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(1) (a) (i) 1) "i~'K2^18MSS888S8888SSSSSSSSSS88Jxir{icx{8Aui{x`xoYi{xxxl888SS8JSJSJ8SS..S.SSSS>A.SSxSSJJSJS+SSSSS8SSSSSSSSS.xJxJxJxJxJorJiJiJiJiJ8.8.8.8.{SxSxSxSxS{S{S{S{SxSxJ{SxSxSxS{S`SxIxSxIqIqIrSrS{dgIiSiSgIxSxSxSxSxS{S{S8.SSSS8Sz]SSuSg/gfX@#ћ (2) termination of all subsidies for LEC payphones, including "access  X-  Mcharge payphone service elements[;]"y@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).#x6X@`7>fX@#ћ (3) prescription of nonstructural safeguards for Bell  X-  zOperating Company ("BOC") payphones;*@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(C).#x6X@`7>fX@#ћ (4) promulgation of rules permitting the BOCs to   negotiate with the payphone location provider about a payphone's presubscribed interLATA  X-  carrier, unless the Commission finds that such negotiations are "not in the public interest;"@ X0 -ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(D).#x6X@`7>fX@#ћ (5)   promulgation of rules permitting all payphone providers to negotiate with the location provider  Xv-  about a payphone's presubscribed intraLATA carrier;tv@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(E).t and (6) establishment of a class of public  X_-  interest payphones to be located "where there would otherwise not be a payphone[.]"_= @ XM-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(2).#x6X@`7>fX@#ј We also   note that in a separate proceeding on operator service provider issues, the Commission tentatively   concludes that it should: (1) establish benchmarks for rates charged by operator service providers   ("OSPs") that reflect consumers' expectations; and (2) require OSPs whose charges, and related   aggregator surcharges or premisesowner fees, exceed such benchmarks to disclose orally to  X -consumers, before connecting a call, the total charges for which consumers would be liable.V @ X- ԍ#X\  P6G;IP#See Billed Party Preference for InterLATA 0+ Calls, CC Docket No. 92-77, Second Further Notice of  yOt-Proposed Rulemaking, FCC 96253 (rel. June 6, 1995) ("OSP Reform").#x6X@`7>fX@#V  X - g/II. BACKGROUND ă  Xy-  ` ` 2.  Payphone service has been regulated primarily by the states as part of the   LECs' basic service. For example, states have set the rates for local payphone usage. While   some of the costs of payphones owned by LECs have been recovered through charges to   payphone users, other components of those costs have been recovered through intrastate and   interstate rates that are unrelated to payphone usage. Like LEC payphones, AT&T payphones  X-are classified as network equipment and, therefore, may recover their costs in a similar manner. g @ X#-  "ԍ` ` #X\  P6G;IP#Memorandum Opinion and Order, Petition for Declaratory Ruling of Tonka Tools, Inc., 58 Rad.  yO$-Reg. 2d (P&F) 903, 91011 (1985) ("Tonka").  X- ` ` 3.  In 1980, in its Computer Inquiry II, the Commission concluded that   customer premises equipment ("CPE"), such as the telephone sets used by end users, should be" ,=(=(JJ"   competitively provided and that it should not be offered as part of a carrier's regulated  X-  transmission service. @ Xb- ԍ#X\  P6G;IP#Final Decision, Amendment of Section 64.702 of the Commission's Rules and Regulations (Second  yOK-  Computer Inquiry), 77 FCC 2d 384 (1980) ("Computer II"), modified on recon., 84 FCC 2d 50 (1981), modified  yO-  Zon further recon., 88 FCC 2d 512 (1981), aff'd sub. nom. Computer and Communications Industry Ass'n v. FCC,  yO-  693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983). The Commission defined CPE as "terminal   equipment, located at a subscriber's premises which is connected with the termination of a carrier's communication  yOk-channel(s)...." Computer II, 77 FCC 2d at 398, n.10.#d6X@`7s@#ч The Commission determined that, if carriers bundled CPE with tariffed   basic service, both a consumer's freedom of choice and marketplace competition in a developing  X-  yindustry would be hampered. a@ X -ԍ#X\  P6G;IP#Id. at 446.#x6X@`7>fX@#ѐ The Commission recognized the potential for carriers to engage   in anticompetitive activities. For example, carriers could potentially subsidize services facing   competition with revenues from regulated, monopolistic services or shift costs from a service in  Xv-  a competitive industry to a service that the carrier operates as a regulated monopolist. v@ X9-ԍ#X\  P6G;IP#Id. at 443.#x6X@`7>fX@#ѐ In an   effort to prevent cost misallocations, the Commission concluded that BOC provision of CPE (as  XH-  well as enhanced services) should be offered through a separate subsidiary. H @ X- \ԍ#X\  P6G;IP#Subsequent Commission orders removed the separate subsidiary requirement, replacing it with a system of  yO-  <nonstructural safeguards designed to deter anticompetitive behavior. See, e.g., Separation of Costs of Regulated  yOm-  Telephone Service for Costs on Nonregulated Activities., 2 FCC Rcd 1298 (1987) ("Joint Cost Order"), recon., 2  yO5-  FCC Rcd 6283 (1987), further recon, 3 FCC Rcd 6701 (1988), aff'd sub nom. Southwestern Bell Corp. v. FCC, 896 F.2d 1378 (D.C. Cir. 1990). The Commission  X1-  specifically excluded coin-operated payphones from the definition of CPE.^A1@ Xv- ԍ#X\  P6G;IP#Final Decision, Amendment of Section 64.702 of the Commission's Rules and Regulations (Second  yO_-  Computer Inquiry), 77 FCC 2d 384, 447 n. 57 (1980) ("Computer II"), modified on recon., 84 FCC 2d 50 (1981),  yO'-  modified on further recon., 88 FCC 2d 512 (1981), aff'd sub. nom. Computer and Communications Industry Ass'n  yO-v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983).^ The Commission   ?found that, unlike other CPE, which could be "unbundled" from basic exchange service,   coin-operated payphones were still integrated with the LECs' network facilities and it concluded  X -  xthat payphones should remain part of regulated basic communications service. @ X:-ԍ#X\  P6G;IP#Id. at 447.#x6X@`7>fX@#ѐ The Commission  X -later extended this determination to coinless payphones. N@ X!-Ѝ#X\  P6G;IP#Tonka, 58 Rad. Reg. 2d (P&F) 903, 910.  X -  ` ` 4.  At the time of the break-up of the Bell System, payphones were regarded   as a part of basic local service. The Bell System payphones were classified as exchange facilities   installed by the BOCs for the provision of local service to the public. Thus, the Modification of"y,=(=(JJ"   <Final Judgment ("MFJ") Court's plan of reorganization assigned all Bell System payphones to the  X-BOCs rather than to AT&T.&@ Xb- {ԍ#X\  P6G;IP#See United States v. Western Elec. Co., 569 F. Supp. 1057, 1102 n.195 (D.D.C. 1983), aff'd sub nom.  yOK-California v. United States, 464 U.S. 1013 (1983).&  X-  ` ` 5.  Soon after divestiture, several manufacturers developed a "smart" payphone   Zԩ payphones with sufficient computer intelligence to perform most of the control and supervision   functions previously performed by a LEC's network. Because smart payphones could be   separated from local exchange service, the Commission revisited its determination to exclude all   Mpayphone service from Part 68 rules governing the connection of terminal equipment to the  XH-  network.3HA@ X: - ԍ#X\  P6G;IP#See Memorandum Opinion and Order, Registration of Coin Operated Telephones, 49 Fed. Reg. 27763 (1984)  yO# -("Coin Registration Order").#x6X@`7>fX@#3 In the Coin Registration Order, the Commission reaffirmed that LEC payphones   would continue to be classified as network elements rather than CPE. The Commission   jconcluded, however, that Part 68 should apply to smart payphones and recognized the right of   ynon-LEC providers to interconnect these payphones to the interstate public switched network.   As with LEC payphones, the Commission concluded in a later proceeding that the states should  X -  iretain the authority to regulate the rates and other terms of payphone interconnection. @ X@- ԍ#X\  P6G;IP#See Memorandum Opinion and Order, Universal Payphone Corp., 58 Rad. Reg. 2d (P&F) 76 (1988)  yO)-("Universal"). The FCC   also recognized that state commissions had the authority to regulate the charges, terms, and  X -conditions of local and intrastate payphone service.h 3@ X-ԍ#X\  P6G;IP#Id. at 80.h  Xy- q` ` 6.  Since the development of smart payphones, a number of independent or   "competitive" payphone owners (referred to in previous Commission orders as "private payphone   iowners" or "PPOs") have begun to compete with the LECs for the provision of payphone service.  X4-  Currently, there are approximately 1.5 million LEC payphones4 @ X- ԍ#X\  P6G;IP#Statistics of Communications Common Carriers, 1994/1995 edition, Common Carrier Bureau, FCC at 159,  yO-Table 2.10 (1995) ("Common Carrier Statistics"). and approximately 350,000  X-  [competitively provided payphones.9A] @ X+!- Nԍ#X\  P6G;IP#See Ex Parte Letter of Michael Benson, Senior Product Manager, PPO Compensation Clearinghouse,   xCincinnati Bell to Michael Carowitz, Attorney, Common Carrier Bureau, FCC (April 24, 1996). Cincinnati Bell,   : as the payphone compensation paying agent for three interexchange carriers, states that it receives quarterly bills from  yO#-PPOs for more than 350,000 competitively provided payphones. Id.9 As a general matter, neither PPOs nor the LECs own the   Zpremises where a particular payphone is located. Instead, location providers select the payphone  X-service provider who will provide payphone services on their premises. "f,=(=(JJ"Ԍ X- ` ` 7.  While both PPOs and incumbent LECs receive coins as compensation for   most local calls placed on their payphones, there are important differences in how PPOs and   <LECs are compensated. PPOs generally presubscribe their payphones to an interexchange carrier   ("IXC") of their own choice. That IXC provides operator services to the payphone for collect   calls and calls billed to a calling card or a third party. The PPO negotiates an agreement with   the presubscribed IXC, pursuant to which the IXC pays a percentage of its revenues from the   .payphone to the PPO. The PPO, in turn, pays a commission to the location provider based on the revenues generated by the payphone.  X1- ` ` 8.  Pursuant to the MFJ, BOCs were required to permit location providers to  X -  -select the IXC to which the payphone would be presubscribed for interstate, interLATA traffic.A @ X - ԍ#X\  P6G;IP#United States v. Western Elec. Co., 698 F. Supp. 348, 365 (D.D.C. 1988). The 1996 Act continues these  yO| -BOC obligations. See 1996 Act, sec. 601(a)(1). See also 47 U.S.C.  251(g).A   yWith this requirement, the location provider makes its own contract with an IXC to share in the   interLATA revenues generated by the phone, usually through a commission arrangement for each   operatorservice call generated by the payphone at a particular location. Therefore, while the   nonBOC LECs, like the PPOs, may receive a portion of the commissions from IXCs on   yinterLATA operatorservice calls using the presubscribed carrier, the BOCs do not receive any   revenue directly from these calls. On the other hand, unlike the PPOs, all LECs, including the   BOCs, receive, as a part of the carrier common line ("CCL") charges paid by IXCs, compensation   for LEC provision of the facilities necessary to deliver interexchange traffic to the IXCs. The   payphone element of the CCL is charged to all interexchange customers, not just to traffic   originating or terminating at a payphone, and it provides compensation to the LEC for making available the payphone through which calls are routed to the IXC.  X-  ` ` 9.  To date, the Commission has focused on payphones primarily in the context   of its regulation of carriers that provide operatorassisted longdistance service, known as operator   Mservice providers ("OSPs"), and in particular, its implementation of the Telephone Operator  X-  lConsumer Services Improvement Act ("TOCSIA").A@ X-ԍ#X\  P6G;IP#Pub.L. No. 101-435, 104 Stat. 986 (1990) (codified at 47 U.S.C.  226). Because operator services prior to   divestiture were provided exclusively by the Bell System at tariffed rates that were familiar to   .callers, there was widespread consumer dissatisfaction with the varying rates and practices of  Xe-  many OSPs after divestiture.e@ X!- ԍ#X\  P6G;IP#Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation, Report and  yO!-Order, 6 FCC Rcd 4736, 4737 (1991) ("First Report and Order"). The Commission responded to this dissatisfaction both through  XN-  \the formal complaints processNk@ Xj$- ԍ#X\  P6G;IP#See Telecommunications Research & Action Center v. Central Corp., 4 FCC Rcd 2157 (Com.Car.Bur. 1989). and through a rulemaking proceeding.eyN @ X- ԍ#X\  P6G;IP#Policies and Rules Concerning Operator Service Providers, CC Docket No. 90313, Notice of Proposed   Rulemaking, 5 FCC Rcd 4630 (1990); Further Notice of Proposed Rulemaking, 6 FCC Rcd 120 (1990); Report and Order, 6 FCC Rcd 2744 (1991).e In 1990, Congress"N ,=(=(JJ"   yenacted TOCSIA, which required all OSPs to identify themselves to consumers and quote their  X-  rates upon request. @ X-ԍ#X\  P6G;IP#See, generally, 47 U.S.C.  226. TOCSIA also required aggregators to unblock access to other carriers and  X-post certain disclosures on or near each telephone.y@ X= - ԍ#X\  P6G;IP#Id. An "aggregator" is any entity that, in the ordinary course of its operations, makes telephones available   hto the public or to transient users of its premises, for interstate telephone calls using a provider of operator services. 47 U.S.C.  226(a)(2).   X-   ` `  10.  TOCSIA directed the Commission to determine whether PPOs should   receive compensation for originating interstate calls to nonpresubscribed OSPs from their  Xv-  payphones.v@ X"-ԍ#X\  P6G;IP#47 U.S.C.  226(e)(2).#x6X@`7>fX@#ј The Commission concluded in the Second Report and Order that a percall   compensation mechanism was preferable because it would create greater incentives for PPOs to   =place their payphones in locations that generate the most traffic. The Commission concluded,  X1-  however, that it was not technically feasible to implement such a mechanism at that time.(1 @ X- ԍ#X\  P6G;IP#Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation, Second Report  yOw-and Order, 7 FCC Rcd 3251, 325253 (1992) ("Second Report and Order").(   kInstead, the Commission adopted flatrate compensation, in the amount of $6 per phone per   month, on an interim basis. Subsequently, two IXCs, AT&T and Sprint, certified to the   MCommission that they were able to pay compensation on a percall basis and petitioned the  X -  >Commission for approval to pay compensation on that basis. y % @ X- ԍ#X\  P6G;IP#See Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation,  yO-  Memorandum Opinion and Order, 10 FCC Rcd 1590 (Com. Car. Bur. 1994) ("AT&T Waiver"); Memorandum  yO\-Opinion and Order, 10 FCC Rcd 5490 (Com. Car. Bur. 1995) ("Sprint Waiver"). They argued that a percall   compensation mechanism would better serve the Commission's objective to implement a more   Kcostbased approach to compensation for calls to nonpresubscribed OSPs. The Common Carrier   ZBureau agreed and granted AT&T and Sprint the right to pay compensation in the amount of $.25  Xy-  =per call in lieu of paying perphone compensation to PPOs.!yf@ X!-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш The Commission later adopted a   notice of proposed rulemaking, which tentatively concluded that other large IXCs should be  XK-  required to pay compensation on a per-call basis."yK@ X%- ԍ#X\  P6G;IP#See Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation,   Memorandum Opinion and Order on Further Reconsideration and Second Further Notice of Proposed Rulemaking,  yO&-10 FCC Rcd 11457, 1146467 (1995) ("Second Further Notice"). The Common Carrier Bureau also granted"KX",=(=(JJg"   waivers to two incumbent LECs, Ameritech and Southwestern Bell, that claimed the ability to   track payphone calls on a percall basis and proposed to remove payphonerelated costs from their   CCL charges and, instead, to impose a percall charge on IXCs for interstate calls originated from  X-those LECs' payphones.# @ X4- [ԍ#X\  P6G;IP#In the Matter of Ameritech Operating Companies Petition for Waiver of Part 69 of the Commission's Rules   to Restructure Its Rates to Establish a Pay Telephone Use Fee Rate Element; Southwestern Bell Telephone Company   Petition for Waiver of Part 69 of the Commission's Rules to Restructure Its Rates to Establish a Pay Telephone Use  yO-  Fee Rate Element, Order, DA 96268 (released March 1, 1996) at para. 27 ("Ameritech/SW Bell Waiver"),  yOu-application for review and motion for stay pending.   X-  ` `  11.  When it adopted a compensation mechanism for interstate access code calls,   Lthe Commission concluded that, because they did not involve use of a "carrierspecific access  X_-  code"$ _@ X - ԍ#X\  P6G;IP#The Second Report and Order defines an "access code" as a "sequence of numbers that, when dialed,   Yconnects the caller to the OSP associated with that sequence, as opposed to the OSP presubscribed to the originating   line. Access codes include 10XXX in equal access areas and "950" Feature Group B dialing (9500XXX or 950  ,1XXX) anywhere, where the threedigit XXX denotes a particular IXC. Some OSPs use an 800 number as an access  yO-code." Id. at 3251 n.1. and were routed directly to an end user, subscriber 800 calls were not within the class of  XH-  calls for which Congress in TOCSIA directed the Commission to consider compensation.%yHj @ Xc- !ԍ#Xj\  P6G; XP##X\  P6G;IP#First Report and Order, 6 FCC Rcd at 4746 (citing S. Rep. No. 439, 101st Cong., 2d Sess. 19 (1990),  yOL-  reprinted in 1990 U.S. Code Cong. & Ad. News 1577, 1582). "Subscriber 800 calls" consist of calls to an 800  yO-number assigned to a particular subscriber. See Florida Payphone, 54 F.3d at 859. The  X1-  Commission, therefore, limited compensation to interstate "access code calls."b&1 @ X-ԍ#X\  P6G;IP#Id. b In July 1992, in   Mresponse to a petition for reconsideration by the American Public Communications Council   ("APCC"), the Commission affirmed its conclusion that subscriber 800 calls were not within the   Commission's definition of interstate "access code calls" for which compensation should be  X -paid.3' \@ X- !ԍ#X\  P6G;IP#Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation, Order on  yO-Reconsideration, 7 FCC Rcd 4355, 4367 (1992) ("Subscriber 800 Reconsideration Order").3  X -  ` `  12.  In 1992, after the Commission affirmed its exclusion of subscriber 800 calls   from the class of compensable access code calls, the Florida Pay Telephone Association ("FPTA")   sought judicial review in the United States Court of Appeals for the District of Columbia Circuit  Xb-  of this aspect of the First Report and Order and the Subscriber 800 Reconsideration Order. In  XK-  <its Florida Payphone decision,(K@ X$-ԍ#X\  P6G;IP#Florida Public Telecommunications Ass'n. v. FCC, 54 F.3d 857 (D.C. Cir. 1995) ("Florida Payphone"). the Court found no reason to distinguish between the routing of   access code calls and subscriber 800 calls. Therefore, it reversed and remanded the case to the   Commission to "consider the need to prescribe compensation for subscriber 800 calls 'routed to"(,=(=(JJ)"   providers of operator services that are other than the presubscribed provider of operator  X-services.'"a)@ Xb-ԍ#X\  P6G;IP#Id.a The Commission's action on the remand is pending.*Ay@ X- ԍ#X\  P6G;IP#Because the 1996 Act mandates that payphone providers be compensated for all intrastate and interstate calls,  yO-  .including subscriber 800 calls, the rules adopted in this proceeding will address the Florida Payphone remand.   Therefore, we conclude in para. 88, below, that the Commission need not address this remand in a separate proceeding.  X- ` `  X-   ` `  13.  Section 276(b)(1)(A) directs the Commission to establish a compensation  X-  [mechanism to ensure "that all payphone service providers are fairly compensated for each and  X-  zevery completed intrastate and interstate call" from their payphones. t+@ X -ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).t Section 276(b)(1)(B)   .mandates that the Commission "discontinue the intrastate and interstate carrier access charge   payphone service elements and payments ... and all intrastate and interstate subsidies from basic  XH-  exchange and exchange access revenues."t,H3@ X,-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t In addition, Section 276(b)(1)(D) directs the   Commission to consider whether BOCs should be permitted to be involved with the location  X -  provider's selection of the payphone's presubscribed carrier.t- @ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t Together with the other   \subsections of Section 276, these three provisions help to establish regulatory parity for all  X -  payphone service providers ("PSPs"),. @ X2- ԍ#X\  P6G;IP#We adopt the term "payphone service provider," as used throughout Section 276, to refer prospectively to all payphone providers whether PPOs or LECs. 47 U.S.C.  276.  whether competitive payphone owners or incumbent LECs (both independents and BOCs).  X-D III. ISSUESă  Xb-  xA. COMPENSATION FOR EACH AND EVERY COMPLETED INTRASTATE AND   XK- INTERSTATE CALL    ORIGINATED BY PAYPHONES  X- 1. The 1996 Act   X- ` `  14.  As stated above, Section 276(b)(1)(A) mandates that all payphone providers,  X-  -whether independents or LECs,V/y@ X%- ԍ#X\  P6G;IP#As discussed in greater length in paras. 1455, the compensation and reclassification provisions of Section  yO&-  <276 apply to all LECs, whether or not they are BOCs. 47 U.S.C.  276(b)(1)(A)(B). Other provisions, such as   Section 276(b)(1)(C), which mandates nonstructural safeguards for the provision of payphone service, apply only"H'.,=(=(h'"  yO-to the BOCs. See paras. 5766, below. V be "fairly compensated for each and every completed intrastate" X/,=(=(JJ"   and interstate call using their payphone, except that emergency calls and telecommunications relay service calls for hearing disabled individuals shall not be subject to such compensation[.]"  X- 2. Discussion  X-` ` a. Scope of Payphone Calls Covered by this Rulemaking  X_-  ` ` 15.  Currently, most calls originated on payphones are within one of the   following categories: (1) coin calls; (2) directory assistance calls; (3) operator service ("0+" and  X1-  Z"0")r0A1X@ X: - ԍ#X\  P6G;IP#A O+ call occurs when the caller dials "0" plus the called telephone number. 0+ calls include credit card,  yO# -  collect, and third number billing calls. Second Report and Order, 7 FCC Rcd at 3251, n.4. O call transfer service   is a service offered by LECs to OSPs under which LECs transfer a 0 call (when a caller dials only the digit "0" and  yO-then waits for operator intervention) to the OSP requested by the calling party. Id. at 3255, n.44.r calls; (4) access code calls (using e.g., "10XXX" codes and "1-800" or "950" carrier access  X -  numbers); and (5) subscriber 800 calls.Y1y a@ X,- >ԍ#X\  P6G;IP#For purposes of this proceeding, the term "subscriber 800 calls" includes other sequences of numbers that   Ythe FCC deems, or may deem in the future, the equivalent of subscriber 800 numbers, such as numbers with an "888" code.Y Each of these categories can be further subdivided   between local, intraLATA toll, intrastate interLATA, interstate interLATA and international.  X -  Each type of call is a potential source of revenue for the payphone owner, whether the revenue   yis derived from coins deposited into the payphone, through commission payments on operator service calls, or from compensation mandated by the FCC or the states.  X- ' ` ` 16.  The 1996 Act requires the Commission to ensure that PSPs are fairly  Xy-  compensated for all calls originated by their payphones.t2y @ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).t In light of the multiple sources of   revenue for payphones, we seek comment on what constitutes "fair" compensation and how we   ?should "ensure" that each PSP receives it for calls for originated by its payphones. We  X4-  ktentatively conclude that our mandate under Section 276(b)(1)(A) is to ensure that PSPs are   "fairly compensated" for "each and every completed intrastate and interstate call" regardless of   ?whether the PSP currently receives compensation for the particular call originated by its  X-  payphone.3yS @ X!- nԍ#X\  P6G;IP#Id. Section 276(b)(1)(A) exempts from the Commission's mandate only "emergency calls and   htelecommunications relay service calls for hearing disabled individuals" and states that such calls "shall not be subject  yO#-to such compensation[.]" Id.  We tentatively conclude, however, that we should use this mandate to prescribe  X-  compensation only when payphone providers are not already "fairly compensated."a4@ X&-ԍ#X\  P6G;IP#Id.a Currently,   >PPOs and nonBOC LECs receive compensation, pursuant to individual contracts, from the" E4,=(=(JJ"  X-  payphone's presubscribed IXC for all "0+" calls.5@ Xy- lԍ#X\  P6G;IP#In Section 276(b)(1)(D), Congress directed the Commission to consider whether such a compensation arrangement should be extended to BOC payphones. 47 U.S.C.  276(b)(1)(D). IXCs have long competed for this type of  X-  business. Therefore, we tentatively conclude that we need not prescribe percall compensation  X-  =for 0+ calls because competition in this area ensures "fair" compensation for PSPs.K6aA@ X- 0ԍ#X\  P6G;IP#Pursuant to contracts between either PPOs or nonBOC LECs and presubscribed IXCs, the payphone   provider likely recovers the marginal cost of the 0+ calls from its payphones. PPOs, in particular, because they do   not receive noncompetitive revenues to use as a basis for subsidies, would not enter into a contract that would not   compensate them fairly for use of their payphone equipment. Therefore, the payphone provider is "fairly   compensated" for these calls. The issue of fair compensation arises only in cases where a caller uses a PSP's   equipment to dial around the payphone's presubscribed IXC, because the PSP does not receive any revenue to cover   Jits marginal cost in originating the call, or where a governmentmandated rate, such as for local coin calls, may not  yO] -be high enough to be "fairly" compensatory. #x6X@`7>fX@#K We seek comment on these tentative conclusions.  X-   ` ` 17.  Although the 1996 Act directs us to prescribe compensation for all calls,   -Congress specifically expressed its concern in the legislative history about access code calls and  X_-  subscriber 800 calls, whether the calls are intrastate or interstate in destination.7_j @ Xz- Lԍ#X\  P6G;IP#Jt. Statement of Managers, S. Conf. Rep. No. 104230, 104th Cong., 2d Sess. (1996) ("Conference Report") (emphasis added). We tentatively   <conclude that, because the 1996 Act requires us to ensure fair compensation for all calls, we must   Zat least prescribe standards for determining fair compensation for all access code calls, subscriber   800 and other tollfree number calls, and debit card calls. The compensation we prescribe in this   rulemaking will extend to all such calls, whether they are intrastate or interstate in destination. We seek comment on this tentative conclusion.  X - C ` ` 18.  The 1996 Act does not expressly state that compensation should extend to  X -  =international calls. We find no evidence, however, of congressional intent to leave these calls  X-  uncompensated. As discussed below,r8 @ X$-ԍ#X\  P6G;IP#See para. 38, below.r we tentatively conclude that PSPs should be compensated   for their costs in originating calls from their payphones. Compensating international calls would   Lbe consistent with this approach, because the costs of originating these calls are similar to the  XK-  costs of originating "each and every completed intrastate and interstate call."9K@ X!-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).#x6X@`7>fX@#ћ Therefore, despite   =the lack of reference to international calls in Section 276(b)(1)(A), we tentatively conclude that   we should exercise our general jurisdiction under Sections 4(i) and 201(b) of the Communications   Act of 1934, as amended, to ensure that PSPs are compensated for international as well as   interstate and intrastate calls originating from their payphones in the United States. We seek comment on this tentative conclusion. " E9,=(=(JJ"Ԍ X-  5 ` ` 19.  The rate for the most common type of call, the local coin call,c:@ Xy- ԍ#X\  P6G;IP#We estimate, based on extrapolating various industry data, that local calls from payphones comprise about   80 percent of the total call volume, while generating only about one sixth of the revenues (including calls made to   local operator services). On the other hand, these same data show that approximately 80 percent of the industry's  yO-  revenues are generated by calls other than local calls (i.e., access code and 1800 calls). See FCC Industry Analysis  yO-  YDiv., Statistics of Common Carriers, 1994/1995, Table 2.9 (1995) (showing annual local calling revenues from LEC  yO-  and independent payphones of 2.3 billion dollars); FCC Industry Analysis Div., Trends in Telephone Service, Table  yOJ-  31 (rel. May 1996) (showing annual operator services telecommunications revenues of 10.655 billion dollars). Cf.   FCC Industry Analysis Div., Report on Operator Services, Table 2 (rel. Nov. 13, 1992) (coin revenue as a percent   iof total payphone toll revenue was approximately 10 percent in 1987, the most recent year surveyed within the report).c is set by  X-  state commissions.(; @ X - \ԍ#X\  P6G;IP#We note that a number of states have recently examined the basis for the local coin call rate. As a result   ja higher local calling rate was recently approved in the following states: Illinois, Iowa, Michigan, Wisconsin,   Wyoming. At least four states have approved a maximum rate of $.35 per call: Illinois, Iowa, Wisconsin, and   hWyoming. Two states, New Hampshire and Vermont, maintain a maximum rate of $.10 per call. Most other states  yO\-  zmaintain a maximum rate of $.25 per call. See S. Alexander, "Coin Rate Update," Perspectives on Public  yO$-Communication, December 1995, at 34. ( Typically, the rate set for local coin services provided by the incumbent   LECs also applies to the PPOs. In addition, for operator services rates, the rates for intrastate   coin-paid toll services from competitive payphones are frequently capped by the states at the  X-  dominant carrier rate or some increment over that rate.<@ Xo- ԍ#X\  P6G;IP#The Commission has recently proposed rules concerning interstate operator service rates. OSP Reform at para. 53. In many jurisdictions, incumbent LECs  X-  currently do not charge the payphone caller for "411" directoryassistance calls made from their   own phones. PPOs, however, often pay a charge to the incumbent LEC for directoryassistance   calls made from their competitive payphones, and are not always allowed by the state to pass those charges on to callers.  X -  ` ` 20.  Section 276 of the Act requires the Commission to ensure that the payphone   provider receives fair compensation for each interstate and intrastate call, including local coin  X -  -sentpaid calls.s= @ yO0-#X\  P6G;IP#э47 U.S.C.  276 b(1)(A).s Section 276 also expressly preempts state regulations that are inconsistent with  X -  <our regulations.> #@ X -ԍ#X\  P6G;IP#47 U.S.C.  276(c).#x6X@`7>fX@#ѕ We seek comment, however, on how we should exercise our jurisdiction under   Section 276. We have a range of options for ensuring fair compensation for these calls, and we   seek comment on which option will ensure fair compensation for PSPs with respect to local coin sentpaid calls.  Xb- ` ` 21.  More specifically, one option would be to set a nationwide local coin rate   <for all calls originated by payphones. We seek comment on whether the Commission should take   xsuch action and request that commenters identify the specific public interest benefits they believe"4 >,=(=(JJ*"   would result from a nationwide rate, why local rates are inadequate to ensure fair compensation,   Kthe impacts of variations among the states in the local coin sentpaid rate on PSPs and the public,   and whether those impacts are predominantly local, statewide, regional or national. Another   joption would be for the Commission to prescribe specific national guidelines that states would   use to establish a local rate that would ensure that all PSPs are fairly compensated. We seek   zcomment on whether the Commission should take such action and request that commenters   >identify specific public interest benefits they believe would result from us prescribing such   guidelines, what factors such guidelines should consider, how the guidelines would ensure fair   compensation for local coin calls, the impacts of variations among the states in local coin rates, and whether those impacts are predominantly local, statewide, regional or national.  X - q` ` 22.  A third option for ensuring fair compensation for PSPs would be for the   -states, in the first instance, to continue to set the coin rates for local payphone calls according to   factors within their discretion. The Commission has long recognized the interest of the states in   Lsetting enduser rates for local calls, including rates for 411 calls. Indeed, as discussed above,  X -  the states have long had a traditional and primary role in regulating payphones.q? @ X -ԍ#X\  P6G;IP#See para. 2, above.q The states have   -a significant interest in setting local call rates paid by end users, because payphones are used by   some residents as a substitute for local telephone service, in addition to being used by visitors and   retail customers. However, because Section 276 of the 1996 Act requires the Commission to   ensure that PSPs are fairly compensated for "each and every completed intrastate and interstate   call," we seek comment on what further procedures, such as a complaint or petition process, we  X-  should establish, should we ultimately determine to defer to the states in setting payphone rates.@ y@ XG- yԍ#X\  P6G;IP#Current local rates may not always "fairly" compensate the PSP for use of its payphone. For example, while   wa local call provides some revenue to the PSP, local coin rates in some jurisdictions may not cover the marginal cost   Zof the service. In these situations, if a caller uses a payphone at a subsidized local coin rate, the PSP is not being   Jfairly compensated. For a further discussion of the effect on local rates of reclassifying and terminating all subsidies  yO-for LEC payphones, see para. 51, below.   KWe also seek comment on what standards we could use to adjudicate any complaints or petitions   Lthat challenge a particular rate. We further ask whether the states' setting of the rates for local   Lcoin calls subject to complaint or petition would be consistent with Section 276's mandate that   Kthe Commission ensure fair compensation for "each and every completed intrastate and interstate  X-  call."AJ@ X -ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).#x6X@`7>fX@#ћ We seek comment on whether the Commission should take such action and request that   commenters identify specific public interest benefits they believe would result from having coin   rates for local payphone calls set by the states. In addition, we seek comment on whether we   Lshould treat intraLATA 0+ toll calls carried by the presubscribed intraLATA carrier differently from local coin calls, or treat them like local coin calls.  X - F ` ` 23.  With regard to percall compensation for subscriber 800 calls, the   kCommission has previously expressed its concern about the improper use of subscriber 800"  A,=(=(JJ["  X-  numbers to increase compensation.B@ Xy-ԍ#X\  P6G;IP#First Report and Order, 6 FCC Rcd at 4746. The Commission noted in the First Report and Order that   i"a payphone owner could attach an autodialer to a payphone and have it place repeated 800 calls,   ywhich are free to the caller, in order to increase the amount of compensation that the payphone  X-  owner receives."kCy@ X-ԍ#X\  P6G;IP#Id. at n.135.k We seek comment on what rules, if any, the Commission should adopt to   prevent this and other types of fraud. We also seek comment on whether the autodialer problem would extend to other types of compensable calls.   X_-` ` b. Entities Required to Pay Compensation  X1- q` ` 24.  Because the 1996 Act directs the Commission to ensure that all PSPs are   icompensated, with limited exception, for "each and every intrastate and interstate call" using their  X -  payphones,tD *@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).t we must also address who pays that compensation. The possible payors include:   [the caller using the payphone; the carrier over whose network the call is placed; or, in the case   of subscriber 800 calls, the entity being called (who may or may not directly pass all the charges   on to the caller using the payphone). Industry participants have made two compensation  X -proposals that might satisfy the percall compensation requirement.E @ X3-ԍ#X\  P6G;IP#See Second Further Notice, 10 FCC Rcd at 1146467; Ameritech/SW Bell Waiver at para. 27.  Xy-  ` ` 25.  The first proposal builds on the percall compensation mechanism proposed  Xb-  for interstate access code calls in CC Docket No. 9135.Fb@ X-ԍ#X\  P6G;IP#Second Report and Order, 7 FCC Rcd at 3259.#x6X@`7>fX@#Ѱ If this "carrierpays" mechanism were   extended to all dialaround calls, the IXC who receives such a call from a payphone would be   required to pay a percall charge to the provider of the payphone. Each IXC would decide independently how to recover this cost.  X-  ` ` 26.  Another approach would be to rely on a "set use fee." The "set use fee"   is a fee that the IXC would bill and collect from the end user. The fee would then be remitted   to the PSP. In the case of the subscriber 800 and other tollfree number calls, the set use fee   could be collected from the subscriber. For access code calls and operatorassisted calls, the set  X-  use fee would be collected from the end user that is billed for the call. Set use fees currently are"= F,=(=(JJQ"  X-  applied to local and intraLATA 0+ and 0 calls in the state of Florida,1G@ Xy- ԍ#X\  P6G;IP#Florida Public Service Commission, In re Petition for Review of Rates and Charges Paid by PATS Providers  yOb-to LECs, Docket No. 860723TP et al., Order No. 24101, rel. Feb. 14, 1991.1 and to intraLATA 0+,  X-0, and access code calls in the state of California.H)A@ X- yԍ#X\  P6G;IP#Public Utilities Commission of California, Resolution T15782, Concerning Request of Pacific Bell (U1001  C) to Clarify the Types of Calls to which the $0.25 Pay Station Service Charge Applies, rel. March 13, 1996. In   ,California, the screening codes associated with payphone lines are used to identify calls subject to a set use fee when   they arrive at a carrier's network. The carrier keeps track of these calls and the line numbers from which they   originate. The carrier then remits the set use fee to the payphone provider for each call completed during the billing   period. Meanwhile, the carrier bills the end user for the set use fee at the same time as the end user is billed for   the call. Payment to the payphone provider is made either as a direct payment, or as a credit on the payphone   Zprovider's bill. In addition, the carrier is allowed to deduct a reasonable billing and collection charge from the set  yO< -use fee. Id.  X- $ ` ` 27.  The Commission has previously rejected the "set use" payphone fee because  X-  such a fee could produce "unequal treatment among interstate payphone callers[.]"I 2 @ X-  ԍ#X\  P6G;IP#MTS and WATS Market Structure, CC Docket No. 7872, Memorandum Opinion and Order, 97 FCC 2d  yOp-  h682, 705 (1983), aff'd in principal part, National Assn. of Regulatory Utility Comm'rs v. FCC, 737 F.2d 1095 (D.C.  yO8-  Cir. 1984), cert. denied, 469 U.S. 1227 (1985), modified on further recon., 99 FCC 2d 708 (1984), aff'd, American  yO-  Tel. and Tel. Co. v. FCC, 832 F.2d 1285 (D.C. Cir. 1987), modified on further recon., 101 FCC 2d 1222 (1985),  yO-recon. denied, 102 FCC 2d 849 (1985). See also Ameritech/SW Bell Waiver at para. 27. Because the  X-  L1996 Act requires the Commission to prescribe compensation for both intrastate and interstate   dialaround calls, there may be sufficient cause to reexamine a "set use" fee for payphone end   users. We have considered a proposal under which payphone callers, including calling card users,  XH-  .were required to deposit coins into the payphone before placing a call.JH@ X-ԍ#X\  P6G;IP#MTS and WATS Market Structure, 97 FCC 2d at 705. As we found before,   jwe tentatively conclude that we should reject that coindeposit approach here. In addition, we   note that TOCSIA expressly prohibits the Commission from adopting compensation rules for  X -  interstate access code calls that require "advance payment by consumers."rK @ Xh-ԍ#X\  P6G;IP#47 U.S.C.  226(e)(2).r We find here that   a coindeposit approach would appear to unduly burden many transient payphone callers by requiring them to deposit coins in addition to providing callbilling information.  X -  ` ` 28.  We tentatively conclude that, for noncoin payphone calls, either a "carrier  pays" system or a "set use fee" system where the end user pays would satisfy the requirements   .of the 1996 Act. As a general principle, however, we tend to favor an approach that minimizes   transaction costs on the caller and on the industry. We believe that the carrierpays mechanism   iis preferable because it would result in less transaction costs because the IXC could aggregate its   payments to payphone providers. Under a setuse fee, these payments would be spread among   a vast number of payphone callers through their individual telephone bills. Therefore, we"eK,=(=(JJ "   tentatively conclude that we should adopt a "carrierpays" compensation mechanism that builds   on existing procedures. We seek comment on these tentative conclusions. Commenters are   jencouraged to include data on the transaction costs that would likely be imposed by either the  X-  i"carrierpays" or "set use fee" compensation mechanisms. We also seek comment on whether we should adopt one method of compensation that can apply to all dialaround calls.  Xv-` ` c. Ability of Carriers to Track Calls From Payphones  XH-  ` ` 29.  The next issue for our consideration is how calls are to be tracked, so that  X1-  jactual compensation amounts can be determined by the carriers and PSPs. In both the Second  X -  Report and Order and the Reconsideration Order in CC Docket No. 91-35, the Commission found   Mthat no entity was capable of tracking accurately the number of interstate access code calls  X -  Loriginated by each competitive payphone.L @ Xe -ԍ#X\  P6G;IP#Second Report and Order, 7 FCC Rcd at 3253; Reconsideration Order, 8 FCC Rcd at 7157. Because of this technical barrier, the Commission  X -  adopted a flat rate per phone, as opposed to a percall, compensation mechanism.M y@ X-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш Later, as   noted above, AT&T and Sprint were permitted to pay compensation in the amount of $.25 per  X -  call in lieu of paying perphone compensation.rN *@ X-ԍ#X\  P6G;IP#See para. 10, above.r Last year, in the Second Further Notice, the   Commission found that IXCs are now able to track 1-800 and 10XXX access code calls through   automatic number identification ("ANI") and other coding digits that appear on  Xb-  Kpayphone-originated calls (e.g., the "07" code on calls from competitive payphones).Ob@ X-ԍ#X\  P6G;IP#Second Further Notice, 10 FCC Rcd at 11466. Although   IXCs do not receive ANI for 1-950 access code calls, the Commission tentatively concluded that   the volume of 1-950 calls did not appear to be so significant as to justify rejection of a per-call  X-  compensation mechanism.P@ XZ-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш The Commission stated that it would be reasonable to require OSPs   that employ 1-950 access codes to rely upon a usage-based surrogate, such as the ratio of 1-950   access code calls to total access code calls received by OSPs, to calculate their compensation  X-obligations to PPOs.aQ= @ X -ԍ#X\  P6G;IP#Id.a  X-  ` ` 30.  Based on our prior proceedings, we tentatively conclude that tracking   mechanisms and surrogates exist, or might readily be made available, to support the complete   per-call compensation plan mandated by Section 276(b)(1)(A). We seek comment on what   tracking options are currently, or may soon be, available. We seek further comment on the   ability of existing IXCbased tracking mechanisms to accommodate all payphone providers and   IXCs. In the event that there is no standard technology or mechanism available for tracking, we"7 Q,=(=(JJ"   Mseek comment on alternative surrogate methodologies that could be devised and by whom.   Finally, we seek comment on which party or parties, whether IXCs, PSPs, or intraLATA carriers,  X-should be required to develop and maintain the tracking or surrogate methodologies.  X-  a ` ` 31.  Under the existing per-call compensation waivers AT&T, Sprint, Ameritech   ^and SW Bell are responsible for tracking the calls for which they are obligated to pay   <compensation. Pursuant to the rules we adopt in this proceeding, all IXCs that carry access code   calls and tollfree calls originated from payphones, including the intrastate interexchange  XH-  operations of LECs, would be required to track payphone calls.R H@ X - ԍ#X\  P6G;IP#IXCs would be required to track these payphone calls because they receive the benefit of tollfree calls.   For the most part, a LEC (as opposed to a LEC's independent, reclassified payphone operations in the future) that   wcarries a payphone's local coin traffic neither benefits from tollfree calls, nor has revenue diverted because of them.   Therefore, LECs should not be required to incur the expense of tracking calls for which they have little economic  yO -interest.#x6X@`7>fX@#ѭ We tentatively conclude that   LIXCs should be required to initiate an annual independent verification of their per-call tracking   functions, to be made available for FCC inspection, to ensure that they are tracking all of the  X -  calls for which they are obligated to pay compensation.SA @ XM- ԍ#X\  P6G;IP#This information would be used by the Commission in monitoring the payphone compensation mechanism   in its initial two years, particularly to help ensure that all IXCs are paying their respective compensation obligations.   We propose to terminate this reporting requirement after IXCs have filed their reports for the 1998 calendar year.  We seek comment on this tentative   conclusion. We note that additional forms of tracking may become available to be used as a   check on IXC tracking. We understand that some BOCs are able to track, in their network, calls  X -  originating from their payphones.T @ X-ԍ#X\  P6G;IP#Ameritech/SW Bell Waiver, at para. 24. As discussed below,rU S @ X-ԍ#X\  P6G;IP#See para. 48, below.r we seek comment on whether we   should require BOCs and other LECs that provide network tracking for their own payphones to   make those tracking services available to PPOs at the same rates, terms, and conditions as they  Xy-provide themselves.  XK-` ` d. Administration of PerCall Compensation  X-  ` ` 32.  Having discussed who should be responsible for paying and who should   Mtrack the calls, we next turn to who should administer the payment of compensation. In the  X-  Second Report and Order, the Commission established a directbilling arrangement for the  X-  payment of compensation from IXCs to PPOs.V @ X$-ԍ#X\  P6G;IP#Second Report and Order, 7 FCC Rcd at 325960. It was left to the parties to determine the details   of the directbilling arrangement. To assist the IXCs in verifying their compensation obligations,   the Commission also required every incumbent LEC on a quarterly basis to provide each IXC   responsible for compensation with a list of all lines taking customerowned, coinoperated"V,=(=(JJ3"  X-  telephone (COCOT) service in the LEC's region.W@ Xy-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш The existing directbilling arrangement has   the advantage of placing the burden of implementing the compensation mechanism on those  X-parties that receive the benefits of dialaround calls IXCs and PPOs.aXy@ X-ԍ#X\  P6G;IP#Id.a  X-   ` `  33.  We tentatively conclude that this directbilling arrangement should be   imaintained with the simple addition of requiring IXCs, and the intrastate interexchange operations   of LECs to send back to each PSP a statement indicating the number of tollfree and access code   calls that each carrier has received from each of that PSP's payphones. This is the method used   by AT&T and Sprint under waivers that permit them to pay percall compensation for access   Kcode calls. We propose to continue to leave the details of the billing arrangements for the parties   to determine. All parties, whether carriers or PSPs, would be free to retain the services of one   or more clearinghouses to assist them with billing and collection and/or payment of the  X -  compensation.kY *@ X-ԍ#X\  P6G;IP#Cf. id.k We would require, however, that the carrier responsible for paying compensation   file each year a brief report with the Common Carrier Bureau listing the total amount of   kcompensation paid, pursuant to the rules adopted in this proceeding, to PSPs for intrastate,   jinterstate, and international calls; the number of compensable calls received by the carrier; and  X-  the number of payees.GZ@ X- ^ԍ#X\  P6G;IP#Together with the information discussed in para. 31, above, this information would be used by the   Commission in monitoring the payphone compensation mechanism in its initial two years, particularly to help ensure   .that all IXCs are paying their respective compensation obligations. We propose to terminate this reporting   requirement after IXCs have filed their reports for the 1998 calendar year. We note that the Common Carrier Bureau  yO]-  adopted a similar reporting requirement in the AT&T and Sprint percall compensation waiver orders. See AT&T  yO%-Waiver, 10 FCC Rcd at 1592; Sprint Waiver, 10 FCC Rcd at 5491.G On the other hand, f or a "set use" fee arrangement under which the end   user pays the PSP, we tentatively conclude that a compensation mechanism similar to the one in   CC Docket No. 9135 would require substantial modifications to account for the difference in the  XK-  structuring of compensation obligations. As discussed above,v[Kt @ Xp-ԍ#X\  P6G;IP#See paragraph 28, above.v we believe that a set use fee   would lead to greater transaction costs. For administration of the compensation mechanism,   because it would likely be unduly burdensome to require all PSPs (including singlepayphone   providers) to collect a set use fee from all those who are required to pay it, an independent entity   would be required to bill and collect the set use fee and, in turn, remit it to the individual PSP.  X- We seek comment on these tentative conclusions.  X-  X- r` ` !34.  Our proposed compensation plan would use the ANI as the basis for   tracking calls. We, therefore, also tentatively conclude that we should adopt minimal regulatory   \guidelines for the industry on the resolution of disputed ANIs in the percall compensation"|% [,=(=(JJ2"   context. Possible guidelines for which we seek comment are as follows: First, intraLATA   carriers could be required to provide a list of payphone ANIs to IXCs within 30 days of the close   of each compensation period (i.e., each quarter). Second, intraLATA carriers could be required   to provide verification of disputed ANIs on request, in a timely fashion. Data for verification   could be required to be maintained and available for at least 18 months after the close of a   Mcompensation period. Third, once an intraLATA carrier makes a positive identification of a   payphone as having been installed, the IXC could be required to accept claims for that   Kpayphone's ANI until such time as the intraLATA carrier provides information that the payphone   has been disconnected. If an intraLATA carrier fails to provide either positive or negative   verification of a claimed ANI from a PSP, the IXC could be required to pay compensation on   that ANI. Fourth, IXCs should be able to refuse payment for compensation claims that are   submitted long after they were due. IXCs should not refuse payment on timeliness grounds,   however, for ANIs submitted by a PSP up to one year after the end of the period in question.   lFurther, the submission of a claim on a disputed ANI by a PSP to the IXC would toll any   limitation period for bringing a complaint to the Commission until such time as the IXC issues   a final denial of the claim. We seek comment on these or any alternative guidelines for  X-resolution of disputed ANIs.  Xb-` ` e. PerCall Compensation Amount  X4- ` ` "35.  Section 276(b)(1)(A) of the 1996 Act requires the Commission to "ensure   that all payphone service providers are fairly compensated for each and every completed intrastate  X-and interstate call" from their payphones.u\@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).u  X-   ` ` #36.  The Commission has previously examined various compensation methods  X-  in the Second Report and Order. In particular, the Commission rejected arguments by PPOs that   icompensation for interstate access code calls should reflect their "opportunity costs" of initiating  X-  >these calls in lieu of 0+ calls that produce commissions from a presubscribed carrier.]y@ X-ԍ#X\  P6G;IP#Second Report and Order, 7 FCC Rcd at 3255. The   0Commission found that this approach would maintain PPO revenue streams that existed   Lpreviously when PPOs or premises owners were permitted to direct all operatorassisted traffic  XN-  (other than 0 traffic) to the presubscribed carrier, whatever the wishes of the caller.a^N*@ X)!-ԍ#X\  P6G;IP#Id.a The   Commission also rejected arguments that it should base compensation on the actual costs of   .PPOs, because individual cost data was not available for each PPO and such data, if it existed,  X -  iwould likely not be uniform.m_ @ X%-ԍ#X\  P6G;IP#Id. at 325556.m The Commission opted instead for a compensation approach using   <costbased surrogates that it found were reasonable and viable. The Commission identified three"_,=(=(JJZ"  X-  "reasonable" compensation approaches that established a range of reasonable compensation rates   Zfor access code calls. The three approaches were: (1) as a surrogate for PPO costs, access charge   Lcompensation that an incumbent LEC receives for its regulated provision of payphones; (2) as   .a measure of value to OSPs of receiving access code calls, charges for a transfer by a LEC live  X-  {operator to an OSP of the caller's choice ("O transfer service charges"); and (3) AT&T's  X-  federally regulated operator service rates on calls made from payphones presubscribed to AT&T.` @ X- lԍ#X\  P6G;IP#Id. at 325557. We note that the Commission no longer regulates these rates because AT&T is not a  yO-  dominant carrier in its provision of domestic interstate, interexchange services. See Motion of AT&T Corp. to be  yO-  Reclassified as a NonDominant Carrier, Report and Order, 11 FCC Rcd 3271 (1995) ("AT&T Reclassification  yO -  Order"). In addition, we recently found AT&T to be nondominant in the international services market. See Motion of AT&T Corp. to be Declared NonDominant for International Service, Order, FCC 96209 (rel. May 14, 1996).  Xv-  The three measures yielded estimated charges in the range of $.22 to $.61 per call.aav@ X -ԍ#X\  P6G;IP#Id.a In 1992,   xthe Commission based the compensation rate of $6 per phone on the average 15 access-code calls   originated by a competitive payphone each month, or a rate of $.40 per call, which is at the  X1-  Lmiddle of that range.b1J@ X,-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш In the Reconsideration Order, and in the recent Second Further Notice,   the Commission reaffirmed the reasonableness of the compensation measures within the range it  X -  Kestablished in the Second Report and Order.c @ X-ԍ#X\  P6G;IP#Reconsideration Order, 8 FCC Rcd at 7153; Second Further Notice, 10 FCC Rcd at 11467. Both AT&T and Sprint pay percall compensation  X -  ]fall within this range, pursuant to waivers, in the amount of $.25.d @ XI-ԍ#X\  P6G;IP#AT&T Waiver, 10 FCC Rcd at 1592; Sprint Waiver, 10 FCC Rcd at 5491. Similarly, two BOCs,   KAmeritech and Southwestern Bell, each charge IXCs a percall rate for "tollfree" and access code  X -  Mcalls originated by their payphones.e ] @ X-ԍ#X\  P6G;IP#Ameritech/SW Bell Waiver at para. 25. Ameritech has filed a tariff, which is currently under  X -review, proposing a percall rate of $.256 for this service.f @ Xf-ԍ#X\  P6G;IP#Ameritech Transmittal No. 953, filed March 5, 1996, effective April 19, 1996, 34th Revised Page 70.24.  Xy- R ` ` $37.  More recently, in the Second Further Notice, the Commission again sought   comment on the appropriate per-call compensation amount. Commenters responding to this  XK-  notice suggested rates ranging from $.083 to $.55 per call.gK@ X"-ԍ#X\  P6G;IP#See, e.g., MCI Comments at 6; IPTA Comments at 13. Sprint, MCI, and Frontier argued  X4-  that $.25 per call was too high when compared to LEC payphone costs.h4p@ XU%-ԍ#X\  P6G;IP#Sprint Comments at 2, 6; MCI Comments at 1; Frontier Reply at 1. Pacific and Nevada   Bell suggested a company-specific rate of $.32 to $.55 -- the result of adjusting the CCL price"!h,=(=(JJ"  X-  ?cap index to eliminate the payphone element.pi@ Xy-ԍ#X\  P6G;IP#Pacific Bell Reply at 2.p The Illinois Public Telecommunications   Association ("IPTA") submitted data showing that PPO costs average between $.37 and $.55 per   ycall, and argued that a market-based methodology would justify rates ranging from $.42 per call  X-  to $.95 per call.jy@ X-ԍ#X\  P6G;IP#IPTA Comments at 47.#x6X@`7>fX@#є APCC proposed a flexible rate that would be equal to the maximum rate for  X-  a local coin call in each area,ok*@ X -ԍ#X\  P6G;IP#APCC Comments at 2, 10.o while AT&T, Sprint, and MCI all stated that the cost of a local  X-coin call is irrelevant to the cost of a dial-around call.l@ X -ԍ#X\  P6G;IP#AT&T Reply at 4; Sprint Reply at 3; MCI Reply at 5.  X_-  ` ` %38.  We believe that the theory of compensation and price surrogates that the   ?Commission has historically relied upon in its determination of the "range of reasonable  X1-  jcompensation rates"m1@ Xn-ԍ#X\  P6G;IP#Second Report and Order , 7 FCC Rcd at 325657. provide some guidance for our analysis of how to ensure that PSPs are   ["fairly compensated" and what should be the appropriate per-call compensation amount for all   ycalls within the scope of this rulemaking. As before, while we are still confronted in the instant  X -  proceeding by the lack of reliable PPO cost data,n = @ X-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш we tentatively conclude that PSPs should be   compensated for their costs in originating the types of calls for which we have tentatively  X -  concluded that compensation is appropriate.vo @ X]-ԍ#X\  P6G;IP#See paras. 1622, above.v We tentatively conclude further that these costs   -should be measured by appropriate costbased surrogates. We seek comment on these tentative   =conclusions. With regard to the appropriate costbased surrogates, we also seek comment on   ywhether some measure of generic or industrywide costs is available, whether incumbent LECs'   Lcosts would be a reasonable surrogate for PPOs' costs, and whether some other existing set of   rates, such as stateestablished rates for local coin calls, would be a reasonable surrogate. In   addition, to ensure that PSPs receive fair compensation, should we prescribe different percall   compensation amounts for the different types of calls originated by payphones? We also seek   comment on how compensation levels should be permitted to change in the future, and whether   some cost index or price cap system would be appropriate to ensure that compensation levels   yreflect expected changes in unit costs over time. Commenters should submit a summary of any data that support their arguments.  X- C ` ` &39.  We also seek comment on whether we should provide PPOs some measure   zof interim compensation, to be paid until the effective date of the final rules we adopt in this   proceeding, for the growing volume of dialaround calls originated from their payphones. While"e o,=(=(JJO"   xthe Commission will complete the instant proceeding within the nine months mandated by Section  X-  276,qp@ Xb-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1).q we are aware from data filed in other pending proceedings, most notably in response to  X-  the Court's remand of Florida Payphone concerning subscriber 800 compensation, that the  X-  .number of dialaround calls for which PPOs receive no compensation (e.g., subscriber 800 and   debit card calls) or flatrate, nontraffic sensitive compensation (interstate access code calls) has   grown since we first considered the need for compensation in 1991. Subscriber 800 services, in  Xv-  particular, have experienced sustained growth in the past several years.qyvy@ X - ԍ#X\  P6G;IP#The Commission has taken steps to facilitate competition in 800 services by requiring 800 number  yO -  portability. See Provision of Access for 800 Service, Report and Order, 4 FCC Rcd 2824 (1989) ("800 Portability  yOQ -Order").  For example, in an ex  X_-  Lparte letter filed with the Commission in the proceeding entitled "Operator Service Access and   Pay Telephone Compensation," CC Docket No. 9135, the APCC, a trade association of PPOs,  X1-  jargues that since the adoption of the First Report and Order in 1991, "the market for subscriber  X -  800 services has experienced explosive growth, both in terms of revenues and minutes of use."r @ X- >ԍ#X\  P6G;IP#Ex Parte Letter of Albert Kramer, Counsel, APCC to William Caton, Acting Secretary, FCC (August 17, 1995) at 15.   It further argues that the implementation of 800 number portability has led to "vigorous   competition" in this area among the IXCs, which, in turn, has fostered "millions of new 800  X -  subscribers and users in the last few years."as 3@ X-ԍ#X\  P6G;IP#Id.a APCC cites news stories suggesting that on a  X -  typical business day, 30 to 40 percent of all long distance calls involve 800 numbers.t @ XS-ԍ#X\  P6G;IP#Id. at 7 (emphasis in the original). It also   cites data gathered by one PPO from approximately 500 to 1000 competitive payphones in   various states over a period of seven months, which "consistently showed about twice as many  Xy-  ysubscriber 800 calls as access code calls."guy @ X-ԍ#X\  P6G;IP#Id. at 8.g According to AT&T, these "subscriber 800" calls   .currently account for about 40% of all toll calling on AT&T's network on an average business  XK-day.vKF @ XB -ԍ#X\  P6G;IP#AT&T pamphlet entitled "800 * 888 = TOLL FREE."  X- % ` ` '40. In addition, according to APCC, the use of "vanity" access numbers, such   as MCI's "1-800-COLLECT" or AT&T's "1-800-CALL-ATT" and "10ATT," which can be easily  X-  remembered by callers because they contain words or phrases, has grown dramatically.Nwy@ X%- \ԍ#X\  P6G;IP#See generally Petition for Expedited Relief by the American Public Communications Council, CC Docket  yO&-  No. 9135, filed September 2, 1993 ("APCC Petition"). The Commission noted in the Second Further Notice that   Jit would not act on this petition "unless it becomes apparent that a percall compensation mechanism for the entire"H'v,=(=(h'" industry is not viable." 10 FCC Rcd at 11468, n.123.N APCC"Xw,=(=(JJ "   -argues that these calls represent additional interstate access code calls originated by competitive  X-  payphones for which additional compensation is warranted.yxX@ X-ԍ#X\  P6G;IP#APCC Petition at 24.y For both interstate access code   calls and subscriber 800 calls, PPOs are not able to collect payment from either the carrier or the   end user, in the absence of regulation prescribing such payment. According to APCC, the   incumbent LECs, on the other hand, have been relatively unaffected by the increase in   dial-around calling because the LECs have had the ability to support their payphone operations  Xv-  /with revenue from other regulated services and access charge compensation.yv @ X0 - ԍ#X\  P6G;IP#See Ex Parte Letter of Robert Aldrich, Counsel, APCC to William Caton, Acting Secretary, FCC (Oct. 20, 1995). Parties are   encouraged to comment on whether we should establish an interim compensation plan for PPOs.   -Those who support such relief should comment on the appropriate interim compensation amount   Land how such an interim compensation mechanism could be structured. We seek comment on   whether we should adopt a system similar to the interim mechanism for interstate access code   calls in CC Docket No. 9135. We also seek comment on the feasibility of implementing an   interim plan when final rules are required to be in place in nine months. To this end, we request   xcomment on the legal basis for, and practical consequences of, making such interim compensation effective as of the release date of this Notice.  Xy- B. RECLASSIFICATION OF INCUMBENT LEC-OWNED PAYPHONES  XK- 1. The 1996 Act  X- a ` ` (41.  The issues we need to address here are (1) the prospective classification of   xincumbent LEC payphones as CPE; (2) the transfer of incumbent LEC payphone equipment assets   from regulated accounts to an unregulated status; (3) the termination of access charge   compensation and all other subsidies for incumbent LEC payphones; and (4) the classification of   zAT&T payphones. Currently, incumbent LEC payphones, classified as part of the network,   Lrecover their costs from CCL access charges to those carriers that connect with the incumbent   =LEC. Section 276(b)(1)(B) directs the Commission to "discontinue the intrastate and interstate   {carrier access charge payphone service elements and payments in effect on such date of   enactment, and all intrastate and interstate payphone subsidies from basic exchange and exchange  XN-access revenues, in favor of a [per-call] compensation plan[.]"tzN@ X#-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t "3z,=(=(JJ<"Ԍ X- 2. Discussion  X- a. Classification of LEC Payphones as CPE   X-  ` ` )42.  To effectuate the Act's mandate that access charge payphone service  X-  elements and payphone subsidies be discontinued,t{@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t we tentatively conclude that we should treat   incumbent LEC payphones as unregulated, detariffed CPE. We tentatively conclude further that   incumbent LECs should be required to provide to PSPs, on a nondiscriminatory tariffed basis, all functionalities used in a LEC's delivery of payphone services.  X -  ` ` *43.  These issues were raised previously in the context of a Petition for   Declaratory Rulemaking filed by the Public Telephone Council, a petition which focused on BOC  X -  payphones.| y@ X- jԍ#X\  P6G;IP#Public Telephone Council Petition for Declaratory Ruling that Bell Operating Company Pay Telephones are  yO-  Customer Premises Equipment for Regulatory Purposes, filed July 18, 1988 ("PTC Petition"). The Public Telephone   Council ("PTC") is an association comprised of manufacturers and suppliers of telecommunications equipment,   hincluding payphones. PTC Petition at 2. Because the issues raised by the PTC petition are addressed in this NPRM,   which proposes rules required by the Act, we tentatively conclude, in para. 87, below, that we should dismiss PTC's petition without prejudice. Some parties who filed comments in response to the PTC petition argue that the   BOCs have used their control over the public switched network to disadvantage PPOs because  X -  Zthe PPOs are unable to obtain access to the same technologies as those used by the BOCs.} @ X-ԍ#X\  P6G;IP#Louisiana Payphone Association ("LPA") Comments on PTC Petition at 7. As   ydiscussed above, incumbent LECs are able to offer payphone services using either instrument  implemented "smart" payphones, or "dumb" payphones that utilize central office coin services,   or some combination of the two. Meanwhile, PPOs are limited to instrumentimplemented   0"smart" payphones only. The option of using central office coin services, such as coin   recognition, answer detection, and other related services, allows incumbent LECs to use the less   expensive "dumb" pay telephones, which gives incumbent LECs a cost advantage over their   competitors. We tentatively conclude that requiring that central office coin services be made   available to PPOs eliminates this cost advantage and will increase competition in the payphone   industry. We recognize that some of the BOCs have begun offering in several states central  X-office coin services as a tariffed service to PPOs.~A @ XL!- /ԍ#X\  P6G;IP#See, e.g., Ex Parte Letter of Ben Almond, Executive DirectorFederal Regulatory, BellSouth to William   ZCaton, Acting Secretary, FCC (Dec. 8, 1995). BellSouth states that such services are available on a tariffed basis   in the following states within its region: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, and South Carolina.  X-  ` ` +44.  The Commission concluded in Computer II that in order to prevent   improper crosssubsidization, CPE should be unbundled from its underlying transmission.   Additionally, the Commission determined that CPE should be detariffed to ensure that the costs"| ~,=(=(JJ"   <associated with regulated services are separated from the competitive provision of the equipment  X-  used in conjunction with those services.@ Xb-ԍ#X\  P6G;IP#See Computer II, 77 FCC 2d at 445. Therefore, as stated above, we tentatively conclude  X-  that incumbent LEC payphones should be classified as CPE for Computer II regulatory  X-  purposes.fy@ X- 0ԍ#X\  P6G;IP#Section 255 of the 1996 Act requires manufacturers of telecommunications equipment and CPE, and   <telecommunications service providers, to ensure that their equipment and services are accessible to persons with   disabilities, if readily achievable. 47 U.S.C.  255(b)(c). If such access is not readily achievable, the manufacturer   or service provider must ensure that the equipment or service is compatible with existing peripheral devices or   specialized CPE commonly used by persons with disabilities, if readily achievable. 47 U.S.C.  255(d). The  yO -implementation of Section 255 will be addressed in a separate proceeding.#x6X@`7>fX@#f Our classification of payphones as CPE, however, is not intended to adopt Computer  X-  II's requirement that CPE be provided only through a structurally separated affiliate.y@ Xg - ԍ#X\  P6G;IP#See paras. 5766, below, for a discussion of the statutory mandate that we "prescribe a set of nonstructural   Jsafeguards for [BOC] payphone service ... which safeguards shall, at a minimum, include the nonstructural safeguards equal to those adopted in the Computer InquiryIII ... proceeding." 47 U.S.C.  276(b)(1)(C). We seek comment on this tentative conclusion.  X_-  a ` ` ,45.  To unbundle payphones from their underlying transmission, we tentatively   conclude that incumbent LECs, whether or not they themselves provide payphone service, must   offer individual central office coin transmission services to PSPs under a nondiscriminatory,   public, tariffed offering. We seek comment on this tentative conclusion and on which central   office coin services must be made available by incumbent LECs to the PSPs to achieve this goal.   Commenters who supported this approach in the proceeding initiated by the PTC petition listed   =a variety of central office coin services, such as answer and coin detection, currently available  X -  to the BOCs but not offered to PPOs at any price.t S @ X-ԍ#X\  P6G;IP#See LPA Comments at 7.t In the interest of clarity, we seek comment   on both the type of services and the technological requirements necessary to allow PPOs to use   -payphones that are equivalent to those payphones currently used by LECs. In addition, we seek   comment on any industry standards that may need to be developed with respect to potential  Xb-  kclaims regarding any demonstrable network reliability concernsYb @ X- ԍ#X\  P6G;IP#Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket  yO -No. 9698, Notice of Proposed Rulemaking, FCC 96182 (rel. Apr. 19, 1996) at para. 93.#x6X@`7>fX@#Y that may result from PSPs   connecting their payphones that make use of central office coin transmission services.   yCommenters should clearly demonstrate what, if any, specific harm to the network could occur,   and if industry standards are necessary. If so, who should develop these standards, and what time frame would be needed to implement such standards?  X- ` ` -46.  We anticipate that incumbent LECs will continue to use central office coin   Nservices for their payphones after their payphones are unbundled and detariffed. In the  X-  Amendments of Part 69 of the Commission's Rules Relating to the Creation of Access Charge"},=(=(JJp"  X-  Subelements for Open Network Architecture, the Commission concluded that LECs may have an   incentive to price basic transmission services, used to deliver an enhanced service, at   unreasonably high rates in an effort to raise their rivals' costs of delivering the enhanced  X-  Mservice.y@ X4- ԍ#X\  P6G;IP#Amendments of Part 69 of the Commission's Rules Relating to the Creation of Access Charge Subelements  yO-  for Open Network Architecture, CC Docket Nos. 8979 and 87313, 6 FCC Rcd 4524, 4531 (1991) ("Part 69  yO-Amendments Order"), modified on recon., 7 FCC Rcd 5235 (1992), further recon. denied, 10 FCC Rcd 1570 (1994).  To deter this type of anticompetitive conduct, the Commission revised the new  X-  -service test, which all "new services"Vy @ X^ - ԍ#X\  P6G;IP#The Commission defines a "new service" as a service that adds to the range of options already available to   customers. Policy and Rules Concerning Rates for Dominant Carriers, Second Report and Order, 5 FCC Rcd 6824 (1990).V offered by incumbent LECs regulated by price caps must  X-  satisfy.J@ X -ԍ#X\  P6G;IP#Part 69 Amendments Order, 6 FCC Rcd at 4531. Under the new services test, local exchange carriers (LECs) must submit cost support  Xv-  for the prices they intend to charge for new services.av@ X"-ԍ#X\  P6G;IP#Id.a The new services test thus places a   flexible, costbased upper bound on new service prices to guard against unreasonably high rates   and, by requiring that prices exceed direct costs, also establishes a price floor, ensuring that prices   yare not predatory. In addition, to prevent predatory pricing, the new services test requires that  X -  ythe projected revenues from the new service outweigh the costs of provision of that service. @ Xw- /ԍ#X\  P6G;IP#In the Matter of Policy and Rules Concerning Rates for Dominant Carriers Order on Reconsideration, 6 FCC Rcd 2637, 2695 (1991).  X -   We seek comment on whether incumbent LEC provision of coin transmission services on an   unbundled basis should be treated as a new service under the Commission's rules. While the   incumbent LECs have used central office coin services in the past, they have not made these   services available to PPOs for use in their provision of payphone services. Because incumbent   \LECs may have an incentive to charge their competitors unreasonably high prices for these   services, we also tentatively conclude that the new services test is necessary to ensure that central   Loffice coin services are priced reasonably. We seek comment on whether incumbent LECs not   <currently subject to price cap regulation be required to submit cost support for their central office  XK-coin services, pursuant to Sections 61.38, 61.39, and 61.50(i) of our rules.K% @ X! -ԍ#X\  P6G;IP#47 C.F.R.  61.38, 61.39, 61.50(i).  X- ` ` .47.  In Section 68.3 of the Commission's rules, the Commission defined a coin  X-  limplemented telephone@ X$-ԍ#X\  P6G;IP#These payphones have also been referred to as instrument implemented payphones. as a telephone containing all circuitry required to execute coin   Macceptance and related functions within the instrument itself and not requiring coin service",=(=(JJ "  X-  signaling from the central office.l@ Xy-ԍ#X\  P6G;IP#47 C.F.R.  68.3.l Coin service is defined as centralofficeimplemented coin  X-  telephone service.ay@ X-ԍ#X\  P6G;IP#Id.a Under the Coin Registration Order and current Part 68 rules, only   instrumentimplemented payphones can be registered for connection to the network. On the other   hand, centralofficeimplemented coin telephone service interacts with the telephone itself to   provide coin service and answer supervision. PTC's petition requests that the coin service line   be tariffed and offered to the public presumably for connection of instruments capable of  Xv-  interacting with the centralofficeimplemented line and service.jv*@ XQ -ԍ#X\  P6G;IP#PTC Petition at 1.j We tentatively conclude that   .Section 68.2(a)(1) of the Commission's regulations should be amended to facilitate registration  XH-  Zof both instrument implemented and centralofficeimplemented payphones.*AH@ X- lԍ#X\  P6G;IP#The California Payphone Association (CPA) filed before the Commission a Petition for Rule Making   requesting that Section 68.2(a)(1) of the rules be amended to allow for the registration of all coinoperated telephones   and that the Commission reexamine and clarify its interpretation of Section 68.2(a)(1). We note that our tentative conclusion that we should amend this rule would address the CPA petition.* We seek comment   on this tentative conclusion. We also seek comment on the location of the demarcation point for   Mreclassified LEC payphones. We tentatively conclude that the demarcation for all new LEC   payphones should be consistent with the minimum point of entry ("MPOE") standards for other  X -  wireline services.l @ X-ԍ#X\  P6G;IP#47 C.F.R.  68.3.l In addition, we tentatively conclude the demarcation point should be the  X -same one as incumbent LECs use for PPOs today.a @ X-ԍ#X\  P6G;IP#Id.a  X - U ` ` /48.  Incumbent LECs, particularly the BOCs, also provide to their own   payphones a number of other services that may be appropriate to unbundle and make available   to PSPs. We seek comment on whether any of the following services, or others suggested by   commenters, should be unbundled under the rules to be adopted in this proceeding: fraud   protection; installation and maintenance services; joint marketing opportunities; percall tracking  X4-  capabilities; and call validation services. With regard to fraud protection, the superior fraud   .protection available to BOC payphones is partly due to the BOCs' use of network coin control   functions, which are not as easily bypassed as set-based coin control functions. Another fraud   Kprotection feature is the use of specialized telephone numbers to alert international operators that   a telephone to which a collect or thirdparty call is attempted to be billed is a payphone. Should   the Commission require these aspects of fraud protection to be available on an unbundled basis, as discussed above? "|F ,=(=(JJP"Ԍ X- b. Transfer of Payphone Equipment to Unregulated Status   X-  ` ` 049.  If we conclude that we will treat payphones as detariffed CPE,r@ XK-ԍ#X\  P6G;IP#See para. 44, above.r the   [incumbent LECs would have to transfer their payphones and related equipment from regulated  X-  Kto unregulated activities. Our rules provide that, if reallocations of telecommunications plant (i.e.,   central office equipment and outside plant) from regulated to nonregulated operations are  Xv-  required, such plant will be transferred at undepreciated baseline costgvy@ X - ?ԍ#X\  P6G;IP#By baseline cost, we mean either the depreciated original cost at the time of the initial assignment or  yO -allocation of existing plant or the original cost of subsequently acquired new plant. Id.#x6X@`7>fX@#g plus an interest charge  X_-  Lbased on the authorized interstate rate of return to reflect the time value of money._@ X -ԍ#X\  P6G;IP#Joint Cost Order, 2 FCC Rcd 1298, 1320. We seek   comment on the specific assets to be transferred. We tentatively conclude that the assets to be   transferred should be defined generally in terms of CPE deregulation. Thus, the assets to be   transferred may include all facilities related to payphone service, including associated taxes and   <depreciation, but likely would not include the loops connecting the payphones to the network, or  X -  the central office "coin-service"| @ X@-ԍ#X\  P6G;IP#As discussed in paras. 4547, above.| or operator service facilities supporting incumbent LEC   .payphones. Including these network support facilities may be inappropriate because it would   !allow incumbent LECs to continue providing a different form of interconnection to their   payphones than is available to PSPs. We also tentatively conclude that a phasein period for a   transfer of payphonerelated assets is not necessary, because payphone terminal equipment  Xy-  consists of less than one percent of total plant investment for the entire LEC industry.yT@ X~-ԍ#X\  P6G;IP#Common Carrier Statistics at 27, Table 2.7. We seek   comment on our tentative conclusions and the general approach to asset transfers outlined here.  XK-  [We note that we will seek comment in a separate proceeding on how we should treat the LECs'   payphone service operations for accounting purposes. We also seek comment on whether our   approach to asset transfers is consistent with the 1996 Act's definition of "payphone service" as   <the "provision of public or semipublic pay telephones, the provision of inmate telephone service  X-in correctional institutions, and any ancillary services."n @ X -ԍ#X\  P6G;IP#47 U.S.C.  276(d).n  X- c. Termination of Access Charge Compensation and Other Subsidies   X-  ` ` 150.  Incumbent LECs today generally recover payphone costs allocated to the   interstate jurisdiction through the per-minute carrier common line ("CCL") charge they assess on   IXCs and other interstate access customers for originating and terminating interstate calls. The   incumbent LEC assesses the PPO a subscriber line charge ("SLC") (at the multi-line business"N ,=(=(JJ"  X-  .rate) to recover the payphone common line costs associated with that phone. @ Xy- ԍ#X\  P6G;IP#We recently reaffirmed a decision by the Common Carrier Bureau concluding that PPOs should be classified   Jas "end users" under our rules. C.F. Communications Corp. v. Century Telephone of Wisconsin, Inc., Memorandum  yO*-  Opinion and Order, 10 FCC Rcd 9775 (1995), petition for review filed, C.F. Communications Corp. v. FCC and  yO-  United States, No. 951563 (D.C. Cir. filed Nov. 6, 1995). Thus, PPOs are required to pay a SLC for their use of common lines connected to the payphones they serve, but are not assessed a perminute CCL charge.  In the case of   jcompetitive payphones, a PPO recovers its payphone costs out of the revenue it receives from end users, premises owners, and OSPs to whom its payphones are presubscribed.  X-  ` ` 251.  The 1996 Act mandates that the Commission "discontinue the intrastate and   <interstate carrier access charge payphone service elements and payments ... and all intrastate and  Xv-  interstate subsidies from basic exchange and exchange access revenues[.]"tv@ X -ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t Accordingly, we   must adopt rules that provide for the removal from regulated intrastate and interstate rate  XH-  structures of all charges that recover the costs of payphones (i.e., the costs of payphone sets, not   including the costs of the lines connecting those sets to the public switched network, which, like   the lines connecting competitive payphones to the network, will continue to be treated as   >regulated). We tentatively conclude that incumbent LECs must reduce their interstate CCL   jcharges by an amount equal to the interstate allocation of payphone costs currently recovered   Zthrough those charges. LECs subject to the price cap rules would treat this as an exogenous cost  X -  zchange to the Common Line basket pursuant to Section 61.44(c) of our rules.p J@ X-ԍ#X\  P6G;IP#47 C.F.R. 61.44(c).p We request   incumbent LECs to identify in their comments all accounts that contain costs attributable to their   payphone operations. We also request comment on whether specific cost pools and allocators   Mshould be used to capture the nonregulated investment and expenses associated with their   payphone operations. We also seek comment on whether a transition period is necessary to move   from subsidized compensation to per-call compensation for LEC payphones, and how that   transition would proceed. For example, should there be a onetime elimination of the subsidies,   kor should they be phased out over a specified time? If the latter, what time period would be appropriate?  X- ` ` 352. We also propose, pursuant to the mandate of Section 276(b)(1)(B), to   require incumbent LECs to remove from their intrastate rates any charges that recover the costs   of payphones. We solicit comment on whether the Commission should set a deadline and a   specific mechanism for elimination of any intrastate subsidies as well, or whether it would be   both consistent with the statute as well as preferable from a policy perspective to permit the states  Xe-  to formulate their own mechanisms for achieving t his result within a specific time frame? We   xask parties to provide statespecific information regarding the intrastate rate elements that recover payphone costs. " ,=(=(JJz"Ԍ X- ` ` 453.  In the telephone network, payphones, as well as all other telephones, are   -connected to the local switch by means of a subscriber line. The costs of the subscriber line that   are allocated to the interstate jurisdiction are recovered through two separate charges: a flatrate   ZSLC assessed upon the end user customer who subscribes to local service; and a perminute CCL   <charge that recovers the balance of the interstate subscriber line costs not recovered through the   SLC. As noted earlier, LEC payphone costs are also included in the CCL charge. The CCL   charge, however, applies to interstate switched access service that is unrelated to payphone service   costs. While PPOs are required to pay the SLC for the loop used by each of their payphones,   LECs have not been required to pay this charge because the subscriber lines connected to LEC   Zpayphones have been recovered entirely through the CCL charge. We tentatively conclude that,   Zto avoid discrimination among payphone providers, the SLC should apply to subscriber lines that   terminate at both LEC and competitive payphones. We tentatively conclude that the removal of   payphone costs from the CCL and the payment or imputation of a SLC to the subscriber line that   terminates at a LEC nonregulated payphone would result in the recovery of LEC payphone costs  X -  on a more costcausative basis. @ X7-ԍ#X\  P6G;IP#See Ameritech/SW Bell Waiver at para. 25. We seek comment on these tentative conclusions and, more  X -generally, on how removing LEC payphones from the CCL charge would affect the SLC. y@ X- ԍ#X\  P6G;IP#We note that pursuant to Section 254 of the Act we have referred to the universal service Joint Board the  yO-  issue of whether the existing SLC should be preserved or otherwise altered. See FederalState Joint Board on  yO-  Universal Service, NPRM and Order Establishing Joint Board, FCC 9693 at para. 114 (rel. March 8, 1996) ("Joint  yOJ-  Board Notice"). Because the SLC recovers only the costs of the telephone line, the effect on the SLC of removing   <LEC payphones from the CCL charge is beyond the scope of the referral to the Joint Board. Our inquiry in this   proceeding is strictly limited to determining whether terminating all subsidies for LEC payphones would include requiring LECs to pay the SLC for their payphones.  Xy- ` ` 554. The incumbent LECs' multiline business SLC is currently subject to a  Xb-  $6.00 per month cap.nb@ X-ԍ#X\  P6G;IP#47 C.F.R. 69.104.n As noted above, those LECs with interstate subscriber line costs that   exceed this amount recover a portion of the interstate costs of subscriber lines through the CCL   charge. The issue of the appropriate interstate SLC for the future has been referred to a Federal X-  State Joint Board. @ XY-ԍ#X\  P6G;IP#See Joint Board Notice at para. 114. To the extent that LECs charge or impute to their own payphone operations   only the multiline business SLC, which may be less than the full interstate cost of the subscriber   lines connecting their payphones to the network, and recover the balance of the cost of these lines   through the CCL charge, they may, in effect, be subsidizing their payphones with access charge   revenues, in violation of Section 276. We seek comment on whether LECs in those   circumstances should charge or impute to their own payphone operations, as well as to PPOs, an   <additional monthly charge representing the difference between the SLC cap and the full interstate   Zcost of these subscriber lines. We also seek comment on whether comparable changes should be made to incumbent LECs' intrastate rates."e< ,=(=(JJ"Ԍ X-ԙ  d. Deregulation of AT&T Payphones   X- % ` ` 655.  In the Interstate, Interexchange Marketplace proceeding, we noted that we   would consider in the instant proceeding "the issue of bundling pay telephone equipment with the  X-  junderlying transmission capacity."@ X- ԍ#X\  P6G;IP#In the Matter of Policy and Rules Concerning the Interstate, Interexchange Marketplace, Notice of Proposed Rulemaking, CC Docket No. 9661 (rel. March 25, 1996) at para. 91. We tentatively conclude that other IXC bundling issues  X-  should be treated under the same rules we have proposed in the Interstate, Interexchange  Xv-  Marketplace proceeding. Commenters who disagree with this tentative conclusion, however, are invited to comment in this proceeding.  X1-  d ` ` 756.  Like LEC payphones, AT&T payphones are classified as network  X -  equipment and, therefore, may receive subsidies. A@ X -ԍ#X\  P6G;IP#Tonka, 58 Rad. Reg. 2d (P&F) at 903, 91011. We tentatively conclude that payphones   provided by AT&T should be classified as CPE. While the 1996 Act does not expressly address   jAT&T payphones, Section 276 directs the Commission to adopt regulations that will "promote   competition among payphone service providers and promote the widespread deployment of  X -  ipayphone services to the benefit of the general public[.]"n @ Xa-ԍ#X\  P6G;IP#47 U.S.C.  276(b).n Discontinuing possible subsidies for   AT&T payphones would be congruent with the 1996 Act's requirement that the Commission  X-  discontinue subsidies for other payphones (i.e., those owned by incumbent LECs) and would  Xy-  iprovide for symmetrical regulation of the payphone industry.ty@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t There are other reasons why this  Xb-  -proposed action is in harmony with the other rules we propose in this NPRM. First, since Tonka,   AT&T payphones have been treated the same as BOC payphones. Once LEC telephones,   kincluding those provided by the BOCs, are declared to be CPE, the basis for treating AT&T   payphones as network equipment no longer exists. Second, we believe that deregulating AT&T  X-  payphones is in line with our general policy to deregulate nondominant carriers.T@ X -ԍ#X\  P6G;IP#AT&T Reclassification Order, 11 FCC Rcd at 3271. We seek  X-comment on this tentative conclusion.  X-  X-  x C. NONSTRUCTURAL SAFEGUARDS FOR BOC PROVISION OF PAYPHONE    X-  SERVICE  Xe- 1. The 1996 Act  X7- U` ` 857.  Section 276(b)(1)(C) directs the Commission to "prescribe a set of   nonstructural safeguards for Bell operating company payphone service to implement the"  ,=(=(JJ"   provisions of paragraphs (1) and (2) of subsection (a), which safeguards shall, at a minimum,   include the nonstructural safeguards equal to those adopted in the Computer Inquiry - III (CC   0Docket No. 90-623) proceeding[.]" As referred to in Section 276(b)(1)(C), Section 276(a)   Lprovides that a BOC "(1) shall not subsidize its payphone service directly or indirectly from its   <telephone exchange service operations or its exchange access operations; and (2) shall not prefer or discriminate in favor of its payphone service."  X_- 2. Discussion  XH-  X1- a. Background  X -  X -  ` ` 958.  The Computer III nonstructural safeguards currently apply to a BOC's  X -  provision of payphone service if enhanced services are provided through the payphone.Py @ Xe - ԍ#X\  P6G;IP#See In the Matter of American Telephone and Telegraph Company Petition for Limited Waiver of   Comparably Efficient Interconnection Requirements of Third Computer Inquiry; Report and Order, 8 FCC Rcd 6808 (1993).P Under  X -  the Computer III framework, BOCs are permitted to provide enhanced services on an integrated   kbasis subject to nondiscrimination safeguards. The safeguards the Commission adopted in  X -  Computer III @ Xa- ԍ#X\  P6G;IP#See Amendment of Section 64.702 of the Commission's Rules and Regulations (Computer III), CC Docket  yOJ-  No. 85229, Phase I, 104 FCC 2d 958 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I  yO-  iReconsideration Order), further recon., 3 FCC Rcd 1135 (1988) (Phase I Further Reconsideration Order), second  yO-  further recon., 4 FCC Rcd 5927 (1989) (Phase I Second Further Reconsideration Order); Phase I Order and Phase  yO-  I Reconsideration Order vacated California v. FCC, 905 F.2d 1217 (9th Cir. 1990) (California I); Phase II, 2 FCC  yOj-  Rcd 3072 (1987) (Computer III Phase II Order), recon., 3 FCC Rcd 1150 (1988) (Phase II Reconsideration Order),  yO2-  hfurther recon., 4 FCC Rcd 5927 (1989) (Phase II Further Reconsideration Order); Phase II Order vacated, California  yO-  wI, 905 F.2d 1217 (9th Cir. 1990); Computer III Remand Proceeding, 5 FCC Rcd 7719 (1990) (ONA Remand Order),  yO-  recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993) (California  yO-  II); Computer III Remand Proceedings: Bell Operating Company Safeguards and Tier 1 Local Exchange Company  yOR-  Safeguards, 6 FCC Rcd 7571 (1991) (BOC Safeguards Order), BOC Safeguards Order vacated in part and remanded,  yO-California v. FCC, 39 F.3d 919 (9th Cir. 1994) (California III), cert. denied, 115 S.Ct. 1427 (1995). include: (1) nondiscriminatory access to network features and functionalities;   (2) restrictions on the use of Customer Proprietary Network Information ("CPNI"); (3) network   iinformation disclosure rules; (4) nondiscrimination in the provision, installation, and maintenance   of services as well as nondiscrimination reporting requirements; and (5) cost accounting  XK-  safeguards. We tentatively conclude that all Computer III nonstructural safeguards must be   applied to meet our obligation under the 1996 Act. We seek comment on this tentative   conclusion. We also seek comment on whether there are other nonstructural safeguards that,  X-while not explicitly specified in the Computer III, should be applied to BOC payphones.  X-  ` ` :59.  Currently, the Commission regulates BOC provision of enhanced services   through Comparably Efficient Interconnection ("CEI") and Open Network Architecture ("ONA")   requirements that require unbundled nondiscriminatory access to BOC network features and" R,=(=(JJ"  X-  functionalities.|@ Xy-  ԍ#X\  P6G;IP#Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1 (1988) (BOC ONA Order), recon.,  yOb-  5 FCC Rcd 3084 (1990) (BOC ONA Reconsideration Order); 5 FCC Rcd 3103 (1990) (BOC ONA Amendment  yO*-  Order), erratum, 5 FCC Rcd 4045, pets. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993), recon.,  yO-  K8 FCC Rcd 97 (1993) (BOC ONA Amendment Reconsideration Order); 6 FCC Rcd 7646, 764950 (1991) (BOC  yO-  <ONA Further Amendment Order); 8 FCC Rcd 2606 (1993) (BOC ONA Second Further Amendment Order), pet.  yO-for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993).| Pursuant to these requirements, BOCs must file a servicespecific CEI plan  X-  before offering any enhanced service on an integrated basis.a@ X-ԍX#X\  P6G;IP#Phase I Order, 104 FCC 2d at 964965.(#Ƌ A BOC must demonstrate in its   KCEI plan how it would provide competing enhanced service providers (ESPs) with "equal access"  X-  to all basic underlying network services the BOC used to provide its own enhanced services.@ X~ -ԍ#X\  P6G;IP#See Phase I Order, 104 FCC 2d at 1036.   .Subsequently, the Commission required BOCs to develop and implement ONA plans detailing  X-  more fundamental unbundling of their basic network services.sy @ X- ԍ#X\  P6G;IP#Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services,  yO-  Notice of Proposed Rulemaking, 10 FCC Rcd 8360, 8372, para. 17 (1995) ("Computer III Further Remand  yO-Proceedings"). s ONA requires further   unbundling of network elements than under CEI because it is not limited to those elements  X_-  =associated with specific BOC enhanced services._ @ X-ԍ#X\  P6G;IP#Id.#x6X@`7>fX@#ш In 1993, the Common Carrier Bureau lifted   -structural separation requirements after each BOC demonstrated that its ONA plan complied with  X1-  the BOC Safeguards Order. 1@ X- kԍ#X\  P6G;IP#See Bell Atlantic's Notice and Petition for Removal of the Structural Separation Requirement and Waiver  yO-  of Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 7 FCC Rcd 3877 (1992) (Bell  yOH-  Atlantic Order); Southwestern Bell Telephone Company Notice and Petition for Removal of the Structural Separation   wRequirement and Waiver of Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 7 FCC  yO-  Rcd 7294 (1992) (SWBT Order); US West Notice and Petition for Removal of the Structural Separation Requirement   and Waiver of Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 7 FCC Rcd 3639  yOh-  y(1992) (US West Order); Ameritech Operating Companies Notice and Petition for Removal of the Structural   KSeparation Requirement and Waiver of Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882,  yO-  Phase I, 7 FCC Rcd 4104 (1992) (Ameritech Order); New York Telephone Company and New England Telephone   Company Notice and Petition for Removal of the Structural Separation Requirement and Waiver of Certain State  yO -  Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 7 FCC Rcd 8633 (1992) (NYNEX Order);   ,Pacific Bell and Nevada Bell Notice and Petition for Removal of the Structural Separation Requirement and Waiver  yO"-  of Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 8 FCC Rcd 3982 (1993) (Pacific  yO"-  Order); BellSouth Corporation Notice and Petition for Removal of the Structural Separation Requirement and Waiver   jof Certain State Tariffing Requirements, CC Docket Nos. 90623 and 882, Phase I, 8 FCC Rcd 4864 (1993)  yOp$-(BellSouth Order). Following the California III court decision, the Commission has   \continued to require BOCs to file CEI plans for each individual enhanced service it offers in addition to fulfilling the access requirements of its ONA plan. " !,=(=(JJ@ "Ԍ X- ` ` b. BOC CEI Plans   X-  ` ` ;60.  To ensure BOC compliance with the Computer III and ONA requirements,   we propose to require that each BOC file, within 90 days of the effective date of the order in this   proceeding, an initial CEI plan describing how it intends to comply with the CEI equal access   -parameters and nonstructural safeguards for the provision of payphone services. Thereafter, the   ZBOCs may integrate the filing of information on payphone services unbundling and nonstructural   jsafeguards with their ongoing ONA filings. Generally, in a CEI plan, a BOC must describe how   it intends to comply with the CEI "equal access" parameters for the specific payphone service it  X1-  intends to offer. The CEI equal access parameters include: interface functionality; unbundling   of basic services; resale; technical characteristics; installation, maintenance, and repair; end user   ]access; CEI availability; minimization of transport costs; and availability to all interested  X -  customers or enhanced service providers. @ Xe -ԍ#X\  P6G;IP#Phase I Order, 104 FCC 2d at 10391043. We discuss those parameters in more detail below.   LFor each parameter listed, we seek comment on whether that particular CEI requirement should   apply to a BOC's provision of payphone service. In addition, a BOC must describe in a CEI plan   how it will handle CPNI; network disclosure; and nondiscrimination in the provision of   .installation, maintenance, and quality of service. Because the 1996 Act requires that we apply  Xy-  /safeguards that are equal to those set forth in Computer III "at a minimum,"tyy@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(C).t we also seek   comment on any other parameters or requirements for BOC payphone service that, while not listed in this Notice, are consistent with the intent of the 1996 Act.  X- & ` ` <61.  Under Computer III and ONA, BOCs must provide comparably efficient   yinterconnection (CEI) to unbundled network features and functionalities. The Commission has   yspecified seven parameters to judge whether a BOC is providing CEI. We tentatively conclude   that these CEI parameters should apply to BOC provision of basic payphone services. Thus, we   propose to require that the BOCs specify how they will provide CEI for payphone services in the  X-  /payphone CEI plan for the following parameters: (1) Interface functionality. A BOC would   "make available standardized hardware and software interfaces that are able to support   -transmission, switching, and signalling functions identical to those utilized" in its own payphone  Xe-  .services.e*@ X@ -ԍ#X\  P6G;IP#Phase I Order, 104 FCC 2d at 1039. (2) Technical Characteristics.  A BOC would provide basic services with technical   characteristics that are equal to the technical characteristics it uses for its own payphone  X7-  services.j7@ X#-ԍ#X\  P6G;IP#Id. at 1041.j (3) Installation, Maintenance, and Repair.  The time for installation, maintenance and   Lrepair of the basic services and facilities included in a CEI offering would be the same as those  X -  the BOC provides to its own payphone service operations.a @ XF'-ԍ#X\  P6G;IP#Id.a (4) Resale. A BOC's payphone" "= ,=(=(JJy"   service operations would take the basic services used in its payphone service offerings at their   \unbundled tariffed rates to prevent improper costshifting to regulated operations and anti X-  ycompetitive pricing in unregulated markets."j@ XK-ԍ#X\  P6G;IP#Id. at 1040.j (5) End User Access. A   BOC would provide to   Lall end users the same capabilities to use abbreviated dialing or signalling to activate or obtain   [access to payphone services that utilize its facilities. This parameter would require the BOC to   provide end users equal opportunities to obtain access to basic facilities through derived channels,  Xv-  [whether they use the payphone service offerings of the BOC or of a competing provider.avy@ X -ԍ#X\  P6G;IP#Id.a (6)  X_-  \CEI Availability.  A BOC's CEI offering would be available and fully operational on the date   xthat it offers its corresponding payphone service to the public. That parameter also would require   the BOC to provide a reasonable time prior to that date when prospective users of the CEI   offering can utilize the CEI facilities and services for purposes of testing their payphone service  X -  offerings.a *@ X-ԍ#X\  P6G;IP#Id.a BOCs would be prevented from restricting the availability of the CEI offering to  X -  Zany particular class of customer or payphone service competitor.j @ Xx-ԍ#X\  P6G;IP#Id. at 1042.j (7)   Minimization of Transport  X -  Costs. A BOC would provide competitors with interconnection facilities that minimize transport  X -costs.a @ X-ԍ#X\  P6G;IP#Id.a  X -  X- d ` ` =62.  In its CEI plan, a BOC would explain how it would unbundle basic   Lpayphone services. Thus, a BOC would indicate how it plans to unbundle, and associate with   .a specific rate element in the tariff, the basic services and basic service functions that underlie  XK-  its provision of payphone service.jK= @ X9-ԍ#X\  P6G;IP#Id. at 1040.j Nonproprietary information used by the BOC in providing  X4-  the unbundled basic services would be made available as part of CEI.a4 @ X-ԍ#X\  P6G;IP#Id.a In addition, any options   =available to the BOC in the provision of such basic services or functions would be included in  X-  the unbundled offerings.a @ XV"-ԍ#X\  P6G;IP#Id.a As discussed above,rP@ X$-ԍ#X\  P6G;IP#See para. 44, above.r we tentatively conclude that all incumbent   LEC payphones should be treated as detariffed CPE. With this treatment, incumbent LECs must   make payphone services available to customers on an individual, unbundled basis. We seek"#,=(=(JJ"   comment on whether this tentative conclusion concerning all incumbent LECs would satisfy this aspect of the nonstructural safeguards for BOC payphones.  X-  ` ` >63.  In a separate proceeding, the Commission is currently examining a carrier's  X-  obligations under the CPNI provisions of the Act.0@ X- ԍ#X\  P6G;IP#Implementation of the Telecommunications Act of 1996, Telecommunications Carriers' Use of Customer Proprietary Network Information and Other Customer Information, CC Docket No. 96115 (rel. May 17, 1996).0 We tentatively conclude that the rules we   adopt in that proceeding should apply to a BOCs' provision of payphone service. We invite comments on this tentative conclusion.  XH- 4 ` ` ?64.   We tentatively conclude that the BOCs must comply with the Computer III   and ONA network information disclosure requirements. The BOCs cannot design new network  X -  services or change network technical specifications to the advantage of their own payphones. A@ X -ԍ#X\  P6G;IP#BOC Safeguards Order, 6 FCC Rcd at 760204.   -Pursuant to these rules, the BOCs would disclose information about changes in their networks or  X -  >new network services at two different points in time.2A @ X- ?ԍ#X\  P6G;IP#Report and Order, Amendment to Sections 64.702 of the Commission's Rules and Regulations (Third  yOx-  JComputer Inquiry), 2 FCC Rcd 3072, 308788 (1988). The network information subject to disclosure includes only  yO@-  network changes or new basic services that affect the interconnection of enhanced services with the network. Id. at 3097. These network disclosure rules parallel those for CPE.2 First, disclosure would occur at the   "make/buy" point: when a BOC decides to make for itself, or procure from an unaffiliated entity,   Many product whose design affects or relies on the network interface. Second, a BOC would   publicly disclose technical information about a new service 12 months before it is introduced.   If the BOC could introduce the service within 12 months of the make/buy point, it would make   a public disclosure at the make/buy point. The public disclosure, however, would not occur less  Xb-  than six months before the introduction of the service.b@ X-ԍ#X\  P6G;IP#Computer III, 3 FCC Rcd 1150, 1164 (1988). We also seek comment on whether the  XK-  network information disclosure requirements we have proposed in the Implementation of the  X4-  iLocal Competition Provisions in the Telecommunications Act of 1996 proceeding should augment  X-  or replace the application of the Computer III disclosure requirements proposed in this  X-proceeding." @ Xc - ԍ#X\  P6G;IP#Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Notice of Proposed Rulemaking, CC Docket 9698, FCC 96182 (rel. April 19, 1996) at paras. 189194."  X- r ` ` @65.   In addition, we tentatively conclude that BOCs must comply with the  X-  Computer III and ONA requirements regarding nondiscrimination in the quality of service,   installation, and maintenance. BOCs must indicate in their CEI plans how they would comply   .with these requirements. BOCs must also report quarterly on nondiscrimination in installation   and maintenance, semiannually on tariffed payphone services, and annually on any changes to"|$% ,=(=(JJ2"  X-  its payphone CEI plan to comply with other Computer III and ONA requirements. BOCs must   ]also annually certify with regard to nondiscrimination in the quality of service. We seek  X-comment on how these reporting requirements should apply to BOC payphones.  X-  ` ` A66.  We will seek comment in a separate proceeding on whether we should  X-  xapply accounting safeguards identical to those safeguards adopted in Computer III to prevent the   subsidization of payphone services by BOC telephone exchange service or exchange access   operations, or whether additional accounting safeguards are necessary to fulfill our responsibilities under Sections 276(a)(1) and (b)(1)(C).  X -  X -   D.   ABILITY OF BOCs TO NEGOTIATE WITH LOCATION PROVIDERS ON THE    X -  PRESUBSCRIBED INTERLATA CARRIER  X -  X - 1. The 1996 Act  X- ` ` B67.  Section 276(b)(1)(D) directs the Commission to  _Xprovide for Bell operating company payphone service providers to have the same  ~right that independent payphone providers have to negotiate with the location  _provider on the location provider's selecting and contracting with, and, subject to  nthe terms of any agreement with the location provider, to select and contract with,  Dthe carriers that carry interLATA calls from their payphones, unless the  2Commission determines in the rulemaking pursuant to this section that it is not in  X-the public interest[.]z@ XQ-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(D).z   X-  ` ` C68. Section 276(b)(3) states that "[n]othing in this section shall affect any   existing contracts between location providers and payphone service providers or interLATA or   intraLATA carriers that are in force and effect as of the date of enactment of the   KTelecommunications Act of 1996." The legislative history of Section 276 states "that the location   provider has the ultimate decision-making authority in determining interLATA services in  X7-connection with the choice of payphone providers."v7y@ Xa -ԍ#X\  P6G;IP#Conference Report at 44.v " %*,=(=(JJ\"  X- 2. Discussion   X- ` ` D69.  In the years immediately following divestiture, the BOCs routed all 1+ and  X-  \0+ interLATA traffic from their payphones to AT&T.y@ X- @ԍ#X\  P6G;IP#The divesture decree allocated to the BOCs ordinary coin and "ChargeaCall" (credit card) public  yO-  payphones. See Plan of Reorganization, United States v. Western Elec. Co., No. 820192, slip op. at 83 (D.D.C.  yO-Dec. 16, 1982); United States v. Western Elec. Co., 569 F. Supp. at 1102 n. 195. This practice continued until 1988,   when the U.S. District Court for the District of Columbia found that the solution most in keeping   with the Decree's terms was a "billing party pays" system where "the billed party [would] select  X_-  the interexchange carrier of his choice simply by dialing 0+."i_ @ X -ԍ#X\  P6G;IP#Id. at 360.i But the Court also recognized   >that the technology for such a system would not be available for several years. The Court,   therefore, adopted an interim solution in which the owners or proprietors of the premises on  X -  which BOC payphones are located would select the presubscribed IXC for those telephones. @ X- ԍ#X\  P6G;IP#Id. This same condition was later extended to GTE. United States v. GTE Corp., No. 831298, slip op. at 45 (D.D.C. Dec. 23, 1988).  X -This solution is still in force today.o 3@ X-ԍ#X\  P6G;IP#See n. 23, above.o  X - ` ` E70.  While the location provider selects the OSP for BOC and GTE payphones,   all other payphone providers are able to select the OSP serving their payphones. As discussed   above, payphone providers, both PPOs and independent LECs, compete in the market for   lpayphone services by offering the location provider a commission on coin and 0+ traffic   originating from the payphones located on the location provider's premises. In turn, payphone   providers earn revenue by reselling local and 1+ long distance service and by contracting for 0+  XK-  ytraffic with OSPs that pay commissions on 0+ traffic.K @ X-ԍ#X\  P6G;IP#Second Report and Order, 7 FCC Rcd at 3251. The legislation directs the Commission   Lto provide similar rights to BOCs, unless the Commission determines that it is not in the public interest.  X- ` ` F71.  We seek comment on the extent to which extending to the BOCs the same   rights that all other payphone providers have to select and contract with the interLATA carriers  X-  that carry interLATA traffic from their payphones would be "not in the public interest."z @ X$-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(D).z Will   these rights benefit the general public by increasing competition, available services, and overall   efficiency? Will carrierselection rights help to foster increased competition and market parity   that will "promote the widespread deployment of payphone services to the benefit of the general"|&F ,=(=(JJP"  X-  jpublic"?q@ Xy-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1).q Parties commenting on this issue should also address how any Commission action   with respect to a BOC's right to select and contract with interLATA carriers would be consistent   with the other goals enunciated in Section 276, such as promoting regulatory parity between   zBOCs and independent payphone providers, and that the location provider has the ultimate   [decisionmaking authority in determining interLATA services in connection with the choice of payphone providers.  X_- ` ` G72. We also seek comment on whether the ability to select the interLATA   carrier serving their payphones is likely to permit the BOCs to behave anticompetitively in the   -payphone market in the absence of safeguards to prevent cost misallocations and discrimination.   For example, if the Commission ultimately provides the BOCs with carrierselection rights,   should we be concerned that the BOCs, if they are able to provide interLATA service, will direct   such service to themselves? In addition, we seek comment on whether the structural and   accounting safeguards mandated under Sections 271 and 272 of the 1996 Act, and any   Commission rules implementing these safeguards, are sufficient to prevent anticompetitive abuses.   [If not, we seek comment on whether the Commission should adopt rules to prevent BOCs from   <giving more favorable interLATA rates to their own payphone operations than to their payphone   competitors. Parties are asked to specify what safeguards would be necessary to prevent potential   janticompetitive behavior by the BOCs in this regard. We also seek comment on to what extent   a BOC not authorized to provide inregion interLATA service under Section 271 of the 1996 Act   yshould be allowed to participate in the selection of the interLATA carrier, especially if the BOC   has a nonattributable interest in the interLATA carrier, such as an option to purchase or an   ?agreement to merge. Parties commenting on the BOCs' role in selecting a presubscribed   interLATA carrier for BOC payphones should include a detailed analysis of why a BOC's   xparticipation, together with the location provider, in the selection of the presubscribed interLATA carrier is or is not in the public interest.  X- a` ` H73.  We tentatively conclude that, Section 276(b)(3) of the Act, which provides   jthat "nothing in this section shall affect any existing contracts between location providers and   Lpayphone service providers or interLATA or intraLATA carriers that are in force and effect as   =of the date of enactment of the [Act]," grandfathers all contracts in existence as of February 8,   1996. In addition to seeking comment on this tentative conclusion, however, we also seek   comment on what should be considered a Section 276(b)(3) contract for purposes of Section   M276(b)(1)(D). For example, should a location provider's letter of authorization ("LOA") for a   particular IXC be considered a "contract"? We tentatively conclude that a Section 276(b)(1)(D)   zcontract must be a lawful agreement where both parties intended to be bound. Commenters   \should address the issue of whether an LOA or other such similar documents fit within this  X!-definition. "#'y,=(=(JJe""Ԍ X-  E. ABILITY OF PAYPHONE SERVICE PROVIDERS TO NEGOTIATE WITH   X- LOCATION  PROVIDERS ON THE  PRESUBSRIBED INTRALATA CARRIER  X- 1. The 1996 Act  X- ` ` I74.  Section 276(b)(1)(E) directs the Commission to "provide for all payphone   service providers to have the right to negotiate with the location provider on the location   provider's selecting and contracting with, and, subject to the terms of any agreement with the   Llocation provider, to select and contract with, the carriers that carry intraLATA calls from their  X1-payphones.1@ X -ԍ#Xj\  P6G; XP##X\  P6G;IP#47 U.S.C.  276(b)(1)(E).#x6X@`7>fX@#  X - 2. Discussion  X - ` ` J75.  Currently, in some states, competitive payphones are required to route   \intraLATA 0+ and 0- calls, and sometimes other intraLATA calls, to the incumbent LEC. In   contrast, Section 276(b)(1)(E) requires us to prescribe regulations to allow PSPs to negotiate with   the location provider on the selecting and contracting with the intraLATA carrier serving the   payphone. In accordance with this requirement, we tentatively conclude that all PSPs, whether   LECs or PPOs, should be given this right to negotiate with location providers concerning the   intraLATA carrier. We also tentatively conclude that the intraLATA carrier presubscribed to a   payphone should be required to meet our minimum standards for the routing and handling of  X-emergency calls.Ay@ XG- mԍ#X\  P6G;IP#47 C.F.R.  64.706. We have previously recognized that "states are free to adopt more stringent   requirements" in this area. Policies and Rules Concerning Operator Service Providers and Call Aggregators, Report   ;and Order and Further Notice of Proposed Rulemaking, CC Docket No. 94158, FCC 9675 at para. 22 (rel. March 5, 1996). We seek comment on these tentative conclusions.  X- F. ESTABLISHMENT OF PUBLIC INTEREST PAYPHONES  X- 1. The 1996 Act  X|-  S` ` K76.  Section 276(b)(2) requires the Commission to "determine whether public   interest payphones, which are provided in the interest of public health, safety, and welfare, in   locations where there would otherwise not be a payphone, should be maintained, and if so, ensure  X7-that such public interest payphones are supported fairly and equitably."7@ Xj$-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(2).#x6X@`7>fX@#ј "(3,=(=(JJ<"Ԍ X- 2. Discussion  X-  ` ` L77.  Because Section 276(b)(2) directs the Commission to "determine whether  X-  public interest payphones ... should be maintained,"@ X4-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(2).#x6X@`7>fX@#ј we seek comment on whether it would be   in the public interest to maintain payphones provided in the interest of public health, safety, and  X-welfare, in locations where there would otherwise not be a payphone."y@ X-ԍ#X\  P6G;IP#Id.#X\  P6G;IP#ш  X_- ` ` M78.  If we determine that public interest payphones should be maintained, then  XH-  \Section 276(b)(2) gives the Commission statutory authority to determine further how public   Linterest payphones should be regulated. As with our jurisdiction over local call rates, we seek   comment on a range of options for maintaining public interest payphones. One option would be   <for the Commission to prescribe federal regulations for the maintenance of these payphones. We   iseek comment on whether and how this approach would serve the public interest, and on whether Section 276 requires the Commission to assume this responsibility.  X - a` ` N79.  A second option would be for us to establish national guidelines for public   interest payphones. We seek comment on whether there are any state initiatives or programs   concerning public interest payphones that the Commission could use as a model for national   guidelines. For example, California has established an extensive statewide program for the  XK-  kdesignation and funding of public interest payphones.KK*@ X&- ԍ#X\  P6G;IP#See California Public Utilities Commission, Workshop Report on Customer Owned Pay Telephone Service  yO-in Response to Commission Decision 9006018 (rel. Dec. 21, 1993).#x6X@`7>fX@#K Commenters supporting national   Lguidelines should specify what factors the guidelines should consider and how the guidelines should be applied on a nationwide basis.  X- C` ` O80. In the event that the Commission establishes national guidelines for public   interest payphones, we seek comment on what is to be considered a "public interest payphone."   The Joint Explanatory Statement for Section 276 clarifies that the term "public interest  X-  payphones" refers to payphones where payphone service would not otherwise be available as a  X-  [result of the operation of the market.v@ X -ԍ#X\  P6G;IP#Conference Report at 43.v "Thus, the term does not apply to a payphone located   near other payphones, or to a payphone that, even though unprofitable by itself, is provided for  Xe-  a location provider with whom the payphone provider has a contract."eT@ Xj$-ԍ#X\  P6G;IP#Id. (emphasis in original).#x6X@`7>fX@#ѡ The Commission has  XN-  previously examined, in the context of the PTC petition,rN @ X'-ԍ#X\  P6G;IP#See para. 43, above.r the availability of payphones in"N) ,=(=(JJ"   ]unprofitable locations where public policy objectives would call for such availability. In  X-  proposing a definition of public interest payphones, several commenters in that proceeding would   include certain payphones that generate very little revenue or that operate at a financial loss.   They note that these payphones are generally in isolated locations or in areas with a high  X-  Mincidence of vandalism.@ X-ԍ#X\  P6G;IP#See, e.g., NYNEX Reply to PTC Petition at 4. This definition from commenters does not take into account the   congressional directive that one must look to whether a particular payphone is part of a "package"   of payphones in determining whether a payphone is a public interest payphone. We seek   comment, therefore, on whether a "public interest payphone" should be defined as a payphone   {(1) that operates at a financial loss, but also fulfills some public policy objective, such as   zemergency access; and (2) even though unprofitable by itself, is not provided for a location  X -  provider with whom the PSP has a contract. y@ XD -ԍ#X\  P6G;IP#See Conference Report at 43. Under this definition, many payphones that fulfill   important public policy objectives would not be included because they would be paid for, in the   form of lower commission payments, by the entity that is requesting that a payphone be placed   in a particular location to fulfill a public policy objective. This proposed definition would not   <necessarily decrease the number of payphones in existence fulfilling public policy objectives, but   would require the entities that most directly benefit from these low profitability payphones to   assume the cost of their availability. We seek comment generally on this possible definition. Parties may specify whether the definition should be narrower, broader, or more specific.  XK- C ` ` P81. A third option for maintaining public interest payphones would be to defer   to the states to determine, pursuant to their own statutes and regulations, which payphones should   [be treated as "public interest payphones." This approach would treat the provision of "public   zinterest payphones" as primarily a matter of state concern. We seek comment on whether it   would be consistent with the statute and better serve the public interest to allow the states to develop their own guidelines regarding which payphones are "public interest payphones."  X- % ` ` Q82.  With regard to a funding mechanism to support public interest payphones  X-  "fairly and equitably,"q*@ Xn-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(2).q we seek comment on whether such a mechanism should be handled in   conjunction with how public interest payphones are maintained, whether through federal   regulations, federal guidelines for the states, or by the states themselves. In the alternative, would   it serve the public interest for the Commission and the states to administer different portions of   -a public interest payphone program? For example, should the states determine which payphones   .are "public interest payphones," yet have the FCC prescribe guidelines to govern the funding  X -  mechanism for those payphones? @ X%- 0ԍ#X\  P6G;IP#As one example, providers of public interest payphones could be eligible to draw support from a fund similar to that used to support Telephone Relay Service. Commenters that support a Commissionmandated funding   .mechanism should detail how the mechanism would function, including who would be eligible"*T,=(=(JJZ"   ito receive funding, who would be responsible for paying into the fund, and who would administer the funding mechanism.  X- G. OTHER ISSUES  Xv- ` ` R83. In this section, we address a number of issues that, while not specifically mandated by the 1996 Act, are ancillary to the new rules proposed in this NPRM.  X1- 1. Dialing Parity  X -  ` ` S84.  Section 251(b)(3) states that all LECs have the duty to "provide dialing  X -  parity to competing providers of telephone exchange service and telephone toll service."s @ Xe -ԍ #X\  P6G;IP# ` ` 47 U.S.C.  251(b)(3).s We   =tentatively conclude that the benefits of dialing parity requirements that we adopt pursuant to  X -  Section 251(b)(3) of the Act should extend to all payphone location providers.sy y@ X-  ԍ #c PE37P# ` ` See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996,   Notice of Proposed Rulemaking, CC Docket No. 9698, FCC No. 96182, paras. 202219 (rel. April 19, 1996) (discussion of dialing parity requirements).s We seek   \comment on this tentative conclusion and on other methods for achieving dialing parity for   payphone location providers, and users, of payphones that are consistent with the definition of   zdialing parity under Section 3(15) of the 1934 Act, as amended. As a related matter, we seek   =comment on whether the Commission should extend the type of intraLATA carrier unblocking  XK-requirements established in TOCSIA to all local and long distance calls.K@ X-ԍ#X\  P6G;IP# ` ` See generally 47 U.S.C.  226. #Xj\  P6G; XP#  X4-  X- 2. Letterless Keypads   X-  X- ` ` T85. At least two distributors of payphone equipment have been promoting   [letterless keypads. Such keypads defeat callers' attempts to reach their OSP of choice through  X-  a "vanity" access number, such as MCI's "1-800-COLLECT" or AT&T's "1-800-CALL-ATT"   .and "10ATT," that can be easily remembered by callers. Standard payphone keypads contain  X-  ycertain letters of the alphabet that correspond to each digit (e.g., A, B, and C correspond to the   Zdigit "2"). A "letterless" keypad does not include any letters associated with the requisite digits.   We are concerned that use of letterless keypads may frustrate the intent of Congress, as expressed   .in TOCSIA, to permit callers to reach the OSP of their choice from payphones. In addition, we   are concerned that these keypads ultimately frustrates congressional intent, as expressed in the   01996 Act, "to promote competition among payphone service providers and promote the  X -widespread deployment of payphone services to the benefit of the general public[.]"n k@ X%'-ԍ#X\  P6G;IP#47 U.S.C.  276(b).n (#(#" + ,=(=(JJ["Ԍ X- ԙ ` ` U86.  To promote consumer access to OSPs, TOCSIA required the unblocking  X-  of 800 and 950 access numbers at aggregator locations and directed the Commission to mandate   the unblocking of 10XXX access codes and/or the establishment of 800/950 access numbers by  X-  each OSP.n@ X4-ԍ#X\  P6G;IP#47 U.S.C.  226(e).n In the succeeding years, some OSPs have chosen to use "vanity" dialing sequences   for access numbers. While we previously have found that the Commission does not have   conclusive data showing a net change in the average number of access code calls (both 10XXX  Xv-  and 800/950 access calls) originated by each competitive payphone each month,~vy@ X -ԍ#X\  P6G;IP#Second Further Notice at n. 123.~ payphone   Yindustry representatives have argued that use of "vanity" dialing sequences by payphone users has  XH-grown since their introduction.H*@ X# - \ԍ#X\  P6G;IP#See generally Petition for Expedited Relief by the American Public Communications Council, CC Docket No. 9135, filed September 2, 1993.  X - ` ` V87.  The Common Carrier Bureau staff has reviewed advertisements for letterless  X -  keypads that specifically refer to a "by-pass keypad" that "prevents dial around [calls]." We   ytentatively conclude that the use of letterless keypads violates both TOCSIA and the 1996 Act   {by preventing callers from accessing their OSP of choice. We seek comment on how the   Commission should take action to prohibit use of these "bypass" letterless keypads to restrict the  X -availability of "vanity" access numbers.  Xy- 3.  Other Pending Payphone Proceedings  Xb-  XK-   ` ` W88. Several proceedings pending before the Commission concern the rules   kgoverning the payphone industry. We tentatively conclude that it would further the public   zinterest to consolidate and address those proceedings within this rulemaking. The pending   proceedings are as follows: (1) Petition of the Public Telephone Council to Treat BOC   Payphones as CPE, DA 88-2055; (2) Policies and Rules Concerning Operator Service Access and   Pay Telephone Compensation, CC Docket. No. 91-35 (payphone compensation issues only); (3)   .Petition of Oncor Communications, Inc. Requesting Compensation for Competitive Payphone   Premises Owners and Presubscribed Operator Services Providers, DA 95-1921; and (4)  X-  Amendment of Section 69.2(m) and (ee) of the Commission's Rules to Include Independent   Public Payphones Within the "Public Telephone" Exemption from End User Common Line   Access Charges, RM 8723. Each of these proceedings addresses issues covered by Section 276   jof the Act. We seek comment on the implications of our tentative conclusion. Specifically, we   /wish to know which proceedings on the list commenters believe may be resolved here, and  X -  ]reasons for such opinions, and which proceedings should continue separately from this" ,,=(=(JJz"  X-  zrulemaking, and the reasons for those opinions.Zy@ Xy- Oԍ#X\  P6G;IP#Comments filed in the proceedings listed above will be incorporated into the record of the instant   proceeding. Therefore, to avoid redundancy, we advise commenters not to resubmit their past comments in response to this NPRM.Z We also conclude in this Notice that the  X-  iCommission need not address the Florida Payphone remand in a separate proceeding because the   Krules adopted in this proceeding will address the remand by ensuring that PSPs are compensated,  X-pursuant to the 1996 Act, for all intrastate and interstate calls, including subscriber 800 calls.#x6X@`7>fX@##Xj\  P6G; XP#  X- 4. Comments  and  Ex Parte Presentations   X_-  ` ` X89.  All interested may file comments on the issues set forth in this NPRM, on   which comment is specifically sought, by June 27, 1996, and reply comments by July  1Gi 8 1Gi , 1996.   All relevant and timely comments will be considered by the Commission before final action is   ytaken in this proceeding. To file formally in this proceeding, which involves issues concerning   the Commission's expedited implementation of the 1996 Act, participants must file an original,  X -  Kten copies, and the electronic version on disk of all comments and reply comments.  @ X- ԍ#X\  P6G;IP#Each disk must be a standard 3", labeled magnetic disk, formatted to be readable by highdensity 1.44 MB   ifloppy drives operating under MSDOS (3.X or later versions). Participants are encouraged to submit documents   wformatted in WordPerfect 5.1 for Windows. Otherwise, parties must submit the documents formatted in both ASCII   and any word processing program. Parties should submit clearly labelled disks, along with cover letters, directly to the Common Carrier Bureau, Enforcement Division. Comments   >and reply comments should be sent to the Office of the Secretary, Federal Communications   Commission, Washington, DC 20554. If participants want each Commissioner to have a personal   copy of their comments, an original plus fourteen copies must be filed. In addition, participants   should submit two additional copies directly to the Common Carrier Bureau, Enforcement   kDivision, Room 6008, 2025 M Street NW, Washington, D.C. 20554. The petition, comments,   yand reply comments will be available for public inspection during regular business hours in the   Dockets Reference Room (Room 230) of the Federal Communications Commission, 1919 M   Street, NW, Washington, DC 20554. Copies of the petition and any subsequently filed   documents in this matter may be obtained from ITS, Inc., 2100 M Street, NW, Suite 140, Washington, DC 20037, (202) 8573800.  X-  ` ` Y90. To facilitate review of comments and replies, both by parties and by   >Commission staff, we require that comments be no longer than seventyfive (75) pages and   replies be no longer than thirtyfive (35) pages, including exhibits, appendices, and affidavits of   zexpert witnesses. Empirical economic studies and copies of relevant state orders will not be   ]counted against these page limits. The page limits will not be waived and will be strictly   jenforced. Comments and replies must include a short and concise summary of the substantive   arguments raised in the pleading. Comments and replies must also comply with Section 1.49 and"N-,=(=(JJ"  X-  all other applicable sections of the Commission's rules.y@ Xy- ԍ#X\  P6G;IP#See 47 C.F.R.  1.49. However, we require here that a summary be included with all comments and replies,   although a summary that does not exceed three pages will not count toward the page limits. The summary may be  yO*-paginated separately from the rest of the pleading (e.g., as "i,ii"). Id. 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 also must clearly identify the specific portion of this Notice to which a particular comment or set of comments is responsive. If a portion of a party's   Zcomments does not fall under a particular topic listed in the outline of this Notice, such comments   .must be included in a clearly labelled section at the beginning or end of the filing. Parties may  Xv-  not file more than a total of ten (10) pages of ex parte submissions, excluding cover letters. This  X_-  /10 page limit does not include: (1) written ex parte filings made solely to disclose an oral ex  XH-  parte contact; (2) written material submitted at the time of an oral presentation to Commission   jstaff that provides a brief outline of the presentation; or (3) written material filed in response to  X -  direct requests from Commission staff. Ex parte filings in excess of this limit will not be considered as part of the record in this proceeding.  X - 4 ` ` Z91.  Parties are invited to submit, in conjunction with their comments or replies,   proposed text for rules that the Commission could adopt in this proceeding. Specific rule   proposals should be filed as an appendix to a party's comments or reply, and will not be counted   against the page limits set forth in the preceding paragraph. Such appendices may include only   proposed text for rules that would implement proposals set forth in the parties' comments and replies in this proceeding, and may not include any comments or arguments.  X4- S ` ` [92. This is a non-restricted notice and comment rule making proceeding. Ex   parte presentations are permitted, except during the Sunshine Agenda period, provided they are  X-disclosed as provided in Commission rules. @ X-ԍ#X\  P6G;IP#See generally 47 C.F.R.  1.1202, 1.1203, and 1.1206(a).   X-  5. Initial Paperwork Reduction Act Analysis  X-   ` ` \93.  This NPRM contains both proposed and modified information collections.   KAs part of its continuing effort to reduce paperwork burdens, we invite the general public and the   Office of Management and Budget (OMB) to take this opportunity to comment on the   information collections contained in this NPRM, as required by the Paperwork Reduction Act of   N1995, Pub. L. No. 104-13. Public and agency comments are due at the same time as other   =comments on this NPRM; OMB comments are due 60 days from the date of publication of this   NPRM in the Federal Register. 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" .,=(=(JJ"   ]the respondents, including the use of automated collection techniques or other forms of information technology.  X- s ` ` ]94.  Written comments by the public on the proposed and/or modified   >information collections are due June 26, 1996. Written comments must be submitted by the   NOffice of Management and Budget (OMB) on the proposed and/or modified information   ycollections on or before 60 days after date of publication in the Federal Register. In addition to   /filing comments with the Secretary, a copy of any comments on the information collections   Zcontained herein should be submitted to Dorothy Conway, Federal Communications Commission,   QRoom 234, 1919 M Street, N.W., Washington, D.C. 20554, or via the Internet to   >dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 - 17th Street,  X -N.W., Washington, D.C. 20503 or via the Internet to fain_t@al.eop.gov.  X -   6. Initial Regulatory Flexibility Act Analysis   X -  ` ` ^95.  Reason for Action: The Commission is issuing this NPRM to seek   comment on various issues concerning the deregulation of payphones owned by LECs, as mandated by Section 276 of the Telecommunications Act of 1996.  XK-  ` ` _96.  Objectives: To provide an opportunity for public comment and to provide a record for a Commission decision on the issues discussed in the NPRM.  X- 5 ` ` `97.  Legal Basis: The NPRM is adopted pursuant to Section 276 of the 1996 Act; Sections 1, 2, 4(i), and 226 of the Communications Act of 1934, as amended.  X- ` ` a98.  Description, potential impact, and number of small entities affected: Any   rule changes that might occur as a result of this proceeding could impact entities which are small   business entities, as defined in Section 601(3) of the Regulatory Flexibility Act. After evaluating   the comments in this proceeding, the Commission will further examine the impact of any rule   changes on small entities and set forth findings in the Final Regulatory Flexibility Analysis. The   \Secretary shall send a copy of this Notice of Proposed Rulemaking to the Chief Counsel for   Advocacy of the Small Business Administration in accordance with Section 603(a) of the  X -Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.  601, et seq. (1981).  X-  4 ` ` b99.  Reporting, recordkeeping, and other compliance requirements: The NPRM   !proposes to require the BOCs to follow nonstructural safeguards that include reporting   requirements. However, the BOCs are not small business entities as defined in Section 601(3) of the Regulatory Flexibility Act.  X#- q ` ` c100.  Federal rules which overlap, duplicate, or conflict with the Commission's  Xh$-proposal: None.  X:&-  ` ` d101. Significant alternatives minimizing the impact on small entities consistent  X#'-with the stated objectives: The NPRM solicits comments on a variety of alternatives. "#'/,=(=(JJ%"Ԍ X- &ԙ` ` e102.  IRFA Comments: Written public comments are requested on the IRFA.   These comments must be filed in accordance with the same filing deadlines as comments on the   rest of the Notice, but they must have a separate and distinct heading designating them as   responses to the Initial Regulatory Flexibility Analysis. The Secretary 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 in accordance with paragraph 603(a)  Xv-of the Regulatory Flexibility Act.v@ X-ԍ#X\  P6G;IP#Pub.L. No. 96-354, 94 Stat. 1164, 5 U.S.C. Section 601, et seq. (1980).  X1-}/IV. CONCLUSION  X -  X -   ` ` f103. This Notice proposes rules that would accomplish the goals mandated by   Congress in Section 276 of the Telecommunications Act of 1996: (1) compensation for "each  X -  -and every completed intrastate and interstate call using [a] payphone[;]"t y@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(A).t (2) reclassification of   [LEC payphones and a termination of all subsidies, including "access charge payphone service  X -  elements[;]"t *@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(B).t (3) prescription of safeguards for Bell Operating Company ("BOC") payphones;t @ X3-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(C).t   (4) promulgation of rules permitting the BOCs to negotiate with the payphone location provider  Xy-  about a payphone's presubscribed interLATA carrier;ty@ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(E).t (5) promulgation of rules permitting all   jpayphone providers to negotiate with the location provider about a payphone's presubscribed  XK-  intraLATA carrier;tK= @ X9-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(1)(E).t and (6) establishment of a class of public interest payphones to be located  X4-  "where there would otherwise not be a payphone."q4 @ X-ԍ#X\  P6G;IP#47 U.S.C.  276(b)(2).q We seek comment on our tentative conclusions detailed throughout this Notice.  X-  X- 6V. ORDERING CLAUSES ă  X-   ` ` g104.  Accordingly, IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i)  /4(j), 201205, 226, and 276 f the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201205, 226, and 276 that a Notice of Proposed Rulemaking is ADOPTED. "e0 ,=(=(JJ1"Ԍ X- q ` ` h105.  IT IS FURTHER ORDERED that the Chief of the Common Carrier Bureau   is delegated authority to require the submission of additional information, make further inquiries,   \and modify the dates and procedures, if necessary, to provide for a fuller record and a more efficient proceeding.  X- ` ` i106.  IT IS FURTHER ORDERED that this Notice of Proposed Rulemaking is   the Commission's disposition of all matters remanded by the U.S. Court of Appeals for the  X_-  District of Columbia Circuit in Florida Public Telecommunications Ass'n. v, FCC, 54 F.3d 857 (D.C. Cir. 1995).  X - ` ` j107.  IT IS FURTHER ORDERED that the Secretary shall send a copy of this   NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business   Administration in accordance with paragraph 603(a) of the Regulatory Flexibility Act, Pub. L.  X -No. 96-354, 94 Stat. 1164, 5 U.S.C.  601, et seq. (1981). ` `  hh,VFEDERAL COMMUNICATIONS COMMISSION ` `  hh,VWilliam F. Caton ` `  hh,VActing Secretary  ?<#x6X@`7>fX@#