and should increase in accordance with specified factors, such
as inflation, that have historically guided changes in such support.
6. Common Line Costs. Currently, rate-of-return LECs' subscriber
line charges (SLCs) are limited to recovering the lesser of the actual
cost of the interstate portion of the local loop, or $3.50 per month
for residential and single line business customers, or $6.00 per month
for multi-line business customers. Any remaining common line costs are
recovered through carrier common line (CCL) charges, which are per-
minute charges imposed on interexchange carriers (IXCs).
7. We tentatively conclude that we should adopt rate structure
modifications for rate-of-return LECs that are similar to those that
were adopted for price cap LECs in the Access Charge Reform Order. We
seek comment on the applicability of the rate structure modifications
adopted for price cap LECs to rate-of-return LECs. Specifically, the
Commission proposes to permit rate-of-return LECs to adjust their SLC
ceilings on non-primary residential and multi-line business lines to
the level necessary to recover their average per-line interstate-
allocated common line costs, subject to an inflation-adjusted $9.00
ceiling, while leaving the existing SLC ceiling of $3.50 for primary
residential and single-line business lines at its current level.
8. To ameliorate possible adverse impacts of an immediate SLC
adjustment for non-primary residential lines, the Commission proposes
to adjust the SLC ceilings for these lines gradually. The Commission
seeks comment on adjusting the monthly SLC ceiling initially to the
LEC's average per-line interstate-allocated costs, but not exceeding
$1.50 more than the current SLC ceiling. Annually thereafter, rate-of-
return LECs could adjust the monthly SLC ceiling for these lines for
inflation and could increase the ceiling by $1.00 per line, until the
SLC ceiling for non-primary residential lines is equal to the SLC
ceiling permitted for multi-line business lines.
9. To the extent that SLC ceilings prevent rate-of-return LECs from
recovering their allowed common line revenues from end users, the
Commission proposes to permit these LECs to recover the shortfall,
subject to a maximum charge, through a presubscribed interexchange
carrier charge (PICC), a flat, per-line charge assessed on the end-
user's presubscribed interexchange carrier. For the first year, the
proposed ceiling on the PICC will be $1.50 per month for non-primary
residential lines and $2.75 per month for multi-line business lines.
The Commission proposes adjusting the PICC for price cap non-primary
residential and multi-line business lines annually for inflation and
increasing the PICCs for non-primary residential and multi-line
business lines by a maximum of $1.00 and $1.50 per year, respectively,
until price cap LECs recover all their permitted common line revenues
through a combination of flat-rated SLC and PICCs. The Commission also
invites comment on whether the PICC for primary residential and single-
line business lines should be capped at $0.53 per month for the first
year, and adjusted annually thereafter for inflation, and increase by
$0.50 per year, until it equals one twelfth of the sum of the annual
per-line common line cost and residual interconnection charge cost
permitted under our rate-of-return rules, divided by the projected
average number of local exchange service subscriber lines in use during
such annual period, less the maximum primary residential and single-
line business lines SLC computed pursuant to our rules. If a customer
does not designate a presubscribed interexchange carrier, the
Commission proposes to permit rate-of-return LECs to collect directly
from the customer the PICC that could otherwise be assessed against the
presubscribed interexchange carrier.
10. To the extent that the SLC ceilings on all lines and the PICC
ceilings on primary residential and single-line business lines prevent
recovery of the full common line revenues permitted by the rate-of-
return rules, the Commission proposes to permit rate-of-return LECs to
recover the shortfall through a per-minute residual CCL charge. The
Commission proposes that rate-of-return LECs should assess the residual
CCL charge initially on originating minutes, subject to a rate cap,
with any residual being collected through a per-minute terminating CCL
charge. Rate-of-return LECs would, under the Commission's proposal, be
allowed to assess an originating CCL charge that, when added to the sum
of local switching charges, the per-minute residual TIC, and any per-
minute charges related to marketing expenses, does not exceed the sum
of local switching charges, the per-minute CCL charge, and TIC assessed
on originating minutes on December 31, 1997. A per-minute residual TIC
could also be assessed on IXCs by rate-of-return LECs to recover any
TIC costs not recovered through facility-based charges. The originating
residual TIC charge would be subject to the same
[[Page 38777]]
ceiling mechanism as the residual CCL charge.
11. Under the Commission's proposal, the per-minute residual CCL
and residual TIC charges will be eliminated as the PICC ceilings
increase. After the residual CCL and the residual TIC charges are
eliminated, increases in the PICC for primary residential and single-
line business lines will reduce the PICCs on non-primary residential
and multi-line business lines by an amount that corresponds to the
total increases in PICCs for primary residential and single-line
business lines. Reductions will be targeted to the PICCs on multi-line
business lines until the PICCs for those lines are equal to the PICCs
for non-primary residential lines. Thereafter, reductions will be
applied to both classes of customers equally until the combined SLCs
and PICCs for primary residential and single-line business lines
recover the full average per-line common line costs permitted under our
rules, and the additional PICCs on non-primary residential and multi-
line business lines no longer recover common line costs. Under the
proposal, certain TIC costs and marketing expenses, in addition to
common line costs, will be recovered through non-primary residential
line and multi-line business PICCs, even though SLCs and PICCs for
primary residential and single-line business lines only recover the
average per-line common line costs permitted under our rules.
12. We conclude that modifications similar to those we made for
price cap LECs are needed to remove implicit subsidies and ensure that
charges more accurately reflect the manner in which the costs are
incurred, thereby promoting competition. We acknowledge that certain
rate-of-return LECs, especially those in rural and insular areas, face
different market conditions and incur higher costs than do many price
cap LECs due to the lack of economies of scale that result from low
subscriber density and small exchanges that characterize rural areas.
Smaller LECs serving more costly areas, however, will receive universal
service support based on their embedded costs until the Commission,
with the Universal Service Joint Board's assistance, develops an
appropriate model to ensure that rural carriers receive support at a
level that will enable them to provide supported services at affordable
rates. Adopting the same rate structure approach for rate-of return
LECs, therefore, most likely will not align rates with costs as quickly
as it will for price cap LECs. For many rate-of-return companies,
especially those located in rural and insular areas, longer loops and
difficult terrain result in average loop costs that significantly
exceed the average loop costs of price cap LECs. The cost recovery
mechanism for price cap LECs contemplates that price cap LECs will be
able to recover all of their interstate-allocated common line costs
through a combination of SLCs and PICCs, reducing the CCL charge to
zero in a relatively short amount of time.
13. If rate-of-return LECs were to implement the revised common
line rate structure applied to price cap LECs, multi-line business
PICCs and CCL charges would often go to their respective ceilings and
remain higher than those of price cap LECs for the foreseeable future,
because rate-of-return LEC common line costs are significantly higher
than those of price cap LECs. If we direct rate-of-return LECs to
recover certain switching, marketing, and residual TIC costs through
the common line SLCs and PICCs, per-line common line costs will
increase further. Under this scenario, the SLCs and/or PICCs for many
rate-of-return LECs would have to be adjusted to a level that would be
higher than the ceilings we adopted for price cap LECs if significant
reductions in the CCL rate were desired. We solicit comment on this
analysis.
14. We ask interested parties to discuss how we should determine
appropriate SLC ceilings. Several entities have expressed concern that
the immediate SLC increases to $9.00 for non-primary or multi-line
business lines will create a large disparity between SLCs charged by
rate-of-return LECs and neighboring price cap LECs, and that under the
1996 Act and applicable state laws, the lower-cost price cap carriers
will be able to ``cherry pick'' the high volume business customers of
the higher priced rate-of-return LECs. These entities urge the
Commission to grant them pricing flexibility and propose that SLCs be
set based on the national average or on the neighboring price cap LEC's
average SLC.
15. We invite comment on establishing a ceiling that is based on
the neighboring price cap LEC's average multi-line business SLC, or on
the national average. In addition, in some cases, as the non-primary
SLC cap increases, the disparity between the $3.50 SLC for primary
residential lines and the SLC for non-primary residential lines will
most likely be greater for rate-of-return carriers than it is for price
cap companies. Would this disparity warrant a different approach for
rate-of-return carriers' non-primary residential lines than we adopted
for price cap LECs?
16. Interested parties should discuss whether the PICC is an
effective cost recovery mechanism for rate-of-return LECs' common line
costs and, if so, to what extent the PICCs and CCL charges for rate-of-
return LECs should be comparable to those of price cap LECs. If
commenters believe that the plan we adopted in the Access Charge Reform
Order would not produce the expected economic benefits for rate-of-
return LECs and their customers, interested parties should submit
alternative plans. For example, should we prescribe higher ceilings for
PICCs that would permit rate-of-return LECs to reduce their CCL rates
to levels comparable to those of price cap LECs? Alternatively, should
we prescribe a maximum CCL charge and eliminate the PICC ceiling to
allow rate-of-return LECs to recover the shortfall through flat-rated
charges? In addition, in light of the higher common line costs incurred
by many rate-of-return LECs, and because, if adopted, other
modifications proposed in this NPRM will require rate-of-return LECs to
recover certain switching, marketing, and TIC costs through the common
line recovery mechanism, we invite parties to discuss whether we should
permit these carriers to recover relatively more of the common line
revenue requirement through terminating minutes. Given that local
switching per-minute rates will be reduced significantly by the
inclusion of dial equipment minutes (DEM) weighing in universal service
support, we ask interested parties to discuss whether a higher per-
minute CCL charge in the short run is unsatisfactory.
17. Interested parties should also discuss the extent to which, for
purposes of assessing SLCs and PICCs, residential and business lines
should be treated differently. For example, should non-primary
residential lines be assessed lower PICCs than multi-line business
lines and phased in over time, as we did for price cap LECs, or should
we permit the SLCs for non-primary residential lines to increase more
rapidly for rate-of-return LECs than for price cap LECs, in order to
allow carriers in high-cost areas to reduce their CCL charge more
rapidly than would otherwise be possible with graduated increases in
the SLC? Alternatively, should a uniform PICC be applied to all non-
primary residential and business lines to spread the revenue
requirement evenly across these classes of customers?
18. In the Second Reconsideration Order in the Access Charge Reform
proceeding, we concluded that with
[[Page 38778]]
respect to the PICC, Centrex customers should be treated similarly to
PBX customers, because the two arrangements are functionally
equivalent. Accordingly, we determined that Centrex lines should be
assessed PICCs using a 9:1 line-to-trunk equivalency ratio, except
where the multi-line business SLC ceiling does not permit the recovery
of all interstate-allocated loop costs from the end user. In those
instances, a PICC that includes the difference between the per-line
loop cost and the multi-line business SLC cap, subject to the multi-
line business PICC ceiling, will be assessed on Centrex lines. We seek
comment on the applicability of this approach and of the 9:1 ratio to
rate-of-return LECs. Parties proposing different ratios should submit
data supporting the ratio they propose.
19. We also seek comment on how the 1996 Act will affect the
development of competition in areas served by small and rural rate-of-
return LECs. While the entry of competitors in many rate-of-return LEC
service areas may be delayed due to the provisions of 47 CFR 251(f),
entry in these areas will likely occur in time. Specifically, section
251(f)(1) provides an exemption for certain rural telephone companies
from the duties of local exchange carriers enumerated in section
251(c), including but not limited to the duties to interconnect, to
provide access to network elements on an unbundled basis, and to resell
telecommunications services. Section 251(f)(2) provides a mechanism by
which local exchange carriers with fewer than two percent of the
nation's subscriber lines may petition the state for suspension or
modification of some of the duties imposed by the Act on local exchange
carriers. We ask interested parties to discuss the impact of these
statute sections and the development of competition as they relate to
the rate structure and transition mechanism we are proposing in this
NPRM.
20. We also seek comment on whether we should adopt one approach
for all rate-of-return LECs or whether our approach should vary
depending on size, population density, topography, or other factors
that may vary among rate-of-return LECs. Are there concerns that are
specific to National Exchange Carrier Association (NECA) pooling
companies that warrant separate treatment? Interested parties should
address the specific issues raised and submit proposals for
modifications that are consistent with the goals of the 1996 Act.
Interested parties should also propose a time frame for adopting
modifications to the rate structure. Should modifications adopted
become effective immediately or should they be phased in over time?
Finally, parties should address the extent to which options proposed
affect small business entities, including small incumbent LECs and new
entrants.
21. Assessment of SLCs and PICCs on Derived Channels. We propose to
adopt similar SLCs and PICCs for integrated services digital network
(ISDN) service offered by rate-of-return LECs. Specifically, we propose
to permit rate-of-return LECs to charge SLC and PICC rates for Primary
Rate Interface (PRI) ISDN service equal to five times the rate-of-
return LEC's multi-line business SLC and PICC, and SLC and PICC rates
for Basic Rate Interface (BRI) ISDN service equal to the rate-of-return
LEC's non-primary residential line SLC and PICC. We seek comment on
these conclusions and invite parties to comment on the impact that
assessing SLCs and PICCs on ISDN lines will have on rate-of-return
carriers and their customers. Parties should address whether the cost
relationship between ISDN and analog service provided by rate-of-return
LECs is similar to that of price cap LECs; if they believe it is not,
they should submit specific data supporting their position. We also
invite parties to discuss the relationship between proposed
modifications to the common line rate structure and our tentative
conclusion to treat rate-of-return LECs' ISDN lines in the manner
discussed above.
22. Local Switching Dedicated Facilities. The interstate portion of
local switching costs is currently recovered through per-minute local
switching charges levied on IXCs, even though a significant portion of
local switching costs is associated with ports and appears to be driven
by the number of lines or trunks connected to the switch, not by the
number of minutes of traffic routed by the switch. We propose to
require rate-of-return LECs to reassign all costs for line-side ports,
including the line card, protector, and main distribution frame, from
the local switching category to the common line category, for recovery
through the common line rate structure. We seek comment on this
proposal. We ask if there are any specific factors for rate-of-return
LECs that would preclude our adoption of this rate structure change at
this time.
23. We propose to require rate-of-return LECs to conduct cost
studies to determine the geographically-averaged portion of local
switching costs that is attributable to the line-side ports and to
dedicated trunk-side ports, to be filed with the tariffs implementing
these changes. We solicit comment on this cost study proposal. In the
alternative, commenters are requested to suggest a substitute mechanism
to identify and assign costs to line-side ports or to trunk-side ports.
24. We also propose to require rate-of-return LECs to recover
dedicated trunk port costs through a flat-rated trunk port charge
assessed on the purchaser of the dedicated trunk terminating at the
port. Analog switches require a voice-grade interface on the trunk-side
of the end office switch, thereby requiring DS1 transport trunks to be
demultiplexed into individual voice-grade circuits before being
switched at analog end office switches. DS1/voice-grade multiplexers
perform this function. A digital switch port includes the DS1/voice-
grade multiplexing function. In addition, we propose to establish a
separate rate element through which rate-of-return LECs can recover on
a flat-rated basis the additional costs of DS1/voice grade multiplexers
required in conjunction with terminating dedicated trunks at analog
switches that were reassigned from the TIC. We ask whether the benefits
to be gained from a more efficient, cost-causative rate structure
outweigh the burden on rate-of-return LECs of establishing these new
rate elements. In addition, we solicit suggestions as to what specific
modifications of the part 69 cost allocation rules we should make to
implement any rate structure changes for dedicated local switching
facilities.
25. Common line charges will recover the cost of a line port used
to provide basic, analog service, even when the end user has another
form of service. For some services, such as ISDN, the cost of a line
port is significantly more than the cost of a line port associated with
a basic, analog line. We propose to permit rate-of-return LECs to
assess a separate, monthly, flat-rated charge directly on end users of
such services, to recover the amount by which the cost of a line port
for ISDN, or the cost of a line port associated with other services,
exceeds the cost of a line port for basic, analog service. We request
comment on this proposal.
26. Local Switching Shared Facilities. We seek comment on our
tentative conclusion that rate-of-return LECs adhere to a per-minute
rate structure for shared local switching facilities, including the
central processing unit, switching matrix, and shared trunk ports.
Under this approach, the shared trunk ports and any associated DS1/
voice grade multiplexers required at analog local switches will be
assessed on a per-minute basis, separate from the charge for the switch
itself. We ask whether there are any factors inherent to
[[Page 38779]]
rate-of-return LECs that should lead us to change this tentative
conclusion.
27. Call Setup Charge. We propose to permit, but not require, rate-
of-return LECs to establish a charge for call setup, the process of
establishing a transmission path over which a phone call will be
routed. Costs for call setup using SS7 are incurred primarily on a per-
call rather than a per-minute basis. Under this proposed revision to 47
CFR 69.106, a rate-of-return LEC could elect to establish a separate
per-call setup charge assessed on IXCs for all originating interstate
calls handed off to the IXC's point of presence (POP), and on all
terminating interstate calls that are received from an IXC's POP,
whether or not a call is completed. We invite comment on this proposal
for an optional call setup charge, including specific language to
modify our part 69 cost allocation rules to implement this rate
structure change. Moreover, if a rate-of-return LEC elects to recover
revenue requirements through a call setup charge, we tentatively
conclude that this charge cannot overlap with any other local switching
charges, with charges for dedicated SS7 facilities, or with other
signalling charges. We request comment on our tentative conclusion
prohibiting double recovery for call setup charges by rate-of-return
LECs. Commenters also should suggest mechanisms that would prevent any
double recovery for rate-of-return LECs.
28. It would be extremely difficult to segregate the costs of the
switch central processing unit and other traffic-sensitive costs into
per-message and per-minute portions and to verify that the allocation
has been done properly. Therefore, we propose to limit the costs that a
rate-of-return LEC may recover through call setup charges to those
associated with signalling. We request comment on this proposal. We
seek comment on how call setup costs are affected by whether
multifrequency (MF) signalling or SS7 signalling is employed. We also
request estimates of the percentage of the total costs of a typical
call that are represented by call setup costs. To facilitate our
comparison of the estimates submitted, we request that commenters use
an average call duration of 3.86 minutes, which we used as the call
duration in our analysis in the Access Charge Reform Order.
29. Tandem-Switched Transport Issues. We request comment on our
analysis that we should require rate-of-return LECs to recover the
costs of trunk ports used to terminate dedicated trunks on the serving
wire center (SWC) side of the tandem switch through flat-rated charges
assessed on the purchaser of the dedicated trunk terminated at the
trunk port on the SWC side of the tandem switch. To ease the burdens of
implementing this unbundling, we propose to permit rate-of-return LECs
to use the dedicated trunk port rates at the local switch to establish
this unbundled charge. We ask for comment on this proposal. With regard
to shared facilities at the tandem switch, we solicit comment on our
tentative conclusion that there is no need to create a separate charge
for shared trunk ports on the end-office-side of the tandem switch
because this trunk port cost is included in the charge for the tandem
switch and there is no reason to charge separately for shared trunk
ports in the tandem switching context.
30. We also propose to require rate-of-return LECs to establish
separate rate elements to recover the costs of multiplexing equipment
on each side of the tandem switch that were reassigned to tandem
switching from the TIC in the Access Charge Reform First
Reconsideration Order. The rates for multiplexers on the SWC side of
the tandem switch would be flat rated because they are dedicated to a
single IXC. The rates for the multiplexers on the end office side of
the tandem switch would be per-minute charges because these
multiplexers are shared among all users of common transport. To
simplify the implementation process for rate-of-return LECs, we propose
to permit them to use multiplexer rates already established in their
special access tariff for similar multiplexers. We request comment on
these proposals. These provisions cover DS1/voice grade multiplexers
used with analog tandem switches, as well as other multiplexers that
are not included in transport rates.
31. Outstanding Transport Interconnection Charge Issues for Rate-
of-Return LECs. Although the Commission in the Access Charge Reform
Order directed rate-of-return LECs to make specified cost reallocations
from the TIC to other facilities-based rate elements, thereby reducing
the amount in the TIC, the reallocation of costs from the TIC to other
rate elements will not remove all of the costs from the TIC, leaving a
residual TIC. We propose to incorporate the residual TIC in the common
line pricing structure of rate-of-return LECs, just as we did for price
cap LECs. This will put in place a mechanism that will, at different
times for different rate-of-return LECs, begin the process of
transferring TIC costs to other rate elements. We ask for comment on
this analysis and on our proposal to adopt a similar rate structure to
that we employed for price cap LECs.
32. The Access Charge Reform Order reduces the TIC for price cap
LECs by targeting certain price cap index (PCI) reductions to reducing
the TIC. Price cap LECs will target price cap productivity (X-factor)
adjustments to the trunking basket's PCI, and therein to the TIC
service band index (SBI), thus reducing the amounts recovered through
the residual TIC and effectively spreading those residual TIC revenues
among the universe of access services. We ask whether any comparable
mechanism exists for rate-of-return LECs that would eliminate the
residual TIC in a reasonable time. We ask commenters whether it would
be practical to spread the residual TIC proportionately over the other
access elements in a manner comparable to that of targeting price cap
productivity reductions to the TIC. We seek comment on what would be a
reasonable time in which to accomplish such a reallocation. We ask
parties supporting such an approach to propose cost allocation rules to
implement their approach. Parties presenting data to quantify amounts
in the residual TIC should include sufficient detail to permit the
Commission and interested parties to evaluate the procedures used and
to adjust the results, if necessary, to address concerns raised by the
record. We seek comment on how these approaches affect small business
entities, including small incumbent LECs and new entrants.
33. We ask parties to address whether there are additional causes
of costs remaining in the residual TIC for rate-of-return LECs that
have not been identified previously that would justify further
reallocations of costs from the TIC. Parties identifying such costs
should indicate the other element(s) to which these additional costs
should be reallocated. We invite parties to comment on whether any
public policy reasons would support retaining some costs of rate-of-
return LECs in the residual TIC indefinitely. We ask parties to address
the competitive implications of waiting for completion of a Joint Board
review of separations procedures to determine which, if any, of the
costs in the TIC reflect the higher cost of providing transport
services in less densely populated areas, as compared with the costs
underlying transport rates that were derived from special access rates.
See Jurisdictional Separations Reform and Referral to the Federal-State
Joint Board, CC Docket No. 80-286, Notice of Proposed Rulemaking, 12
FCC Rcd 22120 (1997), 62 FR 59842 (November 5, 1997).
34. Signalling System Seven (SS7). SS7 is the international
standard
[[Page 38780]]
network protocol currently used to establish and close transmission
paths over which telephone calls are carried. Once the reallocation of
SS7 costs included in the TIC is completed, most, if not all, of SS7
costs presumably will be recovered through the local switching charge.
We invite comment on our proposal to continue the existing rate
structure for SS7 cost recovery by rate-of-return LECs, and to permit
these LECs to adopt the rate structure for SS7 services that we
approved in Ameritech Operating Companies Petition for Waiver of Part
69 of the Commission's Rules to Establish Unbundled Rate Elements for
SS7 Signalling, Order, 11 FCC Rcd 3839, 3841 (Com. Car. Bur. 1996). The
rate structure established by Ameritech pursuant to that waiver
recovers costs through four unbundled charges for the various functions
performed by SS7 networks: (1) Signal link; (2) STP port termination;
(3) signal transport; and (4) signal switching. We also solicit
additional, alternative SS7 rate structure proposals for rate-of-return
LECs. Any comments on this issue should include an assessment of the
expense of requiring rate-of-return LECs to install equipment in their
networks for metering SS7 traffic. Would the streamlined waiver
petition procedure we propose pursuant to section 69.4(g) be preferable
as a means to address alternative SS7 rate structures proposed by rate-
of-return LECs?
35. We recognize that some call setup is still performed using in-
band, MF signalling, rather than out-of-band signalling systems such as
SS7. SS7 signalling may be less prevalent for rate-of-return LECs than
for price cap LECs. Any determination we make concerning a SS7 rate
structure for rate-of-return LECs could be affected by the extent that
rate-of-return LEC networks use SS7. We also ask parties to comment on
the need for revisions to the cost allocation rules in part 69 to
accommodate the provision of SS7 signalling in accordance with the
provisions of the Ameritech SS7 waiver.
36. General Support Facilities Costs. To the extent that rate-of-
return LECs' costs are underallocated to the billing and collection
category, rate-of-return LECs' regulated services are recovering costs
associated with unregulated services through interstate access charges.
We solicit comment on our tentative conclusion that we should modify 47
CFR 69.307 for rate-of-return LECs to allocate general support
facilities (GSF) costs related to billing and collection services to
the billing and collection category. For rate-of-return LECs that
maintain accounts below the summary account level, we propose the use
of a general expense allocator to apportion the interstate share of
Accounts 2111 (Land), 2121 (Buildings), 2123 (Office Equipment), and
2124 (General Purpose Computers) between: (1) The billing and
collection category and (2) all other elements and categories. To
determine the amount to be assigned to the billing and collection
category, we propose to apply a modified ``Big Three Expense Factor''
allocator to the interstate investment recorded in these four accounts.
The interstate portion of Account 6120 (General Support Expenses) will
continue to be apportioned among all elements and categories, including
billing and collection, based upon the allocation rules contained in 47
CFR 69.401(a)(2). Access Charge Reform, Third Report and Order, CC
Docket No. 96-262, 12 FCC Rcd 22430 (1997) (Third Report and Order), 62
FR 65619 (December 15, 1997). Because certain small rate-of-return LECs
do not maintain accounts below the summary account level, we seek
comment on what adjustments, if any, we should make to the allocation
procedures to reflect this difference. It would be helpful if parties
would comment on how many rate-of-return LECs use general purpose
computers to provide billing and collection services. We also invite
parties to identify any changes that should be made to other access
elements as a result of any changes we may make to the GSF allocation
procedures. Finally, parties should also address the extent to which
these approaches affect large and small rate-of-return LECs differently
and how small business entities, including small incumbent LECs and new
entrants, will be affected.
37. Marketing Expenses. The Commission concluded in the Access
Charge Reform Order that price cap LECs' marketing costs that are not
related to the sale or advertising of interstate switched access
services are not appropriately recovered from IXCs through per-minute
interstate switched access charges. We seek comment on our tentative
conclusion that rate-of-return LECs' marketing expenses allocated to
the interstate jurisdiction should be recovered through the common line
recovery mechanism from end users on a per-line basis. Specifically, we
propose that rate-of-return LECs recover the revenues related to the
Account 6610 marketing expenses by increasing the SLCs for multi-line
business and non-primary residential lines, subject to the SLC
ceilings. To the extent the SLC ceilings prevent full recovery of these
amounts, rate-of-return LECs would be required to recover marketing
costs through equal increases on the PICCs for non-primary residential
and multi-line business lines, subject to the PICC ceilings. In the
event the PICC ceilings prevent full recovery of these expenses, any
residual marketing expenses may be recovered through per-minute charges
on originating access service, subject to the ceiling placed on
originating minutes. If rate-of-return LECs cannot recover their
remaining marketing expenses through per-minute charges on originating
access, any residual may be recovered through per-minute charges on
terminating access service. To the extent marketing expenses will be
recovered through the SLC, they shall not be included in the base
factor portion or considered common line revenues.
38. We also ask parties to propose a mechanism comparable to the
separate basket created for price cap LECs that will remove marketing
expenses from access charges assessed by rate-of-return LECs. We invite
parties to provide language for the amendment of our part 69 cost
allocation rules that affect the recovery of these marketing expenses
through the common line cost recovery mechanism.
39. Special Access. In light of the most recent changes to the
charges incurred by multi-line businesses, including the higher SLC and
the new multi-line business PICC, it may be cost effective for some
multi-line businesses to substitute the purchase of special access
lines for the use of switched access. We have already tentatively
concluded that we should permit price cap LECs to assess a PICC on
special access lines to recover revenues for the common line basket.
Access Charge Reform, CC Docket No. 96-262, Further Notice of Proposed
Rulemaking, 12 FCC Rcd 15982, 16154 para. 401 (1997), 62 FR 31868 (June
11, 1997) (Further Notice). The special access PICC would be no higher
than the PICC that a price cap LEC could charge for a multi-line
business line, would not recover TIC or marketing expenses, and would
be gradually eliminated as the single-line PICC is gradually
implemented for price cap LECs. We tentatively concluded that allowing
price cap LECs to impose such special access PICCs would be necessary
to facilitate the transition from current per minute CCL charges to the
flat-rate PICC.
40. We invite parties to comment on whether, if we apply a PICC to
special access services offered by price cap LECs, we should apply a
PICC to special access services offered by rate-of-return LECs. Parties
should comment on the
[[Page 38781]]
impact of PICCs on special access lines if the PICCs on rate-of-return
LECs' multi-line business lines remain in place for a considerably
longer time than they do for price cap LECs. To the extent parties
advocate assessing PICCs on special access lines, we seek comment on
how special access connections should be counted for purposes of
assessing a ``per line'' PICC. Parties should also address the extent
to which our proposal affects large and small LECs differently and how
small business entities, including small incumbent LECs and new
entrants, will be affected.
41. Part 69 Cost Allocation Rules. Under the Commission's
separations rules at 47 CFR part 36, certain costs of the incumbent LEC
network are assigned to the interstate jurisdiction. For rate-of-return
LECs, the Commission's cost allocation rules at 47 CFR part 69 allocate
these interstate costs among the various access and interexchange
services. In addition to the comment requested previously in this NPRM
on the need for changes to our cost allocation rules in conjunction
with specific proposals to revise certain rate structure provisions of
the part 69 rules, we ask whether we should make any other
modifications at this time to our cost allocation rules for rate-of-
return LECs to accommodate any of those changes, or to update the rules
in other respects. Parties making such suggestions should be specific
about the reasons the change is needed and include proposed language
for revising the cost allocation rules.
42. Modification of New Services Requirement. Rate-of-return LECs
currently must file a petition pursuant to 47 CFR 1.3 to request a part
69 waiver for the establishment of one or more new switched access rate
elements to accommodate a new service offering to switched access
customers. In order to streamline the part 69 waiver process for a
rate-of-return LEC wishing to offer a new service, we request comment
on our proposal to adopt for rate-of-return LECs the streamlined
petition provisions of section 69.4(g), which currently requires a
price cap LEC in similar circumstances to file a petition that
demonstrates one of two criteria: (1) That another LEC has previously
obtained approval to establish identical rate elements and that the
original petition did not rely upon a competitive showing as part of
its public interest justification, or (2) that the new rate elements
would serve the public interest. In addition, we request suggestions as
to any manner in which the procedures or standards of section 69.4(g)
should be modified for rate-of-return LECs. Parties should comment, for
instance, on whether a showing of prior approval should be limited to
petitions granted to other rate-of-return LECs.
Ex Parte Presentations
43. This Notice of Proposed Rulemaking 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.
Regulatory Flexibility Analysis
44. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities of
the proposals suggested in this NPRM. See 5 U.S.C. 603. The RFA, 5
U.S.C. 601 et seq., has been amended by the Contract With America
Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996)
(CWAAA). Title II of the CWAAA is the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA).
45. Written public comments are requested on the IRFA. Comments and
reply comments must be identified by a separate and distinct heading as
responses to the IRFA and must be filed on or before August 17 or
September 17, 1998 respectively. Parties should address the extent to
which our proposals affect large and small incumbent rate-of-return
local exchange carriers (LECs) differently and how small business
entities, including small incumbent LECs and new entrants, will be
affected. The Commission's Office of Public Affairs, Reference
Operations Division, will send a copy of this NPRM, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with 5 USC 603(a). In addition, the NPRM
and IRFA (or summaries thereof) will be published in the Federal
Register.
46. Need for, and Objectives of, the Proposed Rules. The
Commission's access charge rules for rate-of-return LECs were adopted
at a time when interstate access and local exchange services were
offered on a monopoly basis. We seek to revise the Commission's access
charge rules for local exchange carriers (LECs) subject to rate-of-
return regulation to make the rules consistent with the pro-
competitive, deregulatory policies contemplated by the
Telecommunications Act of 1996. In the 1997 Access Charge Reform Order,
we focused on setting in motion the forces of competition and
deregulation in local markets served by incumbent local exchange
carriers subject to price cap regulation. In this NPRM, we propose to
modify our rate structure requirements, to the extent possible, to
permit rate-of-return LECs to recover costs in a manner that more
accurately reflects the way those costs are incurred, identify implicit
subsidies, and reduce subsidies by recovering more costs from the cost
causer, thereby sending more accurate pricing signals to both consumers
and competitors, and facilitating the transformation from a regulated
to a competitive marketplace. Specifically, we propose to reduce usage-
sensitive interstate access charges by diminishing local loop and other
non-traffic sensitive costs and directing rate-of-return LECs to
recover those non-traffic sensitive costs through more economically
efficient, flat-rated charges.
47. Legal Basis. The proposed action is authorized by sections 1-4,
201-205, 251, 254, 303(r) and 403 of the Communications Act of 1934, as
amended, 47 U.S.C. 151-154, 201-205, 251, 254, 303(r) and 403.
48. Description and Estimate of the Number of Small Entities To
Which the Proposed Rules Will Apply. The Regulatory Flexibility Act
directs agencies to provide a description of and an estimate, where
feasible, of the number of small entities that may be affected by
proposed rules, if adopted. 5 U.S.C. 603(b)(3). The Regulatory
Flexibility Act generally defines the term ``small entity'' as having
the same meaning as the term ``small business.'' 5 U.S.C. 601(6). The
term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act. See 5 U.S.C. 601(3).
Under the Small Business Act, a ``small business concern'' is one that:
(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 (SBA). 15 USC 632. See, e.g.,
Brown Transport Truckload, Inc. v. Southern Wipers, Inc., 176 B.R. 82
(N.D. Ga. 1994).
49. Because the small rate-of-return LECs that would be subject to
these rules are either dominant in their field of operations or are not
independently owned and operated, consistent with
[[Page 38782]]
our prior practice, they are excluded from the definition of ``small
entity'' and ``small business concerns.'' See Implementation of the
Local Competition Provisions of the Telecommunications Act of 1996, CC
Docket No. 96-98, First Report and Order, 11 FCC Rcd 15499, 16144-45
Paras. 1327-30 (1996) (Local Competition Order), 61 FR 45476 (August
29, 1996), Order on Reconsideration, 11 FCC Rcd 13042 (1996), 61 FR
52706 (October 8, 1996), vacated in part sub nom. Iowa Utils. Bd. v.
FCC, 120 F.3d 753 (8th Cir. 1997), cert. granted sub nom. AT&T Corp. v.
Iowa Utils. Bd., 118 S.Ct. 879 (1998). Accordingly, our use of the
terms ``small entities'' and ``small businesses'' does not encompass
small rate-of-return LECs. Out of an abundance of caution, however, for
regulatory flexibility analysis purposes, we will consider small rate-
of-return LECs within this analysis and use the term ``small incumbent
rate-of-return LECs'' to refer to any rate-of-return LECs that arguably
might be defined by SBA as ``small business concerns,'' including
consideration of any adverse impact of the rules we adopt and
consideration of alternatives that may reduce adverse impacts on such
entities. Since the time of the Commission's 1996 decision in the Local
Competition Order, 11 FCC Rcd at 16144-45, 61 FR 45476 (August 29,
1996), the Commission has consistently addressed in its regulatory
flexibility analyses the impact of its rules on incumbent LECs. See 13
CFR 121.210 (SIC 4813). See also Executive Office of the President,
Office of Management and Budget, Standard Industrial Classification
Manual (1987).
50. The SBA has defined a small business for Standard Industrial
Classification (SIC) category 4813 (Telephone Communications, Except
Radiotelephone) to be small telecommunications entities when they have
no more than 1,500 employees at the holding company level. 13 CFR
121.201. We invite interested parties to discuss the number of
telecommunications providers, if any, that can be considered ``small
entities'' within the meaning of the Regulatory Flexibility Act, and
whether there is any reason to establish different requirements for
small telecommunication providers. Below, we discuss the total
estimated number of telephone companies falling within these categories
and the number of small businesses in each category, and we then
attempt to refine further those estimates to correspond with the
categories of telephone companies that are commonly used under our
rules.
51. The most reliable source of information regarding the total
numbers of certain common carriers nationwide appears to be data the
Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service (TRS).
FCC, Telecommunications Industry Revenue: TRS Fund Worksheet Data,
Figure 2 (Number of Carriers Paying Into the TRS Fund by Type of
Carrier) (Nov. 1997) (Telecommunications Industry Revenue). According
to data in the most recent report, there are 3,459 interstate carriers.
These carriers include, inter alia, local exchange carriers, wireline
carriers and service providers, interexchange carriers, competitive
access providers, operator service providers, pay telephone operators,
providers of telephone toll service, providers of telephone exchange
service, and resellers. See 13 CFR 121.201, SIC code 4813.
52. Telephone Companies Affected. The United States Bureau of the
Census (Census Bureau) reports that, at the end of 1992, there were
3,497 firms engaged in providing telephone service, as defined therein,
for at least one year. United States Department of Commerce, Bureau of
the Census, 1992 Census of Transportation, Communications, and
Utilities, Establishment and Firm Size, at Firm Size 1-123 (1995) (1992
Census). This number contains a variety of different categories of
carriers, including incumbent LECs, interexchange carriers (IXCs),
competitive access providers, cellular carriers, mobile service
carriers, operator service providers, pay telephone operators, personal
communication service (PCS) providers, covered specialized mobile radio
(SMR) providers, and resellers. It seems certain that some of those
3,497 telephone service firms may not qualify as small entities or
small rate-of-return incumbent LECs because they are not independently
owned or operated. See generally 15 U.S.C. 632(a)(1). For example, a
PCS provider that is affiliated with an IXC having more than 1,500
employees would not meet the definition of a small business. It seems
reasonable to conclude that fewer than 3,497 telephone service firms
are small entity telephone service firms or small incumbent rate-of-
return LECs because some of them are not independently owned or
operated.
53. Wireline Carriers and Service Providers Affected. The SBA has
developed a definition of small entities for telephone communications
companies other than radiotelephone (wireless) companies. According to
the SBA's definition, a small business telephone company other than a
radiotelephone company is one employing no more than 1,500 persons. 13
CFR 121.201, SIC Code 4812. The Census Bureau reports that there were
2,321 such telephone companies in operation for at least one year at
the end of 1992. 1992 Census, supra, at Firm Size 1-123. All but 26 of
the 2,321 non-radiotelephone companies listed by the Census Bureau were
reported to have fewer than 1,000 employees. Thus, even if all 26 of
those companies had more than 1,500 employees, there would still be
2,295 non-radiotelephone companies that might qualify as small entities
or small rate-of-return LECs. We do not have data on the number of
carriers that are not independently owned and operated, and thus are
unable at this time to estimate with greater precision the number of
wireline carriers and service providers that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are fewer than 2,295 small telephone communications
companies other than radiotelephone companies that may be affected by
the proposed rules, if adopted.
54. Incumbent Local Exchange Carriers Affected. Neither the
Commission nor the SBA has developed a definition of small providers of
local exchange service. The closest applicable definition under SBA
rules is for telephone telecommunications companies other than
radiotelephone (wireless) companies. Standard Industrial Classification
(SIC) Code 4813. The most reliable source of information regarding the
number of incumbent LECs nationwide appears to be the report that we
compiled from the 1997 Telecommunications Relay Service (TRS) Fund
worksheets and the Universal Service Fund (USF) worksheets of
September, 1997. According to our most recent data, 1,376 companies
that provided interstate telecommunications service as of June 30, 1997
reported that they were engaged in the provision of local exchange
service. Federal Communications Commission, Common Carrier Bureau,
Industry Analysis Division, Carrier Locator: Interstate Service
Providers, Figure 1 (Nov. 1997). Although it seems certain that some of
these carriers are not independently owned or operated, have more than
1,500 employees, or are subject to price cap regulation, we are unable
at this time to estimate with greater precision the number of rate-of-
return LECs that would qualify as small business
[[Page 38783]]
concerns under the SBA's definition. Consequently, we estimate that
there are fewer than 1,376 small rate-of-return LECs that may be
affected by the proposals in this NPRM, if adopted. We seek comment on
this estimate.
55. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services. The closest applicable definition
under the SBA rules is for telephone communications companies other
than radiotelephone (wireless) companies. 13 CFR 121.201, SIC code
4813. According to the most recent Telecommunications Industry Revenue
data, 143 carriers reported that they were engaged in the provision of
interexchange services. Telecommunications Industry Revenue, Figure 2.
We do not have data specifying the number of these carriers that are
not independently owned and operated or have more than 1,500 employees,
and thus are unable at this time to estimate with greater precision the
number of interexchange carriers (IXCs) that would qualify as small
business concerns under the SBA's definition. Consequently, we estimate
that there are fewer than 143 small entity IXCs that may be affected by
the proposed rules, if adopted.
56. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements. It is not clear whether, on balance, proposals
in this NPRM would increase or decrease incumbent rate-of-return LECs'
administrative burdens. With respect to rate-of-return LECs, we believe
that the rate structure reforms that we propose in Sections II and III
would require at least one, and possibly several, additional filings,
and may reduce some administrative burdens. For example, if we adopt
the streamlined petition provisions of 47 CFR 69.4(g) for introduction
of new services by rate-of-return LECs, we expect that this would
decrease some administrative burdens of rate-of-return LECs.
57. If the rule revisions we propose are adopted, we estimate that
these rate-of-return LECs would make one tariff filing to bring their
access charges into compliance with the revised rules. We are unable to
estimate how extensive each tariff filing would be, on average. We
estimate that, on average, it would take approximately two hours per
page for the rate-of-return LEC to prepare each tariff filing, at a
cost of $35 per hour in professional level and support staff salaries.
If we decide to require the filing of a cost study for determining
local switching costs attributable to line-side ports and to trunk-side
ports, these rate-of-return LECs would file one cost study. We estimate
that, on average, it would take approximately 400 hours for the rate-
of-return LEC to prepare a cost study, at a cost of $30 per hour in
professional level and support staff salaries. Compliance with these
tariff and cost study requirements may compel the use of engineering,
technical, operational, accounting, billing, and legal skills.
58. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered. In Sections II and
III, for the subscriber line charge, the carrier common line charge,
non-traffic sensitive switching costs, the transport interconnection
charge, a special access PICC, and general purpose computer costs, we
have sought comment on how a number of proposals would affect small
entities. These proposals could have varying positive or negative
impacts on small entities, including small rate-of-return LECs and new
entrants. We seek comment on these proposals and urge that parties
support their comments with specific evidence and analysis.
59. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rules. None.
Additional NPRM Filing Procedures
60. Pursuant to applicable procedures set forth in 47 CFR 1.399 and
1.411 et seq., interested parties may file comments with the Secretary,
Federal Communications Commission, Washington D.C. 20554, no later than
August 17, 1998. Interested parties may file replies no later than
September 17, 1998. To file formally in this proceeding, participants
must file an original and twelve copies of all comments, reply
comments, and supporting comments. If participants want each
Commissioner to receive a personal copy of their comments, an original
plus 16 copies must be filed. In addition, parties must file two copies
of any such pleading with the Competitive Pricing Division, Common
Carrier Bureau, Room 518, 1919 M Street, N.W., Washington, D.C. 20554.
61. Parties submitting diskettes should submit them along with
their formal filings to the Commission's Office of the Secretary.
Submissions should be on a 3.5 inch diskette formatted in an DOS PC
compatible form. The document should be saved into WordPerfect 5.1 for
Windows format. The diskette should be submitted in ``read only'' mode.
The diskette should be clearly labelled with the party's name,
proceeding, type of pleading (comment or reply comment), docket number,
and date of submission.
62. Parties may also file informal comments electronically via e-
mail rateofreturn@fcc.gov>. Only one copy of electronically-filed
comments must be submitted. The docket number of this proceeding must
appear in the subject line, CC Docket No. 98-77. The subject line must
also disclose whether an electronic submission is an exact copy of
formal comments. Your full name and U.S. Postal Service mailing address
must be included in your submission.
63. Comments and replies must comply with 47 CFR 1.49 and all other
applicable sections of the Commission's Rules. We also direct all
interested parties to include the name of the filing party and the date
of the filing on each page of their comments and replies. Comments and
replies must also clearly identify the specific portion of the NPRM to
which a particular comment or set of comments is responsive. If a
portion of a party's comments does not fall under a particular topic
listed in the Table of Contents of this NPRM, such comments must be
included in a clearly labelled section at the beginning or end of the
submission.
Ordering Clauses
64. Accordingly, it is ordered, pursuant to sections 1-4, 201-205,
251, 254, 303(r) and 403 of the Communications Act of 1934, as amended,
47 U.S.C. 151-154, 201-205, 251, 254, 303(r) and 403, that notice is
hereby given of the rulemaking described above and that comment is
sought on these issues.
65. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 69
Access charges, Communications common carriers.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-19266 Filed 7-17-98; 8:45 am]
BILLING CODE 6712-01-U
