******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word 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 Access Charge Reform ) ) ) CC Docket No. 96-262 ORDER Adopted: May 17, 2001 Released: May 21, 2001 By the Commission: 1. In the First Report and Order, we tentatively concluded that we should permit price cap local exchange carriers (LECs) to assess a presubscribed interexchange carrier charge (PICC) on their special access lines to enable them to recover some of the common line costs assigned to the federal jurisdiction that they incur in providing switched access service to residential and single line business lines. Commenters unanimously opposed that proposal. For the reasons below, we decline to permit the assessment of such special access PICCs. We also terminate our inquiry into such an assessment. 2. Prior to our First Report and Order, price cap LECs recovered their common line costs primarily through two types of access charges: a flat-rate, end user common line charge, known as the subscriber line charge (SLC), and a usage-based, carrier common line (CCL) charge. In that Order, we permitted a modest increase in the ceilings for the SLCs on both multi-line business lines and non- primary residential lines to enable price cap LECs to recover more of their common line costs through those SLCs. The First Report and Order also permitted incumbent LECs to collect from each interexchange carrier (IXC) a monthly charge on each switched access line presubscribed to that IXC. We authorized this PICC to enable incumbent LECs to recover allowed common line revenues that the SLC caps prevented them from recovering. To the extent that revenues from the maximum SLCs and PICCs on primary residential and SLB lines were inadequate to recover the full common line revenues permitted by our price cap rules, we authorized incumbent LECs to recover the difference through a PICC on non-primary residential and MLB lines. As in the past, we authorized these LECs to recover any remaining permitted common line revenues through their CCL charges. 3. In adopting these new access charge rules, we recognized that multi-line businesses and other large users would pay higher SLCs on their switched access lines. Similarly, as the PICCs were phased in, the Commission anticipated that IXCs would pay higher PICCs for lines to MLB end users as compared with the PICCs they paid on lines to primary residential and SLB end users. Taken together, we were concerned that these changes might result in MLB users paying significantly more for their switched access lines. In contrast, users of special access service did not then (and do not now) pay a SLC on their lines. Similarly, IXCs do not pay PICCs on their special access lines. In light of the anticipated increases in some of the per-line charges incurred by multi-line businesses and other large users for their switched access services, we noted in the First Report and Order that it might be cost effective for these users to abandon their switched access lines and to migrate to special access lines. 4. In the First Report and Order, we expressed concern that such migration might result in a decrease in the projected revenue of incumbent LECs from their MLB SLCs. As a result of such a projected decrease, we expected PICCs on the remaining switched access lines or CCL charges to increase, to the extent permitted. Accordingly, the First Report and Order tentatively concluded that we should permit price cap LECs to assess a PICC on special access lines to enable those LECs to recover additional common line revenues without resort either to larger PICCs or CCL charges. The proposed special access PICCs were to be temporary in duration, because they were to be phased out as the residential and SLB PICCs were implemented more fully. 5. Since the First Report and Order, several developments have led us to conclude that it is no longer necessary to consider the assessment of PICCs by price cap LECs on special access lines. Those developments include later rule changes made in this access charge reform proceeding including increased SLCs and the elimination of residential PICCs, the apparent lack of significant migration of large users from switched access services to special access as a result of the MLB PICC, and the unanimous opposition of the commenters. 6. As required by the Regulatory Flexibility Act (RFA), the First Report and Order included an Initial Regulatory Flexibility Analysis (IRFA) with reference to the Further Notice of Proposed Rulemaking found therein. In the IRFA, the Commission noted that there were thirteen incumbent price cap LECs at that time, that it had limited to those LECs the scope of its proposal to permit the assessment of PICCs on special access lines, and that it had tentatively concluded that each of those LECs had more than 1500 employees and, therefore, that none was a small entity. The Commission sought written public comment on its special access PICC proposal, its tentative conclusions, and the related IRFA. No comments were received concerning the conclusion that those price cap carriers were not small entities, the limitation of the special access PICC proposal to such carriers, or the related provisions of the IRFA. This Final Regulatory Flexibility Analysis conforms to the RFA, as amended by SBREFA. 7. We certify that, under the RFA, there will not be a significant economic impact on a substantial number of small entities resulting from this Order. As explained above, this Order simply terminates our inquiry into whether we should permit price cap LECs to assess PICCs on their special access lines to enable them to recover some of their common line costs. Because this Order does not require or otherwise authorize any change in the provision of access services or the recovery of common line costs by these carriers, there will not be any significant economic impact on these carriers or on any of their customers including small entities. The Commission will send a copy of this Order, including this final certification, to Congress pursuant to the SBREFA and to the Chief Counsel for Advocacy of the Small Business Administration. A summary of this Order, including this certification, will be published in the Federal Register. 8. We, therefore, decline to adopt the tentative conclusion in the First Report and Order that price cap local exchange carriers should be permitted to assess a presubscribed interexchange carrier charge on their special access lines. We further ORDER that the Inquiry initiated in CC Docket No. 96- 262 into the assessment by these carriers of such a charge on their special access lines is hereby TERMINATED but that this docket shall REMAIN OPEN for other purposes. IT IS FURTHER ORDERED that the Commission's Consumer Information Bureau, Reference Information Center, SHALL SEND a copy of this Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. This action is taken pursuant to the authority contained in Sections 1, 4(i) and (j), 201-209, and 403 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i) and (j), 201-209, and 403. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary Appendix A Access Charge Reform, CC Docket No. 96-262 First Report and Order Comments Ad Hoc Telecommunications Users Committee (Ad Hoc) America Online, Inc. American Petroleum Institute Ameritech Operating Companies (Ameritech) AT&T Corp. (AT&T) Bell Atlantic Telephone Companies, New York Telephone Company, and New England Telephone and Telegraph Company (BA/NYNEX) BellSouth Corporation and BellSouth Telecommunications Inc. (BellSouth) Cincinnati Bell Telephone Company Competitive Telecommunications Association Frontier Corporation GTE Service Corporation and affiliated telephone operating companies (GTE) Information Technology Association of America and Internet Access Coalition MCI Communications Corporation (MCI) The Southern New England Telephone Company Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell (SWB/PNB) Sprint Corporation (Sprint) United States Telephone Association (USTA) U S West, Inc. WorldCom, Inc. Reply Comments Ad Hoc Ameritech AT&T BA/NYNEX BellSouth GTE MCI Sprint SWB/PNB USTA