******************************************************** 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 ) ) Virgin Islands Telephone Corporation Request) NSD File No. 98-86 for Extension of Waiver of the Four-Digit ) Carrier Identification Code (CIC) ) Implementation Schedule ) ) ) ORDER Adopted: August 12, 1998 Released: August 12, 1998 By the Chief, Network Services Division, Common Carrier Bureau: I. INTRODUCTION 1. Carrier identification codes (CICs) are numeric codes that enable local exchange carriers (LECs) providing interstate interexchange access services to identify the interstate interexchange carrier (IXC) that the originating caller wishes to use to transmit its interstate call. LECs use the CICs to route traffic to the proper IXC and to bill for the interstate access service provided. CICs facilitate competition by enabling callers to use the services of telecommunications service providers either by presubscription or by dialing a carrier access code (CAC) which incorporates that carrier's unique Feature Group D CIC. Originally, CICs were unique three-digit codes (XXX) and CACs were five-digit codes incorporating the CIC (10XXX). 2. On April 11, 1997, in the CICs Second Report and Order, the Commission and the industry agreed to expand Feature Group D CICs from three to four digits as the supply of three- digit codes was exhausted. The industry agreed that as the expansion from three to four-digit CICs occurred, and as carriers replaced their five-digit CACs with seven-digit CACs, a transition, or permissive dialing period, was needed. On October 22, 1997, in the CICs Order on Reconsideration, the Commission created a "two-step" transition during which three and four- digit Feature Group D CICs co-exist. The CICs Order on Reconsideration mandated that all LECs providing equal access complete switch changes to recognize four-digit CICs by January 1, 1998, the end of the first phase. The second phase, which ends on June 30, 1998, is intended to allow interexchange carriers time to prepare their networks for, and educate their customers about, the replacement of three-digit CICs by four-digit CICs. After June 30, 1998, only four- digit CICs and seven-digit CACs will be recognized. The Commission also affirmed its decision in the CICs Second Report and Order not to grandfather the use of three-digit CICs and five-digit CACs that are in use during the transition. 3. The Virgin Islands Telephone Company (Vitelco), a rural and insular carrier operating in the United States Virgin Islands with approximately 62,000 switched access lines spread over multiple islands, filed a petition for waiver of the CICs Second Report and Order's January 1, 1998, conversion deadline. Stating that it was technically infeasible for it to comply with the January 1, 1998, conversion deadline, Vitelco requested an extension until July 1, 1998. In an Order released December 24, 1997, the Network Services Division (Division) of the Common Carrier Bureau (Bureau) found that Vitelco had demonstrated the special circumstances meriting a waiver of the January 1, 1998, conversion deadline and granted Vitelco's request for extension of the deadline until July 1, 1998. 4. On June 12, 1998, Vitelco filed a request for extension of the conversion deadline by which all LECs providing equal access complete switch changes to recognize four-digit CICs. Vitelco seeks to extend its waiver of the deadline by which it was to implement four-digit CIC capability within its network from the July 1, 1998, extension date approved in its first waiver request until December 1999. On June 25, 1998, Vitelco filed a letter clarifying that it also seeks a waiver of the Commission rule mandating that carriers begin blocking three-digit CICs on July 1, 1998. Vitelco seeks to waive the three-digit CIC blocking deadline of July 1, 1998, to allow its customers to continue to use the five-digit CAC dialing pattern until Vitelco has implemented four-digit CIC capability on its network in December 1999. In this Order, we deny Vitelco's request to further extend its waiver of the conversion deadline for four-digit CIC capability from July 1, 1998, until December 1999, and, accordingly, its request for a waiver of the three-digit CIC blocking deadline. II. DISCUSSION 5. An applicant for waiver must demonstrate that special circumstances warrant a deviation from the general rule and that such deviation will serve the public interest. In evaluating Vitelco's request for extension of its waiver of the conversion deadline for four-digit CIC capability, we have weighed the following factors: Vitelco's diligence in attempting to upgrade its switches within the time frame provided under the original waiver; the impact of availability of products required to accomplish the upgrade on Vitelco's ability to meet the original waiver deadline; and the impact of an extension of the conversion deadline on the IXCs served by Vitelco's switches and on customers' ability to reach IXCs through CAC dialing. 6. We find that Vitelco's request for waiver extension does not demonstrate the special circumstances meriting a grant of the extension. We believe that Vitelco failed to work diligently to upgrade its switches by the June 30, 1998, extension granted by the Commission. Vitelco stated in its previous waiver petition that Alcatel, its primary equipment vendor, had determined that it could not complete upgrades by January 1, 1998, and that Alcatel had not submitted a price quote for the terms of conversion nor a target date for the switch upgrades to four-digit CIC capability as of December 1997. For this reason, Vitelco sought, and was granted, a waiver of the conversion deadline until June 30, 1998. In its current request for further extension of the waiver deadline from June 30, 1998, until December 1999, Vitelco's Vice President, Emiel Michiels states that calls were placed to Alcatel in November 1997, December 1997, and January 1998, requesting a cost estimate for the necessary upgrade. Vitelco states that Alcatel reported on April 1, 1998, that the switch upgrades to allow four-digit CIC capability would cost approximately $884,000. In May 1998, after reviewing Alcatel's proposal, Vitelco made a business decision to replace its two switches on St. Thomas and St. Croix with Nortel equipment. Mr. Michiels reports that Nortel is scheduled to deliver switch equipment for St. Thomas by November 6, 1998, and deliver switch equipment for St. Croix by April 4, 1999. Although Vitelco's business decision may be a reasonable one, we find that it does not justify the five month delay, from December 1997 to May 1998, in Vitelco's decision to replace rather than upgrade its switches, particularly in light of the importance of meeting the CIC conversion deadline. Moreover, Vitelco had already requested and received a six-month extension of that deadline. Yet, in that time period Vitelco accomplished little, if anything, towards meeting the requirement that its network accept four-digit CICs by June 30, 1998. Although Alcatel's response, or lack thereof, to Vitelco's requests for price quotes may have been beyond Vitelco's control, Vitelco had its own obligation to pursue an upgrade to, or replacement of, its switch to meet the four-digit CIC requirement as diligently and expeditiously as it could. We find that it has not met this requirement. In addition, we find that Vitelco has failed to demonstrate the reasonableness of the amount of time it now requests to replace two switches and sixteen remotes. 7. Second, we conclude that Vitelco has not demonstrated that the products needed to accomplish the upgrade of its network are not readily available from switch manufacturers and that this fact has significantly affected its ability to meet the July 1, 1998, deadline. Vitelco reports that Alcatel was not able to provide the necessary upgrades to allow its switch network to accept four-digit CICs. Therefore, Vitelco has chosen to replace its switches and remotes with equipment from Nortel that will not only comply with the requirement for four-digit CIC capability, but will also permit Vitelco to satisfy its local number portability obligations. Thus, we find that Vitelco's inability to meet the deadline extension approved by the Commission in its grant of Vitelco's first waiver request stems more from Vitelco's own business decisions rather than a scarcity of available equipment. Although, Vitelco's engineer states that Vitelco did not sign a final contract regarding purchase of four-digit CIC compliant Nortel switching equipment until June 1998, as noted above, we find that Vitelco did not act reasonably or diligently to meet the four-digit CIC requirement. The unavailability of equipment was not a factor in the delay. 8. Third, we find that the impact of a further extension of the conversion deadline on IXCs and their customers outweighs the burden on Vitelco that would be imposed, absent the extension. Although the Division has previously granted waivers extending the switch conversion deadline for four-digit CIC capability beyond July 1, 1998, to small incumbent LECs serving approximately 10,000 or fewer access lines, we note that Vitelco serves more than 60,000 access lines and, therefore, a far larger number of IXC customers would be affected by the grant of this waiver request than by previously granted waivers. In granting the waivers of the switch conversion deadline, the Division carefully balanced the impact of its decision upon LECs requesting waivers, IXCs, and customers. We find that the number of customers served by Vitelco weighs against the grant of the requested waiver, particularly where, as here, the impact on IXCs and their customers is likely to be significant. If we granted Vitelco's request, Vitelco's network would not accept four-digit CICs until approximately December 1999. Seven-digit CAC calling, therefore, would not be available to IXCs operating in Vitelco's service territory and their customers from June 30, 1998, until December 1999. Moreover, a dialing disparity would result if the customers of IXCs operating on the Virgin Islands could access dial-around services by dialing five-digit CACs while all other customers would have to access IXCs by dialing seven- digit CACs. The dialing disparity between five-digit and seven-digit CAC dialing patterns was a significant factor in the Commission's decision to end the transition on June 30, 1998, and not to extend it beyond that time frame. Although the Commission determined that the variation in CAC lengths during the transition or permissive dialing period was not an unreasonable practice or unreasonable discrimination, it expressly limited this finding to the duration of the permissive dialing period. The Commission previously noted that the permissive dialing period should be ended "as soon as practicable" in order to minimize the anticompetitive effects of dialing disparity, to allow the end of the CIC conservation plan as soon as possible, and to ensure that there are enough CICs in the 5XXX and 6XXX range for assignment during the remainder of the permissive dialing period. Thus, we decline to grant Vitelco the requested waiver of the waiver of the Commission rule mandating that carriers begin blocking three-digit CICs on July 1, 1998. 9. In sum, we conclude that Vitelco has not demonstrated the special circumstances necessary for grant of a further waiver of the CICs Order on Reconsideration's requirements that all LECs providing equal access complete switch changes to recognize four-digit CICs by January 1, 1998, or a waiver of the Commission rule mandating that carriers begin blocking three-digit CICs on July 1, 1998. Accordingly, we find that Vitelco is not in compliance with the Division's order granting Vitelco a waiver of the January 1, 1998, conversion deadline until June 30, 1998, and, therefore, is not in compliance with the Commission requirement that all LECs providing equal access complete switch changes to recognize four-digit CICs by January 1, 1998. 10. On our motion and pursuant to delegated authority, we nonetheless grant Vitelco a limited waiver of the June 30, 1998, conversion deadline. We require that Vitelco come into compliance with the Commission's requirement that Vitelco complete switch changes to recognize four-digit CICs by September 1, 1998. Because Vitelco has failed to meet the Division's extension deadline, we impose an additional requirement on it to assist the Division in monitoring Vitelco's diligence in converting to four-digit CICs. Specifically, we require Vitelco to file a report with the Network Services Division of the Common Carrier Bureau verifying its compliance with the September 1, 1998, deadline for the completed blocking of three-digit CICs established in the CICs Declaratory Order. 11. Lastly, we note that any person or entity that willfully or repeatedly fails to comply with any rule, regulation or order issued by the Commission under the Communications Act of 1934, as amended by the Telecommunications Act of 1996, shall be liable for a forfeiture penalty. Section 503(b)(2)(B) of the Act authorizes the Commission to assess a forfeiture of up to one hundred thousand dollars ($100,000) for each violation, or each day of a continuing violation, up to a statutory maximum of one million dollars ($1,000,000) for a single act or failure to act. Thus, should Vitelco fail to comply with the CICs Order on Reconsideration, the Third CICs Waiver Order, and the CICs Declaratory Ruling, we propose to initiate enforcement action by requiring that Vitelco show cause, pursuant to section 201(b) of the Act, why the Commission should not issue a notice of apparent liability for forfeiture, pursuant to section 503(b) of the Act. III. ORDERING CLAUSES 12. IT IS ORDERED, pursuant to Section 1.3 of the Commission's rules, 47 C.F.R.  1.3, and authority delegated in Section 0.91 of the Commission's rules, 47 C.F.R.  0.91, and Section 0.291 of the Commission's rules, 47 C.F.R.  0.291, that the Petition of Vitelco for Extension of Waiver of the Commission's Rules Regarding Transition to Four-Digit CICs filed by the Virgin Islands Telephone Company, and any relief requested in its clarification letter of June 25, 1998, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Geraldine A. Matise Chief, Network Services Division Common Carrier Bureau