03-18542. Access Charge Reform; Price Cap Performance Review for Local Exchange Carriers; Assessment of Presubscribed Interexchange Carrier Charges of Public Payphones

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document the Commission modified its rules so that payphone lines are no longer subject to the PICC (Presubscribed Interexchange Carrier Charge). This action is necessary because the Commission determined that eliminating the PICC for payphone lines is more consistent with section 276 of the Act. To ensure compliance with the anti-subsidization and anti-discrimination provisions of section 276 of the Act, the Commission determined that payphone line rates should be set according to the cost-based new services test. Because the multi-line business PICC is a subsidy from multi-line business lines to residential and single-line business lines whose subscriber line charge (SLC) rates are capped by the Commission's rules, the PICC is not cost-based and so it does not comply with the new services test. The intended effect of this action is to exempt payphones lines from the PICC.

DATES:

Effective October 1, 2003.

FOR FURTHER INFORMATION CONTACT:

Aaron Goldschmidt, Wireline Competition Bureau, 202-418-1520.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Order on Reconsideration, FCC 03-139 in CC Docket No. 96-262, adopted on June 19, 2003 and released on June 25, 2003. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the FCC's copy contractor, Qualex International, 445 12th Street, SW., Room CY-B402 Washington, DC 20554. The full text also may be downloaded at http://www.fcc.gov. Introduction. On July 21, 2000, One Call Communications, Inc. d/b/a Opticom (“One Call”) filed a petition for reconsideration and clarification of the Commission's CALLS Order. See Access Charge Reform, CC Docket No. 96-262, Sixth Report and Order in CC Docket Nos. 96-262 and 94-1, Report and Order in CC Docket No. 99-249, Eleventh Report and Order in CC Docket No. 96-45, 65 FR 38684, June 21, 2000. In its petition, One Call sought to apply to payphone lines the common line cost recovery mechanism for single-line business and residential subscriber lines established in the CALLS Order, rather than the cost recovery mechanism applicable to multi-line business lines. In this document, the Commission grants One Call's request to reconsider the treatment of payphone lines under the Commission's access charge rules. Specifically, the Commission adopts a rule exempting payphone lines from the PICC, and the Commission denies One Call's request that payphone lines be treated as single-line business lines for purposes of assessment of the SLC.

The PICC for Payphone Lines. The Commission finds that payphone lines should be exempt from the PICC. In furtherance of section 276(a), the Commission has determined that payphone line rates should be set according to the cost-based new services test. See 47 U.S.C. 276(a) (1) and the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, CC Docket 96-128, Report and Order, 61 FR 52307, October 7, 1996. The multi-line business PICC, however, does not recover the costs of the lines on which it is assessed. Rather, it recovers revenues that would be recovered through charges on residential and single-line business lines, if those charges were not capped. Thus, because the PICC is not cost-based, it does not comply with the new services test.

The Commission notes that, in adopting section 276(b), Congress desired to “promote the widespread deployment of payphone services to the general public.” See 47 U.S.C. 276(b)(1). The Commission believes that this is consistent with a universal service function that payphones provide to those who cannot otherwise afford telephone service. The Commission concludes that it is bad policy to impose a non-cost-based charge, such as the PICC, on payphone lines because doing so may limit the deployment of payphone services that serve these important functions. Given Congress's stated intent to preserve the availability of payphones, the universal service functions payphones provide, and that the PICC does not reflect costs incurred for the provision of payphone service, the Commission finds it desirable to exempt payphone lines from the PICC. Although the Commission's Order establishes that payphone lines are exempted from the PICC on a going-forward basis, the Commission makes no finding with respect to the application of PICCs to payphone lines prior to the effective date of the Order.

Therefore, price cap LECs that still assess the PICC on multi-line business lines must adjust their rates in their next annual access tariff filings to reflect that the PICC no longer applies to payphone lines. Price cap LECs may recover the revenue previously recovered through assessing the PICC on payphone lines by adjusting their multi-line business PICCs. To the extent the PICC cap prevents such recovery, price cap LECs may recover the revenue shortfall through Carrier Common Line Charges (CCLCs).

The Appropriate SLC for Payphone Lines. The Commission rejects One Call's proposal that payphone lines be treated as single-line business lines for the purpose of assessing the SLC. Although the multi-line business PICC represents a subsidy flowing from multi-line business lines to residential and single-line business lines, the multi-line business SLC is a cost-based charge. The SLCs are the primary method by which incumbent LECs recover their interstate common line costs, and the SLC caps ensure that the SLCs never recover more than the carrier's per-line permitted revenues. See 47 CFR 69.152(d), (e) and (k). Moreover, the Commission's rules prevent a LEC from subsidizing one class of customers through the SLCs assessed on another class of customers. See id. Thus, the assessment of multi-line business line SLCs on payphone lines does not result in any subsidy to other lines. In addition, to prevent a BOC from overrecovering its costs for a payphone line, the BOC must reduce the monthly per-line charge for payphone lines determined in a state proceeding under the new services test by the amount of the SLC. If the Commission were to treat payphone lines as single-line business lines, however, the amount by which a LEC's per-line revenue requirement exceeds the single-line business line SLC cap, which is lower than the multi-line business SLC cap, would then need to be recovered through increased PICCs on multi-line businesses. This would result in multi-line business lines subsidizing LEC-owned payphone lines in contravention of the mandate of section 276(a) against such subsidization. See 47 U.S.C. 276(a)(1).

Final Regulatory Certification. The Regulatory Flexibility Act of 1980, as amended (RFA), requires that a regulatory flexibility analysis be prepared for notice-and-comment rulemaking proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3). A “small business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). See 15 U.S.C. 632.

The CALLS Order revised the Commission's system of common line access charges by increasing the residential and single-line business line SLC, while simultaneously eliminating the PICC for these lines. The CALLS Order also required annual reductions in traffic sensitive switching and trunking access rates until they reached a specified level. In addition, the CALLS Order also established an interstate access universal support mechanism that provides explicit support to replace support that was implicit in interstate access charges.

This document responds to a petition for reconsideration that sought, for payphone lines, the application of the common line cost recovery mechanism for residential and single-line business lines established in the CALLS Order, rather than the cost recovery mechanism applicable to multi-line business lines. This document grants the petition insofar as it sought the elimination of the PICC for payphone lines, and denies the request that payphone lines be subject to the SLC applicable to single-line business and residential lines. The rule revision will result in a positive net impact on small entities, in that operator service providers will no longer be assessed the PICC on payphone lines. In addition, because small and rural incumbent price cap LECs will be able to increase their PICCs or common line carrier charges to offset the reduction in the number of lines being assessed the PICC revenue, their overall common line revenues will not be affected. Thus, the Commission expects that the rule revision will have a de minimis impact on these affected small entities. Therefore, the Commission certifies that the requirements of the document will not have a significant economic impact on a substantial number of small entities.

The Commission will send a copy of the document, including a copy of this Final Regulatory Flexibility Certification, in a report to Congress pursuant to the Congressional Review Act. See 5 U.S.C. 801(a)(1)(A). In addition, the document (or summary thereof) and this final certification will be published in the Federal Register, and will be sent to the Chief Counsel for Advocacy of the U.S. Small Business Administration. See 5 U.S.C. 605(b).

Paperwork Reduction Analysis. The action contained herein has been analyzed with respect to the Paperwork Reduction Act of 1995, and it contains no new or modified information collections subject to Office of Management and Budget review.

Ordering Clauses. Accordingly, pursuant to sections 1, 4(i) and (j), 201-209, and 276 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and (j), 201-209, and 276, this Order and Order on Reconsideration is adopted. One Call's Petition for Reconsideration and Clarification is granted to the extent indicated herein and otherwise is denied. The Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Order, including the Final Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business Administration. The provisions of this Order shall be effective on October 1, 2003.

List of Subjects in 47 CFR Part 69

• Communications common carriers
• Telephone

Federal Communications Commission.

Marlene H. Dortch,

Secretary.

Rules Changes

For the reasons set forth in the preamble, amend part 69 of title 47 of the Code of Federal Regulations as follows:

1. The authority citation continues to read as follows:

Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, 403.

2. Amend § 69.153 by adding paragraph (f) to read as follows:

§ 69.153

Presubscribed interexchange carrier charge (PICC).

* * * * *

(f) The PICC shall not be applicable to any payphone lines.