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The new services test is a costbased test  S;- xythat establishes the direct cost of providing the new service as a price floor.K@ ;& {O-  \#C\  P6QgP#эxSee Filing and Review of Open Network Architecture Plans, CC Docket No. 882, Memorandum Opinion  {O- xand Order, 4 FCC Rcd 1 (1988) (BOC ONA Order), recon., Filing and Review of Open Network Architecture Plans,  {O- xMemorandum Opinion and Order on Reconsideration, 5 FCC Rcd 3084 (1990) (BOC ONA Reconsideration Order);  {O_- xFiling and Review of Open Network Architecture Plans, Memorandum Opinion and Order, 5 FCC Rcd 3103 (1990)  {O)- x(BOC ONA Amendment Order) erratum, Filing and Review of Open Network Architecture, Erratum, 5 FCC Rcd  {O- x4045, pets. for review denied, California v. FCC, 4 F.3 1505 (9th Cir. 1993), recon., Filing and Review of ONA  {O- xPlans, Memorandum Opinion and Order on Reconsideration, 8 FCC Rcd 97 (1993) (BOC ONA Amendment  {O- xReconsideration Order); Filing and Review of Open Network Architecture Plans, Memorandum Opinion and Order,  {OQ- x6 FCC Rcd 7646, 764950 (1991) (BOC ONA Further Amendment Order), pet. for review denied, California v. FCC,  {O- xK4 F.3d 1505 (9th Cir. 1993) (collectively "BOC ONA Proceeding"); Amendment of Part 69 of the Commission's  {O- xhRules Relating to the Creation of Access Charge Subelements for Open Network Architecture, CC Docket No. 8979,  x,Report and Order & Order on Further Reconsideration & Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd  {Ow -4524, 4531 (1991) (Part 69 ONA Order).K LECs then add a reasonable  S-level of overhead costs to derive the overall price of the new service.. {O"-  #C\  P6QgP#эxId.  For purposes of this order, an overhead loading is defined as the percent by which a rate exceeds the direct cost for a particular service.  S - ` _x3.` ` On May 19, 1997, Bell Atlantic, GSTC, and GTOC filed their Transmittal Nos. 962, 206,  xzand 1095, respectively, to make available various payphone features and functions under their federal"o ,l(l(,, "  S- xjaccess tariffs.  yOh-  #C\  P6QgP#эxBell Atlantic Access Tariff FCC No. 1, Transmittal No. 962; GSTC Access Tariff FCC No. 1, Transmittal No. 206; and GTOC Access Tariff FCC No. 1, Transmittal No. 1095.  On May 27, 1997, the American Public Communications Council (APCC) filed petitions  S- xurging the Commission to reject, or alternatively, to suspend and investigate these transmittals.J X  yO-  #C\  P6QgP#эxPetitions of APCC to Suspend and Investigate Bell Atlantic Transmittal No. 962 ("APCC (BA) Petition"),  xGSTC Transmittal No. 206 ("APCC (GSTC) Petition"), and GTOC Transmittal No. 1095 ("APCC (GTOC) Petition"). J On June,  S-2, 1997, replies to these petitions were filed by Bell Atlantic and GTE. X@ yOz -  #C\  P6QgP#эxReply of Bell Atlantic to APCC Petition to Suspend and Investigate Bell Atlantic Transmittal No. 962  x-("Bell Atlantic Reply"); Reply of GTE Service Corporation to APCC Petition to Suspend and Investigate GSTC Transmittal No. 206 and GTOC Transmittal No. 1095 ("GTE Reply").   S4- ` x4.` ` In the Suspension Order, the Competitive Pricing Division (Division) of the Bureau  x-concluded that these transmittals raised significant questions of lawfulness, including whether the proposed  x?rates were unreasonably discriminatory in violation of Section 202(a) of the Act, were unjust and  xunreasonable in violation of Section 201(b) of the Act, and whether they included any subsidy, preference,  Si- xor discriminatory provision in violation of Section 276 of the Act.i i`  {Oi-  >#C\  P6QgP#эxLocal Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Suspension Order,  {O3- xDA 971149 (Com. Car. Bur., Comp. Pric. Div., rel. June 2, 1997) (Suspension Order). The Suspension Order  yO- xrequired the carriers to advance by one day the effective date of each of these transmittals, to June 2, 1997,  xYsuspended each transmittal for one day to June 3, 1997, initiated an investigation, and imposed an accounting order.  {O- xSee Local Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Erratum, DA 9774559  {OW- x(Com. Car. Bur., Comp. Pric. Div., rel. June 5, 1997). The Suspension Order also suspended and initiated an  xinvestigation of the NYNEX Telephone Companies (NYNEX) Transmittal No. 452. On July 2, 1997, the Division,  xon its own motion, reconsidered that Order with respect to NYNEX Transmittal No. 452 and found, based on the  x=record before it, that the NYNEX transmittal did not warrant investigation and that the investigation of the  {Oy- xJtransmittal should be terminated. Local Exchange Carriers' Payphone Functions and Features, CC Docket No. 97 x140, Order on Reconsideration, DA 971396 (Com. Car. Bur., Comp. Pric. Div., rel. July 2, 1997). On June 9,  x1997, Bell Atlantic filed Transmittal No. 966, which, among other things, adjusted a rate that it stated was  xiincorrectly displayed in its earlier Transmittal No. 962. On June 11, 1997, the Division released an order finding  {O- x-that Bell Atlantic's proposed rate adjustment raised the same issues of lawfulness as Transmittal No. 962. Local  {Oe- x-Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Suspension Order, DA 971233  x(Com. Car. Bur., Comp. Pric. Div., rel. June 11, 1997). Accordingly, the Division suspended Transmittal No. 966  x=for one day insofar as it proposed to adjust rates made available under Transmittal No. 962. In addition, the  x,Division instituted an investigation of that part of the transmittal, consolidated that investigation with the pending  {O-investigation of Bell Atlantic Transmittal No. 962, and imposed an accounting order. Id.i In the Designation Order, the Bureau  xydesignated the following issues for investigation: (1) whether Bell Atlantic's proposed overhead loading for unbundled payphone features was unreasonable and excessive under the new services test; (2) whether Bell Atlantic's determination of rates was consistent with the new services test; (3) whether GTE's direct investment for SCOCS was reasonable; and (4) whether GTE's rates for SCOCS were consistent with the  Sk -new services test.D k  {O%-  M#C\  P6QgP#эxLocal Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Order Designating  {O%-Issues for Investigation, DA 971764 (Com. Car. Bur., rel. Aug. 19, 1997) (Designation Order).D On September 3, 1997, Bell Atlantic and GTE filed their direct cases in response  X8X  "8 l ,l(l(,, "Ԍ S- xto the Designation Order. ƴ yOh-  0ԍxDirect Case of Bell Atlantic in CC Docket 97140 ("Bell Atlantic Direct Case"); Direct Case of GTE Service Corporation in CC Docket 97140 ("GTE Direct Case"). On September 10, 1997, APCC filed a joint opposition to the direct cases  S- xfiled Bell Atlantic and GTE. ƴ yO-  ԍxOpposition of the American Public Communications Council to the Direct Cases of Bell Atlantic and GTE ("APCC Opposition"). On September 17, Bell Atlantic and GTE filed their rebuttals.xƴ yO-  ԍxReply of Bell Atlantic to APCC Opposition in CC Docket 97140 ("Bell Atlantic Reply"); GTE's Rebuttal in CC Docket 97140 ("GTE Rebuttal"). On  x?October 8, 1997, Bell Atlantic filed Transmittal No. 1004, which proposed to revise rates for the  xunbundled payphone features made available under its initial tariff that are at issue in this investigation.  xAPCC filed comments in response to the Bell Atlantic tariff revisions on October 10, 1997. The Division  S- xysuspended this tariff for one day and allowed the tariff to become effective subject to this investigation.ƴ {Or -  ԍxLocal Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Order, DA 972194 (Com. Car. Bur., Comp. Pric. Div., rel. Oct. 14, 1997).  xOn September 5, 1997, GTE filed Transmittal Nos. 217 and 1112, which also proposed to revise the rates  S- x=for the SCOCS payphone features made available in its earlier federal access tariffs.* ƴ yOf-  ԍxGTOC Tariff F.C.C. No 1, Transmittal No. 217 and GSTC Tariff F.C.C. No. 1, Transmittal No. 1112 filed September 5, 1997. No petitions were  x\filed against the GTE transmittals. The Division suspended these tariffs for one day and allowed the  S6-tariffs to become effective subject to this investigation.6 ƴ {OX-  ԍxLocal Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Order, DA 972035 (Com. Car. Bur., Comp. Pric. Div., rel. Sept. 19, 1997).  S - III. INVESTIGATION ISSUES ă  S7 - A. Bell Atlantic Transmittals x1. Background and Contentions  Sk- ` Qx5.` ` In Transmittal No. 962, Bell Atlantic proposed to include in its federal access tariff six  S8- xxunbundled payphone features.8ƴ yO-  #C\  P6QgP#эxBell Atlantic Transmittal No. 962, Description and Justification (D&J) at 2. These unbundled Bell Atlantic  xfeatures are lineside answer supervision (LSAS), inward callblocking, outward callblocking, incoming/outgoing call  {OD!- xxscreening, outward call screening, and limited interLATA dialing. Id. Pursuant to Section 276(d) of the Act, the  xterm "payphone service" is defined as "the provision of public or semipublic pay telephones, the provision of inmate telephone service in correctional institutions, and any ancillary services." 47 U.S.C.  276(d). Bell Atlantic stated that these services would assist independent payphone service providers in making payphone services available to the public by providing services, among others,  x that can aid customers in preventing fraudulent calls from their payphones. Bell Atlantic stated in its  x[initial explanation submitted with the tariff that it determined the rates for unbundled payphone features  x\on the basis of "the cost, the pricing of these service features as they currently exist in Bell Atlantic's  xintrastate tariffs, the available competitive alternatives, and other information on the value of these"9-((r"  S-services."oƴ yOh-#C\  P6QgP#эxBell Atlantic D&J at 8.o  S- ` x6.` ` In the Designation Order, the Bureau examined the ratios of rates to direct costs, which  x-provide a measure of the overhead loadings, and found that Bell Atlantic's rates for the proposed payphone  xzfeatures ranged from a low of 27 times greater than the direct costs to a high of more than 6,900 times  S- xgreater than the direct costs.|Xƴ {O-#C\  P6QgP#эxDesignation Order at para. 10.| The Bureau concluded that the record before it did not justify such high  xlevels of rates in relation to direct costs. Therefore, the Bureau directed Bell Atlantic to explain why these  S- x>services should recover such a large share of Bell Atlantic's overhead costs.:ƴ {O& -ԍxId.: In addition, the Bureau  xfound that Bell Atlantic had set rates based on considerations not relevant under the new services test,  S6- xysuch as the current prices for these services in their intrastate tariffs.|6|ƴ {OR-#C\  P6QgP#эxDesignation Order at para. 11.| The Bureau directed Bell Atlantic  xto explain in detail how its development of rates for these features complied with the new services test,  S-Section 276, and the Payphone Orders.aƴ {O~-#C\  P6QgP#эxId.a  Sk - ` &x7.` ` In its direct case concerning its initially filed tariff, Bell Atlantic argues that the  xreasonableness of the rate elements for its federally tariffed payphone features must be assessed in light  S - xlof associated payphone services offered in state tariffs.P ƴ yOE-ԍxBell Atlantic Direct Case at 2.P Bell Atlantic argues that a statetariffed  xpayphone access line and the individual features on that line together constitute a single integrated service.  x=Bell Atlantic contends that the overall rates for its federal payphone tariffs are just and reasonable when  xthe rate for the state tariffed basic payphone service line and the rates for the optional features are both  S9-taken into account.b90 ƴ {O -#C\  P6QgP#эxId. b x  S- ` 4x8.` ` Bell Atlantic also argues that overhead loadings need not be uniform under the new  S- xservices test, citing the NYNEX Tariff Termination Order. ƴ {O-  #C\  P6QgP#эxBell Atlantic Direct Case at 4, citing NYNEX Telephone Companies Revisions to Tariff F.C.C. No. 1, Memorandum Opinion and Order, 7 FCC Rcd 7940 (1992). According to Bell Atlantic, LECs are allowed  xto distribute overhead loading costs in a nonuniform manner among similar services if they adequately  S;- xjustify those loadings.a;ƴ {O"-#C\  P6QgP#эxId.a Bell Atlantic states that the rates under this investigation satisfy this test. It  xexplains that the loadings for the optional features, while not uniform, allow the entire service to be  xcompensatory, and most of the features are priced at a uniform rates to simplify the rate structures for the  S-public.gƴ {O&-#C\  P6QgP#эxId. at 4.g "o@-((2"Ԍ S- ` x9.` ` In opposition to Bell Atlantic's direct case, APCC contends that state rates are not relevant  x=to the proposed federal rates and that it is appropriate to apply the new services test at the federal level  S- xonly to the federally tariffed payphone features and functions.Fƴ yO-ԍxAPCC Opposition at 2.F APCC argues that since the Commission  xruled that only unbundled features should be federally tariffed, the rates for unbundled features must be  xjustified on the basis of the underlying costs of those features measured by the new services test, and not  S-in conjunction with services tariffed at the state level.gXƴ {O-#C\  P6QgP#эxId. at 3.g  S- ` #x 10.` ` On October 8, 1997, Bell Atlantic filed Transmittal No. 1004 revising rates for five of the  Sh- xsix proposed unbundled payphone features proposed in its initial tariff filing. hƴ yO -ԍxBell Atlantic Tariff F.C.C. No. 1, Transmittal No. 1004 (filed October 8, 1997). Bell Atlantic explains that  x]based on its further review, it has elected to reduce the rates for these payphone features to avoid  S- xprotracted litigation.S!zƴ {O-ԍxId., Bell Atlantic D&J at 2.S In response, APCC states that, while the proposed rate reductions are in the public  S- xinterest, the rates for some of the payphone features are as high as 3.4 times the direct costs." ƴ yO{-  ԍxComments of APCC filed in Response to Bell Atlantic Transmittal No. 1004 (October 10, 1997) ("APCC  yOC-Comments") at 23.pp APCC  S - xjargues that in other contexts ratios of this magnitude have been found unreasonable, citing Open Network  Sj - xArchitecture Tariffs of Bell Operating Companies.#j d ƴ {On-  NԍxId. at 3, citing Open Network Architecture Tariffs of Bell Operating Companies, 9 FCC Rcd 440, 458 (1993). APCC asserts that the revised overhead allocations  S8 - xare acceptable in the context of the de minimis rates proposed by Bell Atlantic even though they would  xbe unreasonable in the context of other services, such as line and local usage rates. APCC requests that  xthe Commission limit any finding that Bell Atlantic's overhead allocations are reasonable to the context  xof the unbundled payphone features offered by Bell Atlantic and other LECs in their federal payphone  Sm- xtariffs.B$m ƴ {O-ԍxId. at 34.B On October 14, 1997, Bell Atlantic filed reply comments.d%mP ƴ yO]-ԍxReply Comments of Bell Atlantic (October 14, 1997).d It states that the Commission should  xterminate this investigation because it does not have interstate customers for the services offered under  xthe initial payphone tariffs and because its newly filed tariffs, which substantially reduce the rates for the  S-payphone features and functions that are under investigation, are unopposed.@&ƴ {OT!-ԍxId. at 2.@ x3. Discussion  S- ` x 11.` ` Because Bell Atlantic has revised the rates that were initially at issue in this investigation  x{and did not have customers for the relevant services, we find that it is unnecessary to consider the  xlawfulness of those rates or to consider the need for refunds. Further, we find no basis to find that the"r&-((3"  x overhead loadings in Bell Atlantic's revised rates are unreasonable or that they produce unreasonable  S- xrates.'ƴ yOh- xԍ Bell Atlantic did not revise its rate for the interLATA dialing service offered in its initial tariff. The  xoverhead loading for this rate is 38 percent of direct costs. APCC has not objected to this rate in this proceeding. We find no basis on this record for finding this rate or its overhead loading unreasonable. In view of Bell Atlantic's substantially reduced rates and the record support for them, we also find  x[that the revised rates do not warrant a finding that they are based on considerations not within the scope of the new services test.  S- ` x 12.` ` We reject Bell Atlantic's view that we should review the reasonableness of its payphone  S- xservice tariffs in light of tariffs filed at the state level. In the Payphone Reconsideration Order, the  x]Commission required LECs to file tariffs for basic payphone lines at the state level only, and that  Si- xLunbundled features and functions be tariffed at both state and federal levels.n(iƴ {O$ -ԍxPayphone Reconsideration Order, 11 FCC Rcd at 2130709.n The Commission required  xAthat all incumbent LEC payphone tariffs filed at the state and federal levels be costbased,  xnondiscriminatory, and consistent with both Section 276 and the Commission's Computer III tariffing  S- x=guidelines, including the new services test.)ƴ {O-ԍxPayphone Clarification Order at para. 2, citing Payphone Reconsideration Order, 11 FCC Rcd at 21308. Bell Atlantic has not provided any basis for departing from  xthis scheme within the context of this investigation to provide for an assessment of federal charges in light  xof charges filed at the state level. As envisioned by the Bureau and the Commission, application of the  xnew services test separately by state and federal authorities to payphone offerings will assure that carrier  x>offerings to payphone service providers will be reasonable and help achieve the goals of Section 276.  xzAccordingly, we will not assess the reasonableness of Bell Atlantic's offering of unbundled payphone features and functions by reference to state tariffs.  S8- ` x 13.` ` With respect to Bell Atlantic's rates, we find no basis in the revised cost data to find that  xkthese overhead loadings are unreasonable or produce unreasonable rates in this case. In particular, we  S- x.note that these services are provided either at very low rates or at no charge.*?ƴ yO-  /ԍxThe revised rates range from no charge for two of the services to a monthly rate of $0.15 for two other proposed services. In addition, Bell Atlantic  xhas explained that its overhead loadings used to develop the rates for its payphone features and functions  Sl- xare comparable with other tariffed services offered by Bell Atlantic.5+Xlƴ yO-  LԍxBell Atlantic Tariff F.C.C. No. 1, Transmittal No. 1004 (D&J) at 45. For example, Bell Atlantic's Premier  xMessaging Service Interface uses a nonuniform overhead loading with a rate of 3.59 times greater than the direct costs.5 We also note that Bell Atlantic's  xjoverhead loadings are comparable to those of other LECs. Bell Atlantic's ratio of rates to direct costs for  xpayphone features range from a low of zero times greater than the direct costs to a high of 3.4 times  xgreater than the direct costs while the ratio of rates to direct costs for the payphone features offered by  xMother LECs ranges from a low of zero times greater than the direct costs to a high of 4.8 times greater  Sm- xthan the direct costs.,m ƴ {O#-  ԍxSee, e.g., NYNEX Tariff F.C.C. No. 1, Transmittal No. 452; US West Tariff F.C.C. No. 5, Transmittal No. 858; and Pacific Bell Tariff F.C.C. No. 128, Transmittal No. 1932. We also agree with Bell Atlantic that the Commission's pricing requirements do  xMnot mandate uniform overhead loading provided that the loading methodology selected as well as any  S- xjdeviation from it is justified.-ƴ {O'-#C\  P6QgP#эxPart 69 ONA Order, 6 FCC Rcd at 4531. Accordingly, we find record support for Bell Atlantic's overhead loadings"--(("  xmand find no basis for finding that they are unreasonable under the new services test or produce  S- xjunreasonable rates. In Open Network Architecture Tariffs of Bell Operating Companies, the Commission  xconcluded that US West's overhead rates for Open Network Architecture (ONA) features were  xunsupported because it failed to provide a reasonable explanation for its overhead loadings for those  S5- xrates..5ƴ {O-ԍxOpen Network Architecture Tariffs of Bell Operating Companies, 9 FCC Rcd at 458 (1993). We do not find that our determination here concerning overhead loadings for Bell Atlantic's  xprovision of payphone features and functions will necessarily be determinative in evaluating overhead loadings for other services.  Si- ` x 14.` ` In light of Bell Atlantic's substantially reduced rates and the record support for them as  xdescribed above, we find no basis to find that the rates are based on factors other than direct costs and  xoverhead loadings. Therefore, we also find that the revised rates do not warrant a finding that they are based on considerations not within the scope of the new services test.  Sj - B.XxGTE's Transmittals (#  S - Issue A: Whether GTE's direct investment for SCOCS is reasonable . x1. Background and Contentions  S8- ` x15.` ` In Transmittal 206, GTE added to its two federal access service tariffs an unbundled,  x\payphonespecific feature called Selective Class of Call Screening (SCOCS). This feature enables the  S- xcustomer to block outgoing 1+, 0+, and 0 calls that are charged to the originating number./|Zƴ yO-  y#C\  P6QgP#эxGTOC Tariff F.C.C. No. 1, Transmittal No. 1095, and GSTC Tariff F.C.C. No. 1, Transmittal No. 206, both  x;issued May 19, 1997. In these transmittals, GTE also clarified certain matters unrelated to payphone features, such  xias the application of its multiline enduser subscriber line charges and the addition of certain provisions regarding  {O$- x.the warehousing and hoarding of tollfree subscriber numbers. We excluded from the application of the LEC  {O- xJPayphones Functions and Features Suspension Order the tariff revisions included in these two transmittals that are  xiunrelated to GTE's provision of payphone features and functions. Those provisions became effective on June 3, 1997. In the  S- xjDesignation Order, the Bureau noted that GTE's cost justification for SCOCS was based upon a claimed  x=direct switching investment of about $50 per line per year and that this was significantly higher than the  S:- xLdirect investments reported by other LECs for similar services.T0:ƴ {Ox-ԍxDesignation Order at para 12.T The Bureau tentatively concluded that  xGTE's direct investment of $50 per line for SCOCS was unreasonable and raised a substantial question  xthat the SCOCS rates were unreasonable. The Bureau directed GTE to provide detailed information  S-regarding its derivation of the unit investment of $50 per line for SCOCS.:10 ƴ {Oq!-ԍxId.:  S;- ` 3x16.` ` In its direct case, GTE explains that the bulk of the unit investment of $50 per line for  S- xSCOCS was based on cost estimates for switching investment of $44 per line per year.m2 ƴ yOj%-#C\  P6QgP#эxGTE Direct Case at 2.m According to  xGTE, this initial estimate in its tariff transmittals for switching investment was based on estimated calling  xpatterns for the SCOCS feature (three call attempts during periods of busy network usage) and the  xLassumption that it would be necessary to utilize a particular switch function from Bellcore's SCIS model"oR 2-((L"  S- x=known as Selective Carrier Denial.a3ƴ {Oh-#C\  P6QgP#эxId.a In its direct case, GTE asserts that based on its reexamination since  xLits initial tariff filing of the available industry data, it can assume one call attempt during periods of busy  xnetwork usage instead of three and that a different, more economical SCIS function known as Code  Sg- x=Restriction and Diversion is available.a4gZƴ {Oa-#C\  P6QgP#эxId.a GTE maintains that the lower assumed busy hour call attempts  xand the different feature selection produce a lower estimate of costs resulting in a revised switching  x\investment estimate of $6.00 per line per year. GTE asserts that it will amend its payphone tariff to  S- x=reflect the revised switching estimate.5Dƴ {OZ -  #C\  P6QgP#эx See GTOC Transmittal No. 217 and GSTC Transmittal No. 1112 filed September 5, 1997. On September  xK19, 1997, the Division released an order finding that the GTOC and GSTC transmittals raised the same issues of  x,lawfulness as Transmittal Nos. 206 and 1095. Accordingly, the Division suspended Transmittal Nos. 217 and 1112  xfor one day, instituted an investigation of those transmittals, consolidated that investigation into the investigation  xyinitiated in CC Docket No. 97140, and subjected the rates proposed in Transmittal No. 217 and 1112 to the  xaccounting order imposed in CC Docket 97140 in order to facilitate any refunds that may later prove necessary.  {O - xLocal Exchange Carriers' Payphone Functions and Features, CC Docket No. 97140, Order, DA 972035 (rel. Sept. 19, 1997). In response to GTE's direct case and revised tariff filing, APCC  x.agrees with GTE's acknowledgement that its earlier estimate of direct investment for the SCOCS feature  xzwas incorrect, and it states that GTE's revised investment cost is much closer to the investment costs  S5- xestimated by other incumbent LECs.m65 ƴ yO-#C\  P6QgP#эxAPCC Opposition at 4.m GTE filed its revised tariffs on September 5, 1997. APCC did not respond separately to GTE's September 5, 1997 tariff filing. x3. Discussion  S6 - ` #x17.` ` GTE's revised direct switching investment per line is substantially reduced from its initial  xtariff filing. There is no basis in the record for finding, nor is it alleged, that the $6.00 per line per year  xdirect investment produces an unlawful charge. Accordingly, we find no basis on this record for finding that this direct investment is unreasonable or that the rates based on it are unlawful.  S7- Issue B: Whether GTE's rates for SCOCS are consistent with the "new services test." x1. Background and Contentions  Sk- ` #x18.` ` GTE stated in its initial transmittals that its rates for SCOCS would be recovered through  x/both recurring and nonrecurring charges, and that nonrecurring charges would mirror the nonrecurring  x=installation charges contained in its existing local exchange tariffs in order to minimize arbitrage and tariff  S- xshopping that might result between GTE's federal and local exchange tariffs.x7 ƴ yO"-#C\  P6QgP#эxGTE Reply to APCC Petition at 4.x Based on this approach,  xGTE's Transmittal Nos. 206 and 1112 proposed widely different rates for the two separate study areas in  Sl- x[California covered by the two transmittals.8lƴ yO$&-  zԍxAlthough these transmittals were companywide, APCC only raised concerns with respect to SCOCS rates in two study areas in California. GTE's Transmittal No. 206 set a $1.99 monthly charge for  xSCOCS with no nonrecurring charges whereas Transmittal No. 1095 established a $23.00 nonrecurring"9 p8-(("  S- xcharge and a monthly charge of $1.69.a9ƴ {Oh-#C\  P6QgP#эxId.a In the Designation Order, the Bureau expressed concern that  x>by mirroring the nonrecurring installation charges contained in its existing local exchange tariffs, GTE  xhad set rates for SCOCS based on considerations not relevant to the new services test since rates would  Sh- xkbe set on factors other than the direct costs and a reasonable overhead loading.U:hZƴ {Ob-ԍxDesignation Order at para. 16.U The Bureau directed  x[GTE to explain in detail how its determination of rates complies with the new services test, Section 276,  S- xand the Payphone Orders. In particular, the Bureau directed GTE to demonstrate how the nonrecurring  S-charges and any recurring charges for SCOCS individually comply with the new services test.:;ƴ {O\ -ԍxId.:  Sj- ` x19.` ` In its direct case, GTE describes its tariff revisions that it filed after the initial tariff was  xset for investigation. GTE states that its tariff revisions establish a $5.00 nonrecurring rate for every state  xMit serves, eliminating the large variations in nonrecurring charges attributable to mirroring discussed in  S- x>the Designation Order.<~ƴ yO-#C\  P6QgP#эxGTE Direct Case at 3. GTE filed their revised tariffs on September 5, 1997. GTE states that the new monthly recurring rates range from $.27 to $.33 a  x0month as compared to the original range of $1.07 to $2.02 a month. GTE asserts that the pricing  x=information submitted in its direct case demonstrates that the new and lower proposed rates for SCOCS  S9 -only recover the direct cost of the service plus a reasonable allocation of company overheads.a=9 ƴ {O-#C\  P6QgP#эxId.a  S - ` x20.` ` APCC asserts that GTE's revised tariff still proposes unreasonable overhead loadings.o> ƴ yO-#C\  P6QgP#эxAPCC Opposition at 45.o  xAPCC sees no reason why overhead loading allocations should exceed 30 or 40 percent of the direct  Sm- xkcosts.f?m0 ƴ {O=-#C\  P6QgP#эxId.at 5.f In addition, APCC finds GTE's proposed uniform nonrecurring charge of $5.00 excessive in  S:- xrelation to the low annual cost ($3.78 to $4.73) attributed to the service.a@: ƴ {O-#C\  P6QgP#эxId.a APCC also states that most  xNlarge LECs apply a nonrecurring charge only if SCOCStype screening service is ordered after the  xinstallation of the payphone line. Thus, APCC states that GTE should not be permitted to impose the  S-nonrecurring charge unless SCOCS is ordered after installation of the payphone line.aAT ƴ {O -#C\  P6QgP#эxId.a  S;- ` x21.` ` In its rebuttal, GTE responds that APCC's statement that GTE is now proposing an  S- xunreasonable overhead loading ratio is incorrect.jBƴ yO$-#C\  P6QgP#эxGTE Rebuttal at 2.j Using as an example its calculations for the State of  xArkansas in Exhibit 1 of its Direct Case, GTE states that APCC based its overhead loading calculations  xon a $0.08 direct cost figure that excludes other direct costs, such as order processing, customer billing," vB-((Q"  S- x]and software expenses.gCƴ {Oh-#C\  P6QgP#эxId. at 3.g GTE also argues that APCC should have calculated overhead costs that  xencompasses additional costs, including the Commission's prescribed 11.25 percent rate of return, order  x[processing, customer billing, and software expenses, all of which are recoverable under the Commission's  Sg- xrules, according to GTE.aDgZƴ {Oa-#C\  P6QgP#эxId.a GTE states that using all recoverable costs results in a $0.35 monthly charge  xthat includes recurring and nonrecurring costs instead of the $0.08 monthly charge used by APCC in its  S- xcalculations.aEƴ {O -#C\  P6QgP#эxId.a GTE states that its $5.00 nonrecurring installation charge is justified because it is only  xcharging $0.28 for its recurring monthly charge even though its costs could justify a $0.35 monthly charge. x3. Discussion  S- ` x22.` ` Our analysis of GTE's revised recurring charges for SCOCS shows, on average, a rate to  S - x direct cost ratio of 2 (rates are two times greater than its direct costs for this service).F  ~ƴ yO-  jԍxFor example, for the State of Arkansas, GTE's monthly rate of $0.28 for SCOCS is approximately two times  xZgreater than the direct costs for the service. The direct costs, which include switching investment and items such  xas order processing and software expenses, are derived by deducting overhead costs (administration and marketing expenses) from the total annual costs.  This ratio is  Si - xcomparable to the ratio of rates to direct costs for similar LEC services.GZi f ƴ yOo-  ԍxThe ratio of rates to direct costs for similar payphone features offered by other LECs range from a low of  {O7- xzero times greater than the direct costs to a high of 4.8 times greater than the direct costs. See, e.g., US West F.C.C.Tariff No. 5, Transmittal No. 858 and Pacific Bell F.C.C. No. 128, Transmittal No. 1932. Further, the record does not  x=show that the costs GTE has included in its overhead loadings are unreasonable in this case. There is no  xother information in the record showing that the proposed recurring charges and the overhead loadings are unreasonable under the new services test.  Sj- ` x23.` ` As explained by GTE in its direct case, it has chosen to recover a portion of its SCOCS  xjcosts through a nonrecurring charge. GTE has failed, however, to submit any cost support justifying the  x$5.00 nonrecurring charge. While it might be reasonable to recover SCOCS costs through a combination  xof recurring and nonrecurring charges, GTE unsupported statement that its has chosen to charge $0.28  x.instead of $0.35 in recurring charges does not justify a $5.00 nonrecurring fee. Nor has it explained how  xthis charge was derived consistent with the new services test. Moreover, GTE has not addressed APCC's  xconcern that limiting application of the nonrecurring charge to requests for SCOCS after installation of  xythe line is the only proper application of nonrecurring charges. Accordingly, we find that GTE has failed  xon this record to justify its $5.00 nonrecurring charge for SCOCS. We therefore find this charge unlawful  xMon this record. Its recurring charge for SCOCS may remain in effect. Based on GTE's statement that  xthere have been no customers for the payphone services made available in its federal access tariff, we find that it is not necessary to direct GTE to make refunds with respect to its nonrecurring charges.  S- IV. CONCLUSION ă  Sm- ` x24.` ` As explained, the initial Bell Atlantic and GTE rates at issue in this proceeding have been  xrevised. Because the carriers had no customers for the services offered under the original tariffs, we do": G-((-"  x=not need to determine whether the rates established in them were unlawful or whether refunds should be  x0required. Finally, for the reasons discussed above, we find no basis on the record for finding Bell  x>Atlantic's rates, as revised, unlawful. However, we find GTE's revised $5.00 nonrecurring charge for  x\SCOCS is unlawful. Therefore, GTE is directed to file tariff revisions removing this unlawful rate no  xlater than 5 days from the release date of this Memorandum Opinion and Order. GTE may seek to justify  xLa nonrecurring charge for SCOCS by means of adequate cost support and a demonstration of compliance  x=with the new services test. Because GTE does not have customers for SCOCS under this tariff, it is not  S-necessary to order refunds.NHZƴ {O-  ԍxSee Letter dated October 21, 1997, from W. Scott Randolph, Director, Regulatory Matters, GTE to Federal  xCommunications Commission (indicating that GTE has no customers for its interstate SCOCS service, either as originally proposed or as revised).N  S5- V. ORDERING CLAUSES ă  S- ` ~x25.` ` Accordingly, IT IS ORDERED that pursuant to Section 204(a) of the Communications  x.Act, 47 U.S.C.  204(a), the investigation and accounting order imposed by the Common Carrier Bureau  xin CC Docket 97140 with respect to Bell Atlantic Telephone Companies Transmittal Nos. 962, 966 and  x104 and GTE System Telephone Companies Transmittal No. 206 and 217 and GTE Telephone Operating Companies Transmittal No. 1095 and 1112 ARE TERMINATED.  S - ` Cx26.` ` IT IS FURTHER ORDERED that pursuant to Sections 4(i), 201(b), 204(a), of the  xCommunications Act, 47 U.S.C.  154(i), 201(b), 204(a), that the nonrecurring charge identified in this  x]Order and contained in payphone features and functions tariffs filed by GTE Systems Telephone  S-Companies and GTE Telephone Operating Companies, described in para. 22, supra., IS UNLAWFUL. x" H-(("  S- ` x27.` ` IT IS FURTHER ORDERED that GTE System Telephone Companies and GTE Telephone  S- xjOperating Companies SHALL FILE tariff revisions, as discussed in para. 24, supra., to become effective on seven days' notice.  S5- ` x28.` ` IT IS FURTHER ORDERED that Sections 61.58 and 61.59 of the Commission's Rules,  xy47 C.F.R.  61.58 and 61.59, ARE WAIVED for the purposes of this compliance Order. GTE Systems  x=Telephone Companies and GTE Telephone Operating Companies should cite the "FCC" number of this Order as authority for their tariff filings. x ` p` cx` `  ccmFEDERAL COMMUNICATIONS COMMISSION x` `  ccmWilliam F. Caton x` `  ccmActing Secretary