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A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading Paper>E!n    X X` hp x (#%'0*,.8135@8:g\\>>>\g0>03\\\\\\\\\\>>ggg\yyrF\yrg S-E S-X(#PX` hp x (#%'0*,.8135@8:!-ԍxId. at 1232425.G If the customer has switched carriers, the LEC that originally served the customer incurs costs in querying and redirecting the call. This could happen, for example, if there is a technical failure in the N1 carrier's ability to query, or if the N1 carrier fails to ensure that its calls are queried, either through its own query capability or through an  S-arrangement with a third party. The Commission determined that if an incumbent LEC performs queries on defaultrouted calls, the incumbent LEC may charge the N1 carrier for performing this"0*&&``"  S-function.MD {Oh-ԍxId. at 1232526.M The Commission determined further that it would "allow LECs to block defaultrouted  S-calls, but only in specific circumstances when failure to do so is likely to impair network reliability."MZD {O-ԍxId. at 1232425.M  S-The Commission also said that it would "require LECs to apply this blocking standard to calls from all  S-carriers on a nondiscriminatory basis."SD {O-ԍxId. at 1232526.S  S8-x5.` ` In the tariffs that are the subject to this investigation, Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell propose to provide number portability query services to other carriers on a  S-prearranged or default basis.g~D {O -ԍxSee Ameritech Tariff F.C.C. No. 2, Transmittal No. 1149, as Amended (filed March 31, 1998)  {O -(Ameritech Transmittal No. 1149); Bell Atlantic Tariff F.C.C. No. 1, Transmittal No. 1041 (filed April 6, 1998)  {O-(Bell Atlantic Transmittal No. 1041); Pacific Bell Tariff F.C.C. No. 128, Transmittal No. 1973 (filed March 13,  {Od-1998) (Pacific Bell Transmittal No. 1973); Southwestern Bell Tariff F.C.C. No. 73, Transmittal No. 2694 (filed March 4, 1998) (Southwestern Bell Transmittal No. 2694).g The Competitive Pricing Division (Division) of the Common Carrier  S-Bureau concluded that these tariffs raised substantial questions of lawfulness, suspended each  S-transmittal for one day, and set them for investigation.P6 D {On-ԍxSee In re Ameritech Tariff F.C.C. No. 2, Transmittal No. 1149, as Amended, CCB/CPD 9826,  {O8-Memorandum Opinion and Order, DA 98648 (rel. Apr. 3, 1998); In re Bell Atlantic Tariff F.C.C. No. 1,  {O-Transmittal No. 1041, CCB/CPD 9825, Memorandum Opinion and Order, DA 98686 (rel. Apr. 9, 1998);  {O-Pacific Bell Tariff F.C.C. No. 128, Transmittal No. 1973, CCB/CPD 9823, Memorandum Opinion and Order,  {O-DA 98598 (rel. Mar 27, 1998); In re Southwestern Bell Tariff F.C.C. No. 73, Transmittal No. 2694, CCB/CPD  {O`-9817, Memorandum Opinion and Order, DA 98530 (rel. Mar. 18, 1998); In re Pacific Bell Tariff F.C.C. No.  {O*-128, Transmittal Nos. 1927 and 1973, and Southwestern Bell Tariff F.C.C. No. 73, Transmittal Nos. 2638 and  {O-2694, Memorandum Opinion and Order, DA 981024 (rel. May 29, 1998). On May 12, 1998, the Commission released an order in its long term number portability cost recovery proceeding promulgating rules governing  SH -longterm number portability cost recovery.H ND {O6-ԍxIn re Telephone Number Portability, CC Docket No. 95116, Third Report and Order, FCC 9882 (rel. May 12, 1998) (Cost Recovery Order). Under those rules, incumbent local exchange carriers may recover their carrierspecific costs directly related to providing longterm number portability by establishing in tariffs filed with the Commission a monthly numberportability end user charge to commence no earlier than February 1, 1999, and a number portability queryservice charge that  S -applies to carriers. D {O!-ԍxId., Appendix B, at 2 (setting out rule to be codified at 47 C.F.R.  52.33(a)). The Commission determined that the number portability queryservice charge may recover only carrierspecific costs directly related to providing longterm number portability that  SX-the incumbent local exchange carrier incurs to provide longterm number portability query service to"X:0*&&``Z"  S-carriers on a prearranged and default basis.ZD {Oh-ԍxId., Appendix B, at 2 (setting out rule to be codified at 47 C.F.R.  52.33(a)(2)). See also id. at  147 (stating that incumbent LECs may recover from N1 carriers in a federally tariffed queryservice charge their carrierspecific costs directly related to providing prearranged and default query services). To assist in the evaluation of carriers' end user charge tariffs, which are likely to be filed later this year or in early 1999, the Commission solicited comments on ways to apportion the different types of joint costs used to provide number portability and other  S-services,D yO-ԍx The Commission requested carriers and interested parties to file comments by August 3, 1998, and  {O-reply comments by September 16, 1998. Id. at  75. and delegated authority to the Common Carrier Bureau to determine appropriate methods  S`-for apportioning joint costs among portability and nonportability services.:`DD {OD -ԍxId.:   S-  III. Issues Designated for Investigation   S-TP  S-A.XxDevelopment of Charges(#  Sp-x6.` ` As noted, under the Cost Recovery Order incumbent LECs may recover from N1  SJ -carriers in a federally tariffed queryservice charge their carrierspecific costs directly related to providing prearranged and default query services. Carriers may not use general overhead loading factors, but may include any incremental overhead cost that they can demonstrate they incurred  S -specifically in the provision of longterm number portability.W D {OH-ԍxCost Recovery Order, at  74.W In the cost justification for their proposed tariffs, Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell have included general  S -overhead loading factors.1 h D {O-ԍxAmeritech Description and Justification at 1113; Bell Atlantic Description and Justification at 89;  {OT-Pacific Bell Description and Justification at 1415; Southwestern Bell Description and Justification at 1214.1  S2-x7.` ` In addition, the carriers have included a variety of other costs, including, among others, OSS, SS7 and switching costs. Carriers have generally failed to show adequately that the costs they propose to recover in their query service charges are costs directly related to providing  S-prearranged and default query services.Z  D {O-ԍxSee Cost Recovery Order at  72.Z For example, none of the carriers distinguished the OSS costs incurred directly for the provision of portability from those incurred to support other functions, such as maintenance or directory services. It is not clear how SS7 costs were allocated between portability services and other services. More generally, to the extent carriers propose to base charges on a portion of joint or common costs used to provide both number portability query services and other nonnumber portability services, carriers have failed to provide an adequate explanation of why the portion allocated to query services is reasonable or constitutes a direct cost of providing number portability query service. Accordingly, we designate for investigation whether the carriers' proposed query service charges are based on costs directly related to providing number portability query"zV 0*&&``" services.  S-  S-x8. ` ` We also designate for investigation whether the carriers' proposed allocations of total number portability costs to query services are reasonable. Thus, Pacific Bell and Southwestern Bell state without any justification or support that they allocated 15 percent of total number portability  S8-costs to query service charges.!8D {O-ԍxPacific Bell Description and Justification at 10; Southwestern Bell Description and Justification at 9. Ameritech bases some allocations of general number portability costs  S-to query services on an engineering study which is not in the record.e"ZD {O -ԍxAmeritech Description and Justification at 10.e Ameritech states that it allocated certain other costs to query service charges based on demand forecasts of the proportion of  S-queries to be made on behalf of other carriers.d#D {OL -ԍxAmeritech Description and Justification at 7.d Bell Atlantic appears to achieve an equivalent result by dividing its query costs by total query demand, thus assigning the same cost per query to internal  Sp-and external demand.c$p~D {O-ԍ Bell Atlantic Description and Justification at 45.c While using demand forecasts might present a reasonable method of allocating costs to query service charges, we are not persuaded that carriers' demand forecasts supporting the proposed rates are reasonable, as discussed below. Accordingly, these carriers in their initial tariff filings have not justified the allocation of total number portability costs to the proposed query service charges.  S -x9.` ` We also designate for investigation whether the carriers' methodologies and  SX-assumptions used to develop their proposed rates are reasonable. For example, Bell Atlantic develops total unit costs for its various query services and then establishes rates by marking up these costs. The  S-markups range from zero to 54 percent.%D {O-ԍxBell Atlantic Description and Justification at Workpapers 61 through 64. Bell Atlantic does not explain these markups or their variation among services. Similarly, as part of its End Office Query charge, Bell Atlantic also includes transport charges "incurred to reoriginate the call from the End Office to the Access Tandem  S-and handoff the call to the appropriate carrier."d&D {O-ԍ Bell Atlantic Description and Justification at 6.d This transport component is over three times the query component. The resulting End Office Query rate is approximately five times the Tandem Office Query rate. Bell Atlantic does not explain the development of this transport component or what  S-proportion of end office queries are projected to require this transport service,'4 D yO -ԍxBell Atlantic presents calculations underlying this charge, but there is no explanation of the methodology  {O!-or assumptions. Bell Atlantic Description and Justification at Workpaper 68. and no other carrier includes such a component or establishes different rates for Tandem and End Office queries. Pacific Bell and Southwestern Bell have not explained why their "nonrecurring" billing charges need to be applied each month to default carriers, and have not adequately justified the level of this charge. Pacific also proposes substantial nonrecurring charges for prearranged database services, but has not explained what costs are incurred nor adequately justified these rate levels. We note that no other"P '0*&&``" carrier has proposed similar charges. We also note that charges for some query services vary widely among carriers. For example, Ameritech's proposed tandem query charge is 3.6 times that of Southwestern Bell. In addition, none of the carriers have adequately identified and explained listed "investments" in the descriptions and justifications accompanying their tariff filings. Consequently, we  S`-cannot evaluate the extent to which these investments are direct costs of providing portability. Bell Atlantic provides many worksheets, but has not explained them or shown that its calculations include  S-only the costs of providing portability services. In particular, they include substantial amounts of  S-"embedded network investment,"}(D {OP-ԍxBell Atlantic Description and Justification, Workpaper 66, at Page 1.} the costs of which may be already recovered in other rates.  S-x 10. ` ` In order to meet their burden under Section 204(a)(1) of the Act to show the reasonableness of the proposed charges, carriers must fully show the assumptions, methodologies, allocations, and specific costs supporting their proposed query service charges. Carriers in their Direct Cases must identify each cost proposed to be recovered, explain why it is a direct cost of providing number portability query service, and explain the methodology by which any portion of a joint or common cost is allocated to query service charges. All investments that are included in the direct cost of providing number portability must be clearly identified and explained. Carriers should state any assumptions they make regarding any portion of the query cost calculation including, but not limited  SX-to, assumptions about depreciation, cost of capital, and taxes.)XZD {OR-ԍxSee AT&T Petition to Reject or Suspend Tariff at 12 (filed March 20, 1998).  S-B.xDemand Development  S-x 11.` ` Ameritech bases its demand forecasts on current terminating traffic volumes. It  S-assumes: (1) that the three largest IXCs will perform their own queries, (2) that it will provide query services to the next three largest IXCs through the first half of 1998, and (3) that it will provide query  S@-services to wireless carriers through 1999.d*@D {O-ԍxAmeritech Description and Justification at 4.d Bell Atlantic makes the same assumptions, and  S-additionally assumes that competitive LECs will be building their own number portability databases.h+~D {O6-ԍxBell Atlantic Description and Justification at 5.h Bell Atlantic estimates its own query demand based on its interswitch traffic and on a projection of  S-intraoffice queries, which is based on its assessment of the impact of local competition.:,D {Ox-ԍxId.: Pacific Bell and Southwestern Bell similarly base their demand forecasts on assumptions about the number of terminating telephone calls by IXCs, wireless carriers, and LECs that have not deployed querying capacity in their own networks, as well as assumptions about the number of terminating calls from  S(-their own line side customers.-(D {Oj$-ԍxPacific Bell Description and Justification at 45; Southwestern Bell Description and Justification at 34. Ĵ Given that there is no specific past experience on which to base demand for query services, carriers will need to make assumptions about future demand. Carriers in"4 -0*&&``z" this instance, however, present their projections without adequately explaining how they were developed. Accordingly, we designate as an issue for investigation whether the carriers' demand forecasts are reasonable.  S`-C.xBlocking Unqueried Traffic  S-x 12.` ` As noted, the Commission determined that carriers may block default routed traffic where the traffic could impair network reliability. Ameritech proposes to block both prearranged and default query traffic where the processing of the query would threaten to disrupt the operation of its  S-network and impair network reliability.r.D {O -ԍxAmeritech Transmittal No. 1149 at 3rd Revised Page 166.4.3.r We designate for investigation whether Ameritech may block prearranged traffic as well as default traffic, and whether the proposed blocking of traffic based  SH -on disruption of its network comports with the blocking standard in the Second Report and Order.  S -D.xInformation Disclosure for Prearranged Query Service  S -  S -x 13.` ` Ameritech proposes to require carriers that request prearranged query services to provide separate, rolling, threemonth estimates of the volume of traffic they intend to deliver to Ameritech end offices and tandem offices, including total monthly traffic, maximum busy hour  S2-volumes, and the Ameritech switch over which they intend to route this traffic.t/2ZD {O,-ԍxAmeritech Transmittal No. 1149 at 10th Revised Page 90.t Ameritech has not adequately explained why it needs this level of information or why it would not suffice for the requesting carrier to provide a more simple estimate of the quantity of query service it requests, such as by specifying in the aggregate how much unqueried traffic they will deliver to end offices and how much to tandem offices. We are concerned that some of this information may be competitively sensitive for competing local service providers. Accordingly, we designate for investigation whether Ameritech's information requirements in this regard are reasonable.  S-  S-E.xImposing Query Charges for All Number Portability NXXs  S-x 14.` ` Bell Atlantic, Pacific Bell, and Southwestern Bell plan to assess a default query charge  Sz-on unqueried calls delivered to any NXX designated as number portable.0&zD {O-ԍxBell Atlantic Transmittal No. 1041 at 3rd Revised Page 890.17; Pacific Bell Transmittal No. 1973 at 9th  {O-Revised Page 627.14; Southwestern Bell Transmittal No. 2694 at 9th Revised Page 342. Ameritech, by comparison, requires queries for unqueried calls to "NXX codes from which a number is or has been ported that  {Ob -have been designated as number portable." Ameritech Transmittal No. 1149 at 2nd Revised Page 166.4.1. We understand this to mean that these carriers propose to assess the default query service charge for calls to NXXs where the carrier has the capability to query, and may actually be querying all calls, but does not have a need to do so in order to correctly route calls because no number in fact has been ported from that NXX. We designate as an issue for investigation whether imposing query charges on calls to number portable NXXs is reasonable given the absence of a need to query if no number has ported from an NXX. We solicit comment on whether it would be reasonable to require incumbent LECs to recover all of their"00*&&``" query service costs associated with all NXXs only in NXXs from which a number has ported, and what rate levels for query services would result from such a recovery mechanism.  S- `IV. Information Requirements TP  S8-x15.` ` In responding to the issues we designate for investigation, the LECs subject to this investigation should present their costs `in terms of the categories the Commission developed in the  S-Cost Recovery Order, i.e. shared costs, carrierspecific costs directly related to providing number portability, and carrierspecific costs not directly related to providing number portability. Direct Cases should break investment and expense estimates into these categories, and should identify costs with sufficient specificity to allow the Commission and other parties to evaluate them.  