******************************************************** 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 ) CC Docket No. 98-199 ) BellSouth Telecommunications, Inc. Tariff ) CCB/CPD 98-49 F.C.C. No. 1, Transmittals No. 474 and 482 ) ) Frontier Telephone of Rochester, Inc. ) CCB/CPD 98-50 Tariff F.C.C. No. 1, Transmittal No. 10 ) ) Sprint Local Telephone Companies ) CCB/CPD 98-47 Tariff F.C.C. No. 1, Transmittal No. 63 ) ) U S WEST Communications, Inc. ) CCB/CPD 98-33 Tariff F.C.C. No. 5, Transmittal No. 931 ) Order Adopted: December 17, 1998 Released: December 17, 1998 By the Commission: I. Introduction 1. In this order, we conclude our investigations into the tariff revisions described in BellSouth Telecommunications, Inc. (BellSouth) Transmittals No. 474 and 482, Frontier Telephone of Rochester, Inc. (Frontier) Transmittal No. 10, Sprint Local Telephone Companies (Sprint) Transmittal No. 63, and U S WEST Communications Inc. (U S WEST) Transmittal No. 931. We allow BellSouth, Frontier, Sprint and U S WEST to continue offering on an interim basis their long-term number portability query and database services under the rates and conditions contained in those tariff revisions. We require them, however, to file new rates, terms, and conditions for these query and database services at the same time that they tariff their long-term number portability end-user charges. II. Background A. The Provision of Long-Term Number Portability 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. In its First Report and Order, the Commission promulgated performance criteria that long-term number portability solutions must meet, and established a schedule for the phased deployment of long-term number portability. The First Report and Order, as modified by the First Memorandum Opinion and Order on Reconsideration, requires LECs to implement long-term number portability: (1) in Chicago, Philadelphia, Atlanta, New York, Los Angeles, Houston, and Minneapolis by March 31, 1998, during Phase I; (2) in the rest of the 100 largest metropolitan statistical areas (MSAs) by December 31, 1998, in quarterly stages during Phases II to V; and (3) thereafter in switches outside the 100 largest MSAs, within six months of a request by a telecommunications carrier. Long-term number portability is currently available in approximately 60 MSAs. 4. Pursuant to the Commission's criteria, carriers are implementing long-term number portability through a location routing number (LRN) architecture. Under an LRN architecture, each customer's ported telephone number is stored in one of seven regional databases and associated with an LRN that identifies the switch that currently serves that telephone number. A telephone number which has not been ported does not have an LRN and is not stored in one of these databases. 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 customer's telephone number along with the LRN of the new carrier's switch 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) ported number LRN updates to regional databases so that the responsible carriers can properly route telephone calls. When a carrier routes an interswitch telephone call to a location where number portability is available, the carrier prior to the terminating carrier will "query" this downloaded data to determine if the called telephone number has been ported and, if ported, this query will determine the LRN of the switch that serves the ported telephone. The carrier that performed the query will then use this LRN to route the call to the terminating carrier for delivery to the called customer. B. Recovery of the Costs of Long-Term Number Portability 5. 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 it. The Commission has determined that a LEC may charge an N-1 carrier for performing queries on the N-1 carrier's behalf pursuant to such an arrangement. The Commission also has 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 as a result of a technical failure in the N-1 carrier's ability to query. The Commission has determined that a LEC may charge the N-1 carrier for querying default-routed calls. The Commission determined further that it would "allow LECs to block default-routed calls, but only in specific circumstances when failure to do so is likely to impair network reliability." The Commission also said that it would "require LECs to apply this blocking standard to calls from all carriers on a nondiscriminatory basis." 6. The Commission released its Third Report and Order in the long-term number portability proceeding on May 12, 1998. In that order, the Commission promulgated rules governing long-term number portability cost recovery. Under those rules, incumbent LECs may recover their carrier-specific costs directly related to providing long-term number portability in two federal charges: 1) a monthly number-portability charge to commence no earlier than February 1, 1999, that applies primarily to end users; and 2) a number portability query-service charge, which applies to carriers on whose behalf the LEC performs queries. 7. The Commission also concluded in the Third Report and 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 and the porting of telephone numbers from one carrier to another." They do not include, however, costs that carriers incur as an "incidental consequence of number portability." Thus, instead of allowing an incumbent LEC to "classify the entire cost of an upgrade as a carrier-specific cost directly related to providing number portability just because some aspect of the upgrade relates to the provision of number portability," the Commission stated it would allow an incumbent LEC to treat as directly related to number portability only "that portion of a carrier's joint costs that is demonstrably an incremental cost carriers incur in the provision of long- term number portability. " To help determine the portion of joint costs incumbent LECs may treat as carrier-specific costs directly related to providing number portability, the Commission asked interested parties to file comments by August 3, 1998, proposing ways to apportion the different types of joint costs. Reply comments were due September 16, 1998. The Commission also "delegate[d] authority to the Chief, Common Carrier Bureau, to determine appropriate methods for apportioning joint costs among portability and nonportability services, and to issue any orders to provide guidance to carriers before they file their [end-user] tariffs, which are to take effect no earlier than February 1, 1999." C. The Incumbent LECs' Tariff Revisions for Number Portability Query and Database Services 8. In March and April 1998, before the Commission released its order on long-term number portability cost recovery, Ameritech Operating Companies (Ameritech), Bell Atlantic Telephone Companies (Bell Atlantic), Pacific Bell Telephone Company (Pacific Bell), and Southwestern Bell Telephone Company (Southwestern Bell) filed tariff revisions pertaining to the provision of long-term number portability query and database services. The tariff revisions governed only these carrier-to- carrier services, and did not govern the monthly charge to end users for long-term number portability, since those charges are not scheduled to go into effect until February 1, 1999. The Competitive Pricing Division (Division) of the Common Carrier Bureau concluded that these tariff revisions raised substantial questions of lawfulness, suspended them for one day, and set them for investigation under section 204 of the Communications Act of 1934, as amended. On June 17, 1998, the Division designated for investigation certain issues regarding the carriers' long-term number portability query and database services cost allocation. The Division also designated issues concerning the terms and conditions of the incumbent LECs' services, specifically: (1) whether carriers may block both prearranged and default query traffic when such traffic threatens to disrupt the operation and reliability of their networks; (2) whether the carriers' proposed query-service charges were based on costs directly related to providing number portability query services; (3) whether the carriers' proposed allocations of total number portability costs to query services were reasonable; (4) whether the carriers' methodologies and assumptions used to develop their proposed rates were reasonable; (5) whether the carriers' demand forecasts for query services were reasonable; and (6) whether it was reasonable for carriers to block prearranged traffic as well as default traffic. A number of parties asked the Commission to declare the tariff revisions unlawful on the grounds that the incumbent LECs had failed to demonstrate that the revisions complied with the Third Report and Order cost recovery provisions and had not met their section 204 burden of establishing that their tariff revisions were "just and reasonable." 9. On August 14, 1998, the Commission concluded the investigation for these tariffs. The Commission held that the carriers could offer query and database services under the rates and conditions contained in their respective tariff revisions on an interim basis. The Commission stated that it could not determine at that time whether the incumbent LECs' tariff revisions were "reasonable or otherwise lawful" because it still had to determine whether the carriers had accurately identified their carrier-specific costs directly related to number portability, and whether they had appropriately allocated these costs between their query and end-user charges. For this reason, the Commission required the carriers to file new tariff revisions regarding their rates and conditions for their query and database services when they file their end- user charges in early 1999. The Commission stated that at the time of the new filing, it will be in a better position to evaluate the reasonableness of the incumbent LECs' rates and conditions. The Commission declined to declare the tariff revisions unlawful or to prescribe rates, as commenters had requested, because the incumbent LECs' long-term number portability query and database services raised novel and complex issues which could not be resolved immediately. 10. In July and August of 1998, BellSouth, Frontier, Sprint and U S WEST filed tariff revisions pertaining to the provision of long-term number portability query and database services. Again, the tariffs relate only to charges for carrier-to-carrier services and do not govern the end-user charges that cannot be recovered until February 1, 1999. The Commission concluded that each tariff revision raised substantial questions of lawfulness warranting suspension and investigation. The investigations into these incumbent LECs' tariff revisions were not included in the tariff investigation of Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell and the subsequent order terminating that investigation because the pleading cycle in the earlier investigation had already begun. Additionally, the Division did not designate specific issues for investigation relating to the tariff revisions of BellSouth, Frontier, Sprint, and U S WEST in light of the ongoing investigation into issues raised in the tariffs of Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell, and the Interim Rates Order, which concluded that the issues raised in that investigation could not be resolved at that time. III. Discussion 11. We cannot determine at this time whether the tariff revisions of Bell South, Frontier, Sprint and U S WEST for long-term number portability query and database services are reasonable or otherwise lawful. To make such a finding, we must determine: 1) whether the incumbent LECs have accurately identified their carrier-specific costs directly related to number portability, and 2) whether they have appropriately allocated those costs between their query- and end-user charges. We will not be in a position to determine whether the incumbent LECs have appropriately identified their carrier-specific costs directly related to number portability until after the Bureau has reviewed the August 3 comments and September 16 replies in the pending proceeding. We also will be unable to determine whether the incumbent LECs have appropriately allocated those costs between the query and end-user charges until after the incumbent LECs have tariffed their end-user charges, which we expect will occur in January 1999. 12. Although we cannot determine at the present time whether the tariff revisions at issue are reasonable or otherwise lawful, we will allow these incumbent LECs to continue providing their long-term number portability query and database services on an interim basis under their currently tariffed rates and conditions. The continued provision of these services is essential to the development of number portability, particularly while it is in its nascent stages. Many carriers have not had a full opportunity to make the investments necessary to perform their own queries, and as a result, must rely upon the availability of the query and database services from other carriers. We require, however, that the incumbent LECs file new tariff revisions regarding their rates and conditions for the query and database services when they file their end-user charges. In this manner, we will revisit these issues when more experience with number portability services has been gained. We also will be in a better position to evaluate the reasonableness of the incumbent LECs' rates and conditions in light of the Bureau's review of the carriers' comments and replies on the identification and apportionment of number portability costs. Moreover, at that point, we also will have before us both the query and end-user charges. 13. We find that these transmittals present us with unusual circumstances that justify the continuation of the existing rates, terms, and conditions on an interim basis, and so decline at this time to declare the tariff revisions unlawful or to prescribe rates. The incumbent LECs are required to provide default query services, and cannot do so except under tariff. The incumbent LECs' long-term number portability query and database services raise novel and complex issues that, for the reasons stated above, we cannot resolve immediately. Because the services in question are new ones with which neither we nor carriers have had much experience, we will not be able to determine what rates and conditions are reasonable until issues are resolved regarding both the identification of costs directly related to number portability, and the allocation of those costs between query and end-user charges. 14. Although we reach no decision as to whether the current rates and conditions are reasonable and in compliance with Commission decisions on number portability, we observe that the rates do not appear facially unreasonable. We also note that number portability is still in its early stages of implementation, and thus these services are being provided in only limited areas of the country. We conclude that it is more prudent to allow the carriers to continue to offer these services under these tariff revisions pending determination of a preferred approach, than to attempt to fine-tune the rates and conditions at this stage. Because the incumbent LECs must file new tariff revisions for query and database services when they file their end-user charges, the interim rates and conditions will be in place for a relatively short time. We expect that the incumbent LECs will make those filings no later than January 1999, so that their end-user charges will be in place by February 1999. In the interim, customers that feel aggrieved by either the rates or conditions under which the incumbent LECs are currently providing these services may file complaints pursuant to section 208. IV. Ordering Clauses 15. Accordingly, IT IS ORDERED that, pursuant to section 204(a)(2)(A) of the Communications Act, 47 U.S.C.  204(a)(2)(A), the investigations of the tariff revisions described in BellSouth Telecommunications, Inc. Tariff F.C.C. No. 1, Transmittals No. 474 and 482, Frontier Telephone of Rochester, Inc. Tariff F.C.C. No. 1, Transmittal No. 10, Sprint Local Telephone Companies Tariff F.C.C. No. 1,Transmittal No. 63, and U S WEST Communications, Inc. Tariff F.C.C. No. 5, Transmittal No. 931 ARE TERMINATED. 16. IT IS FURTHER ORDERED that, pursuant to sections 4(i), 4(j), 251(b)(2), 251(e)(2), and 303(r) of the Communications Act, 47 U.S.C.  154(i), 154(j), 251(b)(2), 251(e)(2), and 303(r), and section 52.33(a) of the Commission's rules, 47 C.F.R.  52.33(a), BellSouth Telecommunications, Inc., Frontier Telephone of Rochester, Inc., Sprint Local Telephone Companies, and U S WEST Communications, Inc. shall file new rates and conditions for their provision of long-term number portability query and database services at the time they tariff their long-term number portability end-user charges. Federal Communications Commission Magalie Roman Salas Secretary