******************************************************** 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 ) ) Petition of Southwestern Bell Telephone Company ) Under Section 69.4(g)(1)(ii) ) CCB/CPD 98-17 of the Commission's Rules ) for Establishment of New Service Rate Elements ) ) Southwestern Bell Tariff F.C.C. No. 73 for provision of Long-Term Number Portability ) Transmittal No. 2694 Database Related Services ) Memorandum Opinion and Order Adopted: March 18, 1998 Released: March 18, 1998 By the Chief, Competitive Pricing Division: I. Introduction 1. In this Memorandum Opinion & Order, we suspend for one day and set for investigation Southwestern Bell Transmittal No. 2694, which seeks to establish rates, terms, and conditions for number portability query services. II. Background 2. Section 251(b)(2) of the Communications Act of 1934, as amended, requires all local exchange carriers "to provide, to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission." Section 251(e)(2) states that "[t]he cost of establishing telecommunications numbering administration arrangements and number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission. Pursuant to section 251(b)(2) and criteria the Commission established in its Report and Order & Further Notice of Proposed Rulemaking (Order & Further Notice) to implement this statutory mandate, carriers will provide long-term number portability through a location routing number (LRN) architecture. Under an LRN architecture, each switch is assigned a unique ten-digit LRN, the first six digits of which identify the location of that switch. Each customer's telephone number is paired with the LRN for the switch that currently serves that telephone number, and the number and the corresponding LRN are stored in one of seven databases, each of which serves an area that corresponds to one of the original Regional Bell Operating Company service territories. Neutral third parties, called local number portability administrators, will administer these regional databases. 3. When a customer changes from one LEC to another, the carrier that wins the customer will "port" the customer's number from the former carrier by electronically transmitting (uploading) the new LRN to the administrator of the relevant regional database. This will pair the customer's original telephone number with the LRN for the switch of the new carrier, allowing the customer to retain the original telephone number. The regional database administrator will then electronically transmit (download) LRN updates to local service management systems operated by carriers or third-parties. This information will then be distributed to service control points (SCPs) that the carriers use to store and process data for providing number portability. 4. For a carrier to route an interswitch telephone call to a location where number portability is available, the carrier must determine the LRN for the switch that serves the terminating telephone number of the call. Carriers will accomplish this by querying an SCP to find the LRN of the terminating telephone number. Rather than perform its own querying, an N-1 carrier may arrange for other carriers or third parties to provide querying and other portability services for them. In the Second Report and Order, the Commission approved the industry's "N minus one" (N-1) querying protocol. Under this protocol, the N-1 carrier will be responsible for the query, "where 'N' is the entity terminating the call to the end user, or a network provider contracted by the entity to provide tandem access." Thus, the N-1 carrier for a local call will usually be the calling customer's LEC; the N-1 carrier for an interexchange call will usually be the calling customer's interexchange carrier. 5. The Commission also determined that if an N-1 carrier arranges with another entity to perform queries on the carrier's behalf that other entity may charge the N-1 carrier in accordance with requirements to be established in the pending long-term number portability cost recovery proceeding. The Commission also noted that when an N-1 carrier fails to ensure that a call is queried, the call might be routed by default to the LEC that originally served the telephone number. If the number has been ported, the LEC that originally served the customer incurs costs in redirecting the call. This could happen, for example, if there is a technical failure in the N-1 carrier's ability to query, or if the N-1 carrier fails to ensure that its calls are queried, either through its own query capability or through an arrangement with another carrier or third-party. The Commission determined in the Second Report and Order that if a LEC performs queries on default-routed calls the LEC may charge the N-1 carrier in accordance with requirements to be established in a pending Commission proceeding aimed at implementing section 251(e)(2)'s competitive neutrality requirement with respect to the costs of long-term number portability. The Commission has not yet issued its order on the costs of long-term number portability. 6. The Competitive Pricing Division (Division) of the Common Carrier Bureau issued two Memorandum Opinions and Orders on October 30, 1997, and December 30, 1997, granting petitions by Ameritech, Bell Atlantic, Southwestern Bell, and Pacific Bell to establish new service rate elements to provide long-term number portability query services. The Division required all four carriers, however, to conform their rates, rate structures, regulations, and services offered under these rate elements to any determinations made by the Commission in CC Docket No. 95-116. The Division further concluded that the tariffs the carriers filed implementing the rate elements raised substantial questions of lawfulness. Consequently, the Division suspended the tariffs for one day and set them for investigation. The Division also imposed an accounting order for the duration of the investigation. The Commission has not yet concluded its investigation of these tariffs. III. Southwestern Bell Rate Element Tariffs 7. Southwestern Bell filed Transmittal No. 2694 on March 4, 1998, to supersede its previously filed query service tariff currently under investigation. MCI filed a petition to reject in part and suspend and investigate in part the tariff revisions described in Southwestern Bell's Transmittal No. 2694 on March 11, 1998. On March 13, 1998, AT&T filed a petition for a waiver to accept a late-filed petition and a petition to reject or suspend the tariff revisions described in Southwestern Bell's Transmittal No. 2694. 8. The Commission is currently considering the appropriate policies, regulations, and rules regarding cost recovery of long-term number portability costs in CC Docket No. 95-116. This includes consideration of mechanisms by which incumbent LECs should be permitted to recover their long-term number portability costs, the kinds of costs carriers may recover, and the extent to which they may establish query charges. Southwestern Bell's tariff revisions described in Transmittal No. 2694 raise issues that the Commission is currently considering in the long-term number portability cost recovery proceeding, and will be subject to any decisions of the Commission in that proceeding. 9. We conclude that Southwestern Bell's tariff revisions described in Transmittal No. 2694 raise substantial questions of lawfulness warranting suspension and investigation. Southwestern Bell has not provided sufficient cost justification and other support to permit a full assessment of the reasonableness of the proposed charges and rate structures, particularly in light of the ongoing proceeding in CC Docket No. 95-116. For example, Southwestern Bell has not provided a sufficiently detailed explanation of how it derived its per-query costs, including the components that make up its annual investment for its query service. In addition, it is unclear how much of Southwestern Bell's Operations Support Systems (OSS) relate to the provision of number portability. Furthermore, it is not clear whether Southwestern Bell's nonrecurring billing charge is lawful under the Communications Act, and whether its level of overhead and joint and common costs is reasonable. We will, therefore, suspend the tariff revisions described in Southwestern Bell Transmittal No. 2694 for one day and institute an investigation. We will also impose an accounting order with respect to the services offered under Southwestern Bell Transmittal No. 2694 during the course of the investigation. We will separately issue an order designating issues for investigation in this proceeding. 10. AT&T filed its petition to reject or suspend Southwestern Bell's tariff revisions two days after the due date for such petitions. It argues that Southwestern Bell nonetheless had adequate time to respond to its late petition, that good cause exists for the waiver to accept a late-filed petition in light of the particular significance of the transmittal in question to the development of local exchange competition under the Telecommunications Act of 1996, that a clerical error caused AT&T's attorneys to first learn of Southwestern Bell's tariff filing on March 13, and that the "recent crush of LNP-related matters before the Commission" also contributed to the late filing. We find that these reasons do not justify good cause in this case. AT&T has failed to adequately show why it could not file in a more timely fashion. In light of the foreshortened comment periods required under the tariff streamlining provisions of the Telecommunications Act of 1996, it is important for parties to file timely petitions in order for the Commission to consider effectively all relevant issues. Accordingly, we deny AT&T's petition for waiver to accept its late- filed petition. V. ORDERING CLAUSES 11. IT IS ORDERED that, pursuant to section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C.  204(a), and sections 0.91 and 0.291 of the Commission's Rules, 47 C.F.R.  0.91 and 0.291, the tariff revisions described in Southwestern Bell's Transmittal No. 2694 ARE SUSPENDED for one day and an investigation IS INSTITUTED. 12. IT IS FURTHER ORDERED that Southwestern Bell SHALL FILE a supplement within 5 business days after release of this Memorandum Opinion and Order suspending the tariff revisions filed under Southwestern Bell's Transmittal No. 2694 for one day to March 20, 1998. Southwestern Bell should cite the "DA" number of this Order as its authority for this filings. 13. IT IS FURTHER ORDERED that, pursuant to section 204(a) of the Communications Act of 1934, as amended, 47 U.S.C.  204(a), and section 0.291 of the Commission's Rules, 47 C.F.R.  0.291, Southwestern Bell SHALL KEEP ACCURATE ACCOUNT of all amounts that are associated with the rates that are subject to this investigation. 14. IT IS FURTHER ORDERED that MCI's petition to reject in part and suspend and investigate in part the revisions described in Southwestern Bell's Transmittal No. 2694 is GRANTED to the extent indicated herein, and is OTHERWISE DENIED. 15. IT IS FURTHER ORDERED that AT&T's petition for waiver of 47 C.F.R.  1.773(a)(2)(ii) is DENIED. FEDERAL COMMUNICATIONS COMMISSION Jane E. Jackson Chief, Competitive Pricing Division Common Carrier Bureau