S" - + V. Procedural Matters ĐTP  S -A.xFiling Schedules  S -x16.` ` The Commission will conduct this investigation as a notice and comment proceeding under CC Docket No. 9814. Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell are the companies subject to this investigation.  S-x17.` ` These parties shall file their direct cases no later than July 1, 1998. The direct cases must present the parties' positions with respect to the issues described in this order. Parties may file pleadings responding to the direct cases no later than July 10, 1998. Such pleadings must be captioned "Oppositions to Direct Case" or "Comments on Direct Case." The companies that file Direct Cases may each file a "Rebuttal" to oppositions or comments no later than July 17, 1998.  S-x18.` ` Parties shall file an original and six copies of all pleadings with the Secretary of the Commission. In addition, parties shall file two copies of any such pleadings with the Competitive Pricing Division, Common Carrier Bureau, Room 518, 1919 M Street, N.W., Washington, D.C. 20554. Parties shall also deliver one copy of such pleadings to the Commission's commercial copying firm, International Transcription Service Inc., 1231 20th Street N.W., Washington, DC 20036. Members of the general public who wish to express their views in an informal manner regarding the issues in this investigation may submit one copy of their comments to the Office of the Secretary, Federal Communications Commission, 1919 M Street N.W., Room 222, Washington, D.C. 20554. All comments should specify the docket number of this investigation.  Sb-x19.` ` The Commission will consider all relevant and timely pleadings. In reaching a decision, the Commission may take into account information and ideas not contained in pleadings, provided that the public file contains such information or a writing containing the nature and source of such information, and provided that the order notes reliance on such information.  S"-bB.xEx Parte Requirements  SL$-x20.` ` This tariff investigation is a "permit-but-disclose proceeding" and subject to the b"permit-but-disclose" requirements under Section 1.1206(b) of the rules, 47 C.F.R.  1.1206(b), as  S%-revised. We remind parties making oral ex parte presentations that they must file memoranda"% 00*&&``'" summarizing their presentations. These summaries must explain the substance of the presentation and not merely list the subjects the parties discussed. Complying with the rules generally requires more than a one or two sentence description of the views and arguments the parties presented. See 47 C.F.R. 1.1206(b)(2), as revised. Section 1.1206(b) sets forth additional rules pertaining to oral and written presentations.  S8-  S-`C.xPaperwork Reduction Act  S-x21.` ` The Commission has analyzed this Designation Order in accordance with the `provisions of the Paperwork Reduction Act of 1980, as amended by the Paperwork Reduction Act of  Sp-1995,N1pD yO -ԍx44 U.S.C.  35013520.N and found that the order does not establish a new or modified form, or impose information collection requirements on the public. Implementation of any new or modified requirements will be subject to approval by the Office of Management and Budget as prescribed by the Act.  S -y VI. Ordering Clauses ă  S -x22.` ` IT IS ORDERED that, pursuant to Sections 4(i), 203(c), 204(a), 205, and 403 of the Communications Act, 47 U.S.C.  154(i), 203(c), 204(a), 205, and 403, and the authority delegated by Sections 0.91 and 0.291 of the Commission's rules, 47 C.F.R.  0.91, 0.291, the issues set forth in this Order ARE DESIGNATED FOR INVESTIGATION.  S-x23.` ` IT IS FURTHER ORDERED that Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell SHALL FILE direct cases addressing the issues designated above no later than July 1, 1998.  S-x24.` ` IT IS FURTHER ORDERED that pleadings responding to the direct cases SHALL BE FILED no later than July 10, 1998, and must be captioned "Opposition to" or "Comment on" specific local exchange carriers' direct cases.  Sx-x25.` ` IT IS FURTHER ORDERED that Ameritech, Bell Atlantic, Pacific Bell, and Southwestern Bell MAY FILE "Rebuttals" to oppositions and comments no later than July 17, 1998. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhJane E. Jackson x` `  hhChief, Competitive Pricing Division x` `  hhCommon Carrier Bureau