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P7,P&z-b81,;b&_ x$&7X7"yyyy\nyc\gnn\"i~'^ %.77\7K%7777777777%%KKK7eDDIODDOO%0I>\IODOD7>OD\D>>**.7%77070770O7777**70I00*, S(!. T(#&a\  P6G;#R&P#yxdddyOuFederal Communications Commission`(# DA 972724 Њ#X\  P6G;P#X01Í ÍX01Í Í#&a\  P6G;#R&P#   OBefore the  *FEDERAL COMMUNICATIONS COMMISSION  S(Washington, D.C. 20554 ă  S`(` `  ,hhhppX  xx  DA 972724  T(In the Matter of ,hhh) ` `  ,hhh)  T(Tariffs Implementing ,hhh)CC Docket No. 97250  T(Access Charge Reformhhh) ` `  ,hhh)  TH (Beehive Telephone Companyhhh)CC Docket No. 97249  T (Beehive Telephone, Inc. Nevadahh)  T (Tariff F.C.C. No. 1 ,hhh)Transmittal No. 8  T ( G MEMORANDUM OPINION AND ORDER ă  T1(Adopted: December 30, 1997hhppXReleased: December 30, 1997 By the Chief, Common Carrier Bureau:  Ti( I. INTRODUCTION ă  T(1. On May 16, 1997, the Commission released its Access Charge Reform Order,^w zP(Ѝ Access Charge Reform, CC Docket No. 96262, First Report and Order, 12 FCC Rcd 15982 (1997)  zPL((Access Charge Reform Order); Order on Reconsideration, 12 FCC Rcd 10119 (1997); Second Order on  zP(Reconsideration, 12 FCC Rcd 16606 (1997) (collectively, Access Charge Reform Proceeding). amending the Commission's access charge rules so that access charges better reflect the manner in which the costs underlying those charges are incurred. The reforms and rate restructurings mandated by that Order involve the most comprehensive changes to the Commission's system of interstate switched access charges since these tariffed charges first were introduced more than 10 years ago. Because many of the amended rules take effect January 1, 1998, the Commission directed incumbent local exchange carriers (LECs) to file implementing tariffs that would be effective on that date. As part of the tariff filings, LECs subject to price cap regulation were required to file summary material, known  T(as tariff review plans (TRPs), to support the revisions to rates in their tariff filings.w xPj!(Ѝ Support Material for Carriers to File to Implement Access Charge Reform Effective January 1, 1998, Tariff Review Plans, DA 972345 (rel. Nov. 6, 1997). The TRPs  T(partially fulfill the requirements of sections 61.41 through 61.49 of the Commission's rules.IFw xP$(ԍ 47 C.F.R. 61.4161.49.I LECs were also required to file tariff revisions, effective January 1, 1998, to comply with: (a) the Commission's order concluding the 1997 Access Tariff Investigation; and (b) the Access Charge"d0*((z"  T(Reform Third Report and Order.d\ zPh(ԍ See 1997 Annual Access Tariff Filings, CC Docket No. 97149, Memorandum Opinion and Order, FCC  zP2(97403 (rel. Dec. 1, 1997); Access Charge Reform and Transport Rate Structure and Pricing, CC Docket Nos. 96262 and 91213, Third Report and Order, FCC 97401 (rel. Nov. 26, 1997).d In addition, revisions to the LECs' access charge tariffs were  T(required to account for the implementation of the new universal service support mechanisms.=Z zPd(ԍ See FederalState Joint Board on Universal Service, CC Docket No. 9645, Report and Order, 12 FCC Rcd 8776 (1997); First Quarter 1998 Universal Service Contribution Factors Revised and Approved, CC Docket No. 9645, Public Notice, DA 972623 (rel. Dec. 16, 1997).=  S-x2. Price cap LECs filed TRPs on November 26, 1997,  yO6 -Ѝ Appendix A lists the LECs filing tariffs and their transmittal numbers. Appendix B lists the petitions and replies to the tariff filings, and identifies the abbreviated names for the parties. Pacific Bell and Nevada Bell filed their TRPs on December 8. AT&T filed its comments in response to Pacific Bell's and Nevada Bell's TRPs on December 23, 1997. MCI and Sprint filed comments on the  S`-TRPs on December 10, 1997, AT&T filed comments on December 11, 1997,X`  yO-Ѝ AT&T filed its Petitions and Comments on December 11, 1997, together with a Motion for Leave to Late File its Petition and Comments due to a computer virus. The Common Carrier Bureau (Bureau) hereby grants AT&T's motion. and LEC replies were  S8-filed December 17, 1997./X8 yO-Ѝ Bell Atlantic filed its reply comments on December 18, together with a Motion to Accept Reply Comments One Day Late, because of the time it needed to change the level of universal service contribution. The Bureau hereby grants Bell Atlantic's motion./ LECs filed their tariff transmittals on December 17, 1997, 86 yO-Ѝ Ameritech, BellSouth, GTOC, and GSTC made tariff filings on November 26, 1997, and refiled them on December 17. The Bureau permitted LECs to refile their tariffs on December 19, 1997, in order to take into account the contribution factors for the universal service support fund. Revisions to the Access Charge Reform Tariffs to Reflect Revised Universal Service Contribution Factors, Public Notice, DA 972632 (rel. Dec. 17, 1997). with AT&T,  S-MCI, Sprint, and TCG filing petitions to suspend and investigate on December 23, 1997,  yO-Ѝ Petitions in response to the November 26, 1997 tariff filings by Ameritech, Bell South, GTOC, and  {O^-GSTC were filed December 10, 1997, except for AT&T, see n.7, supra. and LECs filing replies on December 29, 1997. We refer hereafter to all of the tariff transmittals filed by price  S-cap LECs that are identified in Appendix A collectively as the Price Cap Access Charge Reform  S-Tariffs. In this Memorandum Opinion and Order, we suspend for one day and set for investigation all  St-of the rate changes contained in the Price Cap Access Charge Reform Tariffs. As discussed below, because of the close interrelationship between the many changes that LECs were required to implement in these tariff transmittals, it is not possible at this time to exclude from our investigation particular rate changes proposed by the LECs. In addition, we also suspend for one day and set for investigation the tariffs of Beehive Telephone Company and Puerto Rico Telephone Company, as discussed below. The Bureau will separately issue an order designating specific issues for investigation." @ 0*&&PPj"Ԍ  S-! II. DISCUSSION ă x3. We find that various issues raised by AT&T, MCI, Sprint, and TCG in support of their  S`-petitions to suspend and investigate the Price Cap Access Charge Reform Tariffs raise substantial  S:-questions of lawfulness that warrant investigation of these tariffs.@ : yO-ԍ 47 U.S.C. 204(a).@ These issues include, but are not limited to, the following: whether price cap LECs have provided adequate cost information to support their determinations of the amount of switching costs that is associated with line ports and trunk ports and that, consequently, should be reassigned from the Local Switching to the Common Line rate element; whether price cap LECs were correct in applying the percentage of switching costs associated with line ports to revenue requirement for purposes of calculating the exogenous adjustments to their price cap indices; whether certain price cap LECs have improperly failed to establish a flatrated  S" -charge for multiplexers used between the tandem switch and the serving wire center;k " X yO-ԍ This issue concerns all price cap LECs except BellSouth and SNET.k whether price cap LECs have properly removed SS7 and tandem trunk port costs from the transport interconnection charge (TIC); whether price cap LECs have correctly replaced 9,000 minutes of use with actual minutes of use for purposes of calculating the tandem switched transport rate and the TIC; whether price cap LECs have properly calculated the residual and facilitiesbased portions of the TIC; whether price cap LECs have correctly calculated trunking basket enduser revenues in determining exogenous adjustments to reflect contributions to the new Universal Service Fund; and whether price cap LECs correctly defined and calculated the number of nonprimary residential lines. x4. In addition to the issues raised by petitioners, we have identified other issues that raise substantial questions of lawfulness that warrant investigation of price cap LECs' tariffs. These include, but are not limited to, the following: whether price cap LECs used an incorrect value for "g" in the common line formula; and whether price cap LECs are incorrectly assessing certain multiplexer charges on tandemswitching customers that take service pursuant to the unitary rate structure option. x5. The rate structure changes and exogenous adjustments required for price cap LECs by the  S-Access Charge Reform Proceeding are extensive, complex, and interdependent. We are therefore unable at this time to limit our investigation to discrete rates or provisions of the price cap LECs'  ST-tariff filings. We will, accordingly, suspend all tariff revisions contained in the Price Cap Access  S.-Charge Reform Tariffs for one day and set these provisions for investigation. The specific issues that will be the subject of the investigation will be identified in an upcoming designation order and may include, but are not limited to, the issues identified in this Order. The designation order may also identify discrete issues that do not warrant further investigation. x6. Ameritech, BellSouth, GTOC and GSTC voluntarily filed their tariff revisions several weeks before the deadline for this tariff filing. These early filings permitted the resolution of certain issues affecting particular proposed rate changes so that an investigation of those issues is not"  0*&&PP!"  S-necessary.: Z yOh-ԍ For example, Ameritech was able to correct its underestimation of the effect of the transition from the  {O0-unitary to the threepart tandem switched transport rate structure. See MCI December 10 Petition at 1112; Ameritech December 17 Reply at 13.: Because, however, resolution of the remaining issues may require further revisions to those proposed rate changes, it is necessary to suspend their entire filings. x7. Due to the unusual nature and scope of these tariff filings, the rates that are the subject of this suspension order may be subject to a special, twoway adjustment at the conclusion of the  S8-investigation.@8 {O -Ѝ See Lincoln Telephone and Telegraph's Duty to Furnish Interconnection Facilities to MCI  {O -Telecommunications Corporation, Declaratory Order, 72 F.C.C. 2d 724, 72829 (1979), aff'd 659 F.2d 1092  {OV -(D.C. Cir. 1981) (Lincoln Telephone); see also Local Exchange Carriers' Rates, Terms, and Conditions for  {O -Expanded Interconnection for Special Access, CC Docket No. 93162, Phase I, First Report and Order, 8 FCC Rcd 8344, 836264 (1993).@ In the Access Charge Reform Proceeding the Commission ordered a fundamental restructuring of incumbent LEC interstate switched access service offerings. As noted above, the tariff revisions required to implement this restructuring are far more extensive than any that the Commission has ordered since it first instituted its system of tariffed access charges. In addition, most of the changes affect multiple rate elements, price cap baskets and service categories. For example, the reassignment of nontrafficsensitive costs associated with line ports from the local switching to the common line rate element has the effect of reducing charges for local switching while increasing common line charges. Thus, in many cases, if our investigation shows that a particular rate has been set too high, it may also show that another rate has been set lower than would have been permitted. The Commission's usual practice in proceedings under section 204(a) is to investigate rates subject to an accounting order, and to order refunds of overcharges where refunds are justified. Carriers are not ordinarily compensated if, at the conclusion of an investigation, they are allowed higher rates than  SZ-were in effect during the investigation.QZZ {O-ԍ See, e.g., Local Exchange Carriers' Individual Case Basis DS3 Service Offerings, CC Docket No. 88166, Memorandum Opinion and Order, 6 FCC Rcd 4776, 4778 (1991) (affirming Bureau denial, in suspension order, of request for retroactive adjustments to rates under investigation).Q Under these unusual circumstances, however, in which the Commission has ordered a massive restructuring of many interrelated rates, it may not be possible to achieve a fair balance of ratepayer and shareholder interests without also allowing LECs some measure of recoupment, where appropriate. The Commission has the authority under section 4(i) of the  S-Communications Act of 1934, as amended, to allow such recoupment.Y  {O-ԍ See Lincoln Telephone, n.11, supra.Y  Sj-x8. For these reasons, we hereby put customers on notice that the rates provided in the Price  SD-Cap Access Charge Reform Tariffs that are suspended for one day in this order are provisional rates. If these provisional rates are found at the conclusion of the investigation initiated by this Order to be below a just and reasonable level, we may allow carriers prospectively to charge higher rates for some elements to reflect the fact that they were charging less than would have been permitted for those elements during the pendency of the investigation. If these provisional rates are found at the conclusion of the investigation initiated by this Order to be above those permitted by our rules, and"~V 0*&&PP" thus unreasonably high, we may require the LECs to make refunds to their customers. It is also possible that, in cases in which the same customer has paid charges that were found to be too high and charges that were found to be too low, refunds could be offset by amounts allowed for recoupment. x9. We find that Beehive Telephone Company's tariff filing provides insufficient documentation in support of its proposed rate changes, thereby raising substantial questions of  S-lawfulness.l {Ox-ԍ See AT&T Petition on RateofReturn LEC Tariff Filings at 6.l We will therefore suspend Beehive Telephone Company's December 17, 1997 tariffs for  S-one day and initiate an investigation into the lawfulness of the proposed tariff.SXZ yO -Ѝ An earlier tariff filing of Beehive Telephone Company is currently under investigation in a separate proceeding. Beehive Telephone Company, Inc., Beehive Telephone, Inc. Nevada, Tr. No. 6, Order Designating Issues for Investigation, CC Docket No. 97237, DA 972537 (rel. Dec. 2, 1997).S x 10. AT&T asserts that Puerto Rico Telephone Company's proposed revenue requirement for its host/remote central office equipment (COE) Category 4.3 investment and carrier cable and wire facilities (C&WF) Category 4 investment that is to be redistributed to the tandem switched termination  S -and tandem switched facility rates is overstated.d z yO:-ԍ AT&T Petition on RateofReturn LEC Tariff Filings at 89.d We find AT&T's petition raises substantial questions of lawfulness concerning Puerto Rico Telephone Company's host/remote revenue requirement. Because the rates in question are interrelated with other rate changes proposed by Puerto Rico Telephone Company, however, it is necessary to suspend the entirety of its tariff filing. We will therefore suspend Puerto Rico Telephone Company's tariff filings, Transmittal Numbers 24 and 25, for one day and initiate an investigation into the lawfulness of the proposed tariffs.  S-  S-cIII. EX PARTE REQUIREMENTS TP  S-x 11. This investigation will be conducted as a permitbutdisclose proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are  SC-disclosed as provided in the Commission's rules.oC  {O-ԍ See generally 47 C.F.R. 1.1202, 1.1203, and 1.1206(a).o  S-w IV. ORDERING CLAUSES ĐTP x 12. ACCORDINGLY, IT IS ORDERED that, pursuant to Section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, the tariff revisions filed by Aliant Communications Company, Ameritech Operating Companies, Bell Atlantic Operating Companies, BellSouth Telecommunications, Inc., Cincinnati Bell Telephone Company, Citizens Telecommunications Companies, Frontier Communications of Minnesota and Iowa, Frontier"0*&&PP" Telephone of Rochester, GTE Systems Telephone Companies, GTE Telephone Operating Companies, Nevada Bell, NYNEX Telephone Companies, Pacific Bell, Southern New England Telephone Company, Southwestern Bell Telephone Company, Sprint Local Telephone Companies, and US West Communications, Inc., as detailed in Appendix A for price cap local exchange carriers, ARE SUSPENDED for one day and an investigation IS INSTITUTED. x 13. IT IS FURTHER ORDERED that, pursuant to Sections 204(a) and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a), 154(i) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, Aliant Communications Company, Ameritech Operating Companies, Bell Atlantic Operating Companies, BellSouth Telecommunications, Inc., Cincinnati Bell Telephone Company, Citizens Telecommunications Companies, Frontier Communications of Minnesota and Iowa, Frontier Telephone of Rochester, GTE Systems Telephone Companies, GTE Telephone Operating Companies, Nevada Bell, NYNEX Telephone Companies, Pacific Bell, Southern New England Telephone Company, Southwestern Bell Telephone Company, Sprint Local Telephone Companies, and US West Communications, Inc. SHALL KEEP ACCURATE ACCOUNT of all amounts received that are associated with the rates that are subject to this investigation. x 14. IT IS FURTHER ORDERED that, pursuant to Section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, the tariff revisions filed by Beehive Telephone Company ARE SUSPENDED for one day and an investigation IS INSTITUTED. x15. IT IS FURTHER ORDERED that, pursuant to Sections 204(a) and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a), 154(i) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, Beehive Telephone Company SHALL KEEP ACCURATE ACCOUNT of all amounts received that are associated with the rates that are subject to this investigation. x16. IT IS FURTHER ORDERED that, pursuant to Section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, the tariff revisions filed by Puerto Rico Telephone Company, Transmittal Numbers 24 and 25, ARE SUSPENDED for one day and an investigation IS INSTITUTED. x17. IT IS FURTHER ORDERED that, pursuant to Sections 204(a) and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 204(a), 154(i) and through the authority delegated pursuant to Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and0.291, Puerto Rico Telephone Company SHALL KEEP ACCURATE ACCOUNT of all amounts received that are associated with the rates that are subject to this investigation. x18. IT IS FURTHER ORDERED that each local exchange carrier required to suspend its tariff revisions for one day pursuant to this Order, SHALL FILE a supplement advancing the currently scheduled effective date to December 31, 1997, and at the same time file a supplement reflecting the one day suspension to January 1, 1998. "%0*&&PP'"Ԍx19. IT IS FURTHER ORDERED that all local exchange carriers SHALL FILE these supplements no later than five business days from the release date of this Order. x20. IT IS FURTHER ORDERED that for this purpose, we waive Sections 61.58 and 61.59 of the Commission's rules, 47 C.F.R. 61.58, 61.59. Carriers should cite the "DA" number of the instant Order as the authority for this filing. x21. IT IS FURTHER ORDERED that the petitions to suspend and investigate or to reject the Access Charge Reform Tariffs identified in Appendix A of this Order ARE GRANTED to the extent indicated herein and otherwise ARE DENIED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@A. Richard Metzger, Jr. x` `  hh@Chief, Common Carrier Bureau "00*&&PP"  S-@A-@  X` hp x (#%'0*,.8135@8: