******************************************************** 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 ) ) Application for Review and Motion for Stay of) Allnet Communication Services, Inc.) MEMORANDUM OPINION AND ORDER Adopted: July 14, 1998 Released: July 16, 1998 By the Commission: I. INTRODUCTION 1. Allnet Communications Services, Inc. (Allnet) has filed an application for review and motion for stay of an order of the Commission's Common Carrier Bureau (Bureau) granting Ameritech and Southwestern Bell (SWBT) waivers of Part 69 of the Commission's rules relating to the restructuring of charges for the provision of payphone service. For the reasons set forth below, we dismiss as moot Allnet's application for review and motion for stay. II. BACKGROUND 2. On April 26, 1995, Ameritech filed a petition requesting waiver of Part 69 of the Commission's rules to permit it to recover the interstate portion of its payphone costs through a per-call charge to interexchange carriers (IXCs) that receive interstate traffic originating at Ameritech payphones. On June 7, 1995, SWBT filed a similar petition. At the time Ameritech and SWBT filed their waiver petitions, they were assessing a per-minute carrier common line (CCL) charge on all interstate switched access traffic originating and/or terminating in their respective service areas. The CCL charge recovered, inter alia, revenues associated with the costs of providing payphones. In their petitions, Ameritech and SWBT sought waivers of the Commission's rules in order to remove payphone costs from the CCL charge and to establish a new rate element in the common line price cap basket consisting of a per-call charge to IXCs that carry interstate traffic originating at Ameritech and SWBT payphones. 3. On February 6, 1996, Congress enacted the Telecommunications Act of 1996 (1996 Act). The 1996 Act, among other things, directed the Commission to establish rules for compensating payphone providers on a per-call basis for payphone-originated intrastate and interstate calls. The 1996 Act also specified that the Commission "discontinue the intrastate and interstate carrier access charge payphone service elements and payments . . . and all intrastate and interstate payphone subsidies from basic exchange and exchange access revenues[.]" 4. On March 1, 1996, the Bureau released an order granting Ameritech and SWBT's petitions for waiver on an interim basis pending the conclusion of the Commission's rulemaking proceeding implementing the payphone provisions of the 1996 Act. The Bureau found that the newly developed capability of the Ameritech and SWBT networks to track interstate calls originating from pay telephones and to identify the interexchange carrier to which each call is routed constituted special circumstances justifying a waiver of our rules. The Bureau stated that granting the requested waivers would enable the public to receive promptly the benefits associated with recovering the costs of payphone common lines in a more cost-causative manner. The Bureau also found that granting the waiver requests was consistent with the provisions of Section 276 of the 1996 Act that directed the Commission to establish a per-call compensation plan in order to ensure fair compensation for each and every call from a payphone. 5. On April 1, 1996, Allnet filed a combined application for review and motion for stay of the Bureau's Waiver Order. In support of its position, Allnet argues that the Waiver Order is inconsistent with the 1996 Act, and that procedurally the Bureau erred by granting the waiver petitions rather than awaiting the pending rulemaking proceeding. 6. Subsequent to releasing the order granting Ameritech and SWBT's petitions for waiver, the Commission released the Payphone Orders, which adopted new rules and policies implementing Section 276 of the 1996 Act. Specifically, the Payphone Orders required incumbent local exchange carriers (LECs) to deregulate, detariff, and reclassify incumbent LEC payphones as customer premises equipment (CPE) for regulatory purposes effective April 15, 1997. The new rules also required incumbent LECs to discontinue their recovery of interstate payphone costs through their rates for switched access service and to eliminate payphone subsidies from basic exchange and exchange access revenues. In addition, the Payphone Orders established a per-call compensation plan to ensure that payphone service providers (PSPs) are fairly compensated for all subscriber 800 and access code calls, including 800 calls originating on their payphones. The per-call compensation plan, which became effective October 7, 1997, requires IXCs to which payphone calls are routed to track compensable calls and remit per-call compensation to the PSP on whose payphone the call originated. The Commission rejected the "caller-pays" system advocated by a number of commenters, and concluded that the "carrier-pays" system for per-call compensation places the payment obligation on the primary economic beneficiary in the least burdensome, most cost effective manner. III. DISCUSSION A. Arguments 7. On April 1, 1996, prior to release of the Payphone Orders, Allnet filed a combined application for review and motion for stay of the Bureau's Waiver Order. In support of its position, Allnet argues that the 1996 Act changed the provision of pay telephone service from a common carrier service to a non-common carrier service by specifically excluding aggregators from the definition of "telecommunications carrier." According to Allnet, this change is self-executing, and when combined with the duties imposed on LECs in Section 276(b) of the Act: (1) prohibits LECs from collecting payphone charges through common carrier tariffs; (2) requires that compensation for payphone charges be collected only on completed calls; and (3) requires that compensation for payphone charges be paid by the end user. Allnet further contends that permitting Ameritech and SWBT to recover payphone costs on a per-call basis conflicts with Commission precedent favoring collection of charges on a per-minute basis from the end user, and that procedurally the Bureau erred by granting the waiver petitions rather than awaiting the pending rulemaking proceeding. Finally, Allnet argues that the Waiver Order violates the non- discrimination provisions of the Modification of Final Judgment (MFJ). 8. SWBT and Ameritech respond that the Waiver Order is consistent with the provisions of the 1996 Act. These carriers also dispute Allnet's claims that the Commission erred procedurally, and that the Waiver Order violates the MFJ. B. Analysis 9. Section 276 of the 1996 Act specifically directed the Commission to prescribe regulations that establish a compensation plan to ensure fair compensation for "each and every completed intrastate and interstate call using [a] payphone[.]" In addition, Section 276 required the Commission to discontinue the LECs' recovery of interstate payphone costs through their rates for switched access service and to eliminate payphone subsidies from basic exchange and exchange access revenues. The Commission's Payphone Orders, inter alia, deregulated and detariffed incumbent LEC payphones, and established a per-call-compensation plan requiring IXCs to compensate PSPs for all completed calls originating on their payphones. In adopting the new rules governing payphone service, the Commission addressed and resolved the arguments raised by Allnet in its application for review and motion for stay. 10. By the terms of the Waiver Order, the Part 69 waivers were granted to Ameritech and SWBT on an interim basis until such time as the Commission could adopt rules implementing the statutory payphone provisions of the 1996 Act. These waivers, therefore, were only in effect for a brief time prior to the effective dates of the rules adopted in the Payphone Orders. Moreover, we note that the waivers were consistent with the directives of the 1996 Act because they permitted Ameritech and SWBT to remove the interstate portion of their payphone costs from the CCL charge and to establish a separate charge assessed on IXCs, using a per-call compensation mechanism similar in many respects to the one subsequently adopted in the Payphone Orders. 11. Because the Payphone Orders addressed and resolved the issues raised in Allnet's application for review and motion for stay, and because the waivers granted in the Waiver Order are no longer in effect, we dismiss as moot Allnet's application for review and motion for stay. 12. Accordingly, IT IS ORDERED that the application for review and motion for stay filed by Allnet IS DISMISSED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary