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Petitioners propose that LECs be permitted to reflect trunk equivalency. They  XO-propose that the PICC on Centrex lines be assessed using a linetotrunk equivalency ratio.p*O0 yO-ԍ USTA Petition at 34; ICA Petition at 45; Los Angeles Petition at 10.p  X8-Such ratios are already set forth in intrastate tariffs.P+8` 0 yOI-ԍ ICA Petition at 5; USTA Petition at 4.P In the absence of an intrastate tariff, the  X!-LECs could develop such a ratio,=,! 0 yO-ԍ USTA Petition at 4.= or there could be agreed upon industry relationships  X -between the Centrex lines and trunks.<-  0 yO;"-ԍ ICA Petition at 5.< USTA also suggests that LECs should be permitted to count Network Access Registers (NARs) for purposes of assessing the PICC on Centrex  X-customers.=.0 yO%-ԍ USTA Petition at 4.= USTA contends that NARs are equivalent to PBX trunks since one NAR" .0*&&aa"  X-provides one link to the switch.=/0 yOy-ԍ USTA Petition at 4.= In an ex parte filing, USTA has indicated that in order to address the complexity and verification problems of using individual state tariffs or individual company ratios, the Commission should adopt a uniform linetotrunk equivalency ratio of 9  X-to 1.;0\X0 yO-ԍ Letter from Frank McKennedy, Director, Legal and Regulatory Affairs, United States Telephone  {O-Association, to William F. Caton, Acting Secretary, Federal Communications Commission, Sept. 25, 1997 (USTA  {OX-September 25 Letter) at 2.;  X-x 3.` ` Comments  Xa-x28. Most commenting parties support petitioners.1a|0 {O -ԍ See US West Comments at 4; SNET Comments at 2; Bell Atlantic Comments at 1416; Ad Hoc Comments at 911; Ameritech Comments at 2; GTE Comments at 1920; API Comments at 910; National Centrex Users Group Comments at 13; City of New York Department of Information Technology and Telecommunications (New York City) Comments at 57. We grant New York City's Motion to File Late Comments. New York City notes that its mayoral agencies alone comprise approximately 73,100 Centrex lines and nonmayoral  X3-agencies use at least an additional 1,776 Centrex lines.H23. 0 yO-ԍ New York City Comments at 56.H New York City estimates that it could save over 2 million dollars annually if the Commission adopted a linetotrunk  X -equivalency ration of at least 8 to 1.F3 0 yOt-ԍ New York City Comments at 6.F Similarly, Boston University argues that without trunktoline equivalency, it potentially will have to pay at least an additional $600,000 to cover the  X -new PICCs.J4 N 0 yO-ԍ Boston University Comments at 3.J Boston University suggests that the Commission should at least permit a limited form of grandfathering for Centrex customers who are locked into bona fide longterm  X -contract tariffs.J5 0 yO8-ԍ Boston University Comments at 4.J  X{-x29. AT&T, Teleport, and Time Warner oppose the petitions.x6{n0 yO!-ԍ AT&T Comments at 1213; Teleport Comments at 13; Time Warner Comments at 79.x AT&T argues that because Centrex uses more of the LEC's lines than a PBX arrangement does, the disparity  XM-between Centrex and PBX arrangements is consistent with the principles of costcausation.>7M0 yO$-ԍ AT&T Comments at 13.> AT&T also argues that given that LECs have historically offset the SLC in the intrastate"6 70*&&aa" jurisdiction by providing "credits" on customers' Centrex bills, there is no reason to think that  X-they could not provide similar credits to offset the new multiline business PICC.>80 yOb-ԍ AT&T Comments at 13.> Teleport notes that even though Centrex users pay more in SLCs than do users of PBX, Centrex has  X-remained marketable, and the new PICCs are less burdensome than are the SLCs.A9X0 yO-ԍ Teleport Comments at 3.A Moreover, although the Commission temporarily assessed a lower SLC on Centrex lines when the SLC was first implemented to reduce the possibility that users would move to PBX service before state commissions had an opportunity to adjust intrastate rate structures, Centrex is presently largely deregulated in the intrastate jurisdiction, so that there is no need  XH-to create a transition plan.A:H0 yO -ԍ Teleport Comments at 3.A  X -x30. Time Warner contends that the PICCs on Centrex lines perform the same function  X -as other multiline PICCs, i.e., to recover common line and other revenue shortfalls. Granting the petitions would threaten to undermine the scheme for recovering costs not otherwise  X -recovered from common line charges.D; x0 yO-ԍ Time Warner Comments at 7.D Time Warner argues that the First Report and Order announced that multiline business customers would have to shoulder a disproportionate share of costs during a transition period, and the fact that some customers temporarily shoulder a greater proportion of the burden than others is "a readily accepted, and necessary, aspect of  X}-reform."D<}0 yO6-ԍ Time Warner Comments at 8.D Time Warner also claims that the application of the multiline PICC to Centrex access lines is consistent with the Commission's treatment of integrated services digital  XO-network (ISDN) lines. In the First Report and Order, the Commission determined that Primary Rate Interface (PRI) ISDN service should be subject to a SLC rate equal to five times the incumbent LEC's average perline common line costs, and that Basic Rate Interface (BRI) ISDN service should be subject to a SLC based on the incumbent LEC's average perline costs. The Commission maintained that fivetoone ratio in its application of the PICC to  X-ISDN services.F=0 yO' -ԍ Time Warner Comments at 89.F  X-x 4.` ` Discussion  X-x31. We grant the petitions of USTA, ICA, and Los Angeles that the PICC be assessed on Centrex lines using a linetotrunk equivalency ratio. For the reasons discussed below, we adopt USTA's proposal to use a uniform 9:1 ratio. In large part, the multiline business PICC"T ( =0*&&aa" is not a costbased charge, but a contribution, "for a limited period, to the recovery of  X-common line costs that incumbent LECs incur to serve singleline customers."S>0 {Ob-ԍ First Report and Order at 101.S It is therefore reasonable to consider noncost factors in determining how to assess the PICC. We conclude that with respect to the PICC, Centrex customers should be treated similarly to PBX customers, because the two arrangements are functionally equivalent.  Xv-x32. A business customer with a large number of lines often chooses to connect its users with each other and with other telephone customers in one of two ways: Centrex or PBX. While a Centrex customer receives service from the central office switches of the LEC, a PBX arrangement is not directly supported by the central office switch, but is connected to  X -the central office switch via trunks.? Z0 yO% -ԍ A PBX trunk is the circuit, equivalent to a local loop, which connects the PBX with the LEC's central office. Even though calls made to other customers must travel to the LEC's central office under either approach, the Centrex arrangement requires that internal calls also travel to and from the central office. Centrex service usually requires a loop facility from the central office to the customer's location for each working Centrex telephone number. The PBX arrangement enables the PBX customer to concentrate usage from multiple lines to a few trunks. Also, while a Centrex customer does not purchase the Centrex equipment and does not house it, PBX arrangements require the customer to obtain and provide space for PBX switches at the customer's premises.  XK-x 33. Petitioners state that Centrex and PBX arrangements are functionally equivalent, and opposing parties do not dispute this assertion. We do not wish to encourage a large customer to choose one of these arrangements, PBX, over another, Centrex, simply because,  X-as a result of its IXC being charged substantially more PICCs, i.e., noncostrelated charges, for Centrex service, the PBX service becomes cheaper.  X-x!34. In addition, many Centrex users are government, education, and health care  X-facilities.@$0 yO-ԍ Los Angeles Petition at 6; New York City Comments at 6; National Centrex Users Group Comments at 2; Boston University Comments at 1; Letter from Anthony Alessi, Director, Federal Relations, Ameritech, to  {O-William Caton, Acting Secretary, Federal Communications Commission, Sept. 17, 1997 (Ameritech September 17  {Oi -Letter) at 3. We note that more than 25 percent (18,640) of Los Angeles's 67,000 Centrex lines, which do not include Los Angeles County public schools are used by health care facilities. Without using a linetotrunk equivalency ratio, Los Angeles could be required to pay an additional $2.8 million annually in PICCs, if its presubscribed IXC passes these"g @0*&&aa"  X-charges through.:AZ0 {Oy-ԍ This figure is based on a $2.75 PICC being assessed. SBC projects a lower PICC in California. See Letter from Jay Bennett, Director, Federal Regulatory, SBC Communications, Inc., to William Caton, Acting Secretary, Federal Communications Commission, Aug. 12, 1997.: New York could see the implementation of the PICC increase its rates by over $2.4 million annually, if these charges are passed through by its IXC. Boston University, with its 10,000 Centrex lines, faces a potential increase of $330,000 per year in PICCs. By granting the petitions for relief, we ensure that all multiline business customers shoulder a similar portion of the PICC contribution, irrespective of whether they use Centrex or PBX arrangements.  X_-x"35. Centrex arrangements are charged SLCs on a perline basis, even though this difference results in a higher rate than equivalent PBX arrangements have to pay. That differential is due to the additional common line costs that Centrex lines incur. Historically, the Commission has declined to apply a trunk equivalency ratio for Centrex services, under the rationale that "[i]f Centrex uses more lines, then Centrex necessarily creates more line  X -costs."hB 0 {O-ԍ MTS and WATS Market Structure Order, 97 F.C.C.2d at 700.h Unlike the SLC, in most instances, the multiline business PICC will not recover  X -loop costs of multiline businesses.CZ |0 {O-ԍ First Report and Order at 39 (noting that the $9.00 SLC will permit incumbent price cap LECs to recover their average common line revenues from 99 percent of their nonprimary residential and multiline business lines). Instead, it will contribute to the recovery of the cost of singleline business and residential loops, which have lower SLC and PICC caps. Centrex and PBX are functionally equivalent in most respects. Taking these factors into consideration, it would be inequitable to require Centrex users to cause its presubscribed IXC to bear a significantly larger PICC contribution than do similarlysized PBX users.  XK-x#36. Therefore, we will limit the PICC charges that may be assessed on IXCs serving Centrex customers on a linetotrunk equivalency basis, except where the multiline business SLC ceiling does not permit the recovery of all interstateallocated loop costs from the end user. In those instances, a somewhat greater PICC one that includes the difference between the perline loop cost and the multiline business SLC cap will be assessed on Centrex lines. Thus, for example, if on January 1, 1998, in a particular region the loop cost is $9.40,  X-and the maximum permitted multiline business PICC is being assessed, i.e., $2.75, each Centrex line would be assessed a $0.71 PICC, which is equal to oneninth of $2.75 plus the difference between the $9.40 loop cost and the $9.00 SLC.  Xg-x$37. In determining the appropriate linetotrunk equivalency ratio, we consider several factors. First, we observe that many states, but not all, already have trunk equivalency tables for their intrastate tariffs. USTA has indicated that although these tables are similar, they are"9C0*&&aa"  X-not identical.ND0 {Oy-ԍ USTA September 25 Letter at 2.N For example, USTA states that a Centrex customer with 70 lines is equivalent  X-to a PBX customer with 13 trunks,rEZ0 {O-ԍ USTA Petition at 3. See also USTA September 25 Letter at 8.r while Ameritech states that in Illinois, the equivalency  X-tariff for 70 Centrex lines is 8 PBX trunks.SF0 {Oo-ԍ Ameritech September 17 Letter at 4.S Adopting the trunk equivalency ratios set out in intrastate tariffs would result in different equivalency ratios being used in different states and would not provide a trunk equivalency ratio for many states. Because the trunk equivalency ratio we adopt today is for an interstate charge, a national standard for trunk equivalency ratio is appropriate.  XH-x%38. We also desire administrative ease in calculating trunk equivalency. Adoption of a single ratio would simplify the assessment of PICCs on Centrex lines by eliminating the use of multiple ratios from multiple tables or state tariffs. IXCs would have the benefit of knowing that they will be assessed a set fraction of the PICC for each Centrex line that is presubscribed to their service, even when Centrex customers have lines presubscribed to different IXCs. Therefore, we have elected to adopt a single trunk equivalency ratio for establishing PICC charges for all Centrex lines. USTA suggested a ratio of nine (9) Centrex lines to one (1) PBX trunk. It bases its recommendation on the average of the weighted average trunk equivalency ratios or relationship between NARs and Centrex lines that are  Xy-employed in several jurisdictions.NGy~0 {O-ԍ USTA September 25 Letter at 2.N Applying a 9:1 ratio would result in a maximum PICC on Centrex lines of approximately $0.30 per line in 1998 for the overwhelming majority of Centrex lines. We note that the ratio under some state tariffs can approach 18 to 1 for certain  X4-Centrex customers.SH40 {O-ԍ Ameritech September 17 Letter at 3.S Reducing the PICC from up to $2.75 to less than $0.31 achieves the goal of spreading the PICC contribution more equitably among multiline business customers. Using a more complicated approach to establish equivalency may only add a marginal benefit, increasing or reducing PICCs by less than $0.16, and does not outweigh the additional administrative costs. We adopt the 9:1 ratio proposed by USTA, finding it to be reasonable and administratively simple.  X-x&39. Time Warner is correct in observing that our treatment of Centrex arrangements  X|-differs from how we addressed ISDN service in the First Report and Order. There, we set the SLC for PRI ISDN to be up to five times the amount assessed multiline business subscribers, because that figure reflects the ratio of nontraffic sensitive loop costs associated with PRI ISDN service to nontraffic sensitive costs associated with other multiline business"9H0*&&aa"  X-loops.SI0 {Oy-ԍ First Report and Order at  116.S We also elected to permit incumbent LECs to assess up to five PICCs on PRI ISDN service because "prohibiting incumbent LECs from charging as many as five PICCs for PRI ISDN service could prevent them from recovering the common line costs associated with  X-providing PRI ISDN service in cases where the common line costs exceed the SLC ceiling."SJZ0 {O-ԍ First Report and Order at  118.S  X-x'40. In both our treatment of ISDN lines and Centrex lines, our goal is to establish an  Xv-equitable sharing of the multiline business PICC. Prior to the adoption of the First Report  Xa-and Order, we had no rules relating to the PICC. We had no evidence to the contrary that the assessment of five PICCs for PRI ISDN was inappropriate, so we elected to be consistent as between SLC and PICC assessment. Previously, however, ISDN lines could be charged up  X -to 24 SLCs.ZK 0 {O-ԍ First Report and Order at 11112.Z The adjustment from 24 SLCs to five SLCs and five PICCs does not create  X -undue hardship on ISDN subscribers, and the First Report and Order should reduce their overall rates.  X -x(41. Time Warner also argues that imposing the PICC on Centrex on a perline basis is part of the Commission's access charge transition to a more costcausative rate structure. Although the multiline PICC is part of our transition, this alone does not justify requiring Centrex customers to make a greater contribution toward recovery of the loop cost of residential customers than do PBX customers. Teleport's assertion that petitioners are exaggerating the impact of the PICC on Centrex users, because the amount of the charge is substantially less than the SLC, ignores the fact that the SLC recovers the additional costs imposed by Centrex customers, while the PICC does not.  X-x)42. We deny ICA's petition that we not assess PICCs on tollrestricted Centrex lines. Although the PICC is assessed upon IXCs for all lines that are presubscribed to an IXC, the PICC is not a charge based on toll usage or on the ability to place toll calls. The Commission anticipated that some lines might not be used for long distance when it adopted a rule allowing PICCs to be assessed directly upon end users for any line not presubscribed to  X-an IXC.VL~0 {O -ԍ See First Report and Order at 92.V The fact that tollrestricted Centrex lines incur no longdistance charges is,"L0*&&aa"  X-therefore, irrelevant.M"0 yOy-ԍ We note that the Commission is presently considering whether to waive the PICC for tollrestricted Lifeline users and recover that revenue through Universal Service. FederalState Joint Board on Universal  {O -Service, et. al., CC Docket No. 9645, et. al., Second Further Notice of Proposed Rulemaking, FCC 97317 (rel. Sept. 4, 1997). Multiline businesses, however, are not eligible for Lifeline service. Also, costs for these lines are assigned to the interstate jurisdiction by separations, regardless of whether the lines are tollrestricted.  X- #J:\ACCESS.REF\RECON\CENTREX# J:\ACCESS.REF\RECON\TIC  IV. TRANSPORT TP  X-A.xTIC Exemption  X_- x1.` ` Background  X1-x*43. The Commission created the TIC originally as a residual charge to ensure that its adoption of the 1992 interim transport rate structure was revenueneutral for the incumbent LECs. As such, the Commission required that the TIC be assessed on a perminute basis on  X -all interstate access customers that interconnect with the LEC switched access network.N 0 yOO-ԍ Transport Rate Structure and Pricing, Report and Order and Further Notice of Proposed Rulemaking, 7  {O-FCC Rcd 7006, 7038 (1992) ("First Transport Order"). A portion of the TIC represented the 80 percent of the costs of the tandem switch remaining after the Commission set the tandemswitching rate to recover only 20 percent of the tandemswitching revenue requirement. The rest of the revenues collected from the TIC represented costs previously recovered through transport charges that could not, at that time, be associated definitively with specific facilities or services related to transport. The Commission stated in  Xb-the First Transport Order that, in addition to tandemswitching costs, the TIC likely recovered: (a) costs more appropriately recovered through other rate elements; (b) costs that more properly belong in the intrastate jurisdiction, but that the Part 36 jurisdictional separations rules allocate to the interstate jurisdiction; (c) costs of facilities that were then in place, but not needed for transport under the more efficient transport rate structure being adopted; and (d) costs of notfullydepreciated copper plant that was nevertheless being  X-replaced by less expensive fiber optic facilities.NO 0 {O-ԍ First Transport Order at 7046.N The Commission also cited assertions by parties to that proceeding that the TIC also recovered (e) general support facilities (GSF) and central office equipment (COE) maintenance expenses and GSF investment that were  X-overallocated to the transport category;QP0 {O"-ԍ First Transport Order at 706364.Q and (f) additional costs that the Commission had not  X~-then identified.<Q~0 0 {O_%-ԍ Id. at 7066.<"~ Q0*&&aah"Ԍ X-ԙx+44. In reviewing the Commission's interim transport rate structure, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) found that the just and  X-reasonable rates required by Sections 201 and 202 of the Communications ActER0 yOK-ԍ 47 U.S.C. 201202.E must ordinarily be costbased, absent a clear explanation of the Commission's reasons for a  X-departure from costbased ratemaking.SX0 {O-ԍ Competitive Telecommunications Ass'n v. FCC, 87 F.3d 522, 529 (D.C. Cir. 1996) ("CompTel"). The D.C. Circuit, therefore, directed the Commission to develop a costbased alternative to the TIC, or to provide a reasoned explanation for its  Xv-departure from the principles of costbased ratemaking.;Tv0 {O -ԍ Id. at 533.;  XH-x,45. In the First Report and Order, we reformed the TIC and set forth a plan that will eliminate perminute TIC charges over the next few years. We initially identified TIC amounts that could be associated with particular network facilities and directed incumbent LECs to reallocate these TIC amounts to access rate elements more closely corresponding to those network facilities. These LECs will perform the required reallocations in access tariffs filed to become effective January 1, 1998, with some exceptions. For example, the portion of tandemswitching costs that the Commission initially allocated to the TIC will be reallocated to the tandemswitching rate element in three approximately equal steps concluding January 1, 2000. In addition, the costs of the incumbent LECs' tandemswitched transport transmission facilities that are not recovered from tandemswitched transport users under the unitary rate structure will be recovered through the TIC until July 1, 1998.  X6-x-46. For price cap LECs, the "residual TIC," consisting of amounts that the LEC has not reallocated as described above, will be recovered through perline PICCs, to the extent possible while remaining within the PICC caps. Residual TIC amounts that the price cap LEC cannot recover through PICCs will be recovered through a perminute TIC on originating access, up to a cap, with any remainder recovered from perminute charges assessed on terminating access.  X-x.47. In the First Report and Order, we recognized that the perminute TIC, because it is assessed on all transport minutes carried on facilities that interconnect with the incumbent LEC's local switch, may give the incumbent LEC a competitive advantage in the transport market. We therefore provided a TIC exemption for switched minutes carried by competitive access providers (CAPs) that interconnect with the incumbent LEC switched access network at the end office, stating that, "if the incumbent LEC's transport rates are kept artificially low and the difference is recovered through the TIC, competitors of the incumbent LEC pay some" |T0*&&aa["  X-of the incumbent LEC's transport costs."SU0 {Oy-ԍ First Report and Order at  240.S This TIC exemption is scheduled to take effect on  X-January 1, 1998.VZ0 {O-ԍ Access Charge Errata at  4 (adding new para. 461 to the First Report and Order).  X-x 2.` ` Petitions for Reconsideration and Petitions for Stay  X-x` ` a. AT&T and Teleport  X_-x/48. On reconsideration, AT&T and Teleport request that we permit the perminute residual TIC exemption for switched minutes carried by CAPs that interconnect with the incumbent LEC switched access network at the end office to take effect immediately, rather  X -than on January 1, 1998.[W 0 yO-ԍ Teleport Petition at 24; AT&T Petition at 1012.[ According to Teleport, the Commission, having recognized that the imposition of TIC charges on CAPtransported minutes is "inconsistent with the procompetitive goals of the 1996 Act," should not permit the practice to continue throughout the  X -balance of calendar 1997.CX |0 yO-ԍ Teleport Petition at 34.C In their comments, MCI, Hyperion, TRA, and Time Warner  X -support this request.Y 0 yO{-ԍ Time Warner Comments at 1516; MCI Comments at 15; TRA Comments at 15; Hyperion Comments at 24.  X-x049. Bell Atlantic and GTE oppose this request, arguing that the TIC exemption effectively disallows costs that the incumbent LECs will continue to incur. In support of this argument, Bell Atlantic and GTE contend that the incumbent LECs will be unable to impose TIC charges in areas where they face transport competitors. Because the Commission's rules permitting reallocation of facilitiesrelated TIC amounts to other rate elements do not take effect until January 1, 1998, Bell Atlantic and GTE argue that it would be inappropriate to  X-permit the TIC exemption to take effect at an earlier date.ZZd 0 yO-ԍ Bell Atlantic Comments at 7; GTE Comments at 13.Z Bell Atlantic maintains that the relief that AT&T and Teleport seek would produce an unjustified windfall to them and other" Z0*&&aa"  X-CAPs._[0 {Oy-ԍ Bell Atlantic Comments at 78 (citing NYNEX Petition for Stay Pending Judicial Review, filed July 23, 1997 ("NYNEX Stay Petition")). Bell Atlantic and NYNEX completed their merger after NYNEX filed its  {O -Petition for Stay, but before the pleading cycle closed in this proceeding. See Applications of NYNEX Corporation, Transferor, and Bell Atlantic Corporation, Transferee, For Consent to Transfer Control of NYNEX Corporation and Its Subsidiaries, File No. NSDL9610, Memorandum Opinion and Order, FCC 97286 (rel. Aug. 14, 1997)._ Bell Atlantic and GTE propose that we instead revise the rule to prevent the TIC  X-exemption from taking effect at any time.\D0 {O-ԍ Bell Atlantic Comments at 7; GTE Comments at 13. See also USTA Comments at 78.  X- x` ` b. RCN  X-x150. RCN argues that the TIC exemption contained in the First Report and Order preserves the incumbent LECs' competitive advantage because it exempts CAPtransported minutes only from the "residual" TIC. In making this argument, RCN interprets the term "residual TIC" to include only nonfacilitiesrelated TIC amounts. Under RCN's interpretation, the "residual TIC" would not include facilitiesrelated TIC amounts that will  X -remain in the TIC until they are reallocated as late as January, 2000.>] 0 yO-ԍ RCN Petition at 89.> MCI indicates in its comments that it shares RCN's concern and requests that the Commission clarify that the TIC  X -exemption for CAPtransported minutes applies to the perminute TIC in its entirety.@^ f 0 yO-ԍ MCI Comments at 1314.@  X - x` ` c. U S West and NYNEX Petitions for Stay  X-x251. NYNEX and U S West separately have filed petitions requesting that the Commission stay the effectiveness, pending appeal, of 47 C.F.R. 69.155(c), the rule we  Xd-adopted in the First Report and Order prohibiting local exchange carriers from assessing the perminute residual TIC on traffic that uses the LEC's local switching services, but that does  X8-not use the LEC's local transport services._8 0 yO-ԍ NYNEX Petition for Stay; U S West Petition for Partial Stay Pending Judicial Review, filed August 14, 1997 ("U S West Petition for Stay"). NYNEX and USWest argue that such a stay is warranted because they are likely to prevail on the merits of their respective appeals and that  X -the balance of equities favors a stay.j` N 0 yO #-ԍ NYNEX Petition for Stay at 89; U S West Petition for Stay at 6.j NYNEX and USWest further argue that the rule should be stayed in its entirety, to allow them to recover the entire perminute TIC, without regard for the transport provider. In the alternative, however, NYNEX requests a partial stay to allow it to so recover the nonfacilitiesrelated portion of the TIC."`0*&&aa"Ԍ X-ԙx352. Procedurally, NYNEX maintains that the Commission failed to offer an adequate opportunity for public comment on the residual TIC exemption, in that the Commission's  X-Access Charge Reform NPRM failed to provide adequate notice of the TIC exemptionKa0 yOK-ԍ NYNEX Petition for Stay at 1819.K and  X-that the Commission improperly relied on a CompTel/Teleport ex parte presentation made  X-three weeks before the Order was adopted.lbX0 {O-ԍ NYNEX Petition for Stay, Errata, filed July 24, 1997, at 19.l Several commenters counter that the Commission's NPRM in this proceeding gave adequate notice, and that the TIC exemption is  Xz-a "logical outgrowth" of the NPRM.+cXz0 yO -ԍ MCI Comments on NYNEX Petition for Stay at 45; Teleport Comments on NYNEX Petition for Stay at 1114; WorldCom Comments on NYNEX Petition for Stay at 9; LBC Comments on NYNEX Petition for Stay at 2; Time Warner Comments on NYNEX Petition for Stay at 1317.+  XL-x453. Substantively, NYNEX argues that the Commission's decision to prohibit assessment of the residual TIC on minutes that use CAP transport networks is inconsistent with the Commission's findings that a large portion of the TIC is not related to any specific  X -transport or other facilities.Kd 0 yO-ԍ NYNEX Petition for Stay at 1011.K In opposition, several parties argue that the TIC exemption is consistent with the Commission's finding that the TIC creates a competitive advantage for the incumbent LEC and with the Commission's reliance on a marketbased approach to access  X -reform.e 0 yO -ԍ LBC Comments on NYNEX Petition for Stay at 2; WorldCom Comments on NYNEX Petition for Stay at 34; Time Warner Comments at 89. MCI argues that the Commission's inability to identify every dollar in the TIC is caused by NYNEX's and other incumbent LECs' own failures to explain their claim that these  X-costs have been incurred and to justify their recovery.Wf 0 yO7-ԍ MCI Comments on NYNEX Petition for Stay at 7.W WorldCom asserts that, because the TIC can be traced to the incumbent LECs' transportrelated costs, the Commission properly placed the burden on incumbent LECs to recover the TIC only from their own transport  XO-customers.^gO 0 yO-ԍ WorldCom Comments on NYNEX Petition for Stay at 56.^ Teleport asserts that the TIC keeps incumbent LEC transport rates artificially low, not only to the extent that TIC amounts are related to specific transport facilities, but also to the extent that the TIC compels competitors to pay TIC charges, thereby allowing  X -LECs to establish transport rates that do not fully recover their costs, whatever the source.^h 0 yO#-ԍ Teleport Comments on NYNEX Petition for Stay at 78.^ "h0*&&aa'"Ԍ X-x554. NYNEX also argues that the Commission has failed to explain why it is reasonable for the LEC to recover both servicerelated and nonservicerelated TIC amounts  X-from PICCs, but neither component from the perminute residual TIC.i0 {OK-ԍ NYNEX Petition for Stay at 1112; See also SWBT Comments on NYNEX Petition for Stay at 12. Several commenters counter that the Commission's application of costcausation principles to conclude that CAPs should not be responsible for TIC charges for traffic that does not traverse LEC transport  X-facilities is consistent with the Commission's other decisions reached in the First Report and  Xx-Order.hjxZ0 {O -ԍ E.g., Teleport Comments on NYNEX Petition for Stay at 9.h Time Warner argues, however, that, if the recovery of residual TIC revenues through PICCs, but not through perminute charges is inconsistent with the Commission's approach to the residual TIC, the solution should be to amend the rule to prevent the imposition of any residual TIC amounts, whether through PICCs or through perminute  X -charges, where a CAP provides the transport service.`k 0 yO-ԍ Time Warner Comments on NYNEX Petition for Stay at 10.`  X -x655. NYNEX also argues that the use of price cap Xfactor reductions to decrease the perminute TIC will effectively reallocate the perminute residual TIC to other rate elements as the perminute TIC is reduced to the exclusion of all other rate elements. According to NYNEX, the residual TIC is completely excluded only to the extent that the Xfactor targeting has not reallocated it to a permitted rate element. NYNEX argues that the Commission has not offered a justification for disallowing TIC recovery only during this  Xf-transition period.Hlf|0 yO-ԍ NYNEX Petition for Stay at 12.H  In opposition, Teleport argues that the Commission's stated justification that perminute charges assessed on all switched access minutes, including those of CAPs,  X8-adversely affects the development of competition is adequate.\m8 0 yO-ԍ Teleport Comments on NYNEX Petition for Stay at 9.\  X -x756. NYNEX argues that the CAP TIC exemption is arbitrary in that it will have a disproportionately harsh effect on NYNEX, and that this nonuniform impact will hinder the  X-development of "full and fair" competition.Pn0 yO) -ԍ NYNEX Petition for Stay at 1314, 17.P Similarly, U S West argues that, by making it difficult or impossible for it to collect the perminute TIC, the TIC exemption is contrary to  X-the Commission's decision not to disallow any portion of the current TIC.Ko, 0 yO#-ԍ U S West Petition for Stay at 10.K Many commenters counter, however, that the mere allegation of a disproportionate impact is legally" o0*&&aa"  X-irrelevant and does not justify the stay.pX0 yOy-ԍ LBC Comments on NYNEX Petition for Stay at 2; WorldCom Comments on NYNEX Petition for Stay at 78; MCI Comments on NYNEX Petition for Stay at 9; Time Warner Comments on NYNEX Petition for Stay at 11. Several commenters state that, instead, the imposition of perminute TIC charges on CAP transport minutes inhibited competition because (1) it made it easier for incumbent LECs to underprice their own transport services because transport revenues could be partially collected from a charge that would be subject to less competition; (2) it guaranteed the incumbent LEC a revenue stream not available to competitors; and (3) it required nascent competitive entrants to transfer revenues to their  Xv-largest competitors.qv0 yO -ԍ WorldCom Comments on NYNEX Petition for Stay at 4; Teleport Comments on NYNEX Petition for Stay at 11. These commenters argue that the LECs' loss of their unfair competitive advantage, therefore, will promote, rather than hinder, competition.  X1-x857. NYNEX also argues that the TIC exemption contradicts the Commission's conclusion that access reform, in itself, should not produce overall rate reductions because the price cap LECs' perminute TIC revenues are likely to be less than those calculated in the restructure. As a result, the price cap LECs will be unable to collect the full amount of revenues from perminute residual TIC rates or PICCs that will be included in their January 1,  X -1998, tariff revisions.Kr @0 yO-ԍ NYNEX Petition for Stay at 1415.K In opposition, several parties argue that NYNEX should not be guaranteed TIC revenues, but should be pressured by competition to reduce the disparity  X-between its prices and those of its competitors.s0 yO-ԍ Teleport Comments on NYNEX Petition for Stay at 10; Time Warner Comments on NYNEX Petition for Stay at 1112. MCI cites the fact that NYNEX itself  Xy-submitted a plan that would have eliminated 80 percent of the TICWty( 0 yOR-ԍ MCI Comments on NYNEX Petition for Stay at 2.W and states that the Commission's decision to preclude imposition of TIC charges where such charges would impair the development of competition is consistent with the Commission's other actions designed to promote competition and eliminate the TIC as quickly as possible through price  X-cap reductions and competitive pressures.uX 0 yO -ԍ MCI Comments on NYNEX Petition for Stay at 8 ("If competition will prevent NYNEX from recovering inefficient costs, this is not an unexpected harm, it is precisely the goal the Commission adopted, and explained, for all incumbent LECs").  X-  X-x958. NYNEX and U S West argue that an exemption for the servicerelated portion of the TIC is inconsistent with the Commission's continued reliance on subsidization of tandem"u0*&&aa"ԫ X-switching rates by directtrunked transport customers until December 31, 1999.lv0 yOy-ԍ NYNEX Petition for Stay at 1516; U S West Petition for Stay at 7.l Several commenters counter that the TIC exemption is the only course consistent with the  X-Commission's approach to fostering competition and with the CompTel remand's directive to  X-adopt a costcausative transport rate structure.wX0 yO-ԍ WorldCom Comments on NYNEX Petition for Stay at 67; Teleport Comments on NYNEX Petition for Stay at 10; MCI Comments on NYNEX Petition for Stay at 89. Time Warner further argues that the appropriate remedy would be to allow incumbent LECs to petition the Commission for  X-permission to make a faster transition to costbased tandemswitching rates than the First  Xz-Report and Order timetable permits.cxz0 yO -ԍ Time Warner Comments on NYNEX Petition for Stay at 1213.c  Xe-  XN-x:59. U S West argues that, after January 1, 1998, the TIC will consist of implicit tandem switching and universal service support subsidies (including the higher costs of providing rural transport) and that the TIC exemption results in a collection system for this  X -subsidy that is nonsustainable, discriminatory, and inequitable.My @0 yO-ԍ U S West Petition for Stay at 710.M MCI counters that, because both of these categories of costs are transportrelated, the Commission correctly provided a  X -TIC exemption for CAPprovided transport.Zz 0 yO\-ԍ MCI Comments on U S West Petition for Stay at 4.Z MCI states that revenueneutrality was not a Commission goal in this proceeding; rather, the introduction of competition can be expected  X -to place downward pressure on prices.9{ ` 0 {O-ԍ Id. at 6.9 Furthermore, several commenters argue that, because local transport, whether rural or otherwise, has never been a service eligible for universal service support, U S West's argument that the TIC contains implicit universal  Xh-service subsidies is inaccurate.|h 0 {O -ԍ Id. at 9; LBC Comments on U S West Petition for Stay at 3; Teleport Comments on U S West Petition for Stay at 7. Several commenters also contend that the Commission's established remedy, zonebased deaveraging of transport rates, provides U S West with an  X:-adequate opportunity to recover TIC amounts related to the higher costs of rural transport.}:L 0 yO7!-ԍ MCI Comments on U S West Petition for Stay at 10; Teleport Comments on U S West Petition for Stay at 8. " }0*&&aaF"Ԍ X-x 3.` ` Discussion  X-x;60. We decline to modify the effective date of 47 C.F.R. 69.155(c) as AT&T and Teleport request. Although some of the Commission's actions to reform the interstate access charge system took effect in access tariffs filed to become effective July 1, 1997, the majority of the Commission's rate structure changes take effect on January 1, 1998, or later. Because the TIC exemption at issue here is one part of our larger effort to reform the system of interstate access charges to preserve and promote competition, we believe that the rule should take effect on January 1, 1998, at the same time as many of our other rules relating to the transport rate structure. Incumbent LEC access tariffs filed to become effective on that date will reallocate many of the currentlyidentified facilitiesrelated TIC amounts to other rate elements. In addition, on January 1, 1998, for the first time, the incumbent LECs will begin collecting remaining TIC amounts from PICCs assessed to IXCs on a flatrate, perline basis. Because a portion of the TIC, including some facilitiesrelated TIC amounts, will be allocated to PICCs on January 1, 1998, we conclude that the extent of the exemption we adopt here will not be evident until these tariff revisions take effect. Thus, we conclude that the exemption should take effect only in concurrence with the implementation of the PICC.  Xb-x<61. We agree with RCN and MCI that we should clarify the extent of the TIC  XK-exemption described in the First Report and Order.S~K0 {O-ԍ First Report and Order at  240.S In addition, in response to concerns  X6-raised in NYNEX's and U S West's petitions for stay, we reconsider on our own motion&6Z0 yOA-ԍ 47 C.F.R. 1.108. Under longestablished Commission practice, the filing of a petition for  {O -reconsideration tolls the thirty day period our rules provide for sua sponte reconsideration. E.g., Central Fla.  {O-Enters., Inc. v. FCC, 598 F.2d 37, 48 n.51 (D.C. Cir. 1978), cert. dismissed, 441 U.S. 957 (1979), and cert.  {O-denied 460 U.S. 1084 (1983); Radio Americana, Inc. 44 F.C.C. 2506, 2510 (1961).  X-our adoption of the TIC exemption provided in the First Report and Order. Upon further  X -consideration, we conclude that the TIC exemption provided in the First Report and Order could provide an unjustified windfall to competitive providers of local transport. Because the nonfacilitiesrelated portion of the residual TIC does not relate to the use of the incumbent LEC's interstate transport facilities, we need not exempt competitors from paying this portion of the TIC in order to prevent them from paying for the incumbent LEC's transport when that transport is not used. Therefore, incumbent LECs may continue, after January 1, 1998, to assess upon all local switching traffic that portion of their perminute TIC charges that they do not anticipate will be reallocated in the future to facilitiesbased rate elements. This is the only portion of the perminute TIC, however, that may be assessed upon traffic that uses the incumbent LEC's local switching services, but that does not use the incumbent LEC's local transport services. Under this rule, interexchange traffic that is switched at the incumbent LEC's local switch, but that is not transported on the incumbent LEC's local transport network, will be subject to the perminute TIC, less the portion of the perminute TIC"H0*&&aa" attributable to incumbent LEC tandemswitching and tandemswitched transport transmission costs that have not yet been reallocated to facilitiesbased rate elements. In access tariff revisions filed to become effective January 1, 1998, incumbent LECs must show all such facilitiesrelated amounts that they anticipate will be reallocated in the future, including appropriate documentation, and calculate separate perminute TIC charges for those minutes that use the incumbent LEC's local transport facilities and those that do not.  X_-x=62. In remanding the interim rate structure, the D.C. Circuit instructed the Commission to "move expeditiously . . . to a costbased alternative to the [TIC], or to provide a reasoned explanation of why a departure from costbased ratemaking is necessary and  X -desirable in this context."H 0 {O -ԍ CompTel, 87 F.3d at 532.H For our rate structure to be "costbased," costs must be recovered (1) only from the party that causes the costs to be incurred; and (2) in the manner in which  X -the costs are incurred (e.g., nontrafficsensitive costs should be recovered on a nontraffic  X -sensitive basis). Z0 {O-ԍ Our discussion here focusses on the development of a cost based rate structure, but does not address the  {O-separate question concerning the development of costbased rate levels. See, e.g., 47 U.S.C. 252(d)(1)(A)(i)  {Ov-(requiring that rates for interconnection and unbundled network elements be costbased); First Report and Order at  263 (concluding that a primarily marketbased approach to reforming access charges and controlling rate levels would better serve the public interest than prescriptive action to set rate levels at forwardlooking economic cost).  X -x>63. Our First Report and Order identified certain costs within the TIC that more properly should be recovered through other access rate elements. These costs include additional trunking costs left unrecovered by rates set assuming a uniform loading of 9000 minutes of use per month on shared trunks, rather than rates set using actual traffic levels, as well as misallocated costs of central office equipment maintenance. In addition, we identified costs related to multiplexing, SS7 signalling, and host/remote trunking that are currently  X!-recovered through the TIC.[!0 {O-ԍ First Report and Order at  210223.[ LECs must reallocate all of these costs to facilitiesbased rate elements in access tariffs filed to become effective January 1, 1998. In addition, one third of the 80 percent of the costs of the tandem switch currently assigned to the TIC will be reallocated to the tandem switching rate element on that date.  X-x?64. After January 1, 1998, the costs contained in the TIC that the Commission has identified as facilitiesrelated will have two primary sources. The majority of the facilitiesrelated TIC will consist of the portion of the incumbent LEC's tandemswitching costs not yet reallocated to the tandemswitching rate element. These costs will be reallocated to the tandemswitching rate element in two additional installments in tariffs filed to become effective on January 1, 1999, and January 1, 2000. In addition, from January 1, 1998, until";j 0*&&aa" July 1, 1998, the TIC will also recover the costs of tandemswitched transport transmission facilities that are not recovered by the incumbent LEC from tandemswitched transport customers electing the unitary rate structure. These TIC amounts are also facilitiesrelated.  X-In the First Report and Order, we directed incumbent LECs to remove costs from the TIC "equal to the additional revenues realized from the new tandemswitched transport rates . . .  X-implemented in accordance with the [final transport] rate structure."R\0 {O-ԍ First Report and Order at  222. Targeted Xfactor TIC reductions will not eliminate this component of the facilitiesrelated TIC because these reductions only apply to nonfacilitiesrelated perminute TIC amounts.  {O-First Report and Order at  235238.R Because the threepart rate structure will not take effect until July 1, 1998, we require incumbent LECs to estimate in their tariffs filed to become effective January 1, 1998, the amount by which their tandemswitched transport transmission revenues will increase under the threepart rate structure. This amount, currently contained in the TIC, is facilitiesrelated and therefore subject to the exemption described in this order.  X -x@65. Neither the tandemswitching costs nor the tandemswitched transport transmission costs contained in the TIC relate to facilities used by purchasers of competitive alternatives to the incumbent LEC's transport facilities. The D.C. Circuit remanded the interim transport rate structure to the Commission in part because that rate structure did not recover the costs of  X-the tandem switch in a costcausative manner. Our First Report and Order, in reallocating these costs, remedies this situation as expeditiously as possible while minimizing the potential for rate shock that otherwise might accompany such a shift. Because these costs are incurred on behalf of the incumbent LEC's own transport operation, however, it would be inconsistent with the principles of costcausation to prolong the recovery of these costs from users of competing transport facilities.  X-xA66. Our approach to access reform relies first on increasing marketbased pressures as competition develops to place downward pressure on access charge levels. We conclude that, for this approach to succeed, we should develop a rate structure that permits maximum competitive pressure on each incumbent LEC revenue stream, absent compelling public policy reasons to the contrary. It would impair the effectiveness of our marketbased approach for us to insulate a significant portion of the costs of the incumbent LEC's transport facilities from competition by mandating recovery of these costs from incumbent LEC competitors.  X;-xB67. We recognize that, during the twoyear transition period, our rules will continue to prohibit the incumbent LEC from allocating the full, embedded cost of the tandem switch to the tandemswitching rate element. The effect of our threestep reallocation process will be to permit a continued subsidy of the incumbent LEC's tandem switch by users of the incumbent LEC's directtrunked transport facilities and minimize any rate shock for tandem"0*&&aa"ԫ X-switched transport customers.9X0 yOy-ԍ Users of the incumbent LEC's directtrunked transport facilities, however, often use incumbent LEC tandemswitched transport facilities for overflow traffic at peak calling hours. These users, therefore, receive a portion of the benefits of the tandem switching subsidy.9 Because the incumbent LEC's competitors offering transport services will not be subject to this subsidy, they may enjoy a slight competitive advantage over the incumbent LEC.  X-xC68. We find, however, that the competitive benefits to be gained from recovering these costs only from the incumbent's customers and not from customers using competitive transport providers outweigh any potential dangers resulting from the small, temporary asymmetry caused by the TIC exemption we provide here. Even though the full costs of the incumbent LEC's tandem switch will not be borne by the users of the tandem switch until January, 2000, the effects of the TIC exemption will be reduced substantially before that time as the incumbent LEC collects an increasing proportion of the tandemswitching costs remaining in the TIC through PICCs. As discussed below, we continue to permit the incumbent LEC to assess the full PICC on each of its loops, without regard for the type or provider of the transport the IXC uses to transport the minutes generated by that loop from the end office to the IXC's facilities. As the portion of the incumbent LEC's tandemswitching costs that is recovered through the perminute TIC decreases, any potential adverse effects of this small asymmetry will rapidly decrease. In contrast, if we were to mandate recovery of this portion of the incumbent LEC's tandemswitching costs from all customers using the incumbent LEC's local switching facilities, without regard for whether they make use of the incumbent LEC's transport facilities, we would insulate this revenue from much of the pressure we anticipate will develop as competitors enter the local service and access markets. The resulting delay in competitive entry would be harmful to consumers, who will benefit most from increased competition.  X-xD69. We revise the TIC exemption contained in our First Report and Order, however, to permit the incumbent LEC to impose the remaining nontransport costs assigned to the TIC on all minutes switched by the incumbent LEC at its end office, without regard for whether those minutes are carried on incumbent LEC or competitive transport facilities. In contrast to the portion of the incumbent LEC's tandemswitched transport costs that will remain in the  Xg-TIC after January 1, 1998, we did not find in the First Report and Order that the remainder of the TIC could be associated definitively with particular interstate facilities on the record before us. Instead, we stated that a portion of these TIC amounts may result from the operation of the jurisdictional separations process, which allocates the costs of private line and switched services differently between the state and interstate jurisdictions, despite the fact that  X-these two types of services use comparable facilities.S0 {O$-ԍ First Report and Order at  225.S As a result, we recognized in the  X-First Report and Order the possibility that rates for directtrunked transport and tandem"z0*&&aa"ԫswitched transport transmission facilities may not recover the full amount of the costs of  X-switched facilities the separations process allocates to the interstate jurisdiction.30 {Ob-ԍ Id.3  X-xE70. We have recently begun a broad reexamination of the jurisdictional separations  X-process that may eventually correct this problem.Z0 yO-ԍ Jurisdictional Separations Reform and Referral to the FederalState Joint Board, CC Docket No. 80286, Notice of Proposed Rulemaking, FCC 97354 (rel. Oct. 7, 1997). In the meantime, however, we are unable to associate these TIC amounts with any particular interstate facilities. Instead, to the extent that this portion of the TIC may result in part from overallocation of costs to the interstate jurisdiction, thereby lowering intrastate rates, this portion of the TIC may be a form of  XH-implicit universal service support.|H0 {O -ԍ In the Local Competition Order, we permitted incumbent LECs to recover, for a limited period, of a charge equal to 75 percent of the TIC assessed on all interstate minutes traversing the incumbent LECs' local switches for which the interconnecting carriers pay unbundled local switching element charges. We permitted this charge based on our finding that the TIC, in part, consisted of contributions toward universal service. Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and  {O-Order, 11 FCC Rcd 15499, 1586269 (1996), aff'd sub nom. Competitive Telecommunications Ass'n v. FCC, 117 F.3d 1068 (8th Cir. 1997). As such, it would be inequitable to mandate recovery of this portion of the perminute TIC only from the incumbent LEC's transport customers. Because these amounts do not appear to be any more closely related to the incumbent LEC's interstate transport facilities than they are to any other interstate facilities of the incumbent, it is appropriate for all of the incumbent LEC's access customers, and not just its transport  X -customers, to pay a share of this portion of the perminute TIC. In the First Report and  X -Order, we stated our commitment to minimize the potential of the perminute TIC artificially  X -to suppress demand for interstate toll services.S 0 {OR-ԍ First Report and Order at  233.S Because the nonfacilitiesrelated TIC is composed of amounts that have not been demonstrated to reflect usagesensitive costs, it does have this undesirable effect. We have therefore required that it be eliminated expeditiously through targeting of the Xfactor reductions to the interconnection charge service category and  XO-through conversion of the residual TIC to a flatrated charge.3O 0 {O-ԍ Id.3  X!-xF71. In addition, we stated in the First Report and Order that a portion of the costs remaining in the TIC may result from our use of special access rates to develop initial geographicallyaveraged directtrunked transport and tandemswitched transport transmission  X-rates. We agreed in the First Report and Order that, while the use of such rates appears to have been appropriate in urban areas, these rates may not fully recover the higher costs of"0*&&aa"  X-transport in less densely populated rural areas.S0 {Oy-ԍ First Report and Order at  226.S Because we are unable to quantify these cost differences, and because it is likely that the cost differential varies greatly across LECs and across study areas served by the same LEC, we did not mandate any immediate reallocation of costs from the TIC to rural transport rates. Instead, we expect that, as competition develops, the incumbent LECs will come under increasing pressure to deaverage  X-transport rates under our existing deaveraging rules. We observe that, as with the costs discussed in the previous paragraph, recovery of rural transport costs through the TIC supports a conclusion that at least a portion of the nonfacilitiesrelated TIC may be related to the  XH-provision of universal service.4HZ0 yOS -ԍ U S West Petition for Stay at 8. In the NPRM in this proceeding, we sought comment on how universal service support received under the new universal service support mechanisms should be allocated to reduce interstate rates and stated that "[s]ome of those support amounts may reduce the amount that would otherwise be  {O -recovered through the TIC." Access Charge Reform, et. al., Notice of Proposed Rulemaking, Third Report and Order, and Notice of Inquiry, 11 FCC Rcd 21354, 21402 (1996) (NPRM).4 xG72. We also here clarify that the "residual TIC" that the incumbent LEC should recover from PICCs includes all TIC amounts that have not been reassigned to other facilitiesbased rate elements, including the portion of the incumbent LEC's tandem switching costs that have not been reassigned to the tandemswitching rate element in tariffs filed to become effective on January 1, 1998, and January 1, 1999. We direct price cap LECs that will recover only a portion of their residual TIC from PICCs to allocate nonfacilitiesrelated TIC  X-amounts and facilitiesrelated TIC amounts between PICCs and perminute charges on a pro  X{-rata basis. The incumbent LECs must reallocate the full amount of the costs of their tandem switch to the tandem switching rate element in installments on January 1, 1998, 1999, and 2000, whether they are then contained in perminute charges or in PICCs.  X!-xH73. Accordingly, we revise the TIC exemption contained in our First Report and  X -Order to permit the incumbent LEC, in tariffs filed to become effective January 1, 1998, to impose that portion of the perminute TIC that is not expected to be reassigned to particular facilities on a costcausative basis on all transport minutes switched at its end office, without regard for whether those minutes are carried on incumbent LEC or competitive transport facilities. Perminute TIC amounts that the LEC expects to reallocate to facilitiesbased rate elements, in contrast, may be assessed only on minutes transported on the incumbent LEC's own transport facilities. xI74. TIC amounts that a price cap LEC will recover through PICC charges may be assessed to an IXC for a particular loop without regard for the type or provider of the transport the IXC uses to transport the minutes generated by that loop from the end office to the IXC's facilities. Although certain price cap LECs will recover a portion of the costs of" 0*&&aa=" their tandemswitching facilities during the transition through PICCs from IXCs that do not use the price cap LEC's transport facilities to transport all of the minutes generated on a particular loop, the administrative difficulties associated with calculating partial PICCs in this context outweigh the benefits to be gained from doing so. If an IXC were to use a combination of competitive and incumbent LECprovided transport facilities between an end office and its serving wire center, it would be needlessly complicated to determine the portion of the minutes generated on each loop that were carried on competitive transport links. Furthermore, unlike the perminute TIC, the flatrated PICC will not substantially alter the incremental cost of additional transport minutes transported over competitive transport facilities. Thus, even if an IXC pays a full PICC, this payment will not affect the IXC's decision whether to purchase additional transport minutes from the incumbent LEC or a competitive transport provider. As a flatrated charge, the PICC will not artificially suppress demand for interstate toll telecommunications services. xJ75. In addition, the PICC is subject to competitive pressures, whether or not it recovers TIC amounts for traffic transported by the incumbent LEC's competitors. If the end user chooses an alternate provider of local service, the incumbent LEC will no longer recover any portion of the PICC for that loop. Thus, we conclude that the dangers associated with the recovery of the full PICC without regard for the transport provider are far more attenuated than the dangers that would be associated with recovery of facilitiesrelated costs from perminute TIC charges levied on competitive transport minutes. xK76. We deny the petitions filed by U S West and NYNEX requesting a stay of the  X-perminute TIC exemption rule.D0 yOh-ԍ In determining whether to stay the effectiveness of one of its rules or orders, the Commission uses the  {O0-fourfactor test established in Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958), as  {O-modified in Washington Metropolitan Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977). Under that test, petitioners must demonstrate that: (1) they are likely to succeed on the merits on review; (2) they would suffer irreparable injury absent a stay; (3) a stay would not substantially harm other interested parties; and (4) a stay would serve the public interest. We find that neither NYNEX nor U S West has satisfied any of the four factors for granting a stay. In light of the substantial relief we have granted above, however, we provide only a brief analysis here of the petitioners' arguments. The practical effect of our revisions to the TIC exemption, however, will be to provide a substantial portion of the relief sought in the stay petitions. In light of these revisions, we believe that the petitioners are unlikely to succeed on the merits on review, that they will not suffer irreparable injury absent a stay, that a stay would cause substantial harm to the incumbent LECs' competitors, and that the public interest is best served by the TIC exemption described here. With respect to the portion of the TIC related to the costs of the incumbent LEC's interstate transport facilities, we conclude that there are sound policy reasons underlying our decision to maintain this exemption and, consequently, we find against the petitioners here. " 0*&&aa>"ԌxL77. We conclude that NYNEX's objections to the sufficiency of our notice are without merit. The NPRM in this proceeding provided adequate notice of the TIC exemption we ultimately adopted. Our NPRM in this proceeding stated that "to the extent that any portion of the TIC should properly be included in LEC transport rates, other than the TIC, the TIC provides the LECs with a competitive advantage for their interstate transport services because incumbent LEC transport rates are priced below cost while the LECs' competitors using expanded interconnection must pay a share of incumbent LEC transport costs through the TIC....Our goal in this proceeding is to establish a mechanism to phase out the TIC in  XH-a manner that fosters competition and responds to the [CompTel] court's remand."DH0 yO -ԍ NPRM, 11 FCC Rcd at 21402.D We went on to state, in the section of the NPRM entitled "Possible Revisions to the TIC," that "our goals are to move towards significantly more costbased access rates and competition in the access and interexchange markets. The development of a competitive access market will be distorted by the assessment of the TIC as a surcharge on local switching. The TIC  X -therefore will be unsustainable."D X0 yO-ԍ NPRM, 11 FCC Rcd at 21407.D We sought comment on the extent to which various approaches to reducing the TIC would "achieve the goals of this proceeding" and asked parties to "address the relative merits of each [approach], or of other approaches that they may  X-suggest."D0 yO+-ԍ NPRM, 11 FCC Rcd at 21409.D We conclude therefore that, beyond reasonable question, our NPRM provided adequate notice of "the terms or substance of the proposed rule or a description of the subjects  Xd-and issues involved."Bdx0 yO-ԍ 5 U.S.C.  553(b)(3).B xM78. In any event, courts require only that the rule, as adopted, constitute a "logical  X-outgrowth" of the proposed rule.0 {O-ԍ E.g., National Mining Ass'n v. Mine Safety and Health Admin., 116 F.3d 520, 531 (D.C. Cir. 1997).ĩ To satisfy this standard, courts ask "whether 'the purposes  X-of notice and comment have been adequately served.'"1\0 {OS-ԍ National Mining Ass'n v. Mine Safety and Health Admin., 116 F.3d at 531 (quoting American Water  {O-Works Ass'n v. EPA, 40 F.3d 1266, 1274 (D.C. Cir. 1994) and Fertilizer Inst. v. EPA, 935 F.2d 1303, 1311 (D.C. Cir. 1991)).1 Factors to be considered include "whether a new round of notice and comment would provide the first opportunity for  X-interested parties to offer comments that could persuade the agency to modify its rule;"c 0 {OI#-ԍ American Water Works Ass'n v. EPA, 40 F.3d at 1274.c and whether "the notice given affords 'exposure to diverse public comment,' 'fairness to affected" P 0*&&aa"  X-parties,' and 'an opportunity to develop evidence in the record.'"B\0 {Oy-ԍ National Mining Ass'n v. Mine Safety and Health Admin., 116 F.3d at 531 (quoting Association of Am.  {OC-Railroads v. DOT, 38 F.3d 582, 589 (D.C. Cir. 1994) and Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 547 (D.C. Cir. 1983)).B We conclude that the NPRM language quoted above more than adequately meets this standard. The NPRM in this proceeding discussed possible revisions to the TIC rate element for nine full pages, sought comment on four specific TICreduction options, and invited commenters to suggest alternate  X-approaches.G0 yOA -ԍ NPRM, 11 FCC Rcd at 2140209.G The NPRM in this proceeding discussed expressly the anticompetitive problems associated with the payment of TIC charges by competitive providers of transport services, stated that the TIC would be "unsustainable" in that form, and sought comment on approaches to reform that would "achieve the goals of this proceeding," among which was the adoption of a transport rate structure that would foster competition. In such circumstances, we conclude that commenters should have anticipated that the Commission might eventually  X -adopt a TIC exemption for competitive transport providers,{ |0 {OG-ԍ See Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d at 549.{ that our NPRM afforded adequate notice of the Commission's eventual adoption of such an exemption, and that we provided an adequate opportunity for diverse public comment. xN79. In response to the NPRM, several commenters, in their initial comments, proposed TIC exemptions for competitive transport. WorldCom, for example, argued that, "the Commission should restructure the TIC rate element . . . in a manner that maximizes competitive pressure on the charge. As local and fullservice competition begin[s] to emerge, competitive carriers should be able to avoid the TIC to the extent that they win customers away from incumbent LECs. This will create competitive pressure for the LECs to reduce  X4-their TIC rate levels, without necessitating any prescriptive action by the Commission."840 {O-ԍ Access Charge Reform, et. al., CC Docket No. 96262, et. al, Comments of WorldCom, filed January 29,  {O-1997, at 65. See also id. at 6064 (opposing TICrecovery mechanisms that would have shielded the TIC  {O-revenue stream from competitive pressures because such mechanisms would, inter alia, eliminate marketbased downward pressures access rates, impede competitive entry, harm consumers, and provide incumbent LECs with an unjustified revenueentitlement). 8  X-The fact that several commenters raised this solution in their comments, and in subsequent ex  X-parte filings, supports our conclusion that the NPRM adequately raised this issue. xO80. We also conclude that NYNEX's claims of irreparable harm are without merit. Although the TIC exemption may impact some incumbent LECs differently from others, the same can be said for virtually all of the rules we adopt, simply because of differences in the circumstances and business climate facing each LEC. Our focus in the context of a stay petition must be on individualized allegations of irreparable harm. We find that neither"! 0*&&aa" petitioner has met that standard with respect to the TIC exemption we provide in this Order.  X-Mere financial or economic losses do not, in and of themselves, constitute irreparable harm.m0 {Ob-ԍ Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir 1985).m In addition, because this portion of the perminute TIC is likely to be relatively small, in relation to the remainder of the TIC and other transport charges, the incumbent LECs are unlikely to suffer largescale competitive losses as a result of the exemption, as modified here. In any event, we have long held that "revenues and customers lost to competition which can  Xv-be regained through competition are not irreparable."&vZ0 yO -ԍ Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Order, 11  {OI -FCC Rcd 11754, 1175657 (1996) (quoting Central & S. Motor Freight Tariff Ass'n v. United States, 757 F.2d  {O -301, 309 (D.C. Cir. 1985), cert. denied, 474 U.S. 1019 (1985)) (denying stay of certain provisions of the Local  {O -Competition Order).  XH-xP81. In contrast, continued subsidy of the incumbent LECs' tandem switching facilities by competitors is incompatible with the development of competition in the local market. Without an exemption permitting new entrants to cease subsidizing incumbent LEC transport facilities, the incumbent LEC's revenue stream from facilitiesrelated, perminute TIC charges would be insulated from competition. These new entrants, having already shouldered financial burdens in seeking to compete with the established monopoly incumbent LEC, should not be required in addition to subsidize the facilities of the incumbent LEC against whom they compete. Such a result would cause continued harm to these new entrants, and would further delay the public interest benefits of competition. Thus, we conclude that the petitioners have failed to satisfy either of the last two factors we must consider in evaluating their stay petitions. Accordingly, we deny the stay petitions.  X4- J:\ACCESS.REF\RECON\TIC J:\ACCESS.REF\RECON\111 B.xDeaveraged TandemSwitched Transport Transmission Rates xQ82. We also take this opportunity to amend the language of section 69.111(c)(1) to specify the manner in which minutes are to be determined through June 30, 1998, in calculating tandemswitched transport transmission rates when an incumbent LEC has deaveraged rates by density zone. Section 69.111(c)(2), which applies after July 1, 1998,  X-includes such language. The First Report and Order did not intend to take away the ability of incumbent LECs to deaverage transport transmission rates if they have met the requisite qualifications. Finally, we amend the references to section 69.124 in section 69.111 to refer to section 69.123.  I#J "P"H0*&&aa "  X- I#J  J:\ACCESS.REF\RECON\111 (J:\ACCESS.REF\RECON\RATOFRET.URN(  V. RATEOFRETURN LECs TP  X-xR83. In the First Report and Order, we took steps to adopt, inter alia, a costbased  X-transport rate structure and to comply with the D.C. Circuit's CompTel remand.E0 {O6-ԍ Comptel, 87 F.3d 522.E As  X-acknowledged in the First Report and Order, the CompTel remand applied to rateofreturn  X-LECs as well as price cap LECs.SZ0 {O-ԍ  First Report and Order at  335.S xS84. Upon further consideration, we recognize that, absent clarification, some language  XN-in the First Report and Order may be ambiguous in delineating which of our decisions applied to all incumbent LECs, including rateofreturn LECs. For example, in Section III.C.  X" -of the First Report and Order, we directed "all incumbent LECs to discontinue the unitary rate structure option for the transmission component of tandemswitched transport, effective  X -July 1, 1998."S 0 {O-ԍ  First Report and Order at  175.S In contrast to this language, we stated at paragraph 335 in the First Report  X -and Order that we had restricted "application of the rules we adopt in this proceeding to the incumbent price cap LECs, with [three] limited exceptions," for: (1) "universal service support to the interstate revenue requirement for all incumbent LECs in Section VI.D;" (2) "the changes to the TIC that we adopt[ed] in Section III.D . . . will also apply to rateofreturn incumbent LECs;" and (3) "in Section VI.A . . . our exclusion of unbundled network elements from Part 69 access charges applies to all incumbent LECs." xT85. We take this opportunity to clarify that, with two limited exceptions, the decisions  X+-made in Section III.C of the First Report and Order relating to the rate structure and rate levels for entrance facilities, directtrunked transport, and tandemswitched transport apply to  X-all incumbent LECs, including rateofreturn LECs.G~0 yO.-ԍ NPRM, 11 FCC Rcd at 2138081.G The two exceptions are that we did not create for rateofreturn LECs separate rate elements for dedicated ports at the tandem switch  X-and for multiplexers at the tandem switch.i\0 yO-ԍ In tariffs filed to become effective January 1, 1998, rateofreturn LECs must reallocate the costs of these  {OX -trunk ports and multiplexers from the TIC to other, currentlyexisting rate elements. Access Charge Sua Sponte  {O"!-Reconsideration Order, 12 FCC Rcd at 1012223.i Thus, for example, rateofreturn LECs must discontinue the unitary rate structure option for tandemswitched transport no later than July 1, 1998, when all incumbent LECs must use only the threepart rate structure for cost  X-recovery.S2 0 {Oo%-ԍ  First Report and Order at  175.S These transport modifications that are applicable to rateofreturn LECS are in"# 0*&&aa" addition to those decisions made in Sections III.D, VI.A, and VI.D that also apply to rateof X-return LECs."0 {Ob-ԍ In both Sections III.C. and III.D. of the First Report and Order, we explained that incumbent LECs must reallocate in three annual steps tandem switching revenues from the TIC to the tandemswitching rate element, excluding signalling and dedicated port costs allocated elsewhere in last May's order. This decision applies to rateofreturn LECs as well as price cap LECs.  X- (J:\ACCESS.REF\RECON\RATOFRET.URN( 'J:\ACCESS.REF\RECON\NECAWAI.VER' #X\  P6G;ɒP#X01Í ÍX01Í Í#Xj\  P6G;ynXP#  X-  VI. MEMORANDUM OPINION AND ORDER TP  Xv-xU86. The National Exchange Carrier Association, Inc. (NECA) asserts in its reconsideration petition that the Commission should revise on reconsideration the rule provisions governing calculation of NECA carrier common line (CCL) rates, without waiting for the conclusion of a separate proceeding on access charge reform for rateofreturn LECs.  X -In the alternative, NECA requests that the Commission issue an order waiving section 69.105(b)(2)(3) for NECA's pool, so as to allow NECA to reflect revised long term support  X -(LTS) formula amounts in its CCL tariff rates effective January 1, 1998.M 0 yOO-ԍ NECA Reconsideration Petition at 6.M No party opposed or supported NECA's petition for reconsideration or waiver of the rule. We have decided to waive the specified rule provisions at this time, and make appropriate rule revisions in the  X -separate proceeding.  Xy-xV87. Section 69.105(b) currently sets the NECA CCL tariff at the average of pricecap LECs' CCL charges. Prior to January 1, 1998, LTS is a variable amount, based on the difference between the revenues earned from charging a nationwide average CCL rate and the  X4-NECA pool CCL revenue requirement. In the Universal Service Order, we substituted federal universal service support payments for previouslyreceived recovery from the interstate access  X-charge system through LTS.$B0 yO-ԍ FederalState Joint Board on Universal Service, Report and Order, 12 FCC Rcd 8776, 9164 (1997)  {O-(Universal Service Order). "[A]lthough we remove the LTS system from the access charge regime, . . . we enable rural LECs to continue to receive payments comparable to LTS from the new universal service support  {OU-mechanisms . . . ." Id. at 9165. The rule revisions in the First Report and Order removed LTS amounts from price cap LEC CCL calculations, but postponed making conforming  X-revisions in Section 69.105(b) to the CCL rate calculation for NECA tariff participants.1. 0 {O!-ԍ  First Report and Order at  37577. We justified the delay in making revisions to the NECA CCL calculations due to a failure to receive any comments as to how the NECA CCL rate calculation rules should be adjusted. According to NECA, however, notice and comment are unnecessary for a ministerial change to the  {O$-CCL rate calculation rule in order to conform that rule to policy decisions made in the Universal Service Order  {O$-and the First Report and Order.1  X-x"$0*&&aa"Ԍ X-xW88. Section 1.3 of our rules empowers the Commission to grant waivers of its rules if  X-good cause is shown.=0 yOb-ԍ 47 C.F.R.  1.3.= In this situation, NECA must demonstrate that special circumstances justify a departure from the general rule and that such a deviation will serve the public  X-interest.X0 {O-ԍ Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164 (D.C. Cir. 1990); WAIT Radio v. FCC, 418 F.2d 1153 (D.C. Cir. 1969). We conclude that NECA has demonstrated that continued application of Section 69.105(b)(2)(3) would be contrary to the public interest in these circumstances. As we stated  X-in the Universal Service Order, the "elimination of pricecap [incumbent LECs'] LTS obligations will allow their CCL charges to fall, but there is no corresponding reason for a reduction in the NECA CCL tariff. Yet under our current rules, the NECA CCL charge would fall simply because of our regulatory changes to pricecap [incumbent LECs'] LTS payment  X3-obligations. We must therefore establish a new method to set the NECA CCL tariff."30 {O-ԍ  Universal Service Order, 12 FCC Rcd at 9170; see also id. at 9164, 916566, 9169.  X -xX89. Because changes in the recovery of LTS amounts and pricecap carrier CCL rate  X -computations as adopted in the First Report and Order and Universal Service Order are  X -scheduled to become effective on January 1, 1998,?| D0 yO-ԍ Prior to January 1, 1998, LTS is a carrier's total common line revenue requirement less revenues  {O-received from SLCs and CCL charges. Universal Service Order, 12 FCC Rcd at 8942 ("[B]eginning in 1998, rural carriers will recover from the new universal service support mechanisms LTS at a level sufficient to protect  yO(-their customers from the effects of abrupt increases in the NECA CCL rates"). Rural and nonrural carriers that received LTS in 1997 will receive support from the new universal service mechanisms in 1998 that equals the 1997 LTS funding amount, adjusted by the percentage of change from 1995 to 1996 of the nationwide average  {O-loop cost.  Id. at 8927, 8942; See also 47 C.F.R.  54.303.? grant of the waiver will allow NECA to  X -conform its rates to decisions reached in the Universal Service Order by reflecting revised LTS formula amounts in its CCL tariff rates effective January 1, 1998. We therefore waive Section 69.105(b)(2)(3) for the calculation of NECA's CCL pool rate that will become  X-effective January 1, 1998,  0 yO-ԍ At this time we anticipate that Section 69.105(b)(2)(3) will be revised in time for tariff filings effective July 1, 1998. We are not revising this rule now because it is likely that the rule would need to be changed again in the near future if we decide to adopt a PICC and make other common line changes in the separate access reform proceeding for rateofreturn LECs. on the condition that NECA must compute the Carrier Common Line charge as follows:  XQ- Xx(a) From the NECA pool aggregate Carrier Common Line revenue requirement amount, subtract: (1) aggregate End User Common Line charges; (2) aggregate Special Access Surcharges; and (3) the portion of perline support that NECA" %p0*&&aa" CCL pool participants receive, in the aggregate, pursuant to 47 C.F.R.   X-54.303.F0 yOb-ԍ 47 C.F.R.  69.502.F  Xx(b) The premium originating Carrier Common Line charge must be one cent per minute, except as described herein at (d), and  Xx(c) The premium terminating Carrier Common Line charge must be computed by subtracting the projected revenues generated by the originating Carrier Common Line charges (both premium and nonpremium) from the number calculated in (a) above, and dividing the remainder by the sum of the projected premium terminating minutes and a number equal to 0.45 multiplied by the projected nonpremium terminating minutes, except as described herein at (d).  Xx(d) If the calculations described in (c) above result in a per minute charge on premium terminating minutes that is less than one cent, both the originating and terminating premium charges for the NECA CCL pool participants must be computed by dividing the number calculated pursuant to (a) above by the sum of the premium minutes and a number equal to 0.45 multiplied by the nonpremium minutes for the NECA CCL pool participants.   X- This NECA CCL charge calculation will reflect that now the CCL charge, rather than LTS, is a residual amount.  X4- I#J  'J:\ACCESS.REF\RECON\NECAWAI.VER' J:\ACCESS.REF\RECON\END   VII. FINAL REGULATORY FLEXIBILITY ANALYSIS TP  X-x Y90. In the First Report and Order, we conducted a Final Regulatory Flexibility Analysis as required by Section 603 of the Regulatory Flexibility Act, as amended by the Contract with America Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847  X-(1996).[X0 {O-ԍ First Report and Order at  419440.[ The changes we adopt in this Order do not affect that analysis.  X-M  VIII. FINAL PAPERWORK REDUCTION ANALYSIS ă xZ91. We have required incumbent price cap LECs to provide IXCs with customerspecific data that specifies the number and type(s) of PICCs being assessed on each line. This requirement constitutes a new "collection of information," within the meaning of the Paperwork Reduction Act of 1995, 44 U.S.C.  35013520. Implementation of this requirement will be subject to approval by the Office of Management and Budget as prescribed by the Paperwork Reduction Act. The Commission has requested emergency approval of this requirement to ensure that it may be effective on January 1, 1998. " &0*&&aa4&"Ԍ X-  I#J  I#J IX. ORDERING CLAUSES TP  X-x[92. Accordingly, IT IS ORDERED, pursuant to Sections 14, 201205, 251, 254, 303, and 405 of the Communications Act of 1934, as amended, 47 U.S.C.  151154, 201205,  I#J  I#J 251, 254, 303, and 405, and pursuant to section 1.108 of the Commission's rules, 47 C.F.R.   X-1.108 that this Order on Reconsideration IS ADOPTED.  X_-x\93. IT IS FURTHER ORDERED that section 69.153(g) of the Commission's rules, 47 C.F.R.  69.153(g) IS AMENDED as set forth in the appendix.  X1-  X -x]94. IT IS FURTHER ORDERED that sections 69.4, 69.111(c)(1), 69.153(c)(1), 69.153(d)(1)(i), 69.153(d)(2)(i), and 69.155(c) of the Commission's rules, 47 C.F.R.  69.4, 69.111(c)(1), 69.153(c)(1), 69.153(d)(1)(i), 69.153(d)(2)(i), and 69.155(c) ARE AMENDED as set forth in the appendix. x^95. IT IS FURTHER ORDERED, pursuant to 47 U.S.C.  154(i) and 47 C.F.R.  1.3, that NECA's request for waiver of Section 69.105(b)(2)(3) of the Commissions rules, 47 C.F.R.  69.105(b)(2)(3) IS GRANTED subject to the limitations and conditions described herein. x_96. IT IS FURTHER ORDERED that the information collections contained in these rules become effective January 1, 1998, following OMB approval, unless a notice is published in the Federal Register stating otherwise. x`97. IT IS FURTHER ORDERED that, except as otherwise specified herein, the policies and rules adopted here shall be effective January 1, 1998. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton  X-x` `  hhActing Secretary J:\ACCESS.REF\RECON\END %J:\ACCESS.REF\RECON\RULES.APP% "'0*&&aa6$"  X- (  I. A. 1. a.(1)(a) i) a)a I. A. 1. a.(1)(a) i) a):&r APPENDIX Final Rules AMENDMENTS TO THE CODE OF FEDERAL REGULATIONS Part 69 ACCESS CHARGES  X- 1. The authority citation for Part 69 continues to read as follows:  XH-Authority: 47 U.S.C. 154(i) and (j), 201, 202, 203, 205, 218, 254, and 403.  X -2. Section 69.4 is amended by removing paragraph (h)(6), and revising paragraph (a) to read as follows:  X - 69.4 Charges to be filed. x(a) The end user charges for access service filed with this Commission shall include charges for the End User Common Line element, and for line port costs in excess of basic, analog service.  XK- * * * * *  X-3. Section 69.111 is amended by substituting  69.123 wherever  69.124 occurs, and revising paragraph (c)(1) to read as follows:  X- 69.111 Tandem-Switched Transport and Tandem Charge.  X|-* * * * *  XN- Xx` ` (c)(1) Until June 30, 1998:(# XxX` `  (i) Except in study areas where the incumbent local exchange carrier has implemented density pricing zones as described in section 69.123, perminute common transport charges described in subparagraph (a)(1) shall be presumed reasonable if the incumbent local exchange carrier bases the charges on a weighted per-minute equivalent of direct-trunked transport DS1 and DS3 rates that reflects the relative number of DS1 and DS3 circuits used in the tandem to end office links (or a surrogate based on the proportion of copper and fiber facilities in the interoffice network), calculated using the total actual voicegrade minutes of use, geographically averaged on a studyareawide basis, that the incumbent local exchange carrier experiences based on the prior year's:&"Q%(0*&&aa $" annual use. Tandem-switched transport transmission charges that are not presumed reasonable shall be suspended and investigated absent a substantial cause showing by the incumbent local exchange carrier.(#` XxX` `  (ii) In study areas where the incumbent local exchange carrier has implemented density pricing zones as described in section 69.123, perminute common transport charges described in subparagraph (a)(1) shall be presumed reasonable if the incumbent local exchange carrier bases the charges on a weighted per-minute equivalent of direct-trunked transport DS1 and DS3 rates that reflects the relative number of DS1 and DS3 circuits used in the tandem to end office links (or a surrogate based on the proportion of copper and fiber facilities in the interoffice network), calculated using the total actual voicegrade minutes of use, averaged on a zonewide basis, that the incumbent local exchange carrier experiences based on the prior year's annual use. Tandem-switched transport transmission charges that are not presumed reasonable shall be suspended and investigated absent a substantial cause showing by the incumbent local exchange carrier.(#` * * * * *  XK-  X-4. Section 69.153 is amended by revising paragraphs (c)(1) and (d), and adding paragraph (g) to read as follows:  X-  69.153` ` Presubscribed interexchange carrier charge (PICC) * * * * * x(c) The maximum monthly PICC for primary residential subscriber lines and singleline business subscriber lines shall be the lower of: Xx` ` (1) One twelfth of the sum of projected annual common line revenues and residual interconnection charge revenues permitted under our price cap rules divided by the projected average number of local exchange service subscriber lines in use during such annual period, minus the maximum subscriber line charge calculated pursuant to 69.152(d)(2); or(# Xx` ` (2) * * *(# x(d) To the extent that a local exchange carrier cannot recover its full common line revenues, residual interconnection charge revenues, and those marketing expense revenues described in  69.156(a) permitted under price cap regulation through the recovery"Q%)0*&&aa $" mechanisms established in  69.152, 69.153(c), and 69.156(b) and (c), the local exchange carrier may assess a PICC on multiline business subscriber lines and nonprimary residential subscriber lines. Xx` ` (1) The maximum monthly PICC for nonprimary residential subscriber lines shall be the lower of:(# XxX` `  (i) One twelfth of the projected annual common line, residual interconnection charge, and  69.156(a) marketing expense revenues permitted under our price cap rules, less the maximum amounts permitted to be recovered through the recovery mechanisms under  69.152, 69.153(c), and 69.156(b) and (c), divided by the total number of projected nonprimary residential and multiline business subscriber lines in use during such annual period; or(#` XxX` `  (ii) * * *(#` x` ` (2) If the maximum monthly PICC for nonprimary residential subscriber lines is determined using paragraph (d)(1)(i) of this section, the maximum monthly PICC for multiline business subscriber lines shall equal the maximum monthly PICC of nonprimary residential subscriber lines. Otherwise, the maximum monthly PICC for multiline business lines shall be the lower of: XxX` `  (i) One twelfth of the projected annual common line, residual interconnection charge, and 69.156(a) marketing expense revenues permitted under parts 61 and 69 of our rules, less the maximum amounts permitted to be recovered through the recovery mechanisms under 69.152, 69.153(c) and (d)(1), and 69.156 (b) and (c), divided by the total number of projected multiline business subscriber lines in use during such annual period; or(#` XxX` `  (ii) * * *(#` * * * * * Xx` ` (g)(1) The maximum monthly PICC for Centrex lines shall be oneninth of the maximum charge determined under paragraph (d)(2) of this section, except that if a Centrex customer has fewer than nine lines, the maximum monthly PICC for those lines shall be the maximum charge determined under paragraph (d)(2) of this section divided by the customer's number of Centrex lines.(# Xx` ` (2) In the event the monthly loop costs for a multiline business line, as defined in 69.152(b)(1), exceed the maximum permitted End User Common Line charge, as set in 69.152(b)(3), the maximum monthly PICC for a Centrex line determined"Q%*0*&&aa $" under paragraph (g)(1) of this section shall be increased by the difference between the monthly loop costs defined in 69.152(b)(1) and the maximum permitted End User Common Line charge set in 69.152(b)(3). In no event, however, shall the PICC for  X-a Centrex line exceed the maximum established under paragraph (d)(2) of this section.(#  Xv-5. Section 69.155(c) is revised to read as follows:  XH- 69.155` ` Perminute residual interconnection charge. * * * * * x(c)(1) No portion of the charge assessed pursuant to paragraphs (a) or (b) of this section that recovers revenues that the local exchange carrier anticipates will be reassigned to other, facilitiesbased rate elements, including the tandemswitching rate element described in 69.111(g), the threepart tandem switched transport rate structure described in 69.111(a)(2), and port and multiplexer charges described in 69.111(l), shall be assessed upon minutes utilizing the local exchange carrier's local switching facilities, but not the local exchange carrier's transport service. x(c)(2) If a local exchange carrier cannot recover its full residual interconnection charge revenues through the PICC mechanism established in 69.153, and will consequently recover a portion of its residual interconnection charge revenues through perminute charges assessed pursuant to paragraphs (a) and (b) of this section, then the local exchange carrier must allocate its residual interconnection charge revenues subject to the exemption established in paragraph (c)(1) of this section between the PICC and the perminute residual interconnection charge in the same proportion as other residual interconnection charge revenues are allocated between these two recovery mechanisms. %J:\ACCESS.REF\RECON\RULES.APP%