******************************************************** 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 ) ) Implementation of the ) Pay Telephone Reclassification ) CC Docket No. 96-128 and Compensation Provisions of the ) Telecommunications Act of 1996 ) ) TDS Telecommunications Corporation ) Petition for Waiver of ) Coding Digit Requirement ) ) International Telecard Association Petition ) for Reconsideration of Payphone ) Compensation Obligation ) ) AirTouch Paging Petition for Waiver ) of Payphone Compensation Obligation ) Adopted: March 9, 1998 Released: March 9, 1998 By the Chief, Common Carrier Bureau: MEMORANDUM OPINION AND ORDER Adopted: Released: Table of Contents Topic Paragraph Number I. Introduction 1 II. Background 7 A. Payphone Compensation 7 B. Payphone-Specific Coding Digits 13 III. Clarification of Payphone-Specific Coding Digits Requirements16 A. Statement of the Problem 16 B. Methods for Identifying Payphone Calls17 C. Discussion 23 IV. Tariffing and Cost Recovery 34 A. Introduction 34 B. Availability of Coding Digit to IXCs35 C. Charge to PSPs for FLEX ANI 38 D. Blanket Waiver and Blanket Permission Under Part 6946 V. Requests for Waivers of Coding Digits Requirements 50 A. Background 50 B. Discussion 54 1. LEC Coalition, USTA, and TDS Waiver Requests65 2. Other Waiver Requests 80 VI. Requests for Waiver and Reconsideration of Payphone Compensation Requirements83 A. Introduction 83 B. Discussion 86 VII. Conclusion 99 VIII. Ordering Clauses 100 Appendix A List of Parties Filing Comments and Replies (Bureau Waiver Order) Appendix B List of Parties Filing Comments and Replies (ITA Petition) Appendix C List of Parties Filing Comments and Replies (AirTouch Petition) I. INTRODUCTION 1. In this order we clarify and waive certain requirements established in the Payphone Orders regarding payphone-specific coding digits in order to facilitate the transition for local exchange carriers ("LECs"), payphone service providers ("PSPs") and interexchange carriers ("IXCs") to provide and receive payphone-specific coding digits to identify calls from payphones to pay payphone compensation for subscriber 800 and access code calls. We conclude that the waivers we grant in this order to ensure the orderly transition for the requirements we established in the Payphone Orders to implement Section 276 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996 ("1996 Act"), are in the public interest. We find that the waivers we grant herein reflect the transitional "default per-call rate" period established by the Commission in the Payphone Orders and extended in the Second Report and Order. We note that almost 80% of payphones are expected to provide payphone-specific coding digits by March 9, 1998, and the number of payphone digits for which payphone-specific coding digits are available will continue to increase over the next few months as technical problems are overcome by LECs. 2. Accordingly, in this order, we clarify the requirements established in the Payphone Orders for the provision of payphone-specific coding digits by LECs and PSPs, to IXCs beginning October 7, 1997. We clarify that automatic number information indicators ("ANI ii") and flexible automatic numbering identification ("FLEX ANI") are the methods to provide payphone-specific coding digits that comply with the requirements of the Payphone Orders. We also clarify the requirement for federal tariffs that LECs must file pursuant to the Payphone Orders. LEC FLEX ANI tariff revisions to provide FLEX ANI to IXCs must be filed no later than March 31, 1998, with a scheduled effective date of April 15, 1998, if a LEC is able to provide FLEX ANI to 25% or more of the smart payphones in its service area. Thereafter, within the waiver period granted in this order, a LEC must file its FLEX ANI tariff to provide FLEX ANI to IXCs no later than when it is able to provide FLEX ANI to 25% or more of the smart payphones in its service area. After filing the FLEX ANI tariff, LECs will continue to make FLEX ANI available as each end office becomes FLEX ANI capable. LEC tariffs to recover the costs of implementing FLEX ANI from PSPs must be filed no later than 30 days after full implementation of FLEX ANI. In this order we also grant permissions and waivers under Part 69 of the Commission's rules so that LECs can establish rate elements to recover the costs of implementing FLEX ANI to provide payphone-specific coding digits for per-call compensation. 3. We affirm our grant in the Bureau Waiver Order, on our own motion, of a limited waiver of five months, until March 9, 1998, to those LECs and PSPs who assert that they cannot provide payphone-specific coding digits as required by the Payphone Orders. We also grant, to the extent described herein, the requests of USTA, TDS, and the LEC Coalition. In addition, we grant limited waivers, subject to certain procedures, for LECs unable to provide payphone-specific coding digits through FLEX ANI by March 9, 1998, because fully implementing FLEX ANI would require additional time, or because implementing FLEX ANI is either technically infeasible or would result in a midsize or small LEC being unable to recover its costs for implementing FLEX ANI for payphone compensation within a reasonable period. The waivers we grant to LECs and PSPs in this order also apply to the requirement that LECs provide payphone-specific coding digits to PSPs, and that PSPs provide coding digits from their payphones before they can receive per-call compensation from IXCs for subscriber 800 and access code calls. Those LECs and PSPs that are able to transmit the required coding digits by March 9, 1998, remain obligated to do so. Similarly, all LECs and PSPs are obligated to transmit the required coding digits as soon an they are technically capable, but in any event, no later than the end of the waiver period for which they are eligible pursuant to this order. 4. During the period of the Bureau Waiver Order and the waivers granted herein, the IXC obligation to pay per-call compensation established in the Payphone Orders remains in effect. Neither the Bureau Waiver Order, nor this order, waives the per-call compensation requirements of the Payphone Orders and the Second Report and Order. As required in the Bureau Waiver Order, payphones appearing on the LEC-provided lists of payphones are eligible for per-call compensation even if they do not transmit payphone-specific coding digits. As required in the Payphone Orders and the Second Report and Order, absent a negotiated agreement, IXCs must pay per-call compensation of $0.284, for all calls they receive from payphones not otherwise compensated. Payments must be remitted at least on a quarterly basis. The payment for the October 1997 through December 31, 1997 period must be paid no later than April 1, 1998. LECs that have certified to the IXC that they comply with the requirements of the Payphone Orders must receive per-call compensation. There are no state or federal certification requirements. Additionally, we recognize that there likely will be some disputes between IXCs and PSPs about the true number of compensable calls. These disputes should not be a basis for delay of payphone compensation payments. Because LECs and IXCs have identified problems in transmitting and receiving payphone-specific coding digits, a retroactive adjustment (true-up) of payphone compensation may be necessary for the waiver periods granted in the Bureau Waiver Order and this order. We will address true-up requirements for payphone compensation, if any, in a subsequent order in this proceeding. In addition, we do not address in this order AT&T's request, in response to the Bureau Waiver Order, that it and similarly situated IXCs receive a waiver to pay per-phone rather than per-call compensation for payphones that do not provide payphone-specific coding digits. We will address AT&T's request in a subsequent order. Although we intend to issue this order in the near future, the timing of this order in no way relieves or delays the obligation of IXCs to pay compensation on April 1, 1998. 5. The waivers granted herein are effective immediately in order to ensure that all PSPs continue to receive per-call compensation, as required by the Payphone Orders. Without these waivers, many PSPs would not receive per-call compensation, because the LECs servicing them are not yet able to provide the required payphone-specific coding digits. The immediate implementation of this waiver is crucial to the Commission's efforts to ensure fair compensation for all PSPs, encourage the deployment of payphones, and enhance competition among payphone providers, as mandated by Section 276. 6. In addition, we deny the petition for reconsideration of the Bureau Waiver Order filed by International Telecard Association ("ITA") and the petition for waiver of compensation obligations filed by AirTouch Paging ("AirTouch"). II. BACKGROUND A. Payphone Compensation 7. In the Payphone Orders, the Commission adopted new rules and policies governing the payphone industry to implement Section 276 of the Act. Those rules and policies in part: (1) establish a plan to ensure fair compensation for "each and every completed intrastate and interstate call using [a] payphone[;]" and (2) discontinue LEC intrastate and interstate carrier access charge service elements and payments in effect on such date of enactment, and all intrastate and interstate payphone subsidies from basic exchange services. Prior to the Payphone Orders, PSPs received no revenue for originating certain calls (i.e., for subscriber 800 and other toll-free number calls) and could not block callers from making some of these calls (e.g., access code calls). Based on evidence in the record, the Commission noted in the Report and Order that the number of these types of calls completed from payphones had proliferated in the past several years, and concluded that PSPs must be compensated, pursuant to Section 276 of the Act, for access code, subscriber 800, and other toll-free number calls, whether they are jurisdictionally intrastate or interstate. 8. In the Report and Order, the Commission noted that the 1996 Act erects a "procompetitive deregulatory national framework designed to accelerate rapid private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition." Thus, the Commission sought to advance the twin goals of Section 276 of the Act of "promot[ing] competition among payphone service providers and promot[ing] the widespread deployment of payphone services to the benefit of the general public . . . ," by eliminating the effects of some of the long-standing barriers to full competition in the payphone market. To effectuate this objective, the Commission concluded that it would continue to regulate certain aspects of the payphone market, but only until such time as the market evolves to erase these sources of market distortions. 9. In the Report and Order, the Commission concluded that the payphone marketplace has low entry and exit barriers and likely will become increasingly competitive, and that the market generally is best able in the long term to set the appropriate price for payphone calls, including local coin calls. In the Payphone Orders, the Commission concluded that the appropriate per-call compensation amount, in the absence of a negotiated agreement, ultimately is the amount the particular payphone charges for a local coin call, because the market will determine the fair compensation rate for those calls. The Commission further concluded that if a rate is compensatory for local coin calls, then it is an appropriate compensation amount for other calls as well, because the Commission found the costs of originating various types of payphone calls such as access code and subscriber 800 calls to be similar to the costs incurred when initiating a local coin call. 10. Before moving to a local coin call default rate, however, the Commission found that it was necessary to observe over time how the payphone marketplace would function in the absence of regulation. The Commission recognized that competitive conditions, which are a prerequisite to a deregulatory market-based approach, did not exist yet, and would not be achieved instantaneously. Therefore, the Commission established an interim compensation plan to ease the transition to market- based local coin rates and to ensure fair compensation for coin and noncoin calls. 11. In the Payphone Orders, the Commission established a two phase interim plan to address coin calls and a two-year interim plan for payphone compensation for subscriber 800 and access code calls, based on a rate of $0.35 per call, beginning November 7, 1996. Under the first phase of interim compensation, the Commission required IXCs with annual toll revenues in excess of $100 million to pay, collectively, a flat-rate compensation amount of $45.85 per payphone per month in shares proportionate to their share of total market long distance revenues. During the second phase of interim compensation, which is the first year of per-call compensation, all IXCs were required to pay $0.35 per subscriber 800 call or access code call unless they negotiated with the PSP to pay a different amount. 12.In Illinois Public Telecomm., the court affirmed many aspects of the Commission's Payphone Orders, but it vacated, among other things: (1) the default per-call compensation rate the Commission had set for subscriber 800 and access code calls at the same market-based $0.35 rate as for local coin calls; (2) the requirement that only those IXCs with annual toll revenues over $100 million pay PSPs for these calls during the first year of the interim period. The court held that the Commission had not justified its conclusion that the costs of local coin calls were similar to those of subscriber 800 and access code calls, and it remanded that issue, among others, to the Commission for further proceedings. After receiving comment on this and other issues, the Commission adopted the Second Report and Order, establishing a default compensation rate of $0.284 per call absent a negotiated agreement, for subscriber 800 and access code calls, and inmate and 0+ calls. This rate was calculated by adjusting the market-based local coin rate to account for cost differences between local coin calls on the one hand, and subscriber 800 and access code calls on the other. The Commission also extended the default per-call compensation period from one to two years, for the first two years of per-call compensation, i.e., from October 7, 1997 until October 6, 1999, to allow participants, including IXCs, LECs, and PSPs, additional time to adjust to market-based payphone compensation for subscriber 800 and access code calls. B. Payphone-Specific Coding Digits 13.In the Payphone Orders, the Commission imposed a requirement that, by October 7, 1997, LECs transmit payphone-specific coding digits to PSPs, and that PSPs transmit those digits from their payphones to IXCs. The provision of payphone-specific coding digits is a prerequisite to payphone per-call compensation payments by IXCs to PSPs for subscriber 800 and access code calls. The Report and Order required that LECs provide coding digits to enable the identification of payphones. The Commission also required IXCs to implement methods to track payphone calls. In the Order on Reconsideration, the Commission clarified that for payphones to be eligible for compensation, "payphones will be required to transmit specific payphone coding digits." The Commission further clarified that each payphone must transmit coding digits that "specifically identify it as a payphone, and not merely as a restricted line." Finally, that order clarified that LECs must make available to PSPs, on a tariffed basis, such coding digits as part of their ANI for each payphone. Pursuant to these requirements, the LECs and PSPs were required to provide this information needed by IXCs to identify compensable calls from payphones for per-call compensation. 14.Because, in some cases, LECs and PSPs were not prepared to provide coding digits and IXCs were not prepared to track individual calls by October 7, 1997, USTA, the LEC Coalition and TDS requested waivers of the October 7, 1997 date. On October 7, 1997, we provided, on our own motion, a limited waiver until March 9, 1998, for those payphones from which the necessary coding digits to identify individual payphone calls were not provided. We noted that sixty percent of payphones already transmit unique coding digits. The limited waiver was to afford LECs, IXCs, and PSPs an extended transition period for the provision of payphone-specific coding digits without further delaying the payment of per-call compensation as required by Section 276 of the Communications Act to ensure compensation for each call from a payphone. This limited waiver applies to the requirement that LECs provide payphone-specific coding digits to PSPs, and that PSPs provide coding digits from their payphones before they can receive per-call compensation from IXCs for subscriber 800 and access code calls. We stated that an immediate waiver was necessary to begin per-call compensation on October 7, 1997, in keeping with the Commission's mandate under Section 276 of the Communications Act to ensure compensation for each call from a payphone. We required, however, that LECs and PSPs capable of transmitting coding digits for some or all of their serving area remain obligated to do so. Although we granted a waiver on our own motion in the Bureau Waiver Order, we recognized in that order that USTA, the LEC Coalition, and TDS filed petitions for waiver of the payphone-specific coding digit requirements. We subsequently sought comment on those requests, which we address in this order. In response to the Bureau Waiver Order, ITA filed for reconsideration of, and AirTouch requested a waiver of, the per-call compensation payment obligation during the waiver period. 15. In addition, in response to the Public Notice, APCC, USTA, and SNET request that the Commission clarify the LEC obligations and tariff requirements, the timetable for implementation, how the provision of payphone-specific coding digit service should be tariffed, and the payphone compensation scheme during the waiver period. We address below the payphone-specific coding digit requirement, the tariffing and cost recovery requirements, waiver requests from USTA, the LEC Coalition, and TDS, the Bureau Waiver Order, and the petitions filed by ITA and AirTouch. III. CLARIFICATION OF PAYPHONE-SPECIFIC CODING DIGIT REQUIREMENTS A. Statement of the Problem 16.Since the release of the Order on Reconsideration, LECs, PSPs, and IXCs have disagreed on the appropriate method for providing the payphone-specific coding digits that both complies with the order, and provides the information necessary for IXCs to track and pay per-call compensation pursuant to the Payphone Orders. For the implementation of per-call compensation, where IXCs must pay PSPs for each and every call from a payphone not otherwise compensated, the IXC must be able to identify that the call came from a payphone. LECs have responded to the requirements of the Payphone Orders by proposing to implement either LIDB or FLEX ANI, while IXCs generally have argued that only FLEX ANI complies with the requirements of the Payphone Orders. All of the Bell Operating Companies (BOCs) and GTE state that they either will have implemented FLEX ANI by March 9, 1998, pursuant to the Bureau Waiver Order, or are in the process of implementing FLEX ANI and will need a further extension of time. USTA claims, however, that implementing FLEX ANI will be very costly and burdensome for midsize and small LECs. B. Methods for Identifying Payphone Calls 17. A toll-free call transmitted by a LEC to an IXC generally carries with it billing information codes, called ANI, which is usually the billing number associated with the originating line supplied by the LEC that assists the IXC in properly billing the call. Several methods are available to enable IXCs to identify payphone calls as originating from payphones. Using a listing or file of payphone originating numbers (LEC ANI lists) allows identification that a call originated from a payphone after the call is completed. There are also several automated methods that enable the identification of payphone calls while the call is being set up. These include: ANI ii, FLEX ANI, LIDB, and IXC databases. 1. LEC ANI lists 18. ANI lists are used by IXCs after the call is completed to match the call information (ANI) received with the call (usually the calling number) with the LEC list of payphone numbers (ANIs) in a LEC's serving area in order to identify that the call came from a payphone. These lists are used after a call is completed to perform billing and pay compensation. ANI lists are not useful in real time while the call is "live." 2. ANI ii 19. In most cases, when the IXC subscribes to Feature Group D (FGD access), LECs currently provide along with the billing number (ANI), the ANI ii, which identifies calls coming from certain payphones. ANI ii is a widely used technology that sends a two-digit code along with the ANI. Five codes are currently available through the conventional ANI ii methodology. The transmitted ANI ii codes, hardwired as part of the switch's generic software, identify the call as "27" if the call is from a "dumb" payphone or "07" for a restricted line, which includes "smart payphones" as well as other types of calls, such as hotel calls. Thus, ANI ii provides, along with the billing number, a unique coding digit identifying dumb payphones with the "27" code, but not providing a unique coding digit identifying smart payphones, which are identified with the "07" coding digit that also identifies other calls such as hotel and hospital calls. Because the payphone-specific coding digit is not available for a payphone call that is coded with the "07" number, call tracking is difficult using conventional ANI ii. Additional ANI ii codes to enable unique identification of smart payphones can be hardcoded into LEC switch software, but this requires substantial vendor involvement and may be very costly. New codes cannot be added to ANI ii without developing a switch generic or switch release and installing it into each switch. 3. FLEX ANI 20. FLEX ANI, which is a switch software feature, enables the transmission of a number of additional coding digits with a call that can, inter alia, uniquely identify a call as coming from a payphone. FLEX ANI codes are generated in end office databases and FLEX ANI is more flexible and easily modified to add additional coding digits than conventional ANI ii. When FLEX ANI codes are available, they are outpulsed with the call, instead of the embedded hardcoded ANI ii digits. FLEX ANI enables the assignment of more two digit codes (potentially 00-99) for payphones in addition to the "27" code already provided by ANI ii, including "29" for prison/inmate payphones and "70" for "smart" payphones. FLEX ANI is deemed flexible because new codes can be added to each end office database with the installation of new switch software. FLEX ANI is not available on non-equal access switches, but is resident on many equal access switches where it must be activated ("turned on") as a software capability. FLEX ANI requires a one time switch implementation per end office and associated trunk translations for each IXC, which ensure that the payphone-specific code will transfer thereafter with all calls from payphones. The major costs involved in implementing FLEX ANI are the initial generic software upgrades if necessary, activating the software, and provisioning end office trunks to provide the service to each IXC. Using FLEX ANI, IXCs can identify the call as a payphone call for call tracking, pay per-call compensation for the call, bill for the call based on the information provided with the call, and block the completion of the call if requested by the customer. By arrangement with their serving LECs, however, IXCs must condition their trunks to receive FLEX ANI. 4. LIDB and IXC Databases 21. LIDB is provided through regional databases called service control points (SCPs). To identify that a call providing a "07" coding digit originated from a smart payphone, an IXC must first either query the LIDB or an internal database. Thus, during the call, when an IXC receives a "07" coding digit for a call, the IXC must send a query to the LIDB database for that call, and LIDB must look up the number of the calling party and match it to lists of numbers for payphones. LIDB then provides the IXC with the digit code that identifies whether the call originated from a payphone as opposed to a hospital or hotel phone. 22.Finally, IXCs can develop their own databases that are similar to the LIDB database and contain the telephone numbers for payphones that IXCs can use to identify whether a call is from a payphone. Then, when an IXC receives a call with an "07" indicator, the IXC sends a query to its own payphone database to identify whether a call originated from a payphone. C. Discussion 23.In response to the concerns raised by LECs, PSPs, and IXCs, we further clarify in this order the payphone-specific coding digit transmission requirement established in the Payphone Orders. We conclude that based on the plain language of the requirements of the Order on Reconsideration, the only methods discussed above that enable, along with the call ANI, the provision of all of the payphone-specific codes necessary to identify the call as originating from a payphone, and identify it as more than a restricted line, are FLEX ANI and hardcoding of ANI ii coding digits into the switch software. Currently, conventional ANI ii only transmits the "27" payphone-specific code that identifies dumb payphones, owned primarily by LECs. To provide additional codes through conventional ANI ii, such as the "70" code that identifies smart payphones owned primarily by independent PSPs, LECs would have to develop generic switch software and load it into each switch. LECs indicate that the cost and time required to hardcode the switches for additional ANI ii codes are substantial. Because we are not aware of any LEC planning to hardcode additional ANI ii payphone- specific coding digits in its switches in its serving area, and we are not aware of any IXC requesting that we adopt such an approach, we do not require this approach for the implementation of payphone-specific coding digits. We note, however, that a LEC may choose to employ hardcoding of additional ANI ii payphone-specific coding digits for all of the switches in its serving area in accordance with the requirements of the Payphone Orders as clarified herein. Thus, we conclude that all LECs must implement FLEX ANI to comply with the requirements set forth in the Payphone Orders, subject to any waivers provided herein. FLEX ANI provides, along with the billing number, the additional "70" and "29," as well as the "27" payphone- specific coding digit available through ANI ii, that enables IXCs to specifically identify a call as coming from a payphone. 24. FLEX ANI transmits coding digits as part of the caller information provided by a LEC with the call while the call is being placed in "real time," and specifically identifies the call as coming from a payphone. Hardcoded ANI ii is the only other method that would have these characteristics, but in this proceeding no LEC has supported increasing the number of ANI ii digits (hardcoding) to comply with the Commission's payphone-specific coding digit requirements. USTA has indicated that this would be a more costly approach than FLEX ANI. In addition, IXCs generally support the implementation of FLEX ANI. None of the other techniques complies with the requirements to transmit unique coding digits with a call ANI to determine if the call originates from a payphone in real- time while the call is "live." ANI lists cannot be used to determine if a call came from a payphone until after the completion of a call. LIDB and individual IXC databases do not provide the coding digits identifying the call as coming from a payphone until after the IXC has queried a specific database to determine whether the call is from a payphone. This database query procedure must be performed on all calls designated with an "07" number, including, for example, hotel calls, requiring a large number of unnecessary database queries to identify calls originating from payphones, Using LIDB or an IXC database, the payphone-specific coding digits are not outpulsed with the call ANI as in the operation of ANI ii and FLEX ANI, as required by the Payphone Orders. Moreover, based on analysis provided by USTA, it does not appear that the implementation of FLEX ANI, with certain exceptions, will be as onerous as LECs originally estimated. 25. The provision of payphone-specific coding digits through FLEX ANI most closely resembles the automatic provision of payphone-specific coding digits for LEC dumb payphones, "27", which is already provided through the ANI ii resident in most equal access switches. Thus, by implementing FLEX ANI, LECs will provide payphone-specific coding digits in the same manner from "dumb" and "smart" payphones, thereby responding to any concerns that the codes for these two types of payphones are not being provided in a similar manner. By providing the payphone-specific coding digit though FLEX ANI rather than LIDB, the coding digit automatically is sent with every payphone call and does not require a database query for each "07," call which may or may not be a payphone call. 26. IXCs generally interpret the Payphone Orders as requiring the provision of payphone-specific coding digits through FLEX ANI. WorldCom argues that LECs must provide FLEX ANI because the option to choose FLEX ANI or LIDB provided by the Commission in the toll fraud proceeding for OLS service does not apply to the requirements of the Payphone proceeding and does not excuse LECs from the requirements of paragraph 64 of the Order on Reconsideration. AT&T and MCI claim that LIDB does not comply with the Payphone Orders, because it does not pass a unique payphone- specific coding digit with ANI, but only an "07" code that requires a LIDB or other IXC database query. 27. IXCs argue that the LEC provision of FLEX ANI is necessary to provide payphone-specific coding digits for several reasons. Pursuant to the requirements of the Payphone Orders, IXCs are required to track and pay per-call compensation. IXCs state that they have built systems to accommodate the FLEX ANI coding digits and would have to make substantial investments to build additional systems to accommodate LIDB and the additional costs for such database queries. CompTel states that carriers owing per-call compensation have spent millions of dollars and personnel time to prepare call processing, call recording and rating, and billing systems on the assumption that they would receive ANI digits uniquely identifying payphones. MCI states that it is unable to use LIDB to determine whether subscriber 800 calls originate from payphones. MCI asserts that LIDB would be costly for IXCs to implement, degrade the efficiency of the network because of the large number of LIDB queries, and would require 12 months for MCI to implement. 28. Independent PSPs generally support the use of FLEX ANI to provide payphone- specific coding digits. APCC states that the advantages of FLEX ANI are that: (1) identification of payphone calls is more efficient; and (2) calls can be blocked. 29. By March 9, 1998, the BOCs and GTE either will have already begun implementation of FLEX ANI, or will be capable of providing FLEX ANI. Some LECs, on the other hand, argue that LIDB satisfies the coding digit requirements of the Payphone Orders and that because the toll fraud proceeding allowed either FLEX ANI or LIDB to respond to the OLS requirement to provide coding digit information, either methodology should suffice to respond to the requirements of the Payphone Orders. We have indicated in both proceedings that requirements adopted in one proceeding do not affect the requirements of the other. The purpose of the toll fraud proceeding is distinct from the purpose of this proceeding to implement Section 276 of the Act. Additionally, the requirements established in the orders in these proceedings are not the same. We have established requirements for IXCs and LECs with regard to payphone compensation, per-call tracking, per-call compensation, and the provision of payphone-specific coding digits that are very different from the OLS requirements established in the toll fraud proceeding. 30. We acknowledge, however, that both proceedings require LECs to provide coding digits with caller information. We also acknowledge that some LECs may have incorrectly interpreted the language of the Payphone Orders and some IXCs have vacillated on the method they prefer for the provision of payphone-specific coding digits to their networks. Moreover, we emphasize the importance in this proceeding of the availability of payphone-specific coding digits as part of the ANI of a call to fully implement the per-call compensation requirements of the Payphone Orders. Thus, we have provided below time extensions for LECs needing additional time to implement FLEX ANI. SNET requests that if we conclude that the provision of payphone-specific coding digits though LIDB does not comply with the requirements of this proceeding, as we do here, it should be relieved of its requirements pursuant to the toll fraud proceeding so that it can avoid spending further on LIDB implementation. This request should be resolved in the toll fraud proceeding. 31.Because we conclude that hardcoding ANI ii payphone-specific coding digits and FLEX ANI, not LIDB, are the only approaches that comply with the requirements of the Payphone Orders for the provision of payphone-specific coding digits, we reject the claim that we should find that LIDB also complies with those requirements because the implementation of FLEX ANI is too costly for LECs. USTA, SNET, and TDS argue that the cost of implementing FLEX ANI will be too burdensome and that LIDB is an economical method of complying with the requirement. MCI asserts, however, that the Commission already has included the cost of this upgrade in the payphone compensation amount and thus the cost cannot be the basis for a waiver. We conclude that mechanisms established by the Commission in the Payphone Orders and the Second Report and Order, and waivers we grant herein, respond to those concerns. In the Payphone Orders, the Commission required that the LECs provide the payphone-specific coding digits through tariffed services. In the Second Report and Order, the Commission included estimated costs for implementing FLEX ANI in the per-call compensation default rate paid by IXCs to PSPs for dial around calls, and we discuss below how LECs may recover those costs from PSPs through tariffs required by the Payphone Orders. We provide waivers in certain circumstances for LECs that are unable to recover their costs for FLEX ANI implementation in a reasonable time. 32. Finally, we clarify that the requirement to transmit payphone-specific coding digits applies only to payphone service provided by LECs to dumb, smart, and inmate payphones. It does not apply to any other LEC provided service such as business lines, PBX, or Centrex lines to which a payphone may be connected. US West requested that the Commission clarify whether LECs, such as US West, are required to provide payphone-specific coding digits to all types of telecommunications lines that might possibly be connected to a payphone or solely to those payphones that are connected to payphone lines. US West contends that it interpreted the Commission's coding digit requirements to require US West to provide such digits solely to those payphones connected to payphone lines. According to US West, two states within its calling area, Minnesota and Iowa, permit PSPs to purchase lines other than specifically identified payphone lines, in US West's case, Public Access Lines (PALs). For example, in Minnesota, PSPs can employ business lines in lieu of PALs. US West contends that an expansion of the coding digit requirement to include these lines would significantly increase the cost and time to implement FLEX ANI, due to increased translation costs. US West further argues that if the coverage of FLEX ANI for per-call compensation purposes is to include all lines that could be connected to a payphone, FLEX ANI implementation will be delayed significantly. 33. As discussed above, in this Order, we conclude that LECs must implement FLEX ANI to comply with the requirements set forth in the Payphone Orders, subject to any waivers we provide herein. At this time, we clarify, however, that LECs are required to provide payphone-specific coding digits only from those payphones that are connected to tariffed payphone lines (for dumb, smart, and inmate payphones) as compared with, for example, payphones connected to business or Centrex lines. The Payphone Orders specifically required that payphone lines be available in every state; thus illustrating that the Commission contemplated that coding digits would be sent over such lines. The Payphone Orders did not intend to require that LECs provide payphone-specific coding digits to all types of lines to which a payphone could conceivably be attached. To reach such a result, and require that LECs provide payphone-specific coding digits to a plethora of different types of LEC service lines, would be unduly burdensome, resulting in increased FLEX ANI implementation costs for translations and delays in the implementation of FLEX ANI. Moreover, because LECs often do not know when a payphone is attached to business lines or PBX lines, requiring the provision of FLEX ANI for those payphones would result in increased complexity and possibility of error in identifying payphones. In the Bureau Waiver Order, we stated that payphones appearing on the LEC-provided lists of payphones (LEC ANI lists) will be eligible for per-call compensation even if they do not transmit payphone-specific coding digits. Although payphones on the LEC ANI lists are eligible for per-call compensation during the waiver period of the Bureau Waiver Order, and this order, to ensure an orderly transition to the provision of FLEX ANI for all payphones on LEC payphone service lines, not just any LEC service line, PSP payphones must be on LEC payphones lines within 30 days of the release of this order to continue to be eligible for per- call compensation, even if the PSP payphones are on the LEC ANI lists. IV. TARIFFING AND COST RECOVERY A. Introduction 34. In response to the concerns raised by LECs, PSPs, and IXCs, we further clarify in this order the tariffing requirements for the provision of payphone-specific coding digits established in the Payphone Orders. The Order on Reconsideration required that LECs "must make available to PSPs, on a tariffed basis, such coding digits as part of the ANI for each payphone." In the Second Report and Order, we included the estimated cost of providing coding digits in the per-call default compensation rate to be paid by IXCs to PSPs for subscriber 800 and access code calls. In this order, we further clarify the tariffing and cost recovery requirements established in those orders. B. Availability of Coding Digits to IXCs 35. To comply with the requirements of the Payphone Orders, LECs must provide FLEX ANI to IXCs through their interstate tariffs, so that IXCs can identify which calls come from payphones. The LEC Coalition, Bell South, and Bell Atlantic have proposed that LECs modify their interstate access tariffs to provide that IXCs may request FLEX ANI without charge if it is for the purpose of complying with the per-call compensation requirements of the Payphone Orders. The LEC Coalition also proposes that LECs recover the costs of providing FLEX ANI to IXCs for payphone compensation from PSPs through a new federal rate element to be applied to all payphone lines on a nondiscriminatory basis. That proposed rate is to be charged monthly on a per-line basis until the costs for implementation of FLEX ANI for payphone compensation are recovered. We conclude that this approach is consistent with the tariff requirements of the Payphone Orders. PSPs will pay the costs incurred by LECs to implement FLEX ANI for payphone compensation through the rate applied to all payphones by the LECs. LECs must provide FLEX ANI to IXCs and the IXCs are charged for this service through the per-call payphone compensation rate which IXCs pay to PSPs. Thus, IXCs will not be charged directly for this service by the LECs. 36. Thus, LECs must file revisions to their interstate access tariffs to reflect FLEX ANI as a nonchargeable option available to IXCs no later than March 31, 1998, for areas for which FLEX ANI is available, if FLEX ANI is available for 25% or more of the smart payphones in its service area. Thereafter, within the waiver period it is granted in this order, a LEC must file its FLEX ANI tariff to provide FLEX ANI to IXCs no later than when it is able to provide FLEX ANI to 25% or more of the smart payphones in its service area. Beginning March 27, 1998, until a LEC has implemented FLEX ANI for all payphones it serves, it must provide monthly to IXCs and PSPs, upon request, information on: (1) end offices where FLEX ANI is available; and (2) proposed dates for the availability of FLEX ANI by end office for all areas where it is not yet available. Beginning March 27, 1998, all LECs must provide on a monthly basis to IXCs, upon request: (1) the number of smart and the number of dumb payphones that are owned by the LEC PSP and independent PSPs in the LEC service area; and (2) the ANI for smart payphones and the ANI for dumb payphones owned by the LEC and independent PSPs that are providing payphone-specific coding digits and those that are not providing payphone specific coding digits in the LEC service area. Because many LECs have reported technical problems in transmitting payphone-specific coding digits even when FLEX ANI is available for a payphone, we require that in these two reports required herein, that LECs indicate which end offices and payphone ANI's are "coding-digit-capable." A payphone is "coding-digit-capable" when it is able to transmit payphone-specific coding digits that are capable of reaching an IXC point of presence (POP) for subscriber 800 and access code calls from payphones using 10XXX and 101XXXX. LECs may provide these reports earlier and LECs do not have to provide this information to an IXC that indicates that it does not require this information to pay per-call compensation. 37. As discussed above, as we required in the Bureau Waiver Order, and we require herein, LECs and PSPs must transmit payphone-specific coding digits as soon as they are technically capable, and no later than the waivers they have been granted. We note, however, that IXCs must request, test, and coordinate with LECs to obtain this service under carrier to carrier procedures to ensure that there are no problems in providing and receiving the FLEX ANI digits for a particular IXC or LEC. We expect, however, that LECs will reduce the burden on IXCs of requesting FLEX ANI by simplifying the service request process. While PSPs are obligated, pursuant to the Payphone Orders, to compensate LECs for coding of the PSPs payphone lines for the transmission from the PSPs payphones of payphone-specific coding digits through LEC tariffed payphone services, PSPs are not required to request the LEC payhone-specific coding digits transmission service to IXCs. C. Charge to PSPs for FLEX ANI 38.As established in the Second Report and Order, the costs incurred by the LECs in providing the coding digits necessary to identify calls that originate from each payphone is a cost of business of the PSPs for which they receive compensation from the IXCs on a per-call basis. We authorized LECs to recover from PSPs their incremental costs of providing payphone-specific coding digits for purposes of enabling PSP calls to be identified by IXCs to pay compensation for each and every completed intrastate and interstate telephone call made using a payphone that is not otherwise compensated. LECs that are not currently providing FLEX ANI will incur costs in acquiring that capability in order to provide payphone-specific coding digits. LECs that already offer FLEX ANI, either as a Basic Service Element (BSE) or as a nonchargeable option, may need to upgrade their FLEX ANI services in order to provide payphone-specific coding digits, and so may also incur some costs as a result of this Order. In this section, we address tariffing issues related to the method for LECs to recover from PSPs their incremental costs of providing payphone-specific coding digits for purposes of enabling PSP calls to be identified by IXCs to pay compensation. We specify rate structure and rate level requirements, and price cap treatment of the rate element that we have allowed LECs to create for the purpose of recovering their costs of implementing payphone-specific coding digits. 1. Rate Structure and Rate Level Issues 39. We require LECs to recover the costs of their provision of payphone-specific coding digits through nonrecurring charges (NRCs). Based on the Bureau's analysis of prior FLEX ANI tariff filings, it appears that LECs incur only nonrecurring costs in their provision of FLEX ANI. Our general rate structure policy is that LECs should recover costs in the manner in which those costs are incurred. Therefore, we require LECs in this proceeding to establish NRCs for the provision of payphone-specific coding digits no later than 30 days after full FLEX ANI implementation. In order to spread the burden on PSPs for recovering the NRCs, we would consider rate structures, such as, one in which the LEC's nonrecurring costs are recovered in monthly installments over a specific period. 40. We also conclude that any LEC revising its tariffs pursuant to this Order should be authorized to recover no more than the incremental costs of implementing the requirement that they provide payphone-specific coding digits for payphone compensation. We conclude that it is reasonable to permit LECs to recover the costs they incur solely to come into compliance with this Order, but we see no reason to permit LECs to increase their rates above that level, or to shift any portion of their overhead costs to PSPs by including overhead loadings in the rate charged to PSPs. 2. Price Cap Issues 41. Under the price cap rules, a "new service" is one that expands the range of service options available to a LEC's access customers, while a "restructure" is simply a modification of charging or provisioning a service that does not result in a net increase in the range of service options available to customers. For those price cap LECs that do not already offer FLEX ANI, the tariff filing to offer payphone-specific coding digits needed to comply with this Order would ordinarily constitute a new service. For price cap LECs that need to revise an existing FLEX ANI tariff to comply with this Order, that revision would ordinarily constitute a restructure. For reasons discussed below, however, we require the price cap LECs to provide payphone-specific coding digits outside price cap regulation pursuant to Section 61.42(f) of the Commission's rules (47 C.F.R. 61.42(f)). 42. With respect to new services, LECs ordinarily are required to incorporate a new service into the appropriate price cap basket at the time of the first annual access filing following the completion of the base period in which that new service is introduced. The Commission permitted LECs to keep new services outside of price cap regulation, and then increase their price cap indices (PCIs) to reflect the introduction of new service, at least in part to encourage price cap LECs to be innovative. In this case, however, we are directing LECs to provide payphone-specific coding digits to comply with Section 276 of the Communications Act. Therefore, encouraging or rewarding innovation is not relevant here. Furthermore, if we were to permit incumbent price cap LECs to incorporate this new service into their PCIs, it would be necessary to mandate an exogenous cost decrease at some time in the future to reflect the LECs' completion of the recovery of their costs. Thus, we can avoid unnecessary complexity and PCI fluctuations by requiring price cap LECs to recover their costs of implementing payphone-specific coding digits outside of price cap regulation. 43. With respect to restructures, price cap LECs are not permitted to increase their PCIs in their next annual access filings, as they are incorporate new services into their price cap baskets. As a result, the price cap rules could prevent LECs from recovering their incremental costs of providing payphone-specific coding digits to comply with this Order. By holding this service outside of price cap regulation, however, price cap LECs already offering Flex ANI will be able to recover those incremental costs. 3. Other 44. We reject the argument that IXCs should not be required to compensate PSPs for the costs they incur in paying LECs to implement FLEX ANI for payphone compensation. That issue was previously addressed by the Commission. The Commission concluded in the Payphone Orders that IXCs are the primary beneficiaries of dial-around calls and they should perform per-call tracking and pay per-call compensation. In addition, the Commission concluded in the Second Report and Order that the costs of providing coding digits to IXCs is a cost of doing business of PSPs for which IXCs must provide compensation as part of the per-call rate. 45.USTA contends that the Commission must authorize full cost recovery and additional time for LECs that implemented LIDB for CC Docket No. 91-35. As discussed below, we grant LECs that have implemented LIDB for CC Docket No. 91-35, and assumed that it would meet the requirements of the Payphone Orders, additional time to implement FLEX ANI for the payphone proceeding. With regard to cost recovery for LIDB expenditures, it is unclear what additional costs would have been incurred to implement LIDB to comply with the payphone-specific coding digit requirement of the Payphone Orders, separate from those incurred for CC Docket No. 91-35. Because we do not have sufficient information on the record, we deny USTA's request. D. Blanket Waiver and Blanket Permission Under Part 69 46.Under Part 69.4(g) of the Commission's Rules, 47 C.F.R.  69.4(g), a LEC subject to price cap regulation may establish a switched access rate element for a new interstate service upon approval of a petition demonstrating that establishment of the new rate element would be in the public interest. Because Part 69 authorizes only a limited number of rate elements, a non-price cap LEC must still obtain a waiver of that Part to establish any rate element for a new interstate service. In response to the request of the LEC Coalition for a blanket waiver of Part 69 and to the separate petition of BellSouth for permission to establish such a new rate element under Part 69.4(g) of the Commission's rules, we take two actions below: first, for LECs not subject to price cap regulation that must secure such waivers, we grant a blanket waiver of Part 69.4(b) and (c) of the Commission's rules to enable those LECs to establish an appropriate new rate element in their interstate tariffs that reflects the incremental costs directly attributable to the implementation of FLEX ANI to transmit payphone-specific coding digits for the purposes of payphone compensation as described elsewhere in this Order and to file the necessary revisions to their interstate tariffs. Second, we grant to those price cap LECs that must secure it, blanket permission under Part 69.4(g) of the Commission's rules to establish a new rate element in their interstate tariffs that reflects those same incremental costs and to file the necessary revisions to their tariffs. 47. The LEC Coalition states that carriers need a blanket Part 69 waiver to establish a new rate element to recover these transmission costs from PSPs. BellSouth, a price cap LEC, also seeks permission under Part 69.4(g) to establish a new rate element to be assessed on PSPs to recover the such costs. We believe that the requested blanket waiver of Part 69 and that a similar blanket permission under Part 69.4(g) would serve the public interest by expediting the filing of the tariff revisions necessary to recover the costs of transmitting these payphone-specific digits and by preventing the repeated expenditure of carrier and staff resources to revisit public interest and other issues already examined in the Payphone Orders, the Second Report and Order, and this Order. We will review the details of the individual LEC Part 69 offerings upon the filing of the relevant tariff transmittals. 48. Under Section 1.3 of the Commission's rules, we are authorized to grant waivers "if good cause therefor is shown." Generally, this requires that a petitioner demonstrate that "special circumstances warrant a deviation from the general rule and that such a deviation will serve the public interest." Under Part 69.4(g), price cap LECs need only show that establishment of a new rate element would be in the public interest. 49.We conclude that special circumstances exist and that it would be in the public interest to grant a blanket waiver of the rate structure requirements of Part 69.4(b) and (c) to allow non- price CAP LECs to develop a new rate element to recover the incremental costs specified earlier from PSPs. As discussed above, in the Payphone Orders, the Commission required that LECs provide payphone-specific coding digits to identify payphones for per-call compensation. We find in this order that FLEX ANI is an acceptable method for transmitting these digits as part of the ANI ii under the Payphone Orders. In the Second Report and Order, the Commission concluded that the costs to be charged by LECs for providing FLEX ANI would be a cost of doing business for PSPs, and that IXCs should reimburse PSPs for those costs as part of per-call compensation. The proposed Part 69 rate element for which we grant a blanket Part 69 waiver to non-price cap LECs and blanket Part 69.4(g) permission for price cap LECs is a key part of the compensation mechanism developed by the Commission. Thus, we find that the special circumstances necessary for a blanket waiver of Part 69 have been established by the unique requirements of the Payphone Orders and the Second Report and Order. Also, for purposes of both the blanket Part 69 waiver and the blanket Part 69.4(g)permission, we find that it is in the public interest for LECs to be able to recover the costs of transmitting payphone-specific coding digits through implementation of FLEX ANI so that IXCs will receive those digits and will be able to compensate PSPs in an appropriate and timely manner and otherwise comply with the requirements of the Payphone Orders. V. REQUESTS FOR WAIVERS OF CODING DIGITS REQUIREMENTS A. Background 50.Shortly before October 7, 1997, the date on which per-call compensation and the payphone-specific coding digit requirements were to go into effect, the Commission received requests from several LECs seeking waivers of the requirement to provide payphone-specific coding digits and the requirement that providing payphone specific coding digits is a prerequisite to receiving per-call compensation as required by the Payphone Orders. We did not specifically address those requests, but we granted, on our own motion, a waiver of the requirement to transmit coding digits until March 9, 1998. Subsequently, we sought comment on the waiver requests of USTA, the LEC Coalition, and TDS, which are briefly described below. 51. On September 30, 1997, USTA petitioned the Commission for a waiver of the requirement that LECs supply the requisite coding digits to PSPs by October 7, 1997. USTA requested that LECs with digital, equal-access switches be given an additional nine months to provide the technology required to supply and accommodate the coding digits; that LECs with non-equal-access switches be exempt from providing payphone identification information until their switches are replaced or upgraded for equal-access; and that LECs be permitted to use whatever technology they select for digital, equal-access switches to provide information that will permit IXCs to track payphone calls in order to compensate PSPs. 52. On September 30, 1997, the LEC Coalition requested that the Commission waive the October 7, 1997 deadline, stating that LECs would be unable to supply forty percent of payphone lines with the requisite coding digits by that date. The Coalition requested that the deadline be extended until the Commission issues an order clarifying the LECs' payphone-specific coding obligations. 53. On October 1, 1997, TDS, an owner of local exchange carriers, petitioned the Commission to extend the deadline for payphone-specific coding digits from October 7, 1997, until July 1, 1998. TDS states that it needs additional time to arrange agreements with database suppliers, and to complete transmission tests to IXCs selected by its subsidiaries. TDS requests a waiver to begin providing coding digits through LIDB, beginning July 1, 1998. B. Discussion 54. We address herein the waivers filed by USTA, the LEC Coalition, and TDS, including their requests for time extensions, the methodology for providing payphone-specific coding digits, and the Commission's waiver standard. We have concluded above that FLEX ANI and hardcoded ANI ii digits are the only acceptable methods for providing payphone-specific coding digits as required by the Payphone Orders. Thus, we reject the requests from these LECs that they may comply with the payphone-specific coding digit requirement through LIDB. 55. In the Bureau Waiver Order, we provided, on our own motion, a time extension until March 9, 1998, for LECs and PSPs to provide payphone-specific coding digits to IXCs and as a prerequisite for per-call compensation. The LEC Coalition, USTA and TDS requested extensions beyond March 9, 1998. We discuss below those requests for additional time to provide FLEX ANI. We are persuaded that some LECs reasonably will need additional time to implement FLEX ANI, and that some LECs should receive waivers because of technical reasons or the inability to recover costs of implementing FLEX ANI over a reasonable period. Accordingly, in this order, we provide additional waivers beyond the waivers provided in the Bureau Waiver Order for LECs that will require additional time to implement FLEX ANI, and those that require a waiver for technical reasons or because they could not recover the costs of implementing FLEX ANI in a reasonable time period as discussed below. 56. We affirm our conclusions in the Bureau Waiver Order that waiving the payphone-specific coding digit requirement for per-call compensation until March 9, 1998, is in the public interest and appropriate in the context of the implementation of the requirements of the Payphone Orders. Pursuant to the Bureau Waiver Order, LECs were required to make available payphone-specific coding digits to IXCs as soon as they were able. The record indicates, however, that many LECs were not prepared on October 7, 1997 to implement FLEX ANI due to many factors including their interpretation of the requirements of the Payphone Orders, the complexity of implementing FLEX ANI in different types of switches with varying capabilities, and the uncertainties regarding the types of methodologies for the provision of payphone-specific coding digits that would be responsive to the needs of IXCs. We have clarified in this order the requirements for the provision of payphone-specific coding digits. As of October 7, 1997, approximately 60% of the payphones already provided payphone-specific coding digits. By March 9, 1998, the deadline included in the Bureau Waiver Order, over 80 percent of payphones will be providing payphone-specific coding digits. Thus, IXCs will be able to identify the majority of payphone calls for per-call compensation using payphone-specific coding digits. 57. We conclude that granting a number of waivers of the payphone-specific coding digit requirement for the implementation of FLEX ANI in LEC switches, including the waiver on our own motion granted in the Bureau Waiver Order, is in the public interest. In the Bureau Waiver Order, we granted waivers until March 9, 1998, to those LECs and PSPs that could not provide payphone-specific coding digits as required by the Payphone Orders. This limited waiver applies to the requirement that LECs provide payphone-specific coding digits to PSPs, and that PSPs provide coding digits from their payphones, before they can receive per-call compensation from IXCs for subscriber 800 and access code calls. In this proceeding, LECs have shown that because of special circumstances related to the complexities of implementing FLEX ANI, among other things, they require an extension of the waiver granted in the Bureau Waiver Order. As discussed further below, we conclude, as we did in the Bureau Waiver Order, that it is in the public interest for IXCs to pay payphone compensation beginning October 7, 1997, despite the limited waivers of the requirement to provide payphone-specific coding digits provided in the Bureau Waiver Order and this order, because of the clear mandate of Section 276 that PSPs be paid compensation for each and every call. The Second Report and Order established a default per-call compensation rate and extended the period of its applicability to address the problem presented by the LECs, IXCs, and PSPs in these waiver requests. Pursuant to the waivers we grant herein, if a payphone does not provide payphone-specific coding digits, the default per-call rate established in the Second Report and Order for the first two years of per-call compensation, $0.284 per-call, will continue to be the per-call default rate for that payphone until that payphone provides payphone-specific coding digits. 58.Parties oppose the grant of waivers in the Bureau Waiver Order and any additional waivers to LECs for the provision of payphone-specific coding digits primarily because the Payphone Orders required that the provision of payphone-specific coding digits was a prerequisite to per-call compensation obligations, and because parties claim they require payphone-specific coding digits to block calls from payphones. With regard to the justification for LECs and PSPs to obtain waivers of the requirement to provide payphone-specific coding digits, IXCs and other parties argue that the Bureau Waiver Order should be rescinded because LECs knew about the requirement to provide payphone- specific coding digits for over a year. IXCs state that they spent millions of dollars establishing systems based on the availability of FLEX ANI coding digits to identify payphone calls, and thus, the LEC proposal to provide the LIDB approach is unresponsive. We reject the IXCs' argument regarding the LECs' knowledge of the coding digit requirement because of the uncertainty evidenced in this proceeding regarding the methodology that complied with the coding digits requirements, and the methodology that would meet the needs of IXCs. As we did in the Bureau Waiver Order, we find the need for limited continuing waivers because of the reasonable delay by some LECs in implementing FLEX ANI caused by the uncertainty regarding the required method to provide payphone-specific coding digits, the complexity of implementing FLEX ANI, and the importance of ensuring that PSPs receive payphone compensation. We are persuaded that LECs are making substantial efforts to comply with the requirements. 59. Waiver of Commission rules is appropriate only if special circumstances warrant a deviation from the general rule, and such a deviation will serve the public interest. Several LECs have pleaded with particularity the problems they have encountered in complying with the payphone- specific coding digit requirement. We are persuaded that these are special circumstances associated with LEC implementation of FLEX ANI for payphone compensation. By granting these waivers, we do not have in mind changing any of the provisions of the Payphones Orders, but instead, we recognize that in the implementation of those provisions, specific circumstances arise which require waivers that are in the public interest. We grant waivers to LECs and PSPs to address the special circumstances faced by LECs and PSPs that are not yet ready to provide payphone-specific coding digits on all the payphones they serve, where FLEX ANI may be technically infeasible, or where a LEC is unable to recover the costs of implementing FLEX ANI within a reasonable time period. We note that there have been complexities associated with implementation of FLEX ANI, including the uncertainty about the method of providing payphone-specific coding digits that would in fact comply with the Commission's requirements and provide the information required by IXCs to identify calls from payphones given their disparate network arrangements. The number and types of switches involved create additional problems in implementing FLEX ANI. Moreover, as discussed below, for some switches, such as non-equal access switches, FLEX ANI cannot be implemented without switch replacement. Nevertheless, the industry continues to work expeditiously in implementing the payphone-specific coding digit requirements, and the waivers affect a limited number of payphones and for a limited period of time. 60. We reject WorldCom's argument that the waiver granted in the Bureau Waiver Order does not meet the waiver standard. The special circumstances for a waiver were made clear in the Bureau Waiver Order and some of those circumstances still exist. We note that in the Second Report and Order, the Commission acknowledged that the Bureau had adopted a waiver of the payphone-specific coding digit requirement. The Commission stated that "[t]his limited waiver was granted by the Bureau to afford LECs, IXCs, and PSPs an extended transition period for the provision of payphone-specific coding digits without further delaying the payment of per-call compensation as required by Section 276 of the Act and this order." The Commission specifically acknowledged the release of the Bureau Waiver Order and the need for such a waiver in granting an extension for the period in which the default per-call rate is in effect. The importance of ensuring the payment of per-call compensation as mandated by Section 276 provides a substantial public interest argument for granting the waiver. We note the significant progress made by LECs during the period covered by the Bureau Waiver Order. We emphasize the importance of implementing payphone-specific coding digit transmission as quickly as is reasonably possible. 61. To the extent that LECs argue that they should be allowed to implement either LIDB or FLEX ANI, we decline to waive the requirements established in the Payphone Orders as clarified in this order that LECs must implement FLEX ANI to provide payphone-specific coding digits. Because in some cases this requirement places substantial burdens on those LECs that interpreted the Commission's orders to allow for the use of LIDB to provide payphone-specific coding digits, we grant limited waivers for those LECs to implement FLEX ANI. 62. As discussed further below, we conclude that a continuing waiver of this rule requiring the provision of payphone-specific digits as a prerequisite to payphone compensation in the circumstances identified in this proceeding will serve the public interest, because it will allow us to move forward in implementing the statutory requirement that PSPs receive fair compensation for calls placed from their phones while continuing to progress to a market-based structure for payphone compensation. Refusing to waive this requirement would lead to the inequitable result that many PSPs, particularly independent PSPs, who do not control the network modifications necessary to permit payphone-specific coding digits to be transmitted, would be denied any compensation, while implementation of FLEX ANI continues, even though IXCs would continue to receive the benefits of calls made from payphones. We stated in the Bureau Waiver Order that the unavailability of the payphone-specific coding digits will not preclude IXCs from identifying payphone calls for the purpose of determining the number of calls for which compensation is owed. Nor will the waiver interfere with the payphones that currently are able to transmit payphone-specific coding digits. 63.The waivers we grant in this order to LECs and PSPs are effective March 9, 1998, to ensure that all PSPs continue to receive per-call compensation after the expiration of the waiver granted in the Bureau Waiver Order. The immediate implementation of these waivers is crucial to the Commission's efforts to ensure fair compensation for all PSPs, encourage the deployment of payphones, and enhance competition among PSPs, as mandated by Section 276 of the Act. We grant these waivers to all similarly situated LECs and PSPs to avoid a significant administrative impact and further delay of the payment of payphone compensation as required by Section 276. 64.Finally, we do not find that granting these waivers undermines any of the policies that the Commission established in the Payphone Orders and the Second Report and Order. In the Second Report and Order, the Commission acknowledged that the Bureau Waiver Order provided additional time for LECs, PSPs, and IXCs to establish mechanisms to provide payphone-specific coding digits. Moreover, the default per-call rate was specifically established in the Payphone Orders because it was anticipated that LECs, IXCs, and PSPs would require some additional time to transition to a truly competitive payphone market. Thus, contrary to the arguments of some parties, the availability of payphone-specific coding digits was never a sin qua non for the payment of payphone compensation. Rather, the interim compensation mechanism specifically recognized the need for a transitional scheme pending the development of, among other things, per-call tracking and the ability of IXCs to block calls from payphones. The Commission extended this transition default per-call rate period for an additional year in the Second Report and Order to allow LECs, PSPs and IXCs to resolve issues related to call tracking and the provision of payphone-specific coding digits. Finally, the Commission has in similar circumstances provided waivers to provide carriers additional time to comply with Commission requirements. 1. LEC Coalition, USTA, and TDS Waiver Requests a. LEC Coalition Waiver Request 65. The LEC Coalition requests a waiver of the payphone-specific coding digit requirements until the Commission clarifies the coding digit requirement. Prior to identifying a number of technical problems discussed below in transmitting payphone-specific coding digits, the LEC Coalition indicated that FLEX ANI would be implemented in 86.3% of the payphones it serves by the end of March 1998. The LEC Coalition stated that Ameritech, Bell Atlantic, BellSouth, and Nevada Bell indicate that they will implement FLEX ANI for 100 percent of the payphones they serve by March 9, 1998. The LEC Coalition states that implementation of FLEX ANI requires loading of the software in switches that do not have it, provisioning, translations, and trunk conditioning. The LEC Coalition also indicates that LECs must test FLEX ANI with IXCs that wish to receive it and ensure proper functioning so that calls are not dropped. 66. The LEC Coalition originally indicated that GTE, SNET, Bell Atlantic (North) and US West would be prepared to provide coding digits through LIDB by March 9, 1998, but not via FLEX ANI. Since that letter, however, Bell Atlantic (North), GTE, and US West indicate that they are implementing FLEX ANI. GTE and US West state that they previously had interpreted the Payphone Orders to enable the use of LIDB to comply with the payphone-specific coding requirement. GTE states that it will implement FLEX ANI as soon as technically possible, if it is given waivers for its non- equal access switches, which it proposes to replace by the second quarter of 1999. GTE states that it will turn on FLEX ANI on a rolling basis as end offices are properly equipped to provide FLEX ANI and IXCs request the service. GTE states that it currently provides the "27" code in 57% of payphones. It indicates that it does not currently have an interstate FLEX ANI and it would take between 8 and 18 months for it to implement FLEX ANI in all of its equal access switches. GTE states that it must implement FLEX ANI in 1700 switches which have six versions of FLEX ANI. 67.US West requests that if the Commission concludes that LIDB does not comply with the Payphone Orders, that it receive a waiver until March 30, 1999, to implement FLEX ANI in all of its switches. US West states that it already provides payphone-specific coding digits for 75 percent of its payphones, the dumb payphones that provide the "27" coding digits. It states that it will provide FLEX ANI for 90% of all "smart" payphones by June 1998. 68. SNET states that although it is not prepared to provide FLEX ANI, it currently transmits the "27" coding digit for 96% of the payphones in its serving area. SNET states that it is implementing LIDB and will require an extension if the Commission decides that FLEX ANI implementation is required. We have stated above that LIDB does not meet the requirements of the Payphone Orders. Because SNET already transmits the "27" digit for 96% of the payphones, it should not have a problem targeting those locations with more independent PSP payphones in order to enable the identification of those payphones through FLEX ANI. SWBT requests a waiver until April 15, 1998, to implement FLEX ANI and indefinite waivers for certain identified switches and call types because of technological limitations, but indicates that it will have over 70% of the lines FLEX ANI capable by March 9, 1998. 69.Ameritech, Bell Atlantic, BellSouth and SBC state that they plan to implement FLEX ANI on all payphones as soon as technically feasible. These LECs state that they will implement FLEX ANI on a rolling basis as end offices are equipped and IXCs request the service. BellSouth and Bell Atlantic state that they have filed a tariff that allows IXCs to order and receive FLEX ANI without charge for payphone compensation. All of the BOCs have indicated problems in implementing FLEX ANI, because of problems, for example, with software upgrades, certain switch types, and network configurations that required heavy vendor software development and network reconfiguration. 70. We conclude that the LEC Coalition has shown that limited waivers are justified to allow for additional time to implement FLEX ANI. As discussed above, some LECs including GTE, US West, and SNET have interpreted the Payphone Orders as allowing the use of LIDB to comply with the payphone-specific coding digit requirement. Because of the reasons discussed above, we conclude that it is in the public interest to provide additional time for these LECs, and other LECs to implement FLEX ANI. Although the BOCs, GTE and SNET indicate that they plan to provide payphone-specific coding digits to over 80% of the payphones in their service areas by March 9, 1998, they all indicate the need for additional time to implement FLEX ANI. 71.Accordingly we grant a number of waivers to allow LECs additional time to implement FLEX ANI. We grant Bell Atlantic, SBC, Ameritech, and BellSouth no more than a 90 day waiver to resolve technical and other implementation problems with specific switch types and some call types. In addition, we grant US West a waiver for provide payphone-specific coding digits until June 30, 1998, to be able to provide FLEX ANI for 90 percent of the smart payphones in its service area and until December 31, 1998, to complete FLEX ANI implementation. With regard to all other LECs that may require additional time to implement FLEX ANI, including GTE and SNET, we grant each LEC a waiver until no later than September 30, 1998, to be able to provide FLEX ANI for 75 percent of the smart payphones in its service area and until December 31, 1998, to complete FLEX ANI implementation to be able to provide payphone-specific coding digits, subject to any additional waivers for which they may qualify as discussed below. Those LECs and PSPs that are able to transmit the required coding digits by March 9, 1998, remain obligated to do so. Similarly, all LECs and PSPs are obligated to transmit the required coding digits as soon an they are technically capable, but in any event no later than the end of the waiver period for which they are eligible pursuant to this order. 72. We require that LECs that have been granted a waiver for additional time beyond March 9, 1998, to implement FLEX ANI, must implement FLEX ANI first in locations where there are larger numbers of payphones owned by independent PSPs for which payphone-specific coding digits are not available. This will enable the identification, as soon as possible, of independent PSP owned payphones, for which payphone-specific coding digits generally are not available. All LECs also must file tariffs, as discussed above, indicating the availability of FLEX ANI to IXCs, no later than March 31, 1998, with a scheduled effective date of April 15, 1998, for areas for which FLEX ANI is available, if FLEX ANI is available for 25% or more of the smart payphones in their service area. Thereafter, within the waiver period it is granted in this order, a LEC must file its FLEX ANI tariff to provide FLEX ANI to IXCs when it provides FLEX ANI to 25% or more of the smart payphones in its service area. After filing the FLEX ANI tariff LECs will continue to make FLEX ANI available as each end office becomes FLEX ANI capable. No later than March 27, 1998, LECs must be prepared to provide IXCs and PSPs information,upon request, regarding their plans to implement FLEX ANI by end office. LECs operating under this waiver must roll out FLEX ANI service for each end office as it becomes available. LECs must notify IXCs regarding the availability of the service that IXCs may request. We require, as described above, that LECs provide to IXCs, upon request, ANI lists that include lists of switches and smart and dumb payphone ANI that do and do not transmit payphone-specific coding digits owned by LECs and independent PSPs. These lists of ANI for payphones in a LEC's service area must be updated monthly, and be made available as ANI lists have been previously provided. b. USTA Waiver Request 73. USTA makes three requests. First, it requests that LECs be allowed to provide payphone-specific coding digits through either FLEX ANI or LIDB. We deny this request, because, as discussed above, we conclude that LIDB does not meet the requirements of the Payphone Orders. Second, USTA requests that we grant digital equal access switches an additional nine months (from October 7, 1997) to provide payphone-specific coding digits through either FLEX ANI or LIDB. As discussed above, we generally grant LECs until September 30, 1998, to be able to provide FLEX ANI to 75 percent of the smart payphones in their serving areas and until December 31, 1998, to complete FLEX ANI implementation subject to certain conditions. For the reasons set forth below, we also grant additional waivers for small and midsize companies that may not be able to recover the costs of implementing FLEX ANI within a reasonable time period. Finally, we grant USTA's request that we waive the payphone-specific coding digit requirement for non-equal access switches until the switches are upgraded to equal access or replaced. i. Midsize and Small LECs with Digital Equal Access Switches 74.USTA and several LECs argue that the cost of implementing FLEX ANI will be costly and burdensome for midsize and small LECs. USTA states that midsize and small companies serve approximately 125,000 payphones. USTA estimates that midsize companies serve 71,500 network controlled payphones, 150 smart payphones owned by its members, and 17,000 independent PSP owned payphones. USTA estimates that its small company members have approximately 27,000 network controlled payphones, 700 smart payphones owned by its members, and 8000 independent PSP owned payphones. USTA provides information from some of its smaller LECs with few switches and payphones indicating that the costs per payphone of implementing FLEX ANI for small companies with few payphones can be substantial. USTA estimates that to implement FLEX ANI it will cost $400,000 to replace a non-equal access switch, $35,000 to upgrade a non-equal access switch to equal access, and $9000 to upgrade an equal access switch that has the FLEX ANI software loaded. USTA states that the costs indicated will be particularly onerous for small, rural, and midsize LECs, and states that the Commission must provide for full cost recovery by LECs of all network upgrades. USTA states that FLEX ANI has been deployed by approximately 63% of the small and midsize companies. NECA supports a waiver stating that equal access LECs will need 9 months to phase-in necessary technology, perform tests, establish arrangements for coordinating signaling and databases, and file tariffs. 75. In this order, we include three mechanisms that respond to these concerns. First, we clarified above the cost recovery mechanism established in the Payphone Orders and the Second Report and Order for the provision of payphone-specific coding digits. Pursuant to that cost recovery mechanism, LECs will charge PSPs a monthly per-phone charge for recovery of the incremental costs that are directly attributable to the costs of implementing FLEX ANI. The costs of implementing FLEX ANI can include, for example, generic upgrades excluding the costs of other software features, loading the software, paying a fee for usage of the software, translations and conditioning the trunks for each end office. These costs will be distributed over a reasonable period and be paid by all PSPs. 76.Second, as discussed above, we grant small and midsize LECs an extension to implement FLEX ANI until September 30, 1998, to be able to provide payphone-specific coding digits through FLEX ANI to 75 percent of the smart payphones in its service area and until no later than December 31, 1998, to complete FLEX ANI implementation. Third, we grant a limited waiver to midsize and small LECs where a LEC is unable to recover its costs, through a monthly charge for no longer than a 10 year period, from all payphones in its serving area. This waiver is specifically granted for small and midsize LECs for which the cost of implementing FLEX ANI would be unreasonably burdensome, despite provisions in this order for cost recovery. For determining whether a small or midsize LEC qualifies for this waiver, we use the following analysis that must be performed annually by the LEC. The LEC may assume that the payphone rate element established to recover the cost over a period not greater than 10 years would not be greater than 20% of the national average payphone line cost of $38.90, or $7.78 per line per month. LECs must make this evaluation and qualify for this waiver individually and not as part of a holding company. LECs must make this evaluation within 30 days of the release of this order, and notify IXCs, upon request, that they will not be implementing FLEX ANI pursuant to this waiver. LECs must provide, upon request, information required from LECs. A LEC delaying the implementation of FLEX ANI pursuant to this waiver provision, must be prepared to submit its analysis of cost recovery for implementing FLEX ANI, if we request the analysis. We may at such time determine whether there continues to be a justification to grant a waiver to that LEC because it is unable to recover its costs of implementing FLEX ANI. ii. Non-equal Access Switches 77. We grant LECs a waiver of the payphone-specific coding digit requirement through FLEX ANI for non-equal access switches until such switches are either upgraded to equal access or replaced. USTA requests a waiver for non-equal access offices from FLEX ANI implementation because these switches would have to be replaced in order to implement FLEX ANI. 78.USTA states that parties do not oppose a waiver for non-equal access switches from the coding digit requirements. USTA asserts that this waiver also should be granted to LECs that employ Bell I signaling. USTA indicates that many of the non-equal access switches are in rural areas, and have few smart payphones or prison payphones. NTCA also supports an exemption for non-equal access switches until the switches are replaced or upgraded for equal access because otherwise the cost of replacement would be prohibitive. IXCs generally support the grant of waivers for non-equal access switches subject to certain modifications in the payphone compensation requirements. We conclude that USTA has shown special circumstances with regard to non-equal access switches and switches with Bell I signalling, because LECs are not able to implement FLEX ANI in those switches at reasonable costs. We conclude that it would not be in the public interest to require the replacement of these switches with the expenditure of substantial investment solely for the provision of payphone-specific coding digits. When LECs replace or upgrade these switches, however, we require that FLEX ANI be implemented within 60 days unless they qualify for another waiver discussed herein. LECs with non-equal access switches must provide information as required above regarding payphones in their service areas. c. TDS Waiver Request 79. Because we require LECs to implement FLEX ANI, we deny TDS's request that it be allowed to implement LIDB to comply with the payphone-specific coding digits requirement. TDS is eligible, however, for one or more of the waivers described above. 2. Other Waiver Requests 80.Some LECs indicate that it would be costly to implement FLEX ANI now for switches that they plan to replace in the near future. We conclude that it is not cost effective to require LECs to implement FLEX ANI in switches that are going to be replaced before October 6, 1999, the end of the default compensation period. Accordingly, we grant LECs that plan to replace switches before October 6, 1999, a waiver until that date to provide FLEX ANI through those switches. In reaching this decision, we balance the need to implement FLEX ANI as soon as possible against the inefficient application of LEC resources, and we conclude that providing a waiver until the end of the period in which the default per-call rate is in effect best balances those concerns. 81. SBC, BellSouth, Ameritech, SNET, and Bell Atlantic have requested additional time to implement FLEX ANI to resolve specific problems with certain switches and call types, and request waivers because there are technical limitations in passing FLEX ANI payphone-specific coding digits on certain types of calls and switches, and the modifications cannot be completed by March 9, 1998. SBC lists the following technical problems: (1) 0- transfer calls from DMS 200 and DMS 100/200 switches affecting less than 1% of all payphone calls; (2) Feature Group B (FGB) 950 calls (tandem and end office) affecting less that 1/4 of 1% of payphone calls; (3) 800 or 888 calls routing to a plain old telephone (POTS) phone number affecting less that 1% of all payphone calls; (4) CICs on feature group D (FGD) and/or GR-394 signaling affecting up to 7-9% of all payphone calls; and (5) calls received over EAOSS trunk groups from DMS end offices affecting less than 1/2 of 1 percent of payphone calls; (6) 800 calls at the tandem switch. SBC requests the following waivers for additional time to provide FLEX ANI based on these technical problems: problem 1 - October 15, 1999; problems 2 and 3 - until 5 months after a standard is developed or five years; problem 4 - until October 15, 1999; and problem 5 - until August 15, 1998. 82. As discussed above, we grant the BOCs 90 days to resolve technical problems in implementing FLEX ANI. Although we discuss herein only the problems raised by SBC, we note that other BOCs have raised additional technical problems that also are encompassed by the waiver we grant for 90 days. BOCs must provide payphone-specific coding digits earlier than the end of the waiver period for each technical problem, if these problems are resolved earlier than the end of the waiver period granted herein. BOCs must notify IXCs regarding the call and switch problems the BOCs are having on a monthly basis. It is our expectation that BOCs and other LECs will share information regarding the types of problems that they are having and solutions developed to resolve those problems to minimize the delay for the provision of payphone-specific coding digits. With regard to these technical problems, BOCs and other LECs must notify IXCs regarding these problems in implementing FLEX ANI. With regard to problem (2), cited by SBC, FGB service, we note that there is currently no standard to provide payphone-specific coding digits and carriers wishing to receive FLEX ANI must take FGD service. Thus, pending the development of standards, we grant all LECs a waiver and require that carriers taking FGB service pay PSPs per-call compensation using ANI lists or other means they may identify. VI. REQUESTS FOR WAIVER OF P AYPHONE COMPENSATION REQUIREMENTS A. Introduction 83. The Bureau Waiver Order granted limited waivers to afford LECs, IXCs, and PSPs an extended transition period for the provision of payphone-specific coding digits without further delaying the payment of per-call compensation as required by Section 276 of the Communications Act. These limited waivers apply to the requirement that LECs provide payphone-specific coding digits to PSPs, and that PSPs provide coding digits from their payphones before they can receive per-call compensation from IXCs for subscriber 800 and access code calls. 84.On November 6, 1997, ITA filed a petition for partial reconsideration of the Bureau Waiver Order. ITA requests that the Commission preclude PSPs from assessing per-call compensation payment obligations on prepaid phone card services for the duration of the waiver, and until accurate coding digit information is provided. ITA claims that providers of prepaid cards will be irreparably harmed without the ability to track and block payphone calls in real time, because this is the only time a prepaid provider can recover a charge from its customer. 85.On December 15, 1997, AirTouch filed a petition for a limited waiver of its payment obligations to pay any payphone service providers (PSPs) on a per-call basis from October 7, 1997, until those PSPs provide payphone-specific coding digits allowing AirTouch to selectively block calls from payphones operated by that PSP. AirTouch claims that because of the Bureau Waiver Order and other circumstances, AirTouch will not receive coding digits and will not be able to block calls coming specifically from payphones. AirTouch states that it will suffer substantial harm if it must pay compensation on a per-call basis without the ability to block calls selectively, because PSPs will have no incentive to negotiate rates and AirTouch's liability will be unlimited for calls from payphones. B. Discussion 86.Subsequent to the Bureau Waiver Order, IXCs and other parties argued in pleadings in response to that order that they should be relieved of the payphone compensation obligation because LECs were not providing payphone-specific coding digits. For the reasons discussed below, we decline to relieve IXCs of the obligation to pay per-call compensation during the waiver period of the Bureau Waiver Order and the additional waivers we grant herein. The Payphone Orders concluded that the primary economic beneficiaries of a subscriber 800 and access code call are the carriers that carry the call. We are not persuaded that our waivers of the provision of payphone-specific coding digits revises the Commission's conclusion. Nor do the waivers preclude IXCs from identifying and paying payphone compensation. The Bureau Waiver Order required that IXCs pay per-call compensation during the coding digit waiver period as required by the Payphone Orders. During that period, IXCs and their customers continued to use payphones to make calls that must be compensated pursuant to the Payphone Orders and the Second Report and Order. Moreover, IXCs already have implemented surcharges for per-call compensation and they would be benefiting unreasonably if we were to grant them a waiver of the payphone compensation obligations so that they do not have to pay per-call compensation when payphone-specific coding digits are not available. The Bureau Waiver Order waived the requirement that LECs and PSPs provide payphone-specific coding digits as a precondition to per-call compensation. The Bureau Waiver Order did not waive any compensation requirements. For the reasons discussed herein, we similarly decline to provide such a waiver or reconsider our decision in the Bureau Waiver Order to waive the coding digit requirement while continuing to require the payphone compensation obligations. 87. Several IXCs and other parties argue that they should be relieved of payphone compensation obligations because: (1) LECs were aware of the clear language and requirements specified in the Payphone Orders that payphone-specific coding digits must be provided by October 7, 1997, so they should not be absolved of the requirement and should be legally liable for any compensation lost by PSPs due to their inability to comply; (2) the payment obligation should have been waived for IXCs and other payors; and (3) IXCs and other payors should not have to pay compensation because they are unable to block calls from payphones and must therefore pay compensation they could otherwise avoid if payphone-specific coding digits were available. For the reasons discussed above, we conclude that LECs are entitled to waivers to complete implementation of FLEX ANI. In addition, we reject the argument that LECs that are unable to provide FLEX ANI on October 7, 1997, during the waiver period in the Bureau Waiver Order or for the duration of the waivers granted in this order, should be responsible for the payphone compensation due from IXCs to PSPs. We conclude that the need for these waivers does not alter the conclusions in the Payphone Orders that the IXCs are the economic beneficiary of subscriber 800 and access code calls and should be the party to pay payphone compensation in light of the Congressional mandate in Section 276. 88. We deny ITA's petition for reconsideration of the obligation to pay compensation during the waiver period, and AirTouch's petition for waiver seeking similar relief, both of which were filed in response to the Bureau Waiver Order. We also deny the requests of ITA and AirTouch that they be granted relief from the payment obligations of the Payphone Order and the Second Report and Order until they can block calls. Although AirTouch and ITA use different administrative mechanisms, they both argue that they should be relieved of the payphone compensation obligations because they will be harmed if they are unable to identify and block payphone calls while the waiver of the payphone-specific coding digit requirement is in effect, or until they can block calls. ITA argues that the Commission should deny in part the requested LEC waivers because granting them would result in harm to prepaid card providers. ITA requests a waiver of payphone compensation until "accurate" payphone-specific coding digits are provided. ITA claims that it will incur $31.8 million in unrecoverable charges on prepaid cards. ITA asserts that prepaid providers cannot recover payphone charges from customers unless payphone calls can be identified/blocked in real-time; otherwise, they will be irreparably harmed. ITA contends that because prepaid card service providers have postalized rates and are paid in advance, the only way to recover a payphone charge is at the time a payphone-originated call is placed. 89.ITA and AirTouch argue that relieving the LECs and PSPs of the obligation to provide payphone-specific coding digits while requiring payors to continue payment obligations undermines the market-based approach used to establish the per-call default compensation rate. AirTouch seeks a waiver until it can selectively block calls. AirTouch argues that it could be obligated to pay as much a $1 million in compensation for calls it is unable to block because the calls do not provide payphone-specific coding digits. AirTouch asserts that it is entitled to the waiver because it detrimentally relied on the fact that coding digits would be available to block payphone calls. AirTouch argues that it should be provided with a waiver because unlike other paging companies, such ,as Paging Network and Metrocall who do not plan to block calls from payphones, it offers call blocking, which enables customers to avoid additional charges. Because it is unable to block 40 percent of the payphone calls, it states that it will be obligated for that compensation. Several parties support AirTouch's petition for waiver and ITA's request for reconsideration and request that they also be exempted from the payphone obligations established in the Payphone Orders and the Second Report and Order. On the other hand, APCC and the LEC Coalition argue that the Commission should deny both petitions because AirTouch and ITA are not underlying facilities-based carriers obligated to pay per-call compensation, the default rate established in the payphone orders does not depend on the ability to block payphone calls, and it would not be in the public interest for the Commission to grant these petitions because delaying payphone compensation would be contrary to Congressional intent. The LEC Coalition argues that IXCs have already increased subscriber 800 rates, increased per-call charges on customers, and gained from reductions in state and federal access charges. 90.We conclude that AirTouch has not shown special circumstances or that a waiver is in the public interest. We also decline to reconsider, in response to ITA's Petition, our decision in the Bureau Waiver Order to waive payphone-specific coding digit requirements while maintaining, and not waiving, the per-call compensation requirements during the waiver period. We note that carriers have known since the adoption of the 1996 Act, in February 1996, that Congress required in Section 276 that PSPs be compensated for "each and every call." Moreover, on September 20, 1996, parties were notified that the per-call default compensation rate in the first year of per-call compensation, the default rate adopted because the payphone market would require a period of transition, would be $0.35 per-call. Despite the court decision vacating, in part, the Payphone Orders in July 1997, and the adoption of the new default compensation rate of $0.284 in October 1997, parties have been on notice that they must pay per-call compensation. In creating the default rate in the Payphone Orders and the Second Report and Order, we also put carriers on notice that there may be transitional problems in moving to a totally unregulated per-call rate. 91. In the Payphone Orders, the Commission established a requirement that underlying facilities-based interexchange carriers pay per-call compensation. We concluded in the Report and Order 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. In addition, under the carrier-pays system, individual carriers, while obligated to pay a specified per-call rate to PSPs, have the option of recovering a different amount from their customers, including no amount at all. We noted in the Report and Order, however, that under the carrier-pays approach, carriers have "the most flexibility to recover their own costs, whether through increased rates to all or particular customers, through direct charges to access code call or subscriber 800 customers, or through contractual agreements with individual customers." As discussed below, the Commission adopted a per-call default rate that provides fair compensation to PSPs for the use of payphones to originate access code and subscriber 800 calls. Per-call compensation to PSPs is a cost of providing service that IXCs can pass on to their own customers, just as they pass on other costs. 92. In Illinois Public Telecomm., the court remanded the per-call default compensation issue to the Commission on the ground that the Commission had not justified its conclusion that the costs of local coin calls were similar to those of subscriber 800 and access code calls. The court did not hold, however, that the Commission erred in using a market-based rate because some carriers lack the ability to block calls. Although the court noted that call blocking technology was available, and acknowledged that the ability to block calls gave IXCs leverage in negotiating rates, the court held that the per-call default rate adopted by the Commission should be reasonably justified so that IXCs are "not forced to resort to call blocking only because the default rate has been set at an unreasonable level." On remand, the Commission obtained further data on cost differences, and explained fully the cost adjustments to the local coin rate, which justified a reduction in the per-call compensation for subscriber 800 and access code calls, absent a negotiated agreement, from $0.35 to $0.284. The Commission considered alternatives to the market-based approach to establish a default rate, but rejected them as not required either by the court's remand or by the statutory standards. The Commission also concluded that the proposed alternatives were inferior to its chosen approach. The Commission's actions are consistent with the agency's statutory mandate to ensure fair compensation for "each and every" call. 93.We cannot at this late date find that certain parties, although they have continued to use payphones to make subscriber 800 and access code calls, which PSPs cannot block because of statutory limitations, may be relieved of the statutory requirement that there be compensation for these calls as required by Section 276. As the Commission already stated "because Section 276 creates no exceptions for calls facilitated by reseller or debit card providers, such exemptions from the obligation to pay compensation, even on an interim basis, would be contrary to the congressional mandate that we ensure fair compensation for 'each and every completed intrastate and interstate call.'" 94.We decline to grant a waiver to ITA and AirTouch of the payphone compensation requirements of the Payphone Orders because they are unable to block payphone calls, nor do we find that the inability to block payphone calls undermines the market-based approach for payphone compensation. In the Second Report and Order the Commission established a default rate for per-call compensation and extended the period for default compensation for to years while acknowledging that it was granting the limited waiver for the provision of payphone-specific coding digits. In that order, the Commission addressed concerns, among other things, that there may be market imperfections in the negotiation process among IXCs, LECs, and PSPs with regard to the transition to unregulated market- based per-call compensation. The Commission stated that it "recognized that competitive conditions, which are a prerequisite to a deregulatory market-based approach, did not exist yet, and would not be achieved instantaneously." The Commission indicated that over time the market-based approach would not overcompensate PSPs because carriers have significant leverage, including the ability to block calls, and to negotiate for lower rates. The establishment of a default compensation rate was itself intended, in part, to compensate for any unequal bargaining power arising out of the inability of carriers to block payphone calls. Additionally, recognizing problems that some carriers are having in providing payphone-specific coding digits and concerns due to potential unequal bargaining power, the Commission extended the one year per-call default rate time period established in the Payphone Orders to two years in the Second Report and Order. Moreover, in the Payphone Orders the Commission required that LECs and PSPs provide payphone-specific coding digits to "assist in identifying them to compensation payors," not because they also can be used for blocking calls from payphones during the interim period while the default per-call rate is in effect. 95. In the Second Report and Order, the Commission stated that it established a default per-call rate "because certain call blocking capabilities are not yet available to participants in the provision of access code and subscriber 800 calls from a payphone, and thus the market is not yet free of impediments that interfere with the competitive negotiated process." Thus, the establishment of a default per-call compensation rate was itself intended to address the possibility of unequal bargaining power between PSPs and carriers. In the Payphone Orders, the Commission concluded that, once competitive market conditions exist, the most appropriate way to ensure that PSPs receive fair compensation for each call is to let the market set the price for individual calls originated on payphones. It is only in cases where the market does not or cannot function properly that the Commission needs to take affirmative steps to ensure fair compensation. For example, because TOCSIA requires all payphones to unblock access to OSPs through the use of access codes (including 800 access numbers), PSPs cannot block access to 800 numbers generally. TOCSIA does not, however, prohibit an IXC from blocking subscriber 800 numbers from payphones, particularly if the IXC wants to avoid paying the per-call compensation charge on these calls. Payphones that are not capable of transmitting payphone-specific coding digits must maintain the default rate established in the Second Report and Order for the waiver period until FLEX ANI coding digits are available. 96.In addition, the waiver of the payphone-specific coding digits requirements is limited. The Bureau Waiver Order stated that at most 40 percent of the payphones were affected by the waiver. As of March 9, 1998, the payphones not receiving payphone-specific coding digits will be reduced to almost 20 percent. Moreover, as discussed above, pursuant to the waiver, LECs and PSPs that are capable of transmitting coding digits are obligated to do so. AirTouch and ITA argue that they are unable to block certain calls for which its customers must pay compensation. As discussed above, however, due to statutory constraints, LECs and PSPs are unable to block the use of their payphones by their customers, and absent a negotiated agreement, the PSPs would not receive compensation without the requirements of the Payphone Orders and the Second Report and Order. We concluded in the Bureau Waiver Order that, on balance, the public interest warranted granting the waiver. We similarly conclude here that the equities under the circumstances and the goals of Section 276 make it clear that the substantive grounds in support of the ITA and AirTouch petitions do not justify a delay in per-call compensation for subscriber 800 and access code calls. 97. The waivers granted in the Bureau Waiver Order and this order to the LECs and PSPs will, we recognize, require AirTouch, ITA and IXCs to pay compensation for certain calls without the ability to block those calls on a real-time basis. We find that it is nonetheless in the public interest to grant the waiver because the mandate of Section 276 is that the Commission adopt rules that provide PSPs with per-call compensation, and the waiver will most expeditiously lead to this result. In light of this mandate, we conclude that the potential harm from the absence of compensation to PSPs would be greater than the potential harm to AirTouch, ITA, IXCs, and other payors from the inability to block certain payphone calls. 98.We conclude consistent with our decisions in the MCI Order and the PCIA Order, that delaying per-call compensation for AirTouch and ITA would be harmful to other parties and adverse to the public interest because it would deprive PSPs of compensation for subscriber 800 and access code calls. IXCs that provide interexchange service to payors such as AirTouch and ITA already have been relieved of part of their burden of paying carrier common line access charges to LECs insofar as those charges previously subsidized LEC payphone operations. Additionally, IXCs already have increased interstate rates and implemented per-call charges for payphone compensation. Moreover, considering the access charge reduction, delaying per-call compensation requirements, in addition to the access charge reduction, would aggravate the immediate revenue loss to LEC providers of payphone services. Thus, balancing the equities, the public interest is best served by the immediate implementation of the Commission's compensation rules. Congress specifically provided for setting an expedited deadline for Commission action. In the long term, of course, depriving PSPs of fair compensation would discourage them from deploying their payphones widely, which would be inconsistent with an express congressional purpose. VII. CONCLUSION 99.In this order, we clarify that LECs must implement FLEX ANI to transmit payphone-specific coding digits that are not already provided as part of ANI ii. We grant waivers to LECs, PSPs, and IXCs and conclude that the waivers are in the public interest to facilitate the transition to per-call compensation. We find that special circumstances with regard to the provision of FLEX ANI and the identification of calls coming from payphones justify these waivers. We conclude that the waivers we grant in this order are necessary to facilitate the identification of calls coming from payphones in order for IXCs to pay payphone compensation consistent with Section 276 and are in the public interest. VIII. ORDERING CLAUSES 100. Accordingly, pursuant to authority contained in Sections 1, 4, 201-205, 218, 226, and 276 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154, 201-205, 218, 226, and 276, that the policies and requirements set forth herein ARE ADOPTED. 101. IT IS FURTHER ORDERED that this Order is effective immediately upon release thereof, and that the waivers included in this order are effective March 9, 1998. 102. IT IS FURTHER ORDERED that pursuant to Section 203 of the Communications Act, 47 U.S.C.  203, each of the LECs, absent a waiver, SHALL FILE tariff revisions to their interstate access tariffs to reflect the availability of FLEX ANI for IXCs for the purpose of payphone compensation no later than March 31, 1998, with a scheduled effective date of April 15, 1998, if FLEX ANI is available for 25% or more of the smart payphones in its service area. Thereafter, within the waiver period it is granted in this order, a LEC must file its tariff revision to provide FLEX ANI to IXCs no later than when it provides FLEX ANI to 25% or more of the smart payphones in its service area. 103. IT IS FURTHER ORDERED that pursuant to Section 203 of the Communications Act, 47 U.S.C.  203, each of the LECs providing FLEX ANI SHALL FILE tariffs to recover the cost of implementing FLEX ANI as required herein no later than 30 days after full implementation of FLEX ANI. 104. IT IS FURTHER ORDERED that LECs are granted a waiver of Part 69 of the Commission's rules to develop a rate element for recovery of costs incurred to implement FLEX ANI from PSPs for the requirements of this order to provide FLEX ANI to IXCs. 105. IT IS FURTHER ORDERED that the ITA Petition for Reconsideration and the AirTouch Petition for Waiver of the Bureau Waiver Order ARE DENIED. 106. IT IS FURTHER ORDERED that the waiver requests of USTA, the LEC Coalition, and TDS ARE GRANTED to the extent described herein, and otherwise ARE DENIED. A. Richard Metzger, Jr. Chief, Common Carrier Bureau Bureau Waiver Order Comments AT&T Corporation (AT&T) Ameritech (Ameritech) American Communications Council (APCC) Bell Atlantic (Bell Atlantic) Competitive Telecommunications Association (CompTel) Frontier Corporation (Frontier) MCI Telecommunications Corporation (MCI) National Exchange Carrier Association, Inc. (NECA) RBOC/GTE/SNET Payphone Coalition (LEC Coalition) RCN Telecom Services, Inc. (RCN) Southern New England Telephone Company (SNET) Southwestern Bell Telephone Company (SWBT) Pacific Bell (Pacific) Nevada Bell (Nevada) Sprint Corporation (Sprint) TDS Telecommunications Corporation (TDS) US West WorldCom Replies American Public Communications Council (APCC) AT&T Corporation (AT&T) Excel International Telecard Association (ITA) LCI International Telecommunications, Inc. (LCI) MCI NTCA Peoples RBOC/GTE/SNET Payphone Coalition (LEC Coalition) RCN Telecom Services, Inc. (RCN) Southern New England Telephone Company (SNET) Sprint TDS Telecommunications Corporation (TDS) USTA U.S. West (US West) WorldCom, Inc. (WorldCom) ITA Petition Comments AirTouch Paging (AirTouch) American Public Communications Council (APCC) RBOC/GTE/SNET Payphone Coalition (LEC Coalition) SmarTalk Teleservices, Inc. Telecommunications Resellers Association (TRA) WorldCom, Inc. (WorldCom) Replies LEC Coalition ITA AirTouch Petition Comments American Communications Council (APCC) AirTouch Paging (AirTouch) American Alpha Dispatch Services, Inc. Dispatchers: Absolute Best Monitoring, Inc. Affordable Message Center, Inc. Procommunications, Inc. National Dispatch Center, Inc. Abacus, Inc. United Cellular Paging, Inc. Dispatch America, Inc. All Office Support Mobile Telecommunications Technologies Corp. (Mtel) PageMart Wireless, Inc. (PageMart) RBOC/GTE/SNET Payphone Coalition (LEC Coalition) Telecommunications Resellers Association (TRA) Replies LEC Coaltition AirTouch