Eliminating Ex Ante Pricing Regulation and Tariffing of Telephone Access Charges, 30899-30916 [2020-09810]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 85, Number 99 (Thursday, May 21, 2020)]
[Proposed Rules]
[Pages 30899-30916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09810]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 54, 61, and 69

[WC Docket No. 20-71; FCC 20-40; FRS 16704]


Eliminating Ex Ante Pricing Regulation and Tariffing of Telephone 
Access Charges

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes to deregulate and detariff the end user 
interstate access charges currently included on consumers' and small 
businesses' local telephone bills. The proposal would also prohibit 
carriers from separately listing these charges on customers' bills and 
address issues related to the Universal Service Fund's and other 
federal programs' historic reliance on these charges in certain 
circumstances. The need to regulate and tariff those charges is 
declining as consumers and businesses continue to rapidly migrate away 
from traditional telephone service provided by local exchange carriers 
to next-generation voice service options. Detariffing and deregulating 
these charges will give carriers the flexibility to price their 
services competitively. Eliminating these charges from consumers' 
telephone bills will make it easier for consumers to understand their 
telephone bills, compare prices among voice service providers, and 
better ensure that a voice service provider's advertised price is 
closer to the total price that appears on its customers' bills.

DATES: Comments are due on or before July 6, 2020, and reply comments 
are due on or before August 4, 2020. If you anticipate that you will be 
submitting comments, but find it difficult to do so within the period 
of time allowed by this document, you should advise the contact listed 
in the following as soon as possible.

ADDRESSES: Pursuant to sections 1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated in this document. 
Comments and reply comments may be filed using the Commission's 
Electronic Comment Filing System (ECFS). See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
    If the FCC Headquarters is open to the public, all hand-delivered 
or messenger-delivered paper filings for the Commission's Secretary 
must be delivered to FCC Headquarters at 445 12th St. SW, Room TW-A325, 
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All 
hand deliveries must be held together with rubber bands or fasteners. 
Any envelopes and boxes must be disposed of before entering the 
building.
    Commercial overnight mail (other than U.S. Postal Service Express 
Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis 
Junction, MD 20701.
    U.S. Postal Service first-class, Express, and Priority mail must be 
addressed to 445 12th Street SW, Washington, DC 20554.
    Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with section 1.49 and all other 
applicable sections of the Commission's rules. The Commission directs 
all interested parties to include the name of the filing party and the 
date of the filing on each page of their comments and reply comments. 
All parties are encouraged to use a table of contents, regardless of 
the length of their submission. The Commission also strongly encourages 
parties to track the organization set forth in the Further Notice in 
order to facilitate its internal review process.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact Victoria Goldberg, Pricing Policy Division, Wireline 
Competition Bureau, at [email protected]. For information 
regarding the Paperwork Reduction Act (PRA) information requirements 
contained in this document, contact Nicole Ongele, Office of Managing 
Director, at (202) 418-2991 or [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (Notice) in WC Docket No. 20-71, adopted March 
31, 2020 and released April 1, 2020. The full text of this document is 
available for public inspection during regular business hours in the 
FCC Reference Information Center, Portals II, 445 12th Street SW, Room 
CY-A257, Washington, DC 20554. It is available on the Commission's 
website at https://docs.fcc.gov/public/attachments/FCC-20-40A1.pdf.

[[Page 30900]]

I. Introduction

    1. Twenty-five years ago, consumers made most of their telephone 
calls from their home phones, their work phones or public payphones--
and, in almost all cases, the local telephone company provided the 
local telephone service. Most of those companies (known as incumbent 
local exchange carriers) faced little to no competition as a result of 
state-granted monopolies. It therefore made sense for the Commission to 
impose pricing regulation and tariffing obligations on the portion of 
local telephone service used to originate and terminate interstate 
long-distance calls and for states to impose similar obligations on the 
intrastate portion of such service. Doing so protected consumers from 
the monopoly power of the incumbent local exchange carrier and ensured 
that rates were just and reasonable as required by the Communications 
Act, 47 U.S.C. 201(b).
    2. Today, the communications marketplace is dramatically different. 
As a result of the Telecommunications Act of 1996, local telephone 
markets are open to competition. And consumers and businesses continue 
to rapidly migrate away from traditional telephone service provided by 
incumbent local exchange carriers to a multitude of voice service 
options offered by providers of interconnected VoIP service, mobile and 
fixed wireless services, and over-the-top voice applications. In light 
of the sweeping changes in the competitive landscape for voice 
services, many states have begun to deregulate the intrastate portion 
of local telephone service provided by incumbent local exchange 
carriers.
    3. And yet, the Commission continues to regulate the various end-
user charges associated with interstate access service offered by 
incumbent local exchange carriers--``Telephone Access Charges'' for 
short. In addition to remaining subject to federal price regulation and 
complicated federal tariffing requirements, these Telephone Access 
Charges are difficult to understand, and the opaque way they are 
sometimes described on telephone bills reduces consumers' ability to 
compare the cost of different voice service offerings.
    4. Significant marketplace and regulatory changes over the past 
two-plus decades call into question whether ex ante price regulation 
and tariffing of Telephone Access Charges remain in the public 
interest. Consistent with the Commission's commitment to eliminate 
outdated and unnecessary regulations and to encourage efficient 
competition, this Notice proposes to deregulate and detariff these 
charges, which represent the last handful of interstate end-user 
charges that remain subject to regulation. In the interest of enabling 
consumers to easily compare voice service offerings by different 
providers, the Commission also proposes to prohibit all carriers from 
separately listing Telephone Access Charges on customers' bills. Doing 
so should help ensure that a voice service provider's advertised price 
is closer to the total price that appears on its customers' bills.

II. Background

A. Currently Tariffed Telephone Access Charges

    5. Section 203 of the Communications Act of 1934, 47 U.S.C. 203, as 
amended (the Act), requires that common carriers file tariffs or 
``schedules showing all charges for itself and its connecting carriers 
for interstate and foreign wire or radio communication between the 
different points on its own system, and between points on its own 
system and points on the system of its connecting carriers or points on 
the system of any other carrier . . . and showing the classifications, 
practices, and regulations affecting such charges.'' Commission rules 
currently include five tariffed Telephone Access Charges: the 
Subscriber Line Charge, the Access Recovery Charge, the Presubscribed 
Interexchange Carrier Charge, the Line Port Charge, and the Special 
Access Surcharge, 47 CFR 51.915(e), 51.917(e), 69.115, 69.152, 69.153, 
69.157.
    6. The Subscriber Line Charge. The Subscriber Line Charge was the 
product of the Commission's decision in 1983 to establish a formal 
system of tariffed charges governing intercarrier compensation. That 
system originally required long-distance companies (known as 
interexchange carriers) to pay local exchange carriers for originating 
and terminating long-distance calls. Those intercarrier charges did 
not, however, recover the entire cost of the local loop--the connection 
between an end user and its local exchange carrier. Instead, the 
Commission created the Subscriber Line Charge as the mechanism through 
which local exchange carriers recover a portion of the costs of their 
local loops through a flat per-line fee assessed on end users. The 
Commission adopted a flat per-line fee because the local exchange 
carrier's cost of providing the local loop is not traffic-sensitive. In 
other words, the costs of providing the local loop do not vary with the 
amount of traffic carried over the loop. The Commission found that 
requiring carriers to recover non-traffic sensitive costs through flat 
fees would ensure that rates were ``just and reasonable'' as required 
by the Act. Recovering the entire cost of the loop from end users, 
however, raised the concern that customers in high-cost areas would see 
a sudden increase in rates. The Commission therefore capped Subscriber 
Line Charges and required carriers to recover the remaining common line 
costs through a per-minute Carrier Common Line charge assessed on 
interexchange carriers. For price cap local exchange carriers, there 
are three categories of caps on the Subscriber Line Charge: A primary 
residential or single-line business cap, a non-primary residential cap, 
and a multi-line business cap, 47 CFR 69.152. For rate-of-return local 
exchange carriers, there are two such categories: a residential or 
single-line business cap and a multi-line business cap, 47 CFR 69.104.
    7. In 1996, the Commission began reform of interstate access 
charges to align the access rate structure more closely with the manner 
in which costs are incurred. At the same time, the Commission developed 
a federal high-cost universal service support mechanism to make 
explicit subsidies that had been implicitly included in interstate 
access service charges. As part of that order and subsequent reforms, 
the Commission increased the Subscriber Line Charge caps for price cap 
carriers as follows:
     $6.50 for primary residential and single-line business 
lines;
     $7.00 for non-primary residential lines; and
     $9.20 per line for multi-line business lines.
    47 CFR 69.152(d), (e), (k). The Commission then amended the 
interstate access charge system for rate-of-return carriers, increasing 
the Subscriber Line Charge caps to the levels established for price cap 
carriers.
    8. The Commission does not regulate the end-user charges of 
competitive local exchange carriers because it has found that 
competitive local exchange carriers generally lack market power in the 
provision of telecommunications service. Thus, competitive local 
exchange carriers are free to build into their end-user rates for voice 
service any charge, including an amount equivalent to the incumbent 
local exchange carriers' Subscriber Line Charge, subject only to the 
general requirement that their rates be just and reasonable, 47 U.S.C. 
201(b).
    9. The Access Recovery Charge. The Commission created the Access 
Recovery Charge in 2011 as part of new rules requiring local exchange 
carriers to reduce, over a period of years, many of their switched 
access charges

[[Page 30901]]

assessed on interexchange carriers, with the ultimate goal of 
transitioning intercarrier compensation to a bill-and-keep regime. The 
Commission adopted a transitional recovery mechanism to mitigate the 
impact of reduced intercarrier compensation revenues on incumbent local 
exchange carriers and to facilitate continued investment in broadband-
capable infrastructure. The Commission defined a portion of the 
revenues that incumbent local exchange carriers lost due to reduced 
access charges as ``Eligible Recovery'' and allowed eligible carriers 
to use a combination of a new limited end-user charge--known as the 
Access Recovery Charge--and universal service support (known as CAF 
Intercarrier Compensation or CAF ICC) to recover their Eligible 
Recovery.
    10. Incumbent local exchange carriers may assess an Access Recovery 
Charge on customers in the form of a monthly fixed charge. To ensure 
that any increases to the Access Recovery Charge would not adversely 
impact service affordability, the Commission limited annual increases 
of the Access Recovery Charge to $0.50 per month for residential and 
single-line businesses and $1.00 per month for multiline businesses. In 
addition, residential and single-line business Access Recovery Charges 
cannot exceed $2.50 per line per month for price cap carriers and $3.00 
per line per month for rate-of-return carriers. Access Recovery Charges 
for multi-line businesses are capped at $5.00 per line per month for 
price cap carriers and $6.00 per line per month for rate-of-return 
carriers. In addition, the multi-line business Access Recovery Charge 
plus the Subscriber Line Charge may not exceed $12.20 per line per 
month, 47 CFR 51.915(e), 51.917(e).
    11. The Commission adopted these caps to fairly balance recovery 
across all end users, to protect customers from carriers imposing 
excessive Access Recovery Charges, and to ensure that the total rates 
that multi-line businesses pay for Subscriber Line Charge and Access 
Recovery Charge line items remain just and reasonable. The Access 
Recovery Charge is tariffed separately from the Subscriber Line Charge 
but may be combined with the Subscriber Line Charge on bills to 
customers.
    12. Carriers that choose not to impose the maximum Access Recovery 
Charge on their end users must still impute the full Access Recovery 
Charge revenue they are permitted to collect for purposes of 
calculating CAF ICC support. In addition, rate-of-return carriers 
offering consumer broadband-only lines must impute an Access Recovery 
Charge amount equal to the amount that would have been assessed on a 
voice or voice-data line in calculating CAF ICC support.
    13. In the USF/ICC Transformation Order, the Commission established 
a sunset date for price cap carriers' CAF ICC Support. Specifically, as 
of July 1, 2019, a price cap carrier unable to recover its entire 
Eligible Recovery through Access Recovery Charges was no longer 
permitted to recover the remainder of its eligible support through CAF 
ICC support 47 CFR 51.915(f)(5). Price cap carriers can continue to 
calculate their Eligible Recovery, pursuant to the Commission's rules, 
and to assess Access Recovery Charges on their end users to recover as 
much of their Eligible Recovery as they can, subject to the caps on the 
Access Recovery Charge. There is no sunset date for rate-of-return 
carriers' CAF ICC support.
    14. The Presubscribed Interexchange Carrier Charge. Price cap 
carriers may assess a monthly flat-rate charge on the presubscribed 
interexchange carrier--the long-distance carrier to which the calls are 
routed by default--of a multi-line business subscriber. Created in 
1997, the charge recovers a portion of the common line costs not 
recovered by the Subscriber Line Charge. The Presubscribed 
Interexchange Carrier Charge is capped and has largely been phased out. 
When a multi-line business customer does not presubscribe to a long-
distance carrier, the Commission's rules allow the price cap carrier to 
assess the Presubscribed Interexchange Carrier Charge on the end-user 
customer directly, 47 CFR 69.153.
    15. The Line Port Charge. A local switch consists of (1) an analog 
or digital switching system, and (2) line and trunk cards. Line ports 
connect subscriber lines to the switch in the local exchange carrier's 
central office. The costs associated with line ports include the line 
card, protector, and main distribution frame. The Line Port Charge is a 
monthly end-user charge that recovers costs associated with digital 
lines, such as integrated services digital network (ISDN) line ports, 
to the extent those port costs exceed the costs for a line port used 
for basic, analog service, 47 CFR 69.130, 69.157. The Line Port Charge 
was established for price cap carriers in 1997 and for rate-of-return 
carriers in 2001.
    16. The Special Access Surcharge. Established in 1983, the $25 per 
month Special Access Surcharge is assessed on trunks that could 
``leak'' traffic into the public switched network in order to address 
the problem of a ``leaky private branch exchange (PBX), 47 CFR 69.5(c), 
69.115.'' The ``leaky PBX'' problem can arise where large end users 
that employ multiple PBXs in multiple locations lease private lines to 
connect their various PBXs. Although these lines were intended to 
permit employees of large business end users to communicate between 
locations without incurring access charges, some large end users 
permitted long-distance calls to leak from the PBX into the local 
public network, where they were terminated without incurring access 
charges. The assessed amount currently constitutes only a de minimis 
portion of revenues for most carriers.

B. Universal Service Rules Related to Telephone Access Charges

    17. The Reasonable Comparability Benchmark. Section 254(b) of the 
Act, 47 U.S.C. 254(b)(3), provides that ``[c]onsumers in all regions of 
the Nation . . . should have access to telecommunications and 
information services . . . that are available at rates that are 
reasonably comparable to rates charged for similar services in urban 
areas.'' Consistent with this principle, the Commission requires 
certain carriers receiving high cost universal service support, known 
as Eligible Telecommunications Carriers, to ``offer voice telephony as 
a standalone service throughout their designated service area . . . at 
rates that are reasonably comparable to urban rates'' as a ``condition 
of receiving support,'' 47 CFR 54.201. Rates for voice services are 
``reasonably comparable'' to urban rates when they are within two 
standard deviations of the ``national average urban rate for voice 
service,'' 47 CFR 54.313(a)(2). The Wireline Competition Bureau 
publishes an updated reasonable comparability benchmark annually.
    18. Telephone Access Charges Used To Calculate Universal Service 
Fund (USF) Support. Revenues from some Telephone Access Charges are 
used in the computation of USF support for rate-of-return carriers. 
Specifically, the Subscriber Line Charge, Line Port Charge, and Special 
Access Surcharge revenues are subtracted from a carrier's common line 
revenue requirement to determine the amount of Connect America Fund 
Broadband Loop Support (CAF BLS) a carrier is entitled to receive, 47 
CFR 54.901. The Access Recovery Charge is subtracted from the Eligible 
Recovery to determine the amount of CAFICC support a rate-of-return 
carrier is entitled to receive.
    19. CAF BLS support is the successor to Interstate Common Line 
Support, which was created by the Commission in 2001 to allow rate-of-
return carriers to recover from the USF any shortfall between their 
allowed Subscriber Line

[[Page 30902]]

Charge and their allowed common line revenue requirement. If a rate-of-
return carrier charged a Subscriber Line Charge that was less than the 
full amount it was permitted to charge, the carrier had to impute the 
maximum allowed Subscriber Line Charge in calculating its Interstate 
Common Line Support. In 2016, the Commission revised its Interstate 
Common Line Support rules to include support for consumer broadband-
only loops and renamed it CAF BLS, but the relationship between the 
Subscriber Line Charge, common line expenses, and the support mechanism 
remains the same.
    20. In 2011, the Commission adopted a Residential Rate Ceiling of 
$30 per month (i.e., the total rate for basic local telephone phone 
service, including any additional charges, that a customer actually 
pays each month) to ensure that local telephone service remains 
affordable and set at reasonable levels. The Commission's rules 
currently prohibit an incumbent local exchange carrier from assessing 
an Access Recovery Charge on residential customers that would cause the 
carrier's total charges to exceed the Residential Rate Ceiling, 47 CFR 
51.915(b)(11)-(12). A rate-of-return carrier can, however, recover 
through CAF ICC, the amount of Eligible Recovery that it is not 
permitted to recover through its Access Recovery Charges due to the 
Residential Rate Ceiling.
    21. Role of Telephone Access Charges in USF Contributions. Section 
254(d) of the Act, 47 U.S.C. 254(d), specifies that ``[e]very 
telecommunications carrier that provides interstate telecommunications 
services shall contribute, on an equitable and nondiscriminatory basis, 
to the . . . mechanisms established by the Commission to preserve and 
advance universal service,'' and that ``[a]ny other provider of 
interstate telecommunications may be required to contribute to the 
preservation and advancement of universal service if the public 
interest so requires.'' Pursuant to that provision, the Commission 
requires all ``[e]ntities that provide interstate telecommunications to 
the public, or to such classes of users as to be effectively available 
to the public, for a fee,'' to contribute to the federal USF based on 
their interstate and international end-user telecommunications 
revenues. The Commission requires interconnected Voice over internet 
Protocol (VoIP) service providers to contribute as a means of ensuring 
a level playing field among direct competitors, 47 CFR 54.706, 54.708.
    22. Contributions to the Fund are based upon a percentage of 
contributors' interstate and international end-user telecommunications 
revenues. This percentage is called the contribution factor. The 
Commission calculates the quarterly contribution factor based on the 
ratio of total projected quarterly costs of the universal service 
support mechanisms to contributors' total projected quarterly collected 
end-user interstate and international telecommunications revenues, net 
of projected contributions, 47 CFR 54.709(a)(2). Telephone Access 
Charges are assessable revenue for federal USF contribution purposes, 
47 CFR 54.709(a)(2).
    23. As discussed, the Commission does not regulate how competitive 
local exchange carriers recover their costs of providing interstate 
access service from their end-user customers. To the extent that a 
competitive local exchange carrier chooses to assess a separate 
interstate end-user access charge on its customers, it is required to 
report such revenues for USF contribution purposes in a manner that is 
consistent with its supporting books of account and records.
    24. For providers of voice services that are not able to easily 
determine the jurisdictional nature of their traffic, the Commission 
created different USF contribution safe harbors for different types of 
providers. Wireless providers, for example, are considered in 
compliance with the Commission's USF contributions requirements if they 
treat 37.1% of their telecommunications revenue as assessable for 
purposes of determining their federal USF contributions. Interconnected 
VoIP service providers are considered to be in compliance with the 
Commission's USF contributions requirements if they treat 64.9% of 
their total revenue as assessable for purposes of determining their 
federal USF contributions.

C. The Commission's Truth-in-Billing Rules

    25. The Commission has long sought to make telephone bills more 
understandable for consumers. Indeed, the Commission currently has two 
open rulemaking proceedings in which the Commission is considering, 
among other things, whether government-mandated charges should be 
separate from other charges on customers' telephone bills, and whether 
to apply the Commission's truth-in-billing rules to interconnected VoIP 
services.
    26. In order to assist consumers in understanding their phone 
bills, the Commission has posted on its website consumer education 
material explaining the various charges consumers are likely to find on 
such bills. As described in the Commission's consumer education 
materials, a typical phone bill includes a ``base'' charge for local 
service; line items for local, state, and federal taxes; additional 
charges to pay for 911 services, federal USF, and Local Number 
Portability Administration; the Subscriber Line Charge; and various 
other charges.
    27. The Commission has held that the prohibition on carriers 
engaging in unjust and unreasonable practices in section 201(b) of the 
Act, 47 U.S.C. 201(b) prohibits carriers from including misleading 
information on telephone bills, but does not require all carriers to 
use the same descriptions for the various types of charges found on 
telephone bills. Recognizing that there are ``many ways to convey 
important information to consumers in a clear and accurate manner'' the 
Commission has declined to prescribe specific descriptions for charges 
typically found on telephone bills. As a result, carriers use different 
descriptions for these charges.
    28. For example, different carriers' bills describe the Subscriber 
Line Charges as ``FCC-Approved Customer Line Charge,'' ``FCC Subscriber 
Line Charge,'' ``Customer Subscriber Line Charge,'' ``Easy Access 
Dialing Fee,'' and ``Federal Line Fee.'' What is more, although the 
Commission has directed carriers to list the Subscriber Line Charge as 
a line-item charge on customers' telephone bills, it also specified in 
2011 that the Access Recovery Charge may be combined in a single line 
item with the Subscriber Line Charge on the bill. As a result, some 
phone bills may have a single line item combining the two charges and 
other phone bills may break them out separately.

D. The Commission's Detariffing Authority

    29. The Telecommunications Act of 1996 was adopted to ``promote 
competition and reduce regulation in order to secure lower prices and 
higher quality services for American telecommunications consumers,'' 47 
U.S.C. 151. In implementing this legislation, the Commission noted the 
pro-competitive, deregulatory goals of the Act and its directive to 
remove ``statutory and regulatory impediments to competition.''
    30. Consistent with these objectives, the 1996 Act granted the 
Commission authority to forbear from statutory provisions and 
regulations that are no longer ``current and necessary in light of 
changes in the industry.'' More specifically, under section 10 of the 
Act, 47 U.S.C. 160, the Commission is required to forbear from any 
statutory provision or regulation if it determines

[[Page 30903]]

that: (1) Enforcement of the provision or regulation is not necessary 
to ensure that the telecommunications carrier's charges, practices, 
classifications, or regulations are just, reasonable, and not unjustly 
or unreasonably discriminatory; (2) enforcement of the provision or 
regulation is not necessary to protect consumers; and (3) forbearance 
from applying such provision or regulation is consistent with the 
public interest.
    31. Over the last two decades, the Commission has repeatedly relied 
on its section 10 authority to forbear from applying section 203's 
tariffing requirements when competitive developments made such 
requirements unnecessary and even counterproductive. Shortly after 
Congress enacted section 10, the Commission forbore from section 203 
tariffing requirements for domestic long-distance services provided by 
non-dominant carriers. The Commission found that market forces would 
generally ensure that the rates, practices, and classifications of 
nondominant interexchange carriers for interstate, domestic, 
interexchange services are just and reasonable and not unjustly or 
unreasonably discriminatory. The Commission also found that tariff 
filings by non-dominant interexchange carriers for long distance 
services were not necessary to protect consumers. Instead, the 
Commission found that market forces, the section 208 complaint process, 
and the Commission's ability to reimpose tariff requirements, if 
necessary, were sufficient to protect consumers. The Commission further 
found that detariffing of non-dominant domestic long distance services 
was in the public interest because it would further the pro-
competitive, deregulatory objectives of the 1996 Act by fostering 
increased competition in the market for interstate, domestic, 
interexchange telecommunications services.
    32. Beginning in 2007, the Commission granted forbearance from 
dominant carrier regulation, including tariffing and price regulation, 
to a number of price cap incumbent local exchange carriers for their 
newer packet-based broadband services. In the case of AT&T, for 
example, the Commission found that a number of entities provided, or 
were ready to provide, broadband services in competition with AT&T's 
broadband services. Given the level of competition, the Commission 
concluded that dominant carrier tariffing and pricing regulation was 
not necessary to ensure that AT&T's rates and practices for those 
services remained just, reasonable, and not unjustly or unreasonably 
discriminatory. The Commission found that, under these circumstances, 
the benefits of tariffing requirements to ensuring just, reasonable, 
and nondiscriminatory charges and practices, were negligible. The 
Commission explained that continuing to apply dominant carrier tariff 
regulation was not in the public interest because it would create 
market inefficiencies, inhibit carriers from responding quickly to 
rivals' new offerings, and impose other unnecessary costs.
    33. More recently, in the 2017 Price Cap BDS Order, the Commission 
found, among other things, that competition was sufficiently pervasive 
to justify granting all price cap carriers forbearance from tariffing 
of their packet-based business data services and time division 
multiplexing (TDM)-based business data services above a DS3 bandwidth 
level. The Commission also adopted a competitive market test to 
determine where there was sufficient competitive pressure on lower 
speed (DS3 and below) TDM-based end user channel termination services 
to justify forbearance from tariffing requirements for those services, 
47 CFR 69.803(a), 69.807(a). The Commission found that application of 
section 203's tariffing requirements was not necessary because 
competition and remaining statutory and regulatory requirements were 
sufficient to ensure ``just and reasonable rates, terms, and 
conditions'' that are not ``unjustly or unreasonably discriminatory.'' 
The Commission further found that by ensuring regulatory parity and 
promoting competition and broadband deployment, detariffing these 
services met the requirements of section 10(a)(3). On partial remand of 
the Price Cap BDS Order, the Commission similarly found that 
competition for lower speed TDM transport business data services in 
price cap areas was sufficiently widespread to justify granting price 
cap carriers forbearance from tariffing these services.
    34. In 2018, the Commission relied on its section 10 forbearance 
authority to detariff certain business data services provided by rate-
of-return carriers receiving fixed or model-based universal service 
support. In the Rate-of-Return BDS Order, the Commission adopted a 
voluntary path by which rate-of-return carriers that receive fixed or 
model-based universal service support could elect to transition their 
business data service offerings to incentive regulation, 47 CFR 
61.50(b). As part of this framework, the Commission granted electing 
carriers forbearance from section 203 tariffing requirements for 
packet-based and higher capacity (above DS3) TDM-based business data 
services. The Commission also detariffed electing carriers' lower 
capacity (DS3 and below) TDM-based business data services in rate-of-
return study areas deemed competitive. The Commission found that 
forbearance from tariffing these services ``will promote competition, 
reduce compliance costs, increase investment and innovation, and 
facilitate the technology transitions.'' Therefore, application of 
section 203 was not necessary, and forbearance was in the public 
interest consistent with sections 10(a) and 10(b).
    35. Thus, both the statute and longstanding Commission precedent 
make clear that the Commission can and should forbear from the 
tariffing requirements of section 203 when there is sufficient 
competition for a service such that tariffing is not necessary to 
protect a carrier's customers nor to promote the public interest.

III. Discussion

    36. In this Notice, the Commission proposes to eliminate ex ante 
pricing regulation of all Telephone Access Charges. In addition, the 
Commission proposes to require incumbent local exchange carriers and 
competitive local exchange carriers to detariff all such charges. The 
Commission proposes a nationwide approach based on its review of data 
demonstrating widespread availability of competitive alternatives for 
voice services and on other factors that appear to make such regulation 
and tariffing unnecessary and contrary to the public interest. The 
Commission seeks comment on this proposal and invites commenters to 
offer alternative proposals. Further, while the Commission believes 
those identified charges--the Subscriber Line Charge (also called the 
End User Common Line charge), Access Recovery Charge, Presubscribed 
Interexchange Carrier Charge, Line Port Charge, and Special Access 
Surcharge--are the appropriate focus of its proposals here, the 
Commission seeks comment on whether there are any other interstate end-
user charges for which the Commission should adopt the reforms being 
considered as part of this proceeding. The Commission also seeks 
comment on the data it uses and on its analysis of those data and 
invite commenters to offer additional data and their own analyses.
    37. Consistent with the goal of simplifying carriers' advertised 
rates and customers' bills, the Commission also proposes to prohibit 
carriers from billing customers for Telephone Access Charges through 
separate line items on

[[Page 30904]]

their bills. Given that some Telephone Access Charges are used to 
calculate contributions to the USF and other federal programs, as well 
as high-cost support, the Commission also proposes ways to provide 
certainty in calculating such contributions and support to ensure 
stability in funding following pricing deregulation and detariffing of 
Telephone Access Charges. Finally, the Commission seeks comment on its 
legal authority to adopt these rule changes and on the costs and 
benefits of its proposals.

A. The Declining Need for Ex Ante Pricing Regulation and Tariffing of 
Telephone Access Charges

    38. The primary objective of ex ante pricing regulation and 
tariffing is to ensure that prices are just and reasonable as required 
by the Act. While such ex ante regulation and tariffing may have been 
necessary when the incumbent local exchange carriers were dominant 
suppliers, that no longer appears to be the case. Today, competition 
for voice services is widespread and the Commission expects it to be 
more effective than regulation in ensuring that incumbent local 
exchange carriers' rates for voice services are just and reasonable. 
The Commission is also concerned that the costs of regulating and 
tariffing Telephone Access Charges are likely to exceed the benefits, 
because they impose costs on carriers and hinder carriers' ability to 
quickly adapt to changing market conditions.
    39. The Commission proposes to find that widespread competition 
among voice services makes ex ante pricing regulation and tariffing of 
Telephone Access Charges unnecessary to ensure just and reasonable 
rates or to otherwise protect customers. The Commission seeks comment 
on its proposal. As the Commission has explained in prior deregulatory 
decisions, `` `competition is the most effective means of ensuring that 
. . . charges, practices, classifications, and regulations . . . are 
just and reasonable, and not unreasonably discriminatory.' '' When 
markets become competitive, pricing regulations are not only 
unnecessary, they are counterproductive.
    40. Over the last several decades, local exchange carriers have 
been quickly losing subscribers while mobile and interconnected VoIP 
providers have continued gaining subscribers. The Commission's annual 
Voice Telephone Services Reports show, for example, that from December 
2008 to December 2018, the share of total voice subscribers served by 
incumbent local exchange carriers decreased from 27.9% to only 7.4%. 
During this same period, the share of total voice subscriptions for 
interconnected VoIP service providers unaffiliated with an incumbent 
local exchange carrier more than doubled, from 4.9% to 11.7%. Moreover, 
in the same period, mobile voice subscriptions increased from 61.7% to 
75.9%, and as of the end of 2018, 57.1% of households purchased only 
wireless voice service.
    41. The Commission's data also demonstrate that competitive voice 
service offerings are available nationwide. More than 99.9% of 
populated census blocks have one or more facilities-based providers of 
mobile voice services unaffiliated with an incumbent local exchange 
carrier deployed in the block. Further, 80.6% of populated census 
blocks have one or more unaffiliated facilities-based providers of 
fixed broadband at speeds of 10/1 Mbps or greater deployed in the 
block. Those fixed broadband technologies include xDSL, fiber, 
terrestrial fixed wireless, and cable modem, and allow providers to 
offer voice services and allow customers to use over-the-top VoIP 
service providers. The Commission believes that the presence of 
competition in voice services imposes material pricing pressure on 
incumbent local exchange carriers, rendering ex ante pricing regulation 
and tariffing of Telephone Access Charges unnecessary to ensure just 
and reasonable rates. The Commission seeks comment on these data, and 
on its analysis. The Commission also invites commenters to offer other 
data sources the Commission should use to examine the extent of 
competition for voice services.
    42. For purposes of these analyses, the Commission defines a 
``populated census block'' as any non-water census block with at least 
one occupied or unoccupied housing unit according to its 2018 ``Staff 
Block Estimates,'' available at https://www.fcc.gov/reports-research/data/staff-block-estimates. The Commission counts wireless voice and 
fixed broadband service providers affiliated with incumbent local 
exchange carriers as ``unaffiliated,'' but only outside of the 
incumbent local exchange carriers' respective study areas. Data on 
census blocks with mobile voice deployment are publicly available on 
the Commission website at https://www.fcc.gov/mobile-deployment-form-477-data (select ``Dec. 2018'' from the ``Actual Area Methodology'' 
column). Lists of carriers and affiliates are available at https://www.fcc.gov/general/form-477-filers-state-0 and https://www.fcc.gov/document/fcc-proposes-detariffing-access-charges-simplifying-consumer-bills. Study area data and data regarding the affiliations of incumbent 
local exchange carriers and wireless voice providers are also available 
on the Commission website at https://www.fcc.gov/economics-analytics/industry-analysis-division/study-area-boundary-data (use ``Census 
Block--Study Area Cross Reference (ZIP) (Oct 2016)'') and https://www.fcc.gov/general/fcc-form-477-additional-data (use ``Form 477 Filers 
by State (12/08-current)'').
    43. Further, this analysis relies on data regarding fixed broadband 
instead of fixed voice or interconnected VoIP because data regarding 
fixed broadband is reported at the more granular census-block level. 
For purposes of this analysis, the Commission limits its consideration 
of fixed broadband to unaffiliated providers offering service with 
speeds of at least 10/1 Mbps, which ensures that the broadband 
deployment measured here represents the availability of next-generation 
voice services such as interconnected VoIP service. Data on census 
blocks with fixed broadband deployment are publicly available on the 
Commission website at https://www.fcc.gov/general/broadband-deployment-data-fcc-form-477 (select ``Data as of December 31, 2018'').
    44. The Commission's proposal to eliminate ex ante pricing 
regulation and tariffing of Telephone Access Charges is supported by 
the fact that the prices charged by incumbent local exchange carriers 
in many of the areas that are least likely to have robust competition 
are subject to other regulatory constraints. Generally, competition in 
voice services is least likely to exist in rural areas and other high-
cost areas. These areas are usually served by carriers that receive 
federal high-cost USF support. To receive such support, a carrier must 
be designated as an Eligible Telecommunications Carrier either by a 
state or by the Commission, 47 CFR 54.201, 54.214(e), 54.254(e). To 
ensure that customers in all areas of the nation have access to 
affordable voice service, consistent with the principles set forth by 
Congress, the Commission requires that Eligible Telecommunications 
Carriers offer supported services--including voice telephony services--
at rates that are reasonably comparable to urban rates throughout their 
designated service areas, unless they can offer a reasonable 
justification for charging higher rates.
    45. This requirement constrains the prices that carriers can charge 
for voice services in high-cost areas of the country. Currently, the 
Commission's Office of Economics and Analytics

[[Page 30905]]

conducts an annual Urban Rate Survey to determine what constitutes a 
reasonable comparability benchmark for residential voice services. A 
voice rate is deemed to be compliant with the Commission's rules if it 
falls within two standard deviations of the national average of the 
Urban Rate Survey, 47 CFR 54.313(a)(2). Therefore, Eligible 
Telecommunications Carriers are presumed to be in compliance with the 
Commission's rules if they charge no more than the reasonable 
comparability benchmark. This benchmark helps constrain incumbent local 
exchange carriers' pricing, even in high-cost areas where robust 
competition is least likely to occur.
    46. The Commission recognizes that a small percentage of consumers 
do not have competitive options, but its preliminary analysis is that 
such consumers live in high-cost areas that are currently served by an 
Eligible Telecommunications Carrier subject to the reasonable 
comparability benchmark. What is more, the Commission expects that the 
overwhelming number of census blocks with competitive options will help 
constrain prices in the very few census blocks that do not have 
competitive options through unaffiliated mobile voice or broadband 
services. As the United States Court of Appeals for the District of 
Columbia Circuit has observed, ``[c]onsumers in areas with fewer than 
two providers may also reap the benefits of competition; a provider in 
this area `will tend to treat customers that do not have a competitive 
choice as if they do' because competitive pressures elsewhere `often 
have spillover effects across a given corporation.''' The Commission 
seeks comment on this preliminary analysis and these expectations.
    47. Furthermore, the Commission expects that the benefits to the 
vast majority of customers from its removal of ex ante pricing 
regulation and detariffing of Telephone Access Charges outweigh the 
potential risk that a small number of consumers without competitive 
options for voice services may pay higher rates if the Commission 
deregulates and detariffs Telephone Access Charges. In reaching its 
forbearance decisions, the Commission has long recognized that 
unnecessary tariffing requirements may impede carriers' flexibility to 
react to competition and may harm customers in some circumstances. For 
example, tariffing requirements can inhibit carriers' ability to offer 
innovative integrated services designed to meet changing market 
conditions. In addition, a customer may be adversely affected when a 
carrier unilaterally changes a rate by filing a tariff revision (so 
long as the revision is not found to be unjust, unreasonable, or 
unlawful under the Act) because, pursuant to the ``filed rate 
doctrine,'' a filed tariff rate, term, or condition controls over a 
rate, term, or condition set in a non-tariffed carrier-customer 
contract. Detariffing, on the other hand, can help customers obtain 
service arrangements that are specifically tailored to their individual 
needs. Furthermore, detariffing will allow consumers to avail 
themselves of the protections provided by state consumer protection and 
contract laws--protections not available to consumers under the filed-
rate doctrine.
    48. Indeed, the Commission has found that the high costs of 
regulation likely outweigh the benefits, even in less-than-fully-
competitive markets, particularly where regulatory costs are imposed on 
only one class of competitors. In light of the evidence of widespread 
competition for voice services, the Commission invites comment on 
whether, and to what extent, the costs of continued regulation of 
Telephone Access Charges imposed on incumbent local exchange carriers 
outweigh the benefits of such regulation. The Commission invites 
commenters to quantify both the costs and the benefits of its proposal 
and of any alternative approaches to the removal of ex ante pricing 
regulation and detariffing of Telephone Access Charges.
    49. Finally, the growing number of states that have adopted rate 
flexibility for the intrastate portion of local telephone services 
supports the conclusion that in many states deregulating and 
detariffing Telephone Access Charges will not affect the overall rate 
customers pay for telephone service. That's because carriers that have 
pricing flexibility for the intrastate portion of their local voice 
services can adjust the intrastate portion of their local rates to 
price their local voice services at market rates notwithstanding 
existing limits on the interstate portion of those charges. As a 
result, federal deregulation and detariffing of Telephone Access 
Charges should not result in any material change in the total rates 
customers pay for voice service in these states. Thus, the Commission 
proposes to find that ex ante pricing regulation and tariffing of 
Telephone Access Charges in such states imposes costs, but likely does 
not yield any benefits. The Commission seeks comment on its theory of 
the impact of states' adoption of pricing flexibility for retail rates.
    50. The Commission invites commenters to provide it with 
information about the status and impact of state telephone rate 
deregulation generally. According to one report, as of 2016, at least 
41 states had ``significantly reduced or eliminated oversight of 
wireline telecommunications'' through legislation or public utility 
commission action. In several states, state utility commissions no 
longer have authority to regulate telecommunications services and their 
prices. California, for example, eliminated pricing regulation for all 
local exchange services that do not receive state high-cost support, 
while Tennessee permits incumbent carriers to elect to operate free 
from the jurisdiction of the state public utility commission, with 
certain exceptions.
    51. Further, a growing number of states have adopted retail rate 
flexibility for the intrastate portion of local voice services 
justified, at least in part, by the presence of competitive options. 
For example, the California Public Utilities Commission found that 
incumbent local exchange carriers ``lack the market power to sustain 
prices above the levels that a competitive market would produce'' 
because of wireless, cable, and VoIP service entrants into the 
marketplace. Still other states such as Washington and Minnesota have 
deregulated rates on a service-area or exchange-area basis for services 
subject to ``effective competition'' or for exchanges satisfying 
competitive market criteria.
    52. In sum, while states are trending toward pricing flexibility 
for the intrastate portion of local telephone rates, there appears to 
be considerable variation among states and among areas within states. 
The Commission seeks comment on that variation and its impact on its 
proposal, if any. Parties are invited to provide more updated data on 
intrastate rate regulation and rate flexibility for the intrastate 
portion of local telephone rates. The Commission seeks comment on 
whether the varied nature of state regulation of local telephone rates 
supports or detracts from its proposal to eliminate ex ante pricing 
regulation and tariffing of Telephone Access Charges nationally.
    53. The Commission also seeks comment on whether there are any 
factors that would either support or call into question its proposal to 
eliminate ex ante pricing regulation and mandatorily detariff Telephone 
Access Charges across the country.
    54. Competitive Local Exchange Carriers. Some competitive local 
exchange carriers have chosen to tariff some Telephone Access Charges. 
By definition, such carriers are subject to competition and already 
have pricing

[[Page 30906]]

flexibility. In the interest of parity, the Commission proposes to 
require competitive local exchange carriers to detariff, on a 
nationwide basis, all Telephone Access Charges. Competitive local 
exchange carriers face competition from wireless providers and other 
competitive wireline providers and must also compete with incumbent 
local exchange carriers. The Commission sees no justification for 
allowing competitive local exchange carriers to tariff Telephone Access 
Charges if incumbent local exchange carriers are prohibited from doing 
so. The Commission seeks comment on its proposal to require mandatory 
detariffing of competitive local exchange carriers' Telephone Access 
Charges.
    55. Detariffing Other Federal Charges. In addition to Telephone 
Access Charges, there are other charges related to federal programs 
that many carriers currently include in their interstate tariffs, e.g., 
pass-throughs for contributions to the USF. The Commission seeks 
comment on mandatorily detariffing these charges. Such charges are 
subject to regulatory requirements and its Truth-in-Billing rules will 
continue to govern if and how these charges can be passed through to 
end users. Accordingly, the Commission expects that detariffing these 
charges will bring the benefits of reduced regulatory requirements 
while creating little risk of abuse. The Commission seeks comment on 
this expectation and any other issues that it should consider in 
deciding whether to detariff all interstate retail charges. The 
Commission invites commenters to identify these charges and to comment 
on the costs and benefits of mandatorily detariffing them.

B. Alternative Approaches

    56. The Commission invites commenters to offer alternative 
approaches to determining where and under what circumstances the 
Commission should eliminate ex ante pricing regulation and require 
detariffing of Telephone Access Charges. For example, should the 
Commission take a more case-by-case approach and find that rate 
regulation is unnecessary only in locations where at least one of the 
following conditions is met: (1) In an incumbent local exchange 
carrier's study area, where there is at least one unaffiliated voice 
provider available in 75% of the populated census blocks; (2) in areas 
where the Eligible Telecommunications Carrier is subject to the 
reasonable comparability benchmark; or (3) in states where intrastate 
rates have been deregulated?
    57. Under this alternative, the Commission would remove ex ante 
pricing regulation and require detariffing of Telephone Access Charges 
in study areas where there is at least one unaffiliated provider of 
voice services in 75% of the inhabited census blocks. In the Price Cap 
BDS Order, the Commission found that one competitor within a census 
block is sufficient to help constrain prices of business data services 
offered by an incumbent local exchange carrier. Do commenters believe 
that one voice competitor in 75% of the inhabited census blocks of a 
study area is sufficient to help constrain prices for voice services 
offered by an incumbent local exchange carrier? In the alternative, 
would competition in a lower percentage of inhabited census blocks in a 
study area be sufficient to help constrain prices for local voice 
services? The Commission invites commenters to offer alternatives, 
explain the bases for the alternatives they offer, and identify 
supporting data.
    58. Under this alternative, the Commission would remove ex ante 
pricing regulation and require detariffing of Telephone Access Charges 
at the study-area level because doing so on a census-block basis is not 
administratively feasible. As the Commission has explained, ``census 
blocks or census tracts are too numerous to effectively administer'' 
and ``could lead to a patchwork of different regulations that vary from 
census block-to-census block.'' Study areas, however, ``are more 
administratively feasible because there are a limited number'' and the 
Commission and industry have substantial experience administering rules 
on a study area basis. Price deregulation and detariffing on the study-
area level is likewise sufficiently granular to protect customers 
across the study area because it is reasonable to assume that incumbent 
local exchange carriers charge uniform prices across study areas. 
Further, customers in rural areas of study areas will benefit from both 
competition in urban areas, as competitive pressures ``often have 
spillover effects across a given corporation,'' and from the 
Commission's prohibitions against unjust and discriminatory rates. The 
Commission seeks comment on these parameters, data, and assumptions, 
including whether the Commission should evaluate competition using a 
competitive market test, as it has previously done.
    59. Under this alternative, the Commission would also eliminate ex 
ante pricing regulation and require detariffing of Telephone Access 
Charges in areas where there is a designated Eligible 
Telecommunications Carrier subject to the reasonable comparability 
requirement. Do commenters agree that the reasonable comparability 
requirement sufficiently constrains retail rates for voice services by 
ensuring that Eligible Telecommunications Carriers do not charge rates 
that significantly exceed the rates that apply in competitive urban 
markets? If so, does it follow that ex ante pricing regulation and 
tariffing are not necessary in areas where there is an Eligible 
Telecommunications Carrier subject to the reasonable comparability 
requirement? Commenters asserting that pricing regulations and 
interstate tariffs are nonetheless necessary to constrain Eligible 
Telecommunications Carriers' Telephone Access Charges should explain 
why the reasonable comparability requirement is not sufficient to 
ensure that Eligible Telecommunications Carriers' rates are just and 
reasonable. Should the Commission instead deregulate and detariff 
Telephone Access Charges based on a combination of competition and 
reasonable comparability requirements in an area? For example, should 
the Commission do so if competition does not hit the 75% threshold 
discussed above, but the reasonable comparability requirement holds in 
areas without competition?
    60. If the Commission eliminates ex ante pricing regulation and 
require detariffing of Telephone Access Charges based on a carrier's 
obligation to comply with the reasonable comparability requirement, 
would a new benchmark for business customers be necessary to constrain 
retail rates charged to business customers? There is currently no 
benchmarking process for retail rates charged to business customers. 
The Commission recognizes that business customers may purchase very 
different voice services depending on a variety of factors and that 
many businesses purchase voice services pursuant to negotiated 
contracts. The Commission seeks comment on whether a comparability 
benchmark for business customers is necessary given their ability to 
negotiate contract rates, especially when voice services are often 
bundled with other services. Does the current benchmark for residential 
customers constrain prices for business customers? Could a benchmarking 
process be developed for retail business rates? If a benchmarking 
process for retail business rates could be developed, would such 
development be unduly complex and burdensome given the differences 
among voice services purchased by business customers?

[[Page 30907]]

    61. Under this alternative, the Commission would also eliminate ex 
ante pricing regulation and require detariffing of Telephone Access 
Charges for incumbent local exchange carriers in study areas where 
states have deregulated the rates charged for the intrastate portion of 
local voice services. The Commission would do so given that a carrier's 
current ability to adjust its end-user rates due to state deregulation 
means that federal deregulation and detariffing of Telephone Access 
Charges will not result in increased prices for voice services. Should 
the Commission generate and maintain a list of areas where there is 
state retail rate pricing flexibility? Should the Commission have 
carriers self-certify whether the intrastate portion of local voice 
services are no longer subject to state price controls and use those 
certifications as the basis for a list? If the Commission does elect to 
maintain a list of states that have deregulated the rates charged for 
the intrastate portion of local voice services, should the Commission 
update that list periodically--every three years, for example--to 
ensure that it accurately reflects state regulation of retail rates. 
How would the Commission make the list available to the public? Should 
the Commission direct the Wireline Competition Bureau to issue a Public 
Notice updating the list every few years? If a state were to re-
implement rate regulation of the intrastate portion of local voice 
services, what effect should that have on the Commission's price 
deregulation and detariffing of Telephone Access Charges?
    62. The Commission invites comment on this alternative approach and 
the costs and benefits of such an approach. Assuming that competition 
and the reasonable comparability requirements impose sufficient pricing 
constraints on carriers subject to them, and that federal price 
regulation does not have any practical effect in areas where states 
offer pricing flexibility, are there any other reasons to impose 
federal tariffing and pricing regulations with respect to Telephone 
Access Charges? The Commission invites commenters to identify any such 
reasons and the relative benefits and costs of leaving ex ante pricing 
regulation and tariffing in place as compared to its alternative 
proposal to deregulate and detariff the Telephone Access Charges.
    63. The Commission also seeks comment on other alternative 
proposals, along with the data and assumptions supporting any 
alternative. For instance, should the Commission consider permissive 
detariffing of Telephone Access Charges for some categories of 
carriers, such as rate-of-return carriers, as suggested by NTCA? What 
considerations, if any, would support a different approach for such 
carriers? How would permissive detariffing for some carriers and 
mandatory detariffing for others affect the overall policy goals of 
this proceeding? Are there other alternatives the Commission should 
consider for some categories of carriers? Commenters supporting an 
alternative approach should also address the costs and benefits of such 
an approach.

C. Measures To Simplify Consumers' Telephone Bills

    64. Consistent with its ongoing efforts to simplify consumers' 
telephone bills, the Commission also proposes to modify its truth-in-
billing rules, 47 CFR 64.2400-64.2401, to explicitly prohibit carriers 
from assessing any separate Telephone Access Charges, such as 
Subscriber Line Charges and Access Recovery Charges, on customers' 
bills after those charges are deregulated and detariffed. The 
Commission seeks comments on this proposal. The Commission also invites 
suggestions for how to minimize any customer confusion regarding 
telephone bills during the transition to price deregulation and 
detariffing of Telephone Access Charges.
    65. The Commission remains concerned that telephone bills are too 
complicated and difficult to read and understand. For example, the 
terms used by carriers to describe Subscriber Line Charges, such as 
``FCC-Approved Customer Line Charge,'' ``FCC Subscriber Line Charge,'' 
and ``Federal Line Fee,'' are meaningless to most consumers. They may 
also lead consumers to mistakenly believe that the government mandates 
the amount of Subscriber Line Charges or other Telephone Access 
Charges.
    66. Prohibiting carriers from using separate, obscurely worded line 
items to bill for the interstate portion of local telephone services 
should make it easier for customers to understand their bills and to 
compare rates between different providers. As a result, greater 
transparency can improve the effectiveness of competition. Studies of 
pricing transparency in other industries have shown that increased 
price transparency reduces prices paid by consumers. For example, the 
advent of the internet, which enabled consumers to make better price 
comparisons, appears to have reduced the prices for life insurance 
policies by about 8% to 15%. Evidence that price transparency can 
benefit consumers has been found in markets for many other products as 
well, including prescription drugs, eye exams and eyeglasses, gasoline, 
automobiles and securities. The Commission would expect that bringing 
advertised rates for voice services closer to what consumers actually 
pay would yield similar price reductions. Moreover, Telephone Access 
Charges are vestiges of legacy telephone networks when most local 
exchange carriers were subject to comprehensive cost-based regulatory 
regimes and operated in a substantially different telecommunications 
marketplace. The Commission does not think that these charges should 
have a place on consumers' phone bills once those charges are 
deregulated and detariffed. The Commission invites comment on that 
reasoning.
    67. Assuming that its proposal results in greater price 
transparency, how could the Commission estimate the benefits that such 
increased transparency would bring? Should the Commission expect price 
declines similar to those observed in other industries when consumers 
were better able to compare prices? If not, is there other evidence or 
are there other approaches the Commission should consider to evaluate 
the benefits of greater transparency provided by its proposal? Are 
there factors that the Commission's proposal fails to address that 
should be addressed in its final rules? Are there are other changes 
that should be made to the Commission's truth-in-billing rules to 
effectuate the changes proposed here?
    68. The Commission recognizes that some states may authorize 
carriers to collect charges for the intrastate portion of local voice 
services from their customers using billing descriptions similar to the 
Telephone Access Charges. Are there state requirements that would 
prohibit carriers from completely eliminating separate line-item 
charges from their bills? If so, how should the Commission address 
those requirements to carry out its policy of minimizing consumer 
confusion? Are there other issues related to the billing of intrastate 
charges of which the Commission should be aware? For example, how are 
such charges listed on customers' bills? In those states where carriers 
do not have pricing flexibility with respect to the intrastate portions 
of their local telephone service, how will continuing state regulation 
of those intrastate rates affect the Commission's proposal to prohibit 
carriers from assessing any separate Telephone Access Charges on 
customers' bills? For example, if a carrier is precluded by state 
regulations from changing its local service rates, what steps does the 
Commission need to take to ensure that a carrier has flexibility to 
charge its customers for the interstate component

[[Page 30908]]

of the service currently collected through Telephone Access Charges?
    69. Are there states that authorize or require carriers to assess 
separate intrastate end-user charges? If so, the Commission asks that 
commenters provide specific examples. To the extent such state laws or 
regulations exist, should the Commission require carriers to make it 
clear that the listed charges are not federally authorized? Do carriers 
combine Telephone Access Charges and intrastate end-user charges into a 
single line item? If so, how do they identify and describe that charge 
on the bill? To the extent that some carriers may be prohibited by 
state law from combining charges for the intrastate and interstate 
portions of their local telephone service on customers' bills, should 
the Commission require such carriers to charge for the interstate 
portions of that service in a certain manner or using uniform 
nomenclature? If so, the Commission seeks comment on the specifics of 
such an approach. In the alternative, where state laws or regulations 
prohibit carriers from combining charges for the intrastate and 
interstate portions of their local telephone service on customers' 
bills, should the Commission consider preempting such laws and 
regulations on the basis that it would be impossible to comply both 
with those laws and the rules proposed in this proceeding and that such 
regulations conflict with the regulatory objectives of this proceeding?
    70. Finally, the Commission also seeks comment on any consumer 
education initiatives the Commission or providers should undertake to 
help consumers understand any billing changes that may result from its 
proposed changes.

D. Addressing Related Universal Service Fund and Other Federal Program 
Issues

    71. The Commission proposes ways to address issues related to the 
Universal Service Fund's and other federal programs' historic reliance 
on Telephone Access Charges in certain circumstances. Addressing these 
issues at the outset will ensure that the rural carriers that rely on 
such federal funds will have the certainty they need to continue 
investing in the deployment of next-generation networks and services in 
rural America.
    72. Connect America Fund Broadband Loop Support. The Commission 
proposes several modifications to its rules for calculating CAF BLS to 
address the detariffing of Telephone Access Charges--modifications that 
the Commission does not expect will materially change the amount of 
funds made available for carriers relying on this mechanism to continue 
to serve their service areas.
    73. The Commission first proposes to require that legacy rate-of-
return carriers that use costs to determine CAF BLS support use $6.50 
for residential and single-line business lines and $9.20 for multi-line 
business lines (the maximum Subscriber Line Charge amounts) to 
calculate their CAF BLS going forward. By using these fixed amounts 
rather than a tariffed rate, the Commission ensures that carriers will 
continue to be able to calculate CAF BLS. The Commission expects that 
this approach will have minimal effect on the CAF BLS legacy rate-of-
return carriers receive since most, if not all, of those carriers are 
currently charging the maximum Subscriber Line Charges allowed under 
its rules. Are there any legacy rate-of-return carriers that would be 
adversely affected by the Commission's proposal? If so, should the 
Commission require each of those carriers to identify the highest end-
user charge that it could have assessed on the day preceding the day 
that it detariffs its Telephone Access Charges and use that amount to 
calculate its CAF BLS going forward?
    74. The Commission also seeks comment on how to account for other 
Telephone Access Charges affecting the calculation of CAF BLS that will 
be detariffed. The Commission proposes to delete any requirement to 
offset Special Access Surcharges from CAF BLS. As a result, a carrier 
receiving CAF BLS will not have to reflect any revenues for this charge 
in determining revenues for purposes of calculating CAF BLS. Given the 
minimal amount of Special Access Surcharge revenues being collected, 
the Commission expects making this change will have a negligible impact 
on CAF BLS. Additionally, the Commission proposes to require carriers 
to use the rates they are charging for line ports as of the effective 
date of an order adopting these reforms. This recognizes that carriers 
assess individual Line Port Charges differently. The Commission seeks 
comment on these proposals. Alternatively, should the Commission 
develop a uniform rate for each type of line port that is currently 
tariffed and, if so, how should such a rate be determined? Would a 
weighted average of the currently tariffed monthly rates in the 
National Exchange Carrier Association tariff be a reasonable approach? 
Or should the Commission eliminate the requirement to take into account 
Line Port Charges when calculating CAF BLS? Or instead should the 
Commission impute the aggregate Line Port Charges of each carrier on 
the effective date of an order adopting these reforms to said carrier 
for purposes of calculating CAF BLS?
    75. The Commission expects that these proposed approaches would 
limit any adverse effects on the CAF BLS program and also minimize the 
administrative and other burdens on legacy rate-of-return carriers, 
most of which are small entities. The Commission invites parties to 
comment on this expectation. Are there alternative approaches the 
Commission should consider to account for these revenues when 
calculating their CAF BLS after these charges have been detariffed? Are 
there any other Telephone Access Charges that would affect CAF BLS 
calculations? The Commission also asks parties to comment on whether 
there should be any particular relationship between how end-user rates 
are treated in connection with determining CAF BLS and on how they are 
treated in determining the revenues that may be assessed for universal 
service contribution purposes.
    76. The Commission invites parties to suggest other approaches that 
would minimize the effects of its proposals on CAF BLS. Parties should 
identify and quantify the costs and benefits that would result from any 
alternative proposals. The Commission invites parties to address the 
extent to which (if at all) the Commission should change the rules 
governing participation in the National Exchange Carrier Association 
tariffing and pooling processes to reflect the detariffing of Telephone 
Access Charges. Finally, if the Commission adopts its proposal to 
detariff and deregulate the pricing of Telephone Access Charges, in 
order to effectuate that proposal, are there any changes that the 
Commission should adopt to other Commission rules, including its rules 
relating to the functions of the National Exchange Carrier Association 
or the USF administration responsibilities handled by the Universal 
Service Administrative Company?
    77. Connect America Fund Intercarrier Compensation. The Commission 
next seeks comment on how to ensure that detariffing of the Access 
Recovery Charge does not unreasonably affect the amount of funds that 
rate-of-return carriers are eligible to receive from CAF ICC. The CAF 
ICC support that a rate-of-return carrier receives is reduced by the 
Access Recovery Charge that the carrier is permitted to charge and by 
an imputed amount based on the Access Recovery Charge that the carrier 
could have charged on voice or voice-data lines if such charges could 
be assessed on Consumer Broadband Only Loop lines. Thus, eliminating 
the Access Recovery

[[Page 30909]]

Charge affects the calculation of CAF ICC support.
    78. The Commission proposes to require rate-of-return carriers to 
calculate CAF ICC using the maximum Access Recovery Charge that could 
have been assessed on the day preceding the detariffing of that charge. 
This approach is administratively simple and would eliminate any 
uncertainty about how to account for the Access Recovery Charge in 
calculating CAF ICC. The Commission invites parties to comment on this 
approach, noting in particular the potential effects of this approach. 
Alternatively, should the Commission eliminate the ongoing imputation 
of Access Recovery Charges for such carriers and instead reduce their 
Eligible Recovery each year by the aggregate Access Recovery Charge 
revenue they were actually receiving on the effective date of any order 
adopting reforms? This would eliminate the need to true up Access 
Recovery Charge revenues along with providing some administrative 
efficiencies.
    79. The Commission invites parties to suggest other approaches for 
addressing potential effects of detariffing Access Recovery Charges on 
CAF ICC. Parties should identify potential issues and quantify the 
costs and benefits that would result from any alternative proposals.
    80. Contributions to the Universal Service Fund and Other Federal 
Programs. Every telecommunications carrier that provides interstate 
telecommunications services has an obligation to contribute, on an 
equitable and nondiscriminatory basis, to the federal Universal Service 
Fund, as well as several other programs. Although the Commission has 
not codified any rules for how contributors should allocate revenues 
between the interstate and intrastate jurisdictions for contributions 
purposes, many incumbent local exchange carriers (and some competitive 
local exchange carriers) have relied on the tariffing of Telephone 
Access Charges at the federal level as their means of determining their 
interstate and international revenues for contributions purposes. These 
revenues are reported on FCC Form 499-A and are used for purposes of 
determining their contributions to the USF, the Interstate 
Telecommunications Relay Service Fund, Local Number Portability 
Administration, and North American Numbering Plan Administration. To 
help ensure continued stability of the USF and other federal programs, 
the Commission seeks comment on two alternative proposals for 
allocating interstate and intrastate revenues for voice services in 
light of its proposed elimination of ex ante pricing regulation and 
detariffing of Telephone Access Charges.
    81. First, the Commission seeks comment on adopting an interstate 
safe harbor of 25% for local voice services provided by local exchange 
carriers, with the option for such carriers to file individualized 
traffic studies to establish a different allocation. As used here, 
``local voice services revenue'' includes revenues from local exchange 
service and revenues related to detariffed Telephone Access Charges. 
Local voice services revenue does not include revenues associated with 
bundled toll services. The Commission proposes a 25% safe harbor 
because these revenues largely reflect common line recovery and 25% of 
common line costs have historically been allocated to the interstate 
jurisdiction, 47 CFR 36.2(b)(3)(iv).
    82. Such an approach would be consistent with the existing approach 
for other voice service providers and types of services. Specifically, 
the Commission's current rules provide a safe harbor for assessing 
contributions for mobile wireless service providers and interconnected 
VoIP providers. The Commission has set an interstate safe harbor of 
37.1% for wireless operators and 64.9% for interconnected VoIP 
providers. In adopting the 37.1% safe harbor, the Commission reasoned 
that this would ensure that mobile wireless service providers' 
obligations are on par with carriers offering similar services that 
must report actual interstate end-user telecommunications revenue. For 
interconnected VoIP services, the Commission established 64.9% as the 
safe harbor, which was the percentage of interstate revenues reported 
to the Commission by wireline toll providers.
    83. As with other contributions safe harbors, the Commission 
proposes to allow a local exchange carrier to use traffic studies to 
determine its contributions base, rather than avail itself of the 
proposed safe harbor. Pursuant to the criteria contained in Form 499-A, 
traffic studies, among other things: (1) ``may use statistical sampling 
to estimate the proportion of minutes that are interstate and 
international''; (2) must account for all interstate or international 
charges as ``100 percent interstate or international''; (3) must be 
designed to use sampling techniques to produce a margin of error of no 
more than 1% with a confidence level of 95%; and (4) should explain the 
methods and estimation methods employed and why the study results in an 
unbiased estimate. If a local exchange carrier elects to use a traffic 
study to determine its interstate and international revenues for 
universal service contribution purposes, it would be required to submit 
the traffic studies for review. The Commission's current rules require 
affiliated entities to make a single election, for all of the 
affiliates each quarter, as to whether to use a traffic study or to use 
the safe harbor adopted for that category of services. The Commission 
proposes applying the same study area and election requirement to local 
exchange carriers.
    84. The Commission invites parties to comment on this proposal and, 
in particular, on the costs and benefits of the proposal. Is 25% a 
reasonable percentage of local voice services revenue to use as a safe 
harbor for assessing federal USF contributions? Could the introduction 
of this safe harbor and/or the Commission's proposal to allow carriers 
to submit a traffic study materially change the amount of contributions 
obtained from local voice services? If so, are there other alternatives 
that will better estimate the contributions base? Will the Commission's 
proposed approach ensure that all carriers make an equitable USF 
contribution? Are there other factors that the Commission should 
consider in establishing a safe harbor? The Commission invites parties 
experienced with the use of other safe harbors to provide information 
that will help inform its decision-making with respect to a proposed 
safe harbor as a proxy for the contributions carriers currently make 
based on their actual Telephone Access Charges. The Commission invites 
parties to address whether the use of a traffic study to estimate 
interstate and international revenues will result in a contributions 
base that will provide comparable support to that provided by the safe 
harbor and is equitable among contributors. Are there alternative 
approaches that would produce better estimates? Are there other methods 
for determining the percentage of interstate and international traffic 
that should be used?
    85. Second, the Commission sought comment in 2012 on adopting 
bright-line rules for the allocation of interstate and intrastate 
revenues for broad categories of services. In light of the other 
proposals the Commission makes today, the Commission now seeks comment 
on taking that proposed approach for all end-user voice services 
currently tariffed at the federal level--those offered by incumbent 
local exchange carriers as well as those offered by competitive local 
exchange carriers. The Commission's analysis in 2012 showed that the 
allocation of

[[Page 30910]]

interstate and intrastate e revenues remained consistent over time 
(between 20% and 30% of total revenues for non-toll services were 
interstate and international and around 70% for toll services). The 
Commission invites comment on whether that allocation has continued to 
remain consistent. The Commission also seeks comment on all aspects of 
adopting bright-line rules for the allocation of interstate and 
intrastate revenue for such voice services, such as whether the 
Commission would need to set different fixed allocators for different 
categories of voice services (and whether that would create any 
competitive distortions in the marketplace or increase compliance 
burdens), what that allocator should be (the Commission specifically 
sought comment on a 20% interstate allocator, but the Commission now 
seeks comment on whether it should be higher such as 25%, 30%, or even 
50%), how much weight to give the traffic studies filed by some 
reporting entities (considering the apparent differences in methodology 
the Commission observed in 2012), and whether the Commission would need 
to create some form of opt-out based on actual revenue receipts (for 
example, for a local voice service not connected to the interstate 
public switched telephone network). Would such an approach reduce the 
administrative costs of compliance, ease oversight, reduce 
gamesmanship, and ensure a steady stream of contributions are available 
for the USF going forward?
    86. The Commission's goal is to help ensure that carriers properly 
attribute revenues to the interstate jurisdiction and prevent carriers 
from avoiding contributions altogether by allocating all their revenues 
to the intrastate jurisdiction. This sort of gamesmanship could 
destabilize the contribution base used to fund universal service and 
other programs. The Commission invites comment on the extent to which 
each proposal would ensure that local exchange carriers would continue 
to contribute on an equitable and non-discriminatory basis.
    87. Are there alternative approaches the Commission could take to 
ensure that local exchange carriers that currently assess Telephone 
Access Charges continue to comply with their obligations to contribute 
to the federal USF? Parties proposing other alternatives for 
determining assessable revenues should present data to support their 
proposals. They should explain how their proposed alternative would 
minimize the effects on the contributions base and reduce 
administrative burdens compared to the safe harbor approach the 
Commission proposes here. Parties should also identify any changes that 
are necessary to Form 499-A or 499-Q and the associated instructions to 
reflect changes made in response to this Notice.

E. Transition Period

    88. To allow affected carriers sufficient time to amend their 
tariffs and billing systems, the Commission proposes a transition that 
would permit carriers to detariff Telephone Access Charges with a July 
1 effective date, consistent with the effective date of the annual 
access charge tariff filing, 47 CFR 69.3, following the effective date 
of the Order in this proceeding, and would require carriers to detariff 
these charges no later than the second annual tariff filing date 
following the effective date of such order. Carriers would be required 
to remove Telephone Access Charges from relevant portions of their 
interstate tariffs on one of these two annual access tariff filing 
dates, at the option of the carrier. Carriers would not be permitted to 
detariff these charges on dates other than the annual tariff filing 
dates specified by Commission. These dates will facilitate the 
transition process for incumbent local exchange carriers who use 
computerized programs to determine their Eligible Recovery and, for 
rate-of-return carriers, their CAF ICC. Finally, it will avoid placing 
large administrative costs on the National Exchange Carrier Association 
if member carriers were to elect to detariff at varying times during 
the year. Once the transition ends, no affected carrier would be 
permitted to include these charges in its interstate tariffs.
    89. The Commission seeks comment on whether the proposed transition 
period provides carriers adequate time to amend their tariffs. The 
Commission also seeks comment on how to minimize consumer confusion 
during that transition. Should the Commission consider a different 
transition period for different classes of carriers, because its 
proposed actions may affect different classes of carriers differently? 
For instance, should the Commission apply the proposed transition to 
incumbent local exchange carriers, because the Commission currently 
regulates their Telephone Access Charges, but prescribe a shorter 
transition for competitive local exchange carriers, which have 
unregulated end-user charges? Would small carriers require more time 
for the transition? Would the changes proposed here affect existing 
contractual arrangements and, if so, would the proposed transition 
allow carriers adequate time to meet or amend those contractual 
arrangements? Should the Commission consider a different transition for 
carriers depending on how they may be affected by changes to universal 
service calculations? The Commission seeks comment on the specific 
costs associated with the transition, and how they could be reduced, 
especially for small carriers.
    90. Finally, the Commission seeks comment on whether the proposed 
transition provides enough time to address changes to customer billing. 
Because the Commission proposes to prohibit affected carriers from 
separately listing any Telephone Access Charges on customer bills, 
carriers would need to make conforming changes to their billing systems 
and to customers' bills. The Commission seeks comment on whether the 
proposed transition period would provide carriers adequate time to 
modify their billing systems and customer bills, and to provide any 
necessary notices to their customers.

F. Legal Authority

    91. Section 201(b) Authority. The Commission intends to rely on 
section 201(b) of the Act to eliminate ex ante price regulation of 
Telephone Access Charges where such regulation is no longer necessary. 
Section 201(b) of the Act specifies that ``[a]ll charges, practices, 
classifications, and regulations for and in connection with such 
communication service, shall be just and reasonable, and any such 
charge, practice, classification, or regulation that is unjust or 
unreasonable is declared to be unlawful.'' It also allows the 
Commission to ``prescribe such rules and regulations as may be 
necessary in the public interest to carry out the provisions of this 
chapter.'' This authority necessarily includes the authority to opt not 
to regulate--or to deregulate--carriers' interstate rates if such 
regulation is no longer necessary and thus, deregulation is in the 
public interest. Even if the Commission eliminates its current pricing 
regulations, any violations of the reasonableness and nondiscrimination 
requirements of sections 201 and 202 of the Act, 47 U.S.C. 201-202, 
could be addressed through the complaint process under section 208 of 
the Act, 47 U.S.C. 208. The Commission seeks comment on these 
conclusions.
    92. The Commission also intends to use its authority under section 
201(b) of the Act to prohibit carriers from including separate line 
items for any Telephone Access Charges, such as Subscriber Line Charges 
and Access Recovery Charges, on customers' bills. The Commission seeks 
comment on the nature and scope of its authority to

[[Page 30911]]

adopt these proposals. The Commission has traditionally relied on its 
section 201(b) authority to adopt its truth-in-billing rules. Are there 
other statutory provisions that would support the Commission's proposal 
to prohibit the assessment of these separate Telephone Access Charges? 
Are there any potential legal impediments that the Commission need to 
address? In the First Truth-in-Billing Order, for example, the 
Commission determined that commercial speech that is misleading is not 
entitled to the protections of the First Amendment and may be 
prohibited.
    93. Forbearance Authority. The Commission intends to rely on its 
authority under section 10 of the Act to forbear from section 203 of 
the Act, 47 U.S.C. 203, and any associated regulations, to the extent 
necessary to detariff Telephone Access Charges on a mandatory basis. 
The Commission also intends to use its forbearance authority as an 
alternate basis for eliminating ex ante price regulation where it is no 
longer necessary or in the public interest. Under section 10 of the 
Act, the Commission can forbear, on its own motion, from applying any 
regulation or provision of the Act in any or some of a carrier's (or 
class of carriers') geographic markets if the Commission determines 
that the following three forbearance criteria are met: ``(1) 
enforcement of such regulation or provision is not necessary to ensure 
that the charges, practices, classifications, or regulations by, for, 
or in connection with that telecommunications carrier or 
telecommunications service are just and reasonable and are not unjustly 
or unreasonably discriminatory; (2) enforcement of such regulation or 
provision is not necessary for the protection of consumers; and (3) 
forbearance from applying such provision or regulation is consistent 
with the public interest.'' The Commission has previously relied on its 
forbearance authority to detariff and deregulate interstate services. 
The Commission seeks comment on whether the forbearance criteria are 
met with respect to both mandatory detariffing and price deregulation 
of Telephone Access Charges in each of the circumstances and conditions 
described herein.
    94. Statutory Authority to Support Universal Service and Other 
Federal Programs. The Commission intends to use its authority under 
section 254 of the Act, 47 U.S.C. 254(d), to make any changes necessary 
to ensure that the Commission minimizes any adverse impact of its 
proposed reforms on universal service contributions and support. 
Section 254(d) requires telecommunications carriers that provide 
interstate telecommunications services to ``contribute, on an equitable 
and nondiscriminatory basis, to the specific, predictable, and 
sufficient mechanisms established by the Commission to preserve and 
advance universal service.'' Section 254(d) also provides the 
Commission's authority to require other providers of interstate 
telecommunications ``to contribute to the preservation and advancement 
of universal service if the public interest so requires.'' Section 
254(e) specifies that only Eligible Telecommunications Carriers 
designated under section 214(e) of the Act shall be eligible to receive 
universal service support, and that ``such support should be explicit 
and sufficient to achieve the purposes'' of section 254 of the Act. 
Together, these statutory provisions provide the Commission authority 
to revise its rules consistent with these requirements and adopt the 
proposals relating to universal service. The Commission invites comment 
on this use of the Commission's section 254 authority.
    95. Similarly, the Commission intends to use its authority under 
sections 225, 251 and 715 of the Act, 47 U.S.C. 225, 251(e)(2), 616, to 
make any changes necessary to ensure that the Commission minimizes any 
adverse impact of its proposed reforms on the TRS Fund, Local Number 
Portability Administration, and North America Numbering Plan 
Administration. Sections 225 and 715 provide the Commission authority 
to prescribe contributions to TRS from ``all subscribers for every 
telecommunications service'' and from interconnected and non-
interconnected VoIP service providers. Section 251(e)(2) provides that 
the ``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.'' The Commission seeks comment on its 
authority under sections 225, 251 and 715 of the Act to minimize any 
adverse impacts of its proposed reforms on these programs.

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    96. This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and OMB to comment 
on the information collection requirements contained in this document, 
as required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
In addition, pursuant to the Small Business Paperwork Relief Act of 
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission 
seeks specific comment on how the Commission might further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees.

B. Initial Regulatory Flexibility Analysis

    97. As required by the Regulatory Flexibility Act, 5 U.S.C. 603, 
the Commission has prepared an Initial Regulatory Flexibility Analysis 
of the possible significant economic impact on a substantial number of 
small entities of the proposals addressed in this Notice of Proposed 
Rulemaking. The Initial Regulatory Flexibility Analysis is set forth in 
Appendix B of the Notice and below. Written public comments are 
requested on the Initial Regulatory Flexibility Analysis. These 
comments must be filed in accordance with the same filing deadlines for 
comments on the Notice, and they should have a separate and distinct 
heading designating them as responses to the Initial Regulatory 
Flexibility Analysis. The Commission's Consumer and Governmental 
Affairs Bureau, Reference Information Center, will send a copy of this 
Notice, including the Initial Regulatory Flexibility Analysis, to the 
Chief Counsel for Advocacy of the Small Business Administration, in 
accordance with the Regulatory Flexibility Act.
    98. Need for, and Objectives of, the Proposed Rules. Despite 
dramatic changes in the competitive landscape for voice services in the 
past twenty-five years, the Commission continues to regulate the 
Telephone Access Charges imposed by incumbent local exchange carriers. 
The Notice suggests that continued regulation and tariffing of 
Telephone Access Charges is no longer necessary or in the public 
interest. Consistent with the Commission's commitment to eliminate 
outdated and unnecessary regulations and to encourage efficient 
competition, the Commission proposes to deregulate and detariff these 
charges nationwide, or in the alternative, in certain areas where 
specific criteria indicate that rate regulation is unnecessary. The 
Commission also seeks comment on mandatorily detariffing other charges 
related to federal programs that many carriers currently include in 
their interstate tariffs.
    99. In the interest of enabling consumers to easily compare voice 
service offerings by different providers, the Commission also proposes 
to modify

[[Page 30912]]

its truth-in-billing rules to explicitly prohibit carriers from 
assessing any separate Telephone Access Charges, such as Subscriber 
Line Charges and Access Recovery Charges, on customers' bills when 
those charges are deregulated and detariffed. Prohibiting carriers from 
using separate, obscurely worded line items to bill for the interstate 
portion of local telephone services should make it easier for customers 
to understand their bills and to compare rates between different 
providers. Doing so should help ensure that a provider's advertised 
price is closer to the total price that appears on its customers' 
bills.
    100. The Commission proposes several modifications to its rules for 
calculating Connect America Fund Broadband Loop Support (CAF BLS) and 
CAF Intercarrier Compensation (CAF ICC) to address the detariffing of 
Telephone Access Charges--modifications that the Commission does not 
expect will materially change the amount of funds made available for 
carriers relying on this mechanism to continue to serve their service 
areas. Given that some Telephone Access Charges are used to calculate 
contributions to the Universal Service Fund (USF) and other federal 
programs, as well as high-cost support, the Commission also proposes 
ways to provide certainty in calculating such contributions and support 
to ensure stability in funding following pricing deregulation and 
detariffing of Telephone Access Charges. Addressing these issues at the 
outset will ensure that the rural carriers that rely on such federal 
funds will have the certainty they need to continue investing in the 
deployment of next-generation networks and services in rural America. 
The Notice seeks comment on these proposals.
    101. Legal Basis. The legal basis for any action that may be taken 
pursuant to the Notice is contained in sections 1, 4(i), 10, 201-203, 
214, 225, 251, 254, 303(r), and 715 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 154(i), 160, 201-203, 214, 225, 251, 254, 
303(r), 616, and sections 1.1 and 1.412 of the Commission's rules, 47 
CFR 1.1 and 1.412.
    102. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA directs agencies to 
provide a description of, and where feasible, an estimate of the number 
of small entities that may be affected by the proposed rule revisions, 
if adopted. The RFA generally defines the term ``small entity'' as 
having the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction,'' 5 U.S.C. 
601(3)-(6). In addition, the term ``small business'' has the same 
meaning as the term ``small-business concern'' under the Small Business 
Act. A ``small-business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the SBA.
    103. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA's 
Office of Advocacy, in general a small business is an independent 
business having fewer than 500 employees. These types of small 
businesses represent 99.9% of all businesses in the United States, 
which translates to 30.7 million businesses.
    104. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field,'' 5 
U.S.C. 610(4). The Internal Revenue Service (IRS) uses a revenue 
benchmark of $50,000 or less to delineate its annual electronic filing 
requirements for small exempt organizations. Nationwide, for tax year 
2018, there were approximately 571,709 small exempt organizations in 
the U.S. reporting revenues of $50,000 or less according to the 
registration and tax data for exempt organizations available from the 
IRS.
    105. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand,'' 5 U.S.C. 
601(5). U.S. Census Bureau data from the 2017 Census of Governments, 13 
U.S.C. 161, indicate that there were 90,075 local governmental 
jurisdictions consisting of general purpose governments and special 
purpose governments in the United States. Of this number there were 
36,931 general purpose governments (county, municipal and town or 
township) with populations of less than 50,000 and 12,040 special 
purpose governments--independent school districts with enrollment 
populations of less than 50,000. Accordingly, based on the 2017 U.S. 
Census of Governments data, the Commission estimates that at least 
48,971 entities fall into the category of ``small governmental 
jurisdictions.''
    106. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as ``establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired communications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies. Establishments in this industry use 
the wired telecommunications network facilities that they operate to 
provide a variety of services, such as wired telephony services, 
including VoIP services, wired (cable) audio and video programming 
distribution, and wired broadband internet services. By exception, 
establishments providing satellite television distribution services 
using facilities and infrastructure that they operate are included in 
this industry.'' The SBA has developed a small business size standard 
for Wired Telecommunications Carriers, which consists of all such 
companies having 1,500 or fewer employees. U.S. Census Bureau data for 
2012 show that there were 3,117 firms that operated that year. Of this 
total, 3,083 operated with fewer than 1,000 employees. Thus, under this 
size standard, the majority of firms in this industry can be considered 
small.
    107. Local Exchange Carriers (LECs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to local exchange services. The closest applicable NAICS 
Code category is Wired Telecommunications Carriers. Under the 
applicable SBA size standard, such a business is small if it has 1,500 
or fewer employees. U.S. Census Bureau data for 2012 show that there 
were 3,117 firms that operated for the entire year. Of that total, 
3,083 operated with fewer than 1,000 employees. Thus under this 
category and the associated size standard, the Commission estimates 
that the majority of local exchange carriers are small entities.
    108. Incumbent Local Exchange Carriers (Incumbent LECs). Neither 
the Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The closest 
applicable NAICS Code category is Wired Telecommunications Carriers. 
Under the applicable SBA size standard, such a business is small if it 
has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate 
that 3,117 firms operated the entire year. Of this total, 3,083 
operated with fewer than 1,000

[[Page 30913]]

employees. Consequently, the Commission estimates that most providers 
of incumbent local exchange service are small businesses that may be 
affected by its actions. According to Commission data, one thousand 
three hundred and seven (1,307) Incumbent Local Exchange Carriers 
reported that they were incumbent local exchange service providers. Of 
this total, an estimated 1,006 have 1,500 or fewer employees. Thus, 
using the SBA's size standard the majority of incumbent LECs can be 
considered small entities.
    109. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate NAICS Code category is Wired 
Telecommunications Carriers, as defined above. Under that size 
standard, such a business is small if it has 1,500 or fewer employees, 
13 CFR 121.201. U.S. Census data for 2012 indicate that 3,117 firms 
operated during that year. Of that number, 3,083 operated with fewer 
than 1,000 employees. Based on this data, the Commission concludes that 
the majority of Competitive LECS, CAPs, Shared-Tenant Service 
Providers, and Other Local Service Providers, are small entities. 
According to Commission data, 1,442 carriers reported that they were 
engaged in the provision of either competitive local exchange services 
or competitive access provider services. Of these 1,442 carriers, an 
estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers 
have reported that they are Shared-Tenant Service Providers, and all 17 
are estimated to have 1,500 or fewer employees. Also, 72 carriers have 
reported that they are Other Local Service Providers. Of this total, 70 
have 1,500 or fewer employees. Consequently, based on internally 
researched FCC data, the Commission estimates that most providers of 
competitive local exchange service, competitive access providers, 
Shared-Tenant Service Providers, and Other Local Service Providers are 
small entities.
    110. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
Interexchange Carriers. The closest applicable NAICS Code category is 
Wired Telecommunications Carriers. The applicable size standard under 
SBA rules is that such a business is small if it has 1,500 or fewer 
employees, 13 CFR 120.201. U.S. Census Bureau data for 2012 indicate 
that 3,117 firms operated for the entire year. Of that number, 3,083 
operated with fewer than 1,000 employees. According to internally 
developed Commission data, 359 companies reported that their primary 
telecommunications service activity was the provision of interexchange 
services. Of this total, an estimated 317 have 1,500 or fewer 
employees. Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities.
    111. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. The 
Telecommunications Resellers industry comprises establishments engaged 
in purchasing access and network capacity from owners and operators of 
telecommunications networks and reselling wired and wireless 
telecommunications services (except satellite) to businesses and 
households. Establishments in this industry resell telecommunications; 
they do not operate transmission facilities and infrastructure. Mobile 
virtual network operators (MVNOs) are included in this industry. Under 
that size standard, such a business is small if it has 1,500 or fewer 
employees, 13 CFR 121.201. Census data for 2012 show that 1,341 firms 
provided resale services during that year. Of that number, all operated 
with fewer than 1,000 employees. Thus, under this category and the 
associated small business size standard, the majority of these 
resellers can be considered small entities.
    112. Internet Service Providers (Broadband). Broadband internet 
service providers include wired (e.g., cable, DSL) and VoIP service 
providers using their own operated wired telecommunications 
infrastructure fall in the category of Wired Telecommunication 
Carriers. The U.S. Census Bureau defines this industry as 
``establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired communications networks. Transmission facilities may be based on 
a single technology or a combination of technologies. Establishments in 
this industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired telephony 
services, including VoIP services, wired (cable) audio and video 
programming distribution, and wired broadband internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry,'' 13 CFR 120.201. The SBA has developed a 
small business size standard for Wired Telecommunications Carriers, 
which consists of all such companies having 1,500 or fewer employees, 
13 CFR 120.201. U.S. Census Bureau data for 2012 show that there were 
3,117 firms that operated that year. Of this total, 3,083 operated with 
fewer than 1,000 employees. Thus, under this size standard, the 
majority of firms in this industry can be considered small.
    113. Cable Companies and Systems (Rate Regulation). The Commission 
has developed its own small business size standards for the purpose of 
cable rate regulation. Under the Commission's rules, a ``small cable 
company'' is one serving 400,000 or fewer subscribers nationwide, 47 
CFR 76.901(e). Industry data indicate that there are currently 4,600 
active cable systems in the United States. Of this total, all but 
eleven cable operators nationwide are small under the 400,000-
subscriber size standard. In addition, under the Commission's rate 
regulation rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers, 47 CFR 76.901(c). Current Commission records show 
4,600 cable systems nationwide. Of this total, 3,900 cable systems have 
fewer than 15,000 subscribers, and 700 systems have 15,000 or more 
subscribers, based on the same records. Thus, under this standard as 
well, the Commission estimates that most cable systems are small 
entities.
    114. All Other Telecommunications. The ``All Other 
Telecommunications'' category is comprised of establishments primarily 
engaged in providing specialized telecommunications services, such as 
satellite tracking, communications telemetry, and radar station 
operation. This industry also includes establishments primarily engaged 
in providing satellite terminal stations and associated facilities 
connected with one or more terrestrial systems and capable of 
transmitting telecommunications to, and receiving telecommunications 
from, satellite systems. Establishments providing internet services or 
voice over internet protocol (VoIP) services via client-supplied 
telecommunications connections are also included in this industry. The 
SBA has developed a small business size standard for All Other 
Telecommunications, which consists of all such firms with annual 
receipts of $35 million or less, 13 CFR 121.201. For this category, 
U.S. Census Bureau data for 2012 show that there were 1,442 firms that 
operated for the

[[Page 30914]]

entire year. Of those firms, a total of 1,400 had annual receipts less 
than $25 million and 15 firms had annual receipts of $25 million to 
$49,999,999. Thus, the Commission estimates that the majority of ``All 
Other Telecommunications'' firms potentially affected by its action can 
be considered small.
    115. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The Commission proposes to 
detariff and deregulate all Telephone Access Charges nationwide, or in 
the alternative, in areas where specific criteria indicate that rate 
regulation is unnecessary. The affected carriers will need to file 
amendments to their tariffs with the Commission in order to detariff 
their Telephone Access Charges within the proposed transition period. 
The Commission also seeks comment on mandatory detariffing of other 
charges related to federal programs that many carriers currently 
include in their interstate tariffs. Because the Commission also 
proposes to prohibit carriers from including Telephone Access Charges 
as separate line items on customer bills, affected carriers will need 
to make changes to existing billing formats and may need to educate 
their customers. Carriers will likely modify their in-house 
recordkeeping to reflect the changes. The Commission proposes a 
transition to facilitate the detariffing of Telephone Access Charges to 
address potential administrative burdens.
    116. The Commission seeks to ensure certainty in calculating 
contributions to the USF, the interstate Telecommunications Relay 
Service Fund, Local Number Portability Administration, and the North 
American Numbering Plan Administration. The Commission proposes to 
adopt a safe harbor for incumbent and competitive local exchange 
carriers to use as a proxy for the contributions carriers currently 
make based on their actual Telephone Access Charges. The Commission 
proposes to treat 25% of a carrier's local voice services revenue as 
assessable revenue subject to contribution obligations. Alternatively, 
a carrier that does not want to rely on the safe harbor would have the 
option of providing a traffic study demonstrating the actual percentage 
of its local voice traffic that is interstate and international in 
nature and using that percentage to determine its contributions base. 
The Commission also seeks comment on adopting bright-line rules for the 
allocation of interstate and intrastate revenues for all voice 
services--those offered by local exchange carriers, as well as those 
offered by other voice service operators. The Commission seeks comment 
on alternative approaches and on whether the proposed approach will 
ensure that all carriers make equitable contributions. The rules could 
potentially affect recordkeeping and reporting requirements.
    117. The Commission also proposes to amend its rules to provide 
certainty in the amount of CAF BLS and CAF ICC support rate-of-return 
carriers receive following the deregulation and detariffing of 
Telephone Access Charges. The Commission seeks comment on proposals to 
establish fixed levels for future inputs to the CAF BLS and CAF ICC 
calculations, as well as seeking alternatives to the proposals. The 
rules could affect recordkeeping and reporting requirements.
    118. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant alternatives that it has 
considered in reaching its proposed approach, which may include the 
following four alternatives (among others): (1) The establishment of 
differing compliance or reporting requirements or timetables that take 
into account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rules for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities, 5 U.S.C. 603(c)(1)-(4). The Commission expects to consider 
all of these factors when the Commission receives substantive comment 
from the public and potentially affected entities.
    119. The Notice seeks comment on a proposal to deregulate and 
mandatorily detariff Telephone Access Charges nationwide, or in the 
alternative, in certain areas where specific criteria indicate that 
rate regulation is unnecessary. The Commission invites comment on 
whether, and to what extent, the costs of continued regulation of 
Telephone Access Charges imposed on incumbent local exchange carriers 
outweigh the benefits of such regulation. The Commission invites 
commenters to quantify both the costs and the benefits of its proposal 
and of any alternative approaches to detariffing and deregulating the 
pricing of Telephone Access Charges. The Commission also seeks comment 
on detariffing charges related to contributions to the federal USF that 
many carriers currently include in their interstate tariffs and seek 
comment on the costs and benefits of mandatorily detariffing these 
charges.
    120. The Notice also seeks comment on a proposal to prohibit all 
carriers from separately listing Telephone Access Charges on customers' 
bills. The Commission seeks comment on how much time carriers would 
need to modify their existing billing systems to comply with its 
proposed rule changes and how the Commission could minimize burdens, 
particularly for smaller carriers. As an initial proposal, the 
Commission proposes a transition that would permit carriers two 
opportunities, one year apart, to detariff Telephone Access Charges at 
the same time as the annual access tariff filing, thereby eliminating 
the need for any additional tariff filings. The Commission expects that 
these options will allow even the small entities adequate time to amend 
their tariffs and meet most, if not all, existing contractual 
arrangements.
    121. The Notice also proposes to amend the Commission's rules to 
provide certainty in the amount of CAF BLS and CAF ICC support rate-of-
return carriers receive following the deregulation and detariffing of 
Telephone Access Charges. The Commission seeks comment on proposals to 
establish fixed levels for future inputs to the CAF BLS and CAF ICC 
calculations, as well as seeking alternatives to the proposals.
    122. To provide certainty in calculating USF contributions and 
support to ensure stability in funding following the deregulation and 
detariffing of Telephone Access Charges, the Commission proposes to 
adopt a safe harbor for incumbent and competitive local exchange 
carriers to use to determine their assessable revenue from the 
interstate access portion of local service for purposes of determining 
their contribution obligations, but to permit carriers to submit 
traffic studies if they do not want to rely on the safe harbor. The 
Notice seeks comment on this proposal and a few different alternative 
approaches. The Commission also seeks comment on adopting bright-line 
rules for the allocation of interstate and intrastate revenues for all 
voice services and seek comment on all aspects of adopting bright-line 
rules for the allocation of interstate and intrastate revenue for all 
voice services.
    123. The Commission expects to consider the economic impact on 
small entities, as identified in comments filed in response to the 
Notice and this IRFA, in reaching its final conclusions and 
promulgating rules in this proceeding.

[[Page 30915]]

The proposals and questions laid out in the Notice were designed to 
ensure the Commission has a complete understanding of the benefits and 
potential burdens associated with the different actions and methods.
    124. Federal Rules that May Duplicate, Overlap, or Conflict with 
the Proposed Rules. None.

C. Ex Parte Presentations: Permit-But-Disclose

    125. The proceeding that this Notice of Proposed Rulemaking 
initiates shall be treated as a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules, 47 CFR 1.1200 et seq. 
Persons making ex parte presentations must file a copy of any written 
presentation or a memorandum summarizing any oral presentation within 
two business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies).
    126. Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must (1) list all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with section 1.1206(b) of the Commission's rules. 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

V. Ordering Clauses

    127. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 4(i), 10, 201-203, 214, 225, 251, 254, 303(r), 
and 715 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i), 160, 201-203, 214, 225, 251, 254, 303(r), 616, and sections 1.1 
and 1.412 of the Commission's rules, 47 CFR 1.1, 1.412, this Notice of 
Proposed Rulemaking is adopted, effective thirty (30) days after 
publication of a summary thereof in the Federal Register.
    128. It is further ordered that, pursuant to applicable procedures 
set forth in sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 
1.415, 1.419, interested parties may file comments on this Notice of 
Proposed Rulemaking on or before 45 days after publication of a summary 
of this Notice of Proposed Rulemaking in the Federal Register and reply 
comments on or before 75 days after publication of a summary of this 
Notice of Proposed Rulemaking in the Federal Register.
    129. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.

List of Subjects

47 CFR Part 51

    Communications common carriers, Telecommunications,

47 CFR Part 54

    Communications common carriers, Internet, Reporting and 
recordkeeping requirements, Telecommunications, Telephone,

47 CFR Part 61 and 69

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission
Marlene Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR parts 51, 54, 61, 
and 69 as follows:

PART 51--INTERCONNECTION

0
1. The authority citation for part 51 is revised to read as follows:

    Authority: 47 U.S.C. 151-155, 201-205, 207-209, 218, 225-227, 
251-252, 271, 332 unless otherwise noted.

0
2. Amend Sec.  51.915 by revising paragraph (e)(1) and adding paragraph 
(e)(6) to read as follows:


Sec.  51.915   Recovery mechanism for price cap carriers.

* * * * *
    (e) Access Recovery Charge.
    (1) Subject to paragraph (e)(6) of this section and to the caps 
described in paragraph (e)(5) of this section, a charge that is 
expressed in dollars and cents per line per month may be assessed upon 
end users that may be assessed an end user common line charge pursuant 
to Sec.  69.152 of this chapter, to the extent necessary to allow the 
Price Cap Carrier to recover some or all of its Eligible Recovery 
determined pursuant to paragraph (d) of this section. A Price Cap 
Carrier may elect to forgo charging some or all of the Access Recovery 
Charge.
* * * * *
    (6) Price Cap Carrier otherwise entitled to assess an Access 
Recovery Charge may not do so if it is subject to detariffing pursuant 
to Sec.  61.27 of this chapter.
* * * * *
0
3. Amend Sec.  51.917 by:
0
a. Revising paragraph (e)(1),
0
b. Adding paragraph (e)(7),
0
c. Revising paragraphs (f)(2), (4) and (5), and
0
d. Adding paragraph (f)(6).
    The revisions and additions read as follows:


Sec.  51.917   Revenue recovery for Rate-of-Return Carriers.

* * * * *
    (e) Access Recovery Charge.
    (1) Subject to paragraph (e)(7) of this section and to the caps 
described in paragraph (e)(6) of this section, a charge that is 
expressed in dollars and cents per line per month may be assessed upon 
end users that may be assessed a subscriber line charge pursuant to 
Sec.  69.104 of this chapter, to the extent necessary to allow the 
rate-of-return carrier to recover some or all of its Eligible Recovery 
determined pursuant to paragraph (d) of this section. A rate-of-return 
carrier may elect to forgo charging some or all of the Access Recovery 
Charge.
* * * * *
    (7) A rate-of-return carrier otherwise entitled to assess an Access 
Recovery Charge may not do so if it is subject to detariffing pursuant 
to Sec.  61.27 of this chapter.
    (f) Rate-of-return carrier eligibility for CAF ICC Recovery.
    (1) * * *
    (2) Subject to paragraph (f)(6) of this section, beginning July 1, 
2012, a rate-of-return carrier may recover any Eligible Recovery 
allowed by paragraph (d) of this section that it could not have 
recovered through charges assessed pursuant to paragraph (e) of this 
section from CAF ICC Support pursuant to Sec.  54.304. For this 
purpose, the rate-of-return carrier must impute the maximum charges it 
could have assessed under paragraph (e) of this section.

[[Page 30916]]

    (3) * * *
    (4) Subject to paragraph (f)(6) of this section, and except as 
provided in paragraph (f)(5) of this section, a rate-of-return carrier 
must impute an amount equal to the Access Recovery Charge for each 
Consumer Broadband-Only Loop line that receives support pursuant to 
Sec.  54.901 of this chapter, with the imputation applied before CAF-
ICC recovery is determined. The per line per month imputation amount 
shall be equal to the Access Recovery Charge amount prescribed by 
paragraph (e) of this section, consistent with the residential or 
single-line business or multi-line business status of the retail 
customer.
    (5) Subject to paragraph (f)(6) of this section, and 
notwithstanding paragraph (f)(4) of this section, commencing July 1, 
2018 and ending June 30, 2023, the maximum total dollar amount a 
carrier must impute on supported Consumer Broadband-Only Loops is 
limited as follows:
* * * * *
    (6) A rate-of-return carrier subject to detariffing pursuant to 
Sec.  61.27 of this chapter must reduce its Eligible Recovery by:
    (i) An amount equal to the maximum Access Recovery Charge- that 
could have been assessed pursuant to paragraph (e) of this section on 
the day preceding the detariffing multiplied by the projected 
subscriber lines for the period associated with the Eligible Recovery 
calculation, and
    (ii) An amount equal to the maximum per line per month Access 
Recovery Charges calculated under paragraph (f)(4) of this section that 
would have been imputed on Consumer Broadband-Only Loop lines that 
receive support pursuant to Sec.  54.901 of this chapter on the day 
preceding the detariffing multiplied by the projected demand for the 
period associated with the Eligible Recovery calculation, subject to 
the total imputation limit under paragraph (f)(5) of this section.

PART 54--UNIVERSAL SERVICE

0
4. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
229, 254, 303(r), 403, 1004 and 1302, unless otherwise noted.

0
5. Amend Sec.  54.901 by revising paragraph (a) and adding paragraph 
(h) to read as follows:


Sec.  54.901  Calculation of Connect America Fund Broadband Loop 
Support.

    (a) Subject to the requirements of paragraph (h) of this section, 
Connect America Fund Broadband Loop Support (CAF BLS) available to a 
rate-of-return carrier shall equal the Interstate Common Line Revenue 
Requirement per Study Area, plus the Consumer Broadband-Only Revenue 
Requirement per Study Area as calculated in accordance with part 69 of 
this chapter, minus: * * *
* * * * *
    (h) In calculating support pursuant to paragraph (a) of this 
section, if a rate-of-return carrier is subject to detariffing pursuant 
to Sec.  61.27 of this chapter, the values for paragraphs (a)(1) and 
(4) shall be as follows:
    (1) The study area revenues obtained from end user common line 
charges shall be set at $6.50 per line per month for residential and 
single-line business lines and $9.20 per line per month for multi-line 
business lines;
    (2) any line port costs in excess of basic analog service described 
in Sec.  69.130 of this chapter being assessed on [the effective date 
of the order].

PART 61--TARIFFS

0
6. The authority citation for part 61 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 201-205, 403, unless 
otherwise noted.

0
7. Add Sec.  61.27 to read as follows:


Sec.  61.27   Detariffing of interstate end user access charges.

    (a) An incumbent local exchange carrier as defined in Sec.  51.5 of 
this chapter must detariff the charges listed in paragraph (b) on July 
1, [insert year] or July 1, [insert year]
    (b) The charges to be detariffed are:
    (1) Access Recovery Charges as described in Sec. Sec.  51.915(e) 
and 51.917(e) of this chapter;
    (2) End-User Common Line charges as described in Sec. Sec.  69.104 
and 69.152 of this chapter;
    (3) Line port costs in excess of basic analog service as described 
in Sec. Sec.  69.130 and 69.157 of this chapter;
    (4) Special Access Surcharge as described in Sec.  69.115 of this 
chapter; and
    (5) Presubscribed interexchange carrier charge assessed on end 
users as described in Sec.  69.153 of this chapter.
    (c) A competitive local exchange carrier must detariff any 
interstate charge listed in paragraph (b) of this section, or its 
equivalent, on July 1, [insert year] or July [insert year]
    (d) A rate-of-return local exchange carrier participating in a 
National Exchange Carrier Association's interstate access tariff must 
remove its charges listed in paragraph (b) of this section from the 
tariff on the date the detariffing takes place. As of that date, the 
National Exchange Carrier Association may no longer pool any costs or 
revenues associated with detariffed offerings.
    (e) Charges listed in paragraph (b) of this section shall not be 
subject to ex ante pricing regulation once detariffed.

PART 69--ACCESS CHARGES

0
8. The authority citation for part 69 continues to read as follows:

    Authority:  47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, 
403.

0
9. Amend Sec.  69.4 by revising paragraph (a) to read as follows:


Sec.  69.4  Charges to be filed.

    (a) Except as provided in Sec.  61.27 of this chapter, the end user 
charges for access service filed with this Commission shall include 
charges for the End User Common Line element, and for line port costs 
in excess of basic, analog service.
* * * * *
0
10. Amend Sec.  69.5 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  69.5   Persons to be assessed.

    (a) Except as provided in Sec.  61.27 of this chapter, end user 
charges shall be computed and assessed upon public end users, and upon 
providers of public telephones, as defined in this subpart, and as 
provided in subpart B of this part.
* * * * *
    (c) Except as provided in Sec.  61.27 of this chapter, special 
access surcharges shall be assessed upon users of exchange facilities 
that interconnect these facilities with means of interstate or foreign 
telecommunications to the extent that carrier's carrier charges are not 
assessed upon such interconnected usage. As an interim measure pending 
the development of techniques accurately to measure such interconnected 
use and to assess such charges on a reasonable and non-discriminatory 
basis, telephone companies shall assess special access surcharges upon 
the closed ends of private line services and WATS services pursuant to 
the provisions of Sec.  69.115 of this part.
* * * * *
[FR Doc. 2020-09810 Filed 5-20-20; 8:45 am]
 BILLING CODE 6712-01-P