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Without guidance from the Commission, carriers  !could differ regarding into which existing account the revenues and expenses should be  X4 !recorded. Za yO' x ԍFor example, revenues received for providing interconnection could be recorded in Account 5230 Miscellaneous revenue, Account 5250 Rent revenue, or Account 5264 Other incidental regulated revenue.  We seek uniformity in reporting to facilitate comparisons among ILECs and to  !calculate and track investments and performance related to these services. In this section of the  !NPRM, we propose new Part 32 accounts and additional subsidiary recordkeeping requirements  Xv4 !for reporting revenues and costs associated with interconnection arrangements.\va {O ' x ԍWe note that the pricing provisions of the Local Competition Order have been vacated. See Iowa Util. Bd.  {O ' !t v. FCC, supra note 2. Regardless of how prices for interconnection are determined, new Part 32 accounts and subsidiary recordkeeping requirements are necessary to meet the goals set forth in paragraph 6. We also  !tentatively conclude that new accounts are not necessary for recording the revenues and costs associated with sharing infrastructure.  X 4 ( S6.` ` These proposed accounts and subsidiary recordkeeping requirements are intended  !to achieve the following goals: (1) to facilitate uniform reporting among ILECs with respect to  !interconnection and infrastructure sharing arrangements; (2) to enable the Commission to monitor  !land assess the economic impact of the development of local exchange and exchange access  !Icompetition and the deployment of advanced telecommunications capabilities; (3) to ensure that  X 4 !regulated ratepayers do not bear the costs of ILECs' competitive activities;G a yO.'ԍ47 U.S.C.  254(k).G and (4) to assist  !Commission decisionmaking concerning ILEC petitions for forbearance from regulation pursuant  !to section 10 of the Act by making information concerning ILEC performance related to these  !services accessible and verifiable. We tentatively conclude that the proposed accounts will  !lprovide the Commission with useful information without imposing undue burdens on carriers.  !We seek comment on this tentative conclusion. We also seek comment on whether the accounts  !Rdescribed below are adequate to meet the Commission's objectives and we invite alternative proposals.  X' A.Revenues and Expenses  X4 ( 7.` ` Interconnection and Access to Unbundled Network Elements . Section 251(c)(2)  X4 !lof the Act requires ILECs to provide interconnectionf a {O#' xV ԍ"Interconnection" refers to the physical linking of two networks for the mutual exchange of traffic. Local  {Ou$'Competition Order, 11 FCC Rcd at 15590. to any requesting telecommunications" 0*%%ZZ"  !carrier at any technically feasible point on rates, terms, and conditions that are just, reasonable,  X4 !and nondiscriminatory.Ja yOb'ԍ47 U.S.C.  251(c)(2).J In addition to these requirements, section 251(c)(3) of the Act requires  !ILECs to provide requesting telecommunications carriers with nondiscriminatory access to  !network elements on an unbundled basis "in a manner that allows requesting telecommunications  !carriers to combine such [unbundled] elements in order to provide . . . telecommunications  X4service."JXa {O'ԍId.  251(c)(3).J  X_4 ( z8.` ` We propose a new Part 32 revenue account Account 5071, Interconnection and  !access to unbundled network elements to record all revenues received by an ILEC from  !Mcompeting local exchange carriers (CLECs), interexchange carriers (IXCs), and any other carriers  !for providing interconnection and access to unbundled network elements pursuant to sections  !251(c)(2) and 251(c)(3). This NPRM also proposes a new Part 32 expense account Account  !6551, Interconnection and access to unbundled network elements to record the costs of  !9purchasing interconnection and access to unbundled network elements from other  !Ztelecommunications carriers pursuant to section 251. We seek comment on the proposed accounts  !and account descriptions. In particular, we seek comment on our proposal to include the amounts  !received for providing both interconnection and access to unbundled network elements in a single  !Vrevenue account and ask whether distinct accounts are necessary to achieve the goals set forth  !