******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Number Portability Query Services ) ) Pacific Bell Tariff F.C.C. No. 128 ) Transmittal Nos. 1927 and 1973 for Provision of Long-Term Number Portability ) Database Related Services ) ) Southwestern Bell Tariff F.C.C. No. 73 ) Transmittal Nos. 2638 and 2694 for Provision of Long-Term Number Portability ) Database Related Services ) Memorandum Opinion and Order Adopted: May 29, 1998 Released: May 29, 1998 By the Chief, Competitive Pricing Division: I. Introduction 1. In this Memorandum Opinion and Order we suspend for one day and set for investigation the tariff revisions regarding long-term number portability database services that Pacific Bell sets forth in Transmittal Nos. 1927 and 1973, and Southwestern Bell sets forth in Transmittal Nos. 2638 and 2694. II. Background 2. The inability of customers to retain their telephone numbers when changing local service providers hampers the development of local competition. Section 251(b)(2) of the Communications Act of 1934, as amended, seeks to remove this impediment to competition by requiring all local exchange carriers (LECs) "to provide, to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission." To prevent the cost of providing number portability from itself becoming a barrier to local competition, section 251(e)(2) requires that "[t]he cost of establishing number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission." 3. Carriers are providing number portability through a location routing number (LRN) architecture. Under an LRN architecture, each customer's telephone number is matched in one of seven databases with an LRN that identifies the switch that currently serves that telephone number. Neutral third parties, called local number portability administrators, administer these regional databases. When a customer changes from one LEC to another, the carrier that wins the customer "ports" the customer's telephone number from the former carrier by electronically transmitting (uploading) the new LRN to the administrator of the relevant regional database. This pairs the customer's original telephone number with the LRN for the switch of the new carrier, allowing the customer to retain the original telephone number. The regional database administrators electronically transmit (download) LRN updates to carriers responsible for routing telephone calls. When a carrier routes an interswitch telephone call to a location where number portability is available, the carrier will "query" this downloaded data to determine the LRN for the switch that serves the terminating telephone number of the call. 4. The Commission has approved the industry's "N minus one" (N-1) querying protocol. Under this protocol, the N-1 carrier is responsible for the query, "where 'N' is the entity terminating the call to the end user, or a network provider contracted by the entity to provide tandem access." Thus, the N-1 carrier for a local call is usually the calling customer's LEC; the N-1 carrier for an interexchange call is usually the calling customer's interexchange carrier. Rather than perform its own querying, an N-1 carrier may arrange for other carriers or third parties to provide querying services for them. The Commission has determined that an incumbent LEC may charge an N-1 carrier for performing queries on the N-1 carrier's behalf pursuant to such an arrangement. The Commission has also noted that an unqueried call might be routed by default to the LEC that originally served the telephone number, usually an incumbent LEC. This could happen, for example, if the N-1 carrier does not ensure that its calls are queried, either through its own query capability or through an arrangement with a third party, or if there is a technical failure in the N-1 carrier's ability to query. The Commission has determined that an incumbent LEC may charge the N-1 carrier for querying default-routed calls. 5. Southwestern Bell and Pacific Bell originally filed transmittals on June 6, 1997, and July 7, 1997, respectively, containing tariff revisions that, among other things, propose prearranged query charges, default query charges, database charges, and billing charges for long-term number portability services that the companies provide to other carriers. The carriers revised their rates on March 4, 1998, and March 13, 1998. The Competitive Pricing Division of the Common Carrier Bureau suspended on March 18, 1998, and March 27, 1998, and set for investigation the revisions concerning the prearranged, default, and billing charges, which otherwise would have taken effect March 19, 1998, and March 28, 1998. The Division did not address the merits of the database charges, however, which are currently scheduled to take effect June 1, 1998. 6. The Commission released an order May 12, 1998, promulgating rules on long-term number portability cost recovery. Pursuant to those rules, "[i]ncumbent local exchange carriers may recover their carrier-specific costs directly related to providing long-term number portability by establishing in tariffs filed with the Federal Communications Commission a monthly number-portability charge [that applies almost exclusively to end users] and a number portability query-service charge [that applies to carriers]." Furthermore, "[t]he number portability query-service charge may recover only carrier-specific costs directly related to providing long-term number portability that the incumbent local exchange carrier incurs to provide long-term number portability query service to carriers on a prearranged and default basis." The Commission stated that carriers "must indicate in the cost support section of their tariffs the portion of their carrier-specific costs directly related to providing number portability attributable to the number portability services they provide end users, and that portion attributable to the number portability query services they provide on behalf of other carriers." 7. The Commission explained in the Cost Recovery Order "that carrier-specific costs directly related to providing number portability are limited to costs carriers incur specifically in the provision of number portability services, such as for the querying of calls . Costs that carriers incur as an incidental consequence of number portability, however, are not costs directly related to providing number portability." The Commission noted that it would "consider as carrier-specific costs directly related to the provision of number portability that portion of a carrier's joint costs that is demonstrably an incremental cost carriers incur in the provision of long-term number portability." Similarly, the Commission stated that "carriers may not use general overhead loading factors in calculating" their carrier-specific costs directly related to providing number portability, but instead may include "only those incremental overheads that they can demonstrate they incurred specifically in the provision of long-term number portability." III. Discussion 8. We conclude that the database charges described in Southwestern Bell Transmittal Nos. 2638 and 2694, and Pacific Bell Transmittal Nos. 1927 and 1973, raise substantial questions of lawfulness warranting suspension and investigation. Neither carrier has provided sufficient cost justification and other support to permit a full assessment of the reasonableness of the proposed charges, particularly in light of additional issues raised by the Cost Recovery Order. We will, therefore, suspend for one day the tariff revisions in Southwestern Bell Transmittal Nos. 2638 and 2694, and Pacific Bell Transmittal Nos. 1927 and 1973, to the extent they pertain to the database charges. We will include these tariff revisions in the pending investigations of the other number portability-related charges of Southwestern Bell and Pacific Bell. We also will impose accounting orders during the course of the investigation with respect to the database services offered under those transmittals. IV. Ordering Clauses 9. IT IS ORDERED that, pursuant to section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C.  204(a), and sections 0.91 and 0.291 of the Commission's Rules, 47 C.F.R.  0.91 and 0.291, the tariff revisions described in Southwestern Bell Transmittal Nos. 2638 and 2694, and Pacific Bell Transmittal Nos. 1927 and 1973, pertaining to long-term number portability database charges ARE SUSPENDED for one day and an investigation IS INSTITUTED. 10. IT IS FURTHER ORDERED that Southwestern Bell and Pacific Bell SHALL FILE a supplement no later than 5 business days after release of this Memorandum Opinion and Order reflecting the one day suspension. For these purposes, we waive sections 61.58 and 61.59 of the Commission's Rules, 47 C.F.R.  61.58 and 61.59. Southwestern Bell and Pacific Bell should cite the "DA" number of this Order as their authority for these filings. 11. IT IS FURTHER ORDERED that, pursuant to section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C.  204(a), and section 0.291 of the Commission's Rules, 47 C.F.R.  0.291, Southwestern Bell and Pacific Bell SHALL KEEP ACCURATE ACCOUNT of all amounts that are associated with the rates that are subject to this investigation. FEDERAL COMMUNICATIONS COMMISSION Jane E. Jackson Chief, Competitive Pricing Division Common Carrier Bureau