+above. Similarly, we ask whether distinct expense accounts are necessary to segregate the  !+amounts paid to obtain interconnection from the amounts paid to obtain access to unbundled network elements.  X4 ( 9.` ` The Local Competition Order established that the minimum set of elements that  !must be unbundled by ILECs includes unbundled access to their local loops, network interface  !devices, local and tandem switching capability, interoffice transmission facilities, signaling and  !callrelated databases, operations support systems functions, and operator services and directory  X4 !assistance facilities.\a {OE' xI ԍLocal Competition Order, 11 FCC Rcd at 15683, para. 366, supra note 2, aff'd Iowa Util. Bd. v. FCC, supra  ! note 2 at p. 18 (finding that our decision to require ILECs to unbundle certain elements was reasonable and consistent  {O'with the Act). See also 47 C.F.R.  51.319. Consistent with this approach, we propose subsidiary recordkeepng  !#categories that will enable carriers to identify the revenue from and amounts paid for  !interconnection and each unbundled network element. We seek comment on this proposed recordkeeping requirement.  X74 (   10.` ` Transport and Termination . Section 251(b)(5) of the Act provides that all LECs,  !including ILECs, have the duty to "establish reciprocal compensation arrangements for the"!0*%%ZZ"  X4 !transport and termination of telecommunications."Ja yOy'ԍ47 U.S.C.  251(b)(5).J The Local Competition Order treats transport  X4 !hand termination as two distinct functions.dXa {O'ԍLocal Competition Order, 11 FCC Rcd at 16015.d "Transport" is defined as "the transmission of  !termination traffic that is subject to section 251(b)(5) from the interconnection point between the  !two carriers to the terminating carrier's end office switch that directly serves the called party (or  X4 !equivalent facility provided by a nonincumbent carrier.)";a {OA 'ԍId. ; "Termination" is defined as "the  !+switching of traffic that is subject to section 251(b)(5) at the terminating carrier's end office  ![switch (or equivalent facility) and delivery of traffic from that switch to the called party's  Xa4premises.":a|a {O 'ԍId.:  X34 ( 11.` ` We propose a new Part 32 revenue account Account 5072, Transport and  !+termination revenue to record all revenues received by ILECs for providing transport and  !termination of traffic subject to section 251(b)(5). We also propose a new Part 32 expense  !account Account 6552, Transport and termination expense to record amounts paid for  !ytransport and termination of traffic subject to section 251(b)(5). We seek comment on these  !proposed accounts and account descriptions. In addition, we propose subsidiary record categories  !so that the amounts attributable to transport and termination may be separately recorded. We seek comment on this proposed requirement.  Xd4 ( 12.` ` The Local Competition Order observes that the legislative history of the transport  !+and termination requirement indicates that "mutual and reciprocal recovery of costs. . . may  !include a range of compensation schemes, such as inkind exchange of traffic without cash  X!4 !payment (known as billandkeep arrangements)."!a {O' x ԍId. at 16008 (citing Joint Managers' Statement, S. Conf. Rep. No. 104230, 104th Cong., 2d Sess. 113 (1996)). We seek comment on whether the proposed  !accounts will be adequate to accommodate the different types of compensation arrangements that may be used.  X4 (  13.` ` Resale . Section 251(c)(4) of the Act imposes a duty on ILECs to offer for resale  !"any telecommunications service that the carrier provides at retail to subscribers who are not  X4 !telecommunications carriers."Mh a yO#'ԍ47 U.S.C.  251(c)(4)(A).M Because the Act does not require an ILEC to make a wholesale  X4 !3offering of any service the ILEC does not offer to retail customers, the Local Competition Order" 0*%%ZZ"  X4 !does not specify a minimum list of services that are subject to the resale requirement.da {Oy'ԍLocal Competition Order, 11 FCC Rcd at 15934.d To  !8enable the Commission to track the revenue associated with resale, we propose establishing  !subsidiary record categories for carriers to report the amounts contained in existing Part 32  !@revenue accounts that result from the wholesale of telecommunications service pursuant to section  !251(c)(4). In addition, it is possible that ILECs may purchase telecommunications services for  !Zresale from another telecommunications carrier. Because purchasing telecommunications services  !gis a new category of expense for carriers subject to our accounting rules, the NPRM also proposes  !a new expense account Account 6553, Purchased telecommunications service expense to  !record all amounts paid by those carriers to purchase telecommunications service for resale. We seek comment on the proposed expense account and revenue recordkeeping requirement.  X ' B.Costs of Providing Interconnection   X 4 ( 14. ` ` We anticipate that ILECs providing interconnection and access to unbundled  !network elements will not generate new types of costs beyond those already being incurred in  !Inormal operations. The costs associated with each unbundled network element are recorded in  X4 !<numerous Part 32 accounts. The particular combination of accounts varies for each element.-` Za yO' xt ԍConsider the example of an unbundled loop. Investment associated with the loop is recorded in the accounts  !x classified as Telecommunications Plant in Service (TPIS) Cable and wire facilities assets, and could include any  ! of the following accounts: 2410 Cable and wire facilities; 2411 Poles; 2421 Aerial cable; 2422  ! Underground cable; 2423 Buried cable; 2424 Submarine cable; 2425 Deep Sea cable; 2426 Intrabuilding  ! network cable; 2431 Aerial wire; and 2441 Conduit systems. The investment expenses associated with the  ! electronics on the loop are recorded in Account 2232 Circuit equipment. The maintenance expenses associated  ! with the loop are categorized as Plant specific operations expense and recorded in Accounts 6210 through 6441,  ! which correspond to the TPIS investment accounts identified above, and Account 6232 Network administration  !Q expense, which pertains to the electronics on the loop. Depreciation expenses are recorded in Account 6561 and  ! includes the depreciation expense of the capitalized costs included in the TPIS investment accounts identified above.  ! In addition, certain costs associated with unbundled loop may be recorded in Accounts 6610 through 6623, as Customer operations expense, and Accounts 6710 through 6790, as Corporate operations expense. -  !Although additional amounts may be incurred, we tentatively conclude that these amounts may  !be recorded within existing accounts. For recordkeeping purposes, we propose establishing  !subsidiary accounting records to record the costs associated with providing interconnection. We  !propose that the total amount of costs to be recorded in the subsidiary records be based on the  !revenues received for providing interconnection and that the apportionment of the costs should  X4 !be consistent with cost studies underlying the charges for these services and elements.iX a yO9"' x ԍFor example, if the appropriate cost study identified network support expense as 10% of the total cost of  !H an unbundled loop, then an amount equal to 10% of the revenue attributable to unbundled loops would be recorded in subsidiary records in the network support expense accounts.i If  !agreements are reached to provide interconnection or access to unbundled network elements that"0*%%ZZ)"  !are not based on ILEC cost studies, we propose to require the ILEC to construct a cost study  !reflecting the agreement upon which to base its assignment of costs to the subsidiary records.  !Moreover, if a state has arbitrated an agreement, we propose that any action of the state that  ! alters the underlying cost study (such as a cost disallowance) should be reflected in the underlying  !lcost study upon which the ILEC bases the reclassification of costs to the subsidiary records.  X4 ![Finally, we propose to require that ILECs maintain a sufficiently detailed audit trail of the  !"assignments of costs to permit audits of the method of assignment and amounts assigned to the subsidiary records. We seek comment on this approach.  XH'  X1'C.Infrastructure Sharing  X 4  X 4 ( 15.` ` Section 259 of the Act generally requires ILECs to make available "public  !"switched network infrastructure, technology, information, and telecommunications facilities and  !functions" to "qualifying carriers" that are eligible to receive federal universal service support but  X 4 !that lack economies of scale or scope.j a {O7'ԍ47 U.S.C.  259; see also 47 U.S.C.  214(e).j Section 259(b)(6) limits the infrastructure sharing  !requirements of section 259 to those instances in which the qualifying carrier does not seek to  X4 ! use shared infrastructure to compete with the ILEC.J!Za yO'ԍ47 U.S.C.  259(b)(6).J In the Infrastructure Sharing Order, the  !Commission adopted rules that rely in large part on negotiated agreements to satisfy the  !"requirements of this section. In particular, the Commission concluded that ILECs may recover  !}their costs associated with infrastructure sharing arrangements and that incentives exist that will  !lencourage providing and qualifying carriers to reach negotiated agreements that ensure such  X4recovery.z"a {O'ԍInfrastructure Sharing Order, supra note 4 at para. 11. z  X4 ( 16.` ` In accordance with the minimal regulatory oversight contemplated by the  X4 !Infrastructure Sharing Order, we tentatively conclude that the goals described in paragraph six,  !Iabove, may not apply to infrastructure sharing. These facility arrangements between telephone  !companies have existed for many years and do not directly affect services provided to  !Rcompetitors. Therefore, we may not need to establish distinct Part 32 accounts or subsidiary  !recordkeeping categories to record the revenues, expenses and investment associated with these  !activities. We seek comment on this tentative conclusion. Commenters who recommend that  !new Part 32 accounts be established to record the amounts associated with infrastructure sharing  !are invited to propose specific accounts and account descriptions or recordkeeping requirements.  !gWe also ask that commenters generally describe the nature and terms of any infrastructure sharing  !agreements in which they participate so that we may provide guidance regarding into what"  |"0*%%ZZ"  !@existing Part 32 accounts the revenues, expenses, and investments related to infrastructure sharing should be booked.  X' D. Other Matters  X4 ( 17.` ` Additional Accounts. We seek comment on whether to create new accounts or  !subsidiary recordkeeping requirements for any other functions arising from implementation of the  Xa4 !1996 Act. Some possibilities include number portability,T#aa {O'ԍSee 47 U.S.C.  251(b)(2).T dialing parity,N$aZa {Ol 'ԍSee id.  251(b)(3).N numbering  XJ4 !administration,o%Ja {O 'ԍSee id.  251(e)(2) and 47 C.F.R.  52.17. o collocation,T&J~a {Oy'ԍSee 47 U.S.C.  251(c)(6).T pole attachments, 'Ja {O ' xh ԍ See id.  224; Amendment of Rules and Policies Governing Pole Attachments, Notice of Proposed  {O'Rulemaking, CS Docket No. 97-98, FCC No. 97-94 (rel. Mar. 14, 1997).  and Telecommunications Relay Services.(Jl a {Og' x" ԍSee 47 U.S.C.  225. Telecommunications Relay Services administration was established prior to the 1996 Act. We  !ttentatively conclude that new accounts or subsidiary recordkeeping requirements are not necessary  !to record the revenues, investments, and expenses associated with these activities because the  !associated costs and revenues may readily be recorded in existing accounts. We seek comment  !/on this tentative conclusion. Commenters are invited to propose accounts, account descriptions,  !}or subsidiary recordkeeping requirements and to explain why additional accounting requirements are necessary.  X4 ( 18.` ` Classification of Companies. Section 32.11 of our rules divides companies into  !two categories for purposes of accounting rules: Class A companies have "annual revenues from  ! regulated telecommunications operations that are equal to or above the indexed revenue  !threshold;" and Class B companies have "annual revenues from regulated telecommunications  X84 !@companies that are less than the indexed revenue threshold."F)8 a yO'ԍ47 C.F.R.  32.11.F These designations determine what  !accounts of the USOA the company must keep. The rules require more detailed accounts for  ! Class A companies. The USOA enables the Commission to monitor earnings and forms the basis  !for our cost allocation, jurisdictional separations, and access charge rules. We have generally  !papplied the requirements on ILECs and interexchange carriers subject to Title II regulation such  !as AT&T and Comsat. We seek comment on whether, given the purpose of Part 32 and the" V )0*%%ZZ"  !yoverall intent of the Act to remove legal and regulatory burdens to competition, section 32.11  !should be amended so that its requirements explicitly pertain only to ILECs, as defined in section 251(h) of the Act, and any other companies that the Commission designates by order.  X4 /2 IV. PROCEDURAL MATTERS c  Xv' A.Effective Date  XH4 ( 19.` ` Pursuant to section 220(g) of the Act, the accounting changes proposed herein shall  !hbe effective six months after a final decision in this proceeding is published in the Federal  X 4 !Register, as required by the Act.G* a yO 'ԍ47 U.S.C.  220(g).G We propose to permit carriers to implement these changes earlier.  X ' B.Ex Parte Presentation  X 4 ( \20.` ` This is a permitbutdisclose proceeding. Ex parte presentations are permitted,  !except during the Sunshine Agenda period, provided that they are disclosed as provided in the  Xy4Commission's rules.e+yXa {O'ԍSee 47 U.S.C.  1.102, 1.203 and 1.206.e  XK' C.Initial Regulatory Flexibility Act Analysis  X4 ( 21.` ` This NPRM proposes new revenue and expense accounts for ILECs to record the  !lrevenues they receive and the amounts they pay in the sale and purchase of interconnection,  !Naccess to unbundled network elements, transport and termination of traffic, and resale of  X4 !telecommunications services. Section 603 of the Regulatory Flexibility Act (RFA), as amended,C,a yOs'ԍ5 U.S.C.  603.C  !requires an initial Regulatory Flexibility Act Analysis in noticeandcomment rulemaking  !cproceedings unless we certify that "the rule will not, if promulgated, have a significant economic  X4impact on a significant number of small entities."G-za {O'ԍId.  605(b).G  Xe4 ( \22.` ` The RFA defines the term "small entity" as having the same meaning as "small  XN4 !business concern" under the Small Business Act (SBA),i.N a {O $'ԍId.  601(6) adopting 15 U.S.C.  632(a)(1).i which defines "small business concern"  !as "one which is independently owned and operated and which is not dominant in its field of"7 .0*%%ZZR"  X4 !<operation."J/a yOy'ԍ15 U.S.C.  632(a)(1).J Section 121.201 of the SBA regulations defines small telecommunications entities  !in SIC Code 4813 (Telephone Communications, Except Radiotelephone) as any entity with fewer  X4 !cthan 1,500 employees at the holding company level.H0Xa yO'ԍ13 C.F.R.  121.201.H Some entities employing fewer than 1500  !<employees at the holding company level may be affected by the proposals made in this NPRM.  !However, we do not consider such entities to be "small entities" under the RFA because they  !Iare either affiliates of large corporations or dominant in their field of operations. Therefore, we do not believe that the proposed rules will affect a substantial number of small entities.  XH4 ( 23.` ` Even if the small ILECs were "small entities" under the SBA, we would still  !certify that no regulatory flexibility analysis is necessary here because none of the proposals in  !this NPRM, if adopted, would have a significant economic impact on the carriers which must  X 4 !comply with our accounting rules. Pursuant to longstanding rules, ILECs must record the  !revenues and expenses associated with their operations. This NPRM merely proposes that new  !revenue and expense accounts be established so that the amounts pertaining to interconnection  !<and infrastructure sharing will be uniformly reported. This procedure will be easy for ILECs to implement and will not require costly or burdensome analysis.  Xy4 ( 24.` ` We therefore certify, pursuant to section 605(b) of the RFA that the rules proposed  !in this NPRM will not have a significant economic impact on a substantial number of small  !entities. The Commission will publish this certification in the Federal Register and will provide  !a copy of the certification to the Chief Counsel for Advocacy of the SBA. The Commission will  !also include this certification in the report to Congress pursuant to the Small Business Regulatory  X4Enforcement Fairness Act.L1a yO'ԍ5 U.S.C.  801(a)(1)(A).L  X4  X' D.Comment Filing Procedures  X4 ( 25.` ` Pursuant to applicable procedures set forth in sections 1.415 and 1.419 of the  X4 !Commission's rules,T2xa yO'ԍ47 U.S.C.  1.415 and 1.419.T interested parties may file comments with the Secretary, Federal  ![Communications Commission, Washington D.C. 20554 on or before December 10, 1997.  !Interested parties may file reply comments on or before January 26, 1998. To file formally in  !this proceeding, participants must file an original and six copies of all comments, reply comments  !and supporting comments. If participants want each Commissioner to receive a personal copy  !of their comments, an original plus eleven copies must be filed. In addition, parties should file"  20*%%ZZ"  !"one copy of any such pleading with Matthew Vitale, Accounting and Audits Division, Common  !ICarrier Bureau, 2000 L Street N.W. Room 200F, Washington, D.C. 20554. Parties should also  !file one copy of any documents filed in this proceeding with the Commission's copy contractor,  !VInternational Transcription Services, Inc., 1231 20th Street N.W., Washington, D.C. 20036. All  !hcomments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street N.W., Room 239, Washington, D.C. 20554.  X_4 ( 926.` ` Along with their formal filings, parties are requested to submit informal comments  !either on 3.5 inch diskettes or electronically via email to . Documents  !submitted on diskette should be saved in WordPerfect 5.1 for Windows format. Diskettes should  !Vbe formatted for a DOS PC, submitted in "read only" mode, and clearly labelled with the party's  !name, proceeding, type of pleading (comment or reply comment), docket number, and date of  !submission. Electronic submissions should include the docket number of the proceeding in the  !subject line and should state whether the electronic submission is an exact copy of formal  !comments. Parties submitting comments electronically must also include their full names and mailing address in the submission.  Xy' E.Paperwork Reduction Act  XK4 ( 27.` ` This NPRM contains either a proposed or modified information collection. As part  !of our continuing efforts to reduce paperwork burden as required by the Paperwork Reduction  X4 !"Act of 1995,z3a yO'ԍPaperwork Reduction Act of 1995, Pub. L. No 10413, 109 Stat. 163 (1995).z 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.  !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  !Ienhance the quality, utility and clarity of the information collected; and (d) ways to minimize the  !burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  XN4 ( 28.` ` Public and agency comments on the paperwork burden are due at the same time  !as other comments on this register; OMB comments are due 60 days from the date of publication  !+of this NPRM in the Federal Register. In addition to filing comments with the Office of the  !VSecretary, Federal Communications Commission, 1919 M Street N.W., Room 222, Washington,  !ID.C. 20554, a copy of any comments on the information collections contained herein should be  !submitted to Judy Boley, Federal Communications Commission, 1919 M Street N.W., Room 234,  !}Washington, D.C. 20554 or via the Internet to jboley@fcc.gov and to Timothy Fain, OMB Desk" X30*%%ZZ."  !8Officer, 10236 NEOB, 725 17th Street N.W., Washington, D.C. 20503 or via the internet to fain_t@a1.eop.gov.  X' F.Additional Information  X4 ( 29.` ` For further information concerning this proceeding, contact Matthew Vitale, Accounting and Audits Division of the Common Carrier Bureau, at (202) 4180866.  XH'GL V. ORDERING CLAUSE Đc  X 4 ( 30.` ` IT IS ORDERED that, pursuant to sections 1, 4, 201205, 218, 220, 251, 252,  !254(k) and 259 of the Communications Act of 1934, as amended by the Telecommunications Act  !+of 1996, 47 U.S.C.  151, 154, 201205, 218, 220, 251, 252, 254(k), and 259, a NOTICE OF PROPOSED RULEMAKING is hereby ADOPTED. ` `  ,hh]FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh]William F. Caton ` `  ,hh]Acting Secretary"30*%%ZZ"  X'h  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)X` hp x (#%'0*,.8135@8: