83 FR 31099 - 8YY Access Charge Reform
FEDERAL COMMUNICATIONS COMMISSION Federal Register Volume 83, Issue 128 (July 3, 2018)
Federal Register Volume 83, Issue 128 (July 3, 2018)
| Page Range | 31099-31116 | |
| FR Document | 2018-14150 |
[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)] [Proposed Rules] [Pages 31099-31116] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14150] ======================================================================= ----------------------------------------------------------------------- FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 51 and 61 [WC Docket No. 18-156; FCC 18-76] 8YY Access Charge Reform AGENCY: Federal Communications Commission. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: In this document, the Commission proposes to migrate interstate and intrastate originating end office and tandem switching and transport charges for toll free (8YY) calls to bill-and-keep, continuing the reform efforts that began with the 2011 USF/ICC Transformation Order. The Commission also proposes to cap 8YY database query rates at the lowest rate charged by any price cap local exchange carrier, and to limit charges to one database query charge per call, regardless of the number of carriers are in the call path or the number of database queries conducted. These proposals should limit unreasonably inflated charges and reduce or eliminate incentives for parties to engage in the types of abuse described in the record. DATES: Comments must be submitted on or before September 4, 2018. Reply comments must be submitted on or before October 1, 2018. ADDRESSES: You may submit comments, identified by WC Docket No. 18-156, by any of the following methods:Federal Communications Commission's Website: http://apps.fcc.gov/ecfs//. Follow the instructions for submitting comments. People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by email: [email protected] or phone: 202-418- 0530 or TTY: 888-835-5322. For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document. FOR FURTHER INFORMATION CONTACT: Irina Asoskov, Wireline Competition Bureau, Pricing Policy Division at 202-418-2196 or at [email protected]. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Further Notice of Proposed Rulemaking (FNPRM or Notice), FCC 18-76, released on June 8, 2018. A full-text version of the Further Notice of Proposed Rulemaking may be obtained at the following internet address: https://docs.fcc.gov/public/attachments/fcc-18-76a1.pdf. I. Background 1. AT&T first introduced interstate toll free service, using 800 numbers, in 1967. The defining characteristic of that service, then known as Inward Wide Area Telecommunications Service (WATS), was that such calls were paid for by the company that received the calls and had subscribed to the toll free service. At the time, and for many years after, interstate calling rates were substantial, so the calling party received significant financial benefit from making a toll free call rather than a direct-dialed long distance (or toll) call. Today, by contrast, the prevalence of unlimited minutes plans for both wireless and wireline service and the advent of the internet and other advances in communications have reduced the financial benefit to the calling party of being able to make a telephone call and not pay for the toll portion of the call. 2. Nonetheless, many businesses and consumers continue to find 8YY numbers useful. Demand for 8YY numbers continues to grow. In fact, the Commission recently authorized a new 833 code to supplement the 800, 888, 877, 866, 855, and 844 codes already in use for 8YY calling. The record offers several explanations for the continued demand for 8YY numbers. A toll free number can give a business a national presence and ``project a professional image.'' Toll free numbers can also act as a powerful branding tool, particularly if the subscriber can obtain a vanity number, such as 1-800-FLOWERS, that promotes its business. Many businesses also use toll free numbers to track the effectiveness of their advertising and marketing strategy. These marketing efforts increase the demand for toll free numbers, as businesses need to assign unique numbers to each advertising campaign or even to different segments of the same advertising campaign. 3. The record indicates that 8YY minutes of use appear to be increasing, at least relative to other originating access minutes. As a result, according to some commenters, 8YY calls account for a substantial majority of originating access minutes. We seek comment on parties' experiences regarding demand for 8YY numbers and legitimate minutes of use. We also invite parties to provide additional information regarding the usefulness of 8YY numbers and demand for 8YY services. A. History of Intercarrier Compensation for 8YY Calls 4. Following the breakup of AT&T, the Commission analyzed the treatment of toll free originating and terminating switched access charges for purposes of carrier revenue recovery. In addition to end office rate elements, the Commission allowed LECs to recover a portion of fixed local loop costs through the carrier common line (CCL) charge that LECs were allowed to recover from IXCs. In devising the CCL rate element for toll free calls, the Commission recognized that toll free calls generally ``originated over regular local loops and terminated over a dedicated access line to the 8YY subscriber's premises.'' The Commission referred to the originating end of such calls as the ``open end'' and the terminating end as the ``closed end.'' In the 1986 WATS Order, the Commission placed the bulk of CCL charges on terminating access minutes, [[Page 31100]] allowing carriers to recover the rest of their loop costs through traffic-sensitive charges. The Commission also exempted the ``closed end'' of the call from the CCL charges, based on a finding that the costs of the closed end of a toll free call were covered by special access charges. Exempting the ``closed end'' of 8YY calls from CCL charges, however, meant that ``800 traffic would be exempt from carrier common line charges altogether, despite the fact that it makes use of the public switched network.'' In other words, because LECs recovered the bulk of their loop costs from terminating access charges, and the terminating end of toll free calls was exempt from the CCL charge, LECs were not able to recover from IXCs the loop costs associated with originating 8YY calls. The Commission allowed LECs to recover their loop costs by treating the originating (open) end of interstate 8YY calls as terminating for purposes of assessing the CCL charge. 5. In 1997, the Commission reaffirmed its prior decision that the ``open end'' of an 8YY call should be treated as the terminating end for access charge purposes. The Commission noted that ``an IXC is unable to influence the end user's choice of access provider for originating access services because the end user on the terminating end is paying for the [8YY] call.'' In the early 2000s, the Commission eliminated the CCL charge, but did not specifically address 8YY services. At present, originating carriers receive payments from 8YY providers for originating interstate toll free calls through originating end office, tandem switching and transport, and database query charges. 6. Database query charges. From 1967, when AT&T first introduced toll free service, until late 1986, ``LECs were unable to provide access for 800 service to any IXC other than AT&T.'' In 1986, the Bell Operating Companies (BOCs) and other LECs began offering other IXCs 8YY access through an NXX-based methodology, whereby the first three digits following the 800 prefix of the dialed number were associated with a specific IXC. Toll free subscribers seeking a particular 800 number had to obtain it from the IXC to which the NXX in that number had been assigned and could not change carriers without changing their 800 number. For example, if MCI had been assigned all numbers beginning with 800-468, then someone who wanted to subscribe to 800-468-3927 (800-GO-TEXAS) would have to do business with MCI. In 1989, the BOCs and some other carriers began developing ``common channel signaling networks based on the CCS7 protocol,'' in which their CCS7 networks would be linked with databases containing the 800 service information. The Commission established a separate access element for the database cost recovery. The Commission required LECs to ``develop rates for 800 data base access based only on their data-base-specific costs'' and expressed an expectation that the costs associated with the 800 number database would be ``relatively modest.'' 7. In 1993, the Commission determined that the newly-created 800 database was ``absolutely necessary to the provision of 800 service using the data base access system'' and concluded that access to the database must be provided pursuant to tariff. In contrast to NXX-based routing, which relied on LECs using their central office switches to process 800 calls, the new routing technology required originating LECs to route 8YY calls through a switch equipped with a ``service switching point'' (SSP). The SSP would then ``suspend'' routing of the call until it determined where to send it by transmitting a query over the signaling system 7 (SS7) to a regional service control point (SCP). The SCP would regularly obtain routing information from the central (SMS/ 800) database. Not all end offices of the LECs that owned an SCP were connected to the SCP. 8YY calls from consumers served by end offices that were not connected to an SCP were routed to one of the LEC's tandem switches equipped with an SCP and the call would be processed from there. Those LECs that did not own an SCP could purchase query services from a LEC that did. 8. In a series of orders, the Commission determined that certain costs associated with the provision of 8YY database query services were reasonable and allowed price cap and rate-of-return carriers to include them in their rate calculations. B. Access Charge Reforms Adopted in the USF/ICC Transformation Order 9. In the USF/ICC Transformation Order, the Commission found that, over time, the intercarrier compensation system had become ``riddled with inefficiencies and opportunities for wasteful arbitrage.'' To rid the system of arbitrage schemes that impose ``undue costs on consumers, inefficiently diverting capital away from more productive uses such as broadband deployment'' and to provide incentives to transition telecommunications networks to IP technology, the Commission adopted a national, default bill-and-keep framework as the ultimate end state of all telecommunications traffic exchanged with a LEC. As the first step in implementing that framework, the Commission adopted a multi-year transition to bill-and-keep for many terminating access charges, determined that ``the originating access regime should be reformed,'' and capped most originating access charges, with the exception of intrastate originating access charges of rate-of-return carriers. The cap applied to a wide range of originating access charges, including, but not limited to, database query charges. The Commission also adopted bill-and-keep as the default compensation regime for non-access traffic between LECs and commercial mobile radio service (CMRS) providers, thus bringing that traffic into parity with CMRS-related access traffic, which had long been subject to bill-and-keep. 10. Based on a determination that concerns regarding network inefficiencies, arbitrage, and costly litigation were ``less pressing with respect to originating access'' than with respect to terminating access, the Commission did not adopt any further reforms to originating access charges. In a Further Notice of Proposed Rulemaking that accompanied the USF/ICC Transformation Order, the Commission sought comment on the steps it should take to transition originating access and transport to bill-and-keep, as well as issues related to 8YY traffic. The Commission sought comment on the timing, transition, and possible need for a recovery mechanism for the remaining rate elements. The Commission explained that access charges for originating 8YY traffic have been treated similarly to terminating access charges for non-8YY calls. It sought comment on ``the appropriate treatment of 8YY originated minutes'' and on whether 8YY access reform should be treated differently from originating access reform more generally. Comments regarding these issues were mixed. C. 8YY Routing and Related Access Elements 11. To understand how the current 8YY system allows for arbitrage and fraud, it is necessary to understand the typical wireline call path for, and intercarrier charges associated with, 8YY calls. As described by various commenters, when a wireline customer places a call to an 8YY number, the call is initially carried by the caller's LEC to that carrier's end office switch. At that point, the LEC may conduct the database query from the end office switch to the SCP, where it obtains the routing information. Then the LEC may route the call to a tandem switch which [[Page 31101]] may or may not be owned by the same LEC. If the LEC did not conduct the database query at its end office, then it may conduct the query from a tandem office, or it may rely on a third-party tandem provider to perform the database query. Once the routing information has been obtained, the call is then routed to the IXC--either directly, or through an intermediate provider--and, ultimately, the 8YY customer. 12. Under our current rules, the LEC that originates an 8YY call is entitled to charge the IXC that terminates the 8YY call originating access charges for the specific services provided, which would typically include originating end office switching, database queries, interoffice transport and, often, tandem switching and transport. The amount of access charges an originating LEC receives for such calls is dependent on the applicable switching and transport rates, including the number of miles that are subject to the transport charge, which is billed on a per-minute, per-mile basis. In some cases, the originating LEC and a third-party tandem provider bill the IXC separately, but some intermediate carriers submit one bill for originating and tandem and transport charges to the IXC and subsequently reimburse the originating carrier pursuant to an agreement between the originating LEC and the tandem carrier. Because database queries can originate from either an end office or a tandem office, tandem providers can also charge the IXC for database queries. According to AT&T, it is not unusual for an IXC to be assessed a database dip charge by both the LEC that originates an 8YY call, and by the tandem provider that picks up that call. AT&T claims that database queries account for a significant share-- approximately 19 percent--of the originating access charges it is billed for 8YY calls. 13. Thus, in the case of 8YY traffic, originating carriers involved in the call have incentives to route calls in ways that maximize the compensation they receive--regardless of whether they receive those access revenues directly or indirectly, via shared revenue arrangements. Moreover, the current system encourages bad actors to place fraudulent, or otherwise illegitimate, robocalls with the sole purpose of generating originating access revenues. These inflated charges raise costs for both IXCs and 8YY subscribers, which have no control over the choice of originating and intermediate providers. 14. While we have described the typical call paths for 8YY calls as laid out by commenters in the current record, to further our understanding of the issues, we invite commenters to provide additional information about their experiences with various call paths associated with 8YY calls. D. More Recent Procedural History 15. On September 30, 2016, AT&T filed a petition seeking forbearance from, among other things, rules related to the tariffing of 8YY database query charges. AT&T alleged that ``some LECs are engaged in schemes to overcharge'' for certain originating 8YY traffic and claimed that ``arbitrage schemes are increasingly shifting to 8YY.'' AT&T pointed to a ``wide variation in the tariffed charges'' for 8YY database queries and asserted that the rates it had negotiated in contracts with some providers were generally lower--and more uniform-- than the tariffed rates for those services. 16. Other IXCs echoed many of AT&T's concerns. Verizon argued that ``[t]raffic pumping involving sham 8YY calls already is a serious arbitrage problem'' and Sprint agreed that the charges for 8YY database queries are ``unjustifiably high.'' Even parties that opposed the forbearance petition acknowledged that the variances in 8YY database query charges may create arbitrage opportunities. AT&T withdrew its petition before the Commission reached a decision. 17. Subsequently, on May 19, 2017, the Ad Hoc Telecommunications Users Committee (Ad Hoc) filed an ex parte letter, urging the Commission to require carriers to ``apply the per minute charges for terminating traffic to the originating or `open' end of 8YY calls.'' Ad Hoc asserts that the Commission could reduce or eliminate incentives to use 8YY for arbitrage and access stimulation schemes if it were to treat originating 8YY calls the same as terminating access calls for purposes of intercarrier compensation. 18. In a public notice dated June 29, 2017, the Wireline Competition Bureau invited interested parties to update the record on issues raised by the Commission in the USF/ICC Transformation Order with respect to access charges for 8YY. We incorporate the comments from the June 29, 2017 Public Notice and the FNPRM portion of the USF/ ICC Transformation Order into this record and seek further comment on issues related to 8YY access charge reform, as discussed in greater detail below. II. Alleged Abuses of the 8YY Intercarrier Compensation Regime 19. Parties raise concerns about abuses of the 8YY intercarrier compensation regime. Based on the current record in this proceeding, we propose to revise our rules to change the incentives that are leading to these reported abuses. 20. In the USF/ICC Transformation Order, the Commission acted to ``reduce arbitrage and competitive distortions'' which had occurred over time. However, commenters allege that because the Commission left originating access charges ``largely unreformed and expensive,'' abuses of the intercarrier compensation system with respect to 8YY service have flourished. The record currently includes descriptions of at least four different categories of schemes by which carriers are reported to be exploiting the current regime governing intercarrier compensation for originating 8YY traffic. In the interest of having a robust record, we seek additional comment on the existence, prevalence, and impact of each of these reported schemes and on any other 8YY-related schemes that commenters propose we address. 21. Benchmarking abuse. Currently, pursuant to the competitive LEC benchmarking rule, competitive LECs are permitted to tariff interstate access charges at a level no higher than the tariffed rate for such services offered by the incumbent LEC serving the same geographic area. Commenters complain that some competitive LECs aggregate 8YY traffic from originating LECs and instead of ``benchmark[ing] its originating tandem switched transport rates to the rates tariffed by the incumbent LEC in the area where the call originated, the CLEC bills the higher rates tariffed by the incumbent LEC in the area where the call is handed off to the IXC.'' We seek comment on this practice and on whether it is a legitimate practice or an improper attempt to exploit a loophole in the Commission's rules. Are there examples of other forms of potential benchmarking abuse in addition to the one we describe here? How prevalent is benchmarking abuse? How much does it cost individual IXCs or 8YY subscribers in additional access charges? Are there legitimate reasons a LEC would choose to hand off 8YY traffic in an area other than where the call originated? 22. Mileage pumping. Because originating carriers charge IXCs for transport on a per-minute, per-mile basis, the farther they transport the originating traffic, the greater the compensation they receive from the IXC serving the 8YY subscriber. As a result, originating carriers have an incentive to artificially inflate their mileage in order to maximize the transport rates they charge to the IXC, particularly if [[Page 31102]] transport rates are materially higher than transport costs, as some commenters' filings suggest. In fact, AT&T alleges that carriers engage in ``mileage pumping'' schemes, in which ``a CLEC tariffs a per-mile charge for transport and then either (i) bills the IXC for transport it does not actually provide . . . or (ii) inefficiently routes traffic long distances--sometimes more than a hundred miles--to inflate the number of miles applied to the per-mile transport charge.'' We seek comment on this practice. Are there other examples of mileage pumping schemes that differ from the ones described by AT&T? If so, please describe them. How prevalent are mileage pumping schemes? How much do they cost 8YY providers or subscribers in inflated charges? Are there legitimate reasons a carrier would haul traffic 100 miles or more before handing it off to an IXC? 23. Traffic pumping. There is also evidence in the record that companies are using traffic pumping schemes to exploit inflated access rates. As described by commenters, in these schemes, a traffic pumper enters into a revenue sharing agreement with a LEC and subsequently uses automated software to place illegitimate calls to 8YY numbers. These calls often use auto dialers or ``robocallers'' to target Interactive Voice Response (IVR) systems and use varying means to keep the IVR engaged, preventing the call from ending. The LEC then bills the IXC for the calls--including the artificially inflated minutes of use--and shares the proceeds with the traffic pumper. These ``[a]nnoying and disruptive 8YY calls'' waste the targeted businesses' resources and ``devalue [providers'] 8YY products.'' We seek comment on this practice. How prevalent are traffic pumping schemes involving toll free calls? Are there examples of 8YY traffic pumping schemes that differ materially from those already described in the record? We encourage parties to quantify the costs these schemes impose on 8YY providers and subscribers. 24. Database queries. As the least regulated rate element of the 8YY traffic flow, database queries also appear to have been the subject of abuse. Commenters point out substantial variance in database charges and contend that query charges are excessive and unrelated to actual costs. For example, AT&T provides numerous examples of database query charges, ranging from as low as $0.0015 to as high as $0.015. IXCs also claim that there are times when they are billed for multiple queries on a single call. We invite commenters to provide information about the actual cost of a database query to a LEC compared to the amount IXCs are being assessed for the database dips. We also seek comment on the impact on IXCs and their customers of paying these database charges. Are there ways for IXCs to determine whether a call has been ``dipped'' more than once? Is there any legitimate reason for a call to be subjected to multiple dips? 25. Other abuses. We also seek comment on whether there are any other abuses related to 8YY access charges that are not described above. If so, what are they? What impact do any other 8YY-related abuses have on carriers and on 8YY subscribers? To the extent that commenters identify other abuses of the 8YY system, we seek comment on whether our proposed reforms would sufficiently address those abuses. If not, what additional measures would we need to take to eliminate those abuses? III. Addressing Alleged Abuses of the 8YY Intercarrier Compensation Regime 26. To address abuses of the current 8YY intercarrier compensation system, we propose to move, over time, all originating interstate and intrastate end office and tandem switching and transport charges related to 8YY calls to bill-and-keep. To avoid a flash cut to bill- and-keep for originating 8YY access charges, we propose a three-year transition period. We propose to allow originating carriers to recover their costs primarily through end-user charges, though we invite comment on allowing some recovery through Connect America Fund (CAF) support. We also propose to cap 8YY database query rates nationwide and to prohibit carriers from assessing more than one database query charge per call, even if more than one carrier handles the call before it is handed off to an IXC. Additionally, we seek comment on other issues related to 8YY traffic, including alternative approaches to address abuses related to 8YY calls. A. Moving 8YY Originating End Office and Tandem Switching and Transport Charges to Bill-and-Keep 27. Consistent with the bill-and-keep framework the Commission adopted as ``a default framework and end state for all intercarrier compensation traffic,'' we propose moving all interstate and intrastate originating access charges related to 8YY calls to bill-and-keep, except for database query charges. We seek comment on this proposal. We also seek comment on an alternative approach that would transition all originating interstate and intrastate end office 8YY access charges to bill-and-keep but move 8YY tandem switching and transport to bill-and- keep only where the originating carrier also owns the tandem. 1. Moving Most Elements of Originating 8YY Access Charges to Bill-and- Keep Should Curtail Abuses of 8YY Calls 28. The current record shows that toll free subscribers are burdened by unpredictable and uncontrollable call volumes and associated charges for calls to their 8YY numbers. With the proliferation of unlawful robocalls, the volume of traffic routed to 8YY numbers no longer depends on the ``promotional efforts'' of the 8YY subscriber. Indeed, just the opposite is true--fraudulent calls are only ``controllable from the originating point.'' And there is significant evidence that some carriers are exploiting loopholes in the current intercarrier compensation system to inflate their bills to IXCs that serve 8YY customers. The intercarrier compensation system needs to adapt to this new reality. 29. Accordingly, in an effort to combat the abuses that appear to plague the existing 8YY regime, we propose to move interstate and intrastate originating 8YY end office, tandem switching and transport access charges to bill-and-keep. Consistent with the USF/ICC Transformation Order, we propose to allow carriers to negotiate private agreements that depart from bill-and-keep, but not permit carriers to tariff any originating end office or tandem switching and transport charges related to 8YY traffic. We seek comment on this approach. Are there any obstacles that would prevent carriers from moving to bill- and-keep for these charges? Would our proposal adequately address the problems currently plaguing the 8YY industry? As explained below, we expect our proposed changes to have numerous benefits, including: Removing incentives for abuse, reducing costs for consumers, potentially lowering rates or improving service for 8YY subscribers, encouraging the transition to IP services, and reducing the number of disputes over intercarrier compensation. 30. The basic logic underpinning our proposal is that each carrier should be responsible for the costs of the parts of the call path which it has discretion to choose. Should we adopt any exceptions to the proposal? For example, are there instances where an IXC, or some other party, may require the originating LEC to route traffic through a specific tandem? If so, should the originating LEC be allowed to charge the IXC for the costs it incurs in using that tandem? If the originating LEC routes 8YY traffic over a tandem that it does not own, how should the [[Page 31103]] originating LEC and the tandem owner recover their respective costs? Should the originating LEC be required to pay the tandem owner for the use of the tandem and recover those costs from its own end users? Are there situations where such an arrangement would not be just and reasonable? 31. Curtailing abuses. We seek comment on the extent to which our proposals will curtail 8YY abuses. In the USF/ICC Transformation Order, the Commission found that, over time, bill-and-keep will ``eliminate wasteful arbitrage schemes and other behaviors designed to take advantage of or avoid above-cost interconnection rates.'' The Commission's prediction has proven accurate, as filings submitted in this proceeding indicate that the transition to bill-and-keep has reduced fraud and abuse related to terminating traffic. However, the reforms adopted in the USF/ICC Transformation Order did not address 8YY traffic, and the record in this proceeding shows an increase in certain types of abuses ``designed to take advantage'' of the intercarrier compensation system, such as the inefficient routing of 8YY calls. 32. In light of the positive outcome of bill-and-keep for terminating traffic, we expect that our proposed reforms to 8YY originating access charges will eliminate abuses--including benchmarking, mileage pumping, and traffic pumping schemes--related to 8YY calls. All of these schemes arise from carriers' ability to bill IXCs inflated access charges relating to 8YY traffic. Moving the access elements associated with these abuses to bill-and-keep should eliminate any ability to profit from these activities. We expect the proposed reforms will provide originating carriers with the incentive to be as efficient and cost-effective as possible in routing 8YY traffic. We seek comment on this expectation. 33. Based on the current record in this proceeding, we propose to revise our rules to change the incentives that are leading to abuses of the intercarrier compensation system for 8YY. We seek comment on each of these alleged abuses, including mileage pumping, traffic pumping, benchmarking abuse, and excessive and unnecessary database dips. How should our rules be modified to curb such abuses? Will moving originating end office and tandem switching and transport rates for 8YY calls to bill-and-keep discourage carriers from engaging in traffic or mileage pumping? We seek comment on any costs and burdens on small entities associated with the proposed rules, including data quantifying the extent of those costs or burdens. 34. At least one competitive LEC that offers toll free services to businesses and also provides originating 8YY services opposes proposals to move originating access charges to bill-and-keep. This carrier asserts that fraudulent toll free calls should be addressed on a case- by-case basis through inter-carrier cooperation and by the Commission's Enforcement Bureau and the Federal Bureau of Investigation. This carrier's contracts require its customers to adopt anti-fraud measures and provide remedies against customers that are suspected of engaging in unlawful activity. Do other carriers use similar contract provisions? How effective are they? What efforts do carriers or their customers make to identify illegitimate 8YY calls? How effective are those efforts? What security mechanisms do wholesalers or traffic aggregators employ to screen incoming calls? What obstacles do carriers or 8YY subscribers face in distinguishing illegitimate traffic from legitimate traffic? We seek comment on these and other issues related to the alternative approach of addressing unlawful toll free calls on a case-by-case basis. a. Benefits to Consumers 35. We seek comment on the extent to which our proposals will benefit consumers. In the USF/ICC Transformation Order, the Commission concluded that the intercarrier compensation regime distorted competition because carriers shifted their network costs onto other carriers and, as a result, consumers could not identify and switch to more efficient providers. At the same time, the Commission observed that ``because the calling party chooses the access provider but does not pay for the toll call, it has no incentive to select a provider with lower originating access rates.'' In the 8YY industry, consumers who call 8YY telephone numbers are not charged directly for the calls, do not know what their originating carrier is charging for routing their 8YY call and, therefore, cannot exercise effective consumer choice. Yet, inefficiencies and abuses of the intercarrier compensation system result in higher prices to 8YY subscribers, who must recover their costs from their customers--a group that likely includes originating 8YY callers. Thus, in the end, consumers indirectly subsidize inefficiencies and abuses of the 8YY intercarrier compensation system. 36. In the USF/ICC Transformation Order, the Commission reviewed economic evidence and concluded that, upon transitioning to bill-and- keep, ``carriers will reduce consumers' effective price of calling, through reduced charges and/or improved service quality.'' The Commission further predicted that these ``reduced quality-adjusted prices will lead to substantial savings on calls made, and to increased calling.'' This prediction appears to have proven true. For example, while there are several factors that may explain increased calling, significant growth has occurred in wireless subscribership since the Commission moved all CMRS traffic to bill-and-keep. 37. We recognize that consumers appear to find toll free calling an attractive way to reach certain businesses and do not expect that to change if we move originating access charges for 8YY calls to bill-and- keep. Given that the Commission has already moved wireless calls-- including 8YY calls from wireless numbers--to bill-and-keep, consumers' use of wireless services may be instructive in helping predict the effects our proposed changes will have on consumers' use of toll free services. Are there any lessons we can learn from the effect bill-and- keep has had on wireless 8YY calls? We seek data on whether wireless 8YY originating calls have increased or decreased over the past five years. Do consumers make fewer toll free calls from wireless phones than they do from wireline phones? Has the number of 8YY calls decreased as more people have switched to wireless phones as their primary method of telecommunications? 38. We expect that transitioning 8YY calls to bill-and-keep will ultimately benefit consumers. We invite comment on this view and welcome commenters to provide economic analysis and data in support of their views. b. Benefits to 8YY Subscribers 39. We seek comment on the extent to which our proposals will benefit 8YY subscribers. Because incentives in the 8YY industry are misaligned (8YY subscribers are paying originating carriers that they did not select), 8YY subscribers are likely paying higher rates than they otherwise would, even for legitimate 8YY traffic. We anticipate that, by correctly aligning carriers' incentives and pricing signals, bill-and-keep will lead to increased competition and ``reduced quality- adjusted prices'' for 8YY subscribers. In addition, we predict that moving to bill-and-keep will prompt ``carriers [to] engage in substantial innovation to attract and retain'' customers. 40. We seek comment on these expectations and predictions. Are our proposed changes to the 8YY access charge regime likely to result in lower [[Page 31104]] rates for 8YY subscribers? Will our proposed changes lead to more competition and innovation? In the USF/ICC Transformation Order, the Commission estimated that ``incumbent LECs will, on average, pass through at least 50 percent of ICC savings to end users, while CMRS providers and competitive LECs will pass through at least 75 percent of these savings.'' Should we expect similar passthrough levels by 8YY providers? Are there effects that resulted from the Commission's actions in the USF/ICC Transformation Order that might be instructive here? c. Encouraging the Transition to All-IP Services 41. We seek comment on the extent to which our proposals will encourage the transition to all-IP services. We are concerned that the current compensation regime creates disincentives for carriers to transition to IP. For example, AT&T claims that ``CLECs engaged in arbitrage are resisting agreements to exchange traffic in IP format because they are reluctant to relinquish high access revenues from originating 8YY traffic that would go to bill-and-keep under an IP arrangement.'' Are other parties having similar experiences? Do other parties share AT&T's concerns that the current intercarrier compensation system is impeding the transition to all-IP services? 42. There is no obvious justification for using tandem switches in an IP environment. As a result, carriers might be reluctant to transition to IP-based services because of concerns about lost intercarrier compensation revenues. We seek comment on this issue. Are there carriers that are reluctant to move to IP-based interconnection due to concerns about losing intercarrier compensation revenues? Will moving originating 8YY access charges--particularly tandem switching and transport charges--to bill-and-keep expedite the transition to IP services? Will it discipline prices? Will it improve network efficiency? d. Reducing Intercarrier Compensation Disputes 43. We seek comment on the extent to which our proposals will reduce intercarrier compensation disputes. The Commission found in the USF/ICC Transformation Order that ``bill-and-keep will . . . reduce ongoing call monitoring, intercarrier billing disputes, and contract enforcement efforts.'' Similarly, we expect that by eliminating the incentives to abuse the intercarrier compensation system for 8YY traffic, our proposed reforms will allow carriers to reduce the resources they currently dedicate to monitoring their 8YY call traffic and disputing 8YY invoices. 44. We invite comment on these expectations. What would be the monetary impact of such savings? Is there any reason that our proposed reforms would not reduce intercarrier disputes related to 8YY calls? Are there any other benefits that are likely to arise from moving most 8YY intercarrier compensation charges to bill-and-keep, in addition to the ones already discussed in this Notice? 2. Alternative Proposal 45. We recognize that our proposal to move all tandem switching and transport to bill-and-keep is a departure from the approach the Commission took in reforming terminating access charges. In the USF/ICC Transformation Order, the Commission adopted bill-and-keep for terminating tandem switching and transport only where the terminating price cap carrier owns the tandem. Accordingly, we invite comment on an alternative proposal to transition all originating interstate and intrastate end office 8YY access charges to bill-and-keep, but to move 8YY tandem switching and transport to bill-and-keep only where the originating carrier also owns the tandem. Under this approach, we propose to cap the mileage that carriers can charge for tandem switching and transport based on the number of miles between the originating end office and the nearest tandem in the same local access and transport area (LATA). As part of this alternative approach, we also propose to cap tandem switching and transport rates based on the rates charged by the incumbent LEC serving the LATA in which the call originates, without regard to the rates charged by the incumbent LEC serving the area where the tandem is located. 46. We seek comment on whether this alternative proposal would adequately address abuses in the 8YY marketplace, including benchmarking abuse and mileage pumping. If we adopt this approach, what are the relative benefits compared to our proposed framework for transitioning all tandem switching and transport elements of originating toll free traffic to bill-and-keep? For example, under this alternative approach, would there be less need for revenue recovery? How would common ownership of the end office and tandem be determined? Should we determine ownership at the holding company level? Is there any reason that an originating LEC should not be deemed to ``own'' a tandem that is owned or operated by an affiliate of the originating LEC? Finally, we seek comment on the drawbacks of this alternative proposal, particularly relative to our proposal to adopt bill-and-keep as the default methodology for all 8YY originating access charges, without regard to who owns the tandem. B. Providing a Transition Period 47. We propose to provide a three-year transition period for moving originating end office and tandem switching and transport access charges for 8YY calls to bill-and-keep. In proposing this transition, we acknowledge concerns that a ``flash cut'' to bill-and-keep might be ``hugely disruptive for originating access providers and . . . could prompt `financial distress.' '' Adopting a glide path will allow providers to evaluate their cost recovery options and make any appropriate changes to their end-user rates to offset the loss of 8YY access payments. 48. A three-year transition period would be consistent with the Commission's decision, in the USF/ICC Transformation Order, to adopt a glide path to a bill-and-keep methodology for many terminating access charges. That decision was prompted by a desire to ``provide industry with certainty and sufficient time to adapt to a changed regulatory landscape.'' As the Commission explained, ``adopting a gradual glide path to a bill-and-keep methodology for intercarrier compensation generally . . . will help avoid market disruption to service providers and consumers'' and ``moderate potential adverse effects on consumers and carriers of moving too quickly.'' 49. We propose a three-step transition process that corresponds with the process for filing annual access tariffs, to become effective on July 1 of every year. Each step will last one year and apply to all LECs that tariff rates related to originating 8YY calls. The rules will apply directly to incumbent LECs, including both rate-of-return carriers and price cap LECs, and will apply to competitive LECs through the continuing application of the existing benchmarking rule. At the first step, to become effective on July 1 of the base year, we propose to require carriers to reduce all interstate and intrastate originating end office and tandem switching and transport tariffed rates for 8YY calls by one-third. At the second step, one year later, we propose to require carriers to further reduce their originating end office and tandem switching and transport rates for 8YY calls by an additional one-third. At the third and final step, two years after the base year filing, we propose to require [[Page 31105]] carriers to move their tariffed rates for originating 8YY end office and tandem switching and transport to bill-and-keep. We seek comment on this proposal. 50. Do commenters have concerns about the adoption of a transition period? Should we adopt different transition periods for originating end office access charges and for tandem switching and transport charges? If so, why and what should they be? Will our proposed transition adequately address concerns about problems associated with a flash cut? Conversely, would a shorter transition of 8YY traffic to bill-and-keep help speed the transition to IP services? Would the proposed transition impact some carriers differently than others? Are there any other aspects of 8YY traffic flow that we should address when we consider a transition period? We also seek comment on our proposed rules for effectuating this proposal. Do the proposed rules provide sufficient guidance for implementing our proposed transition period? Are there additional issues that we should address in the proposed rules to avoid confusion during implementation? 51. Consistent with the rules the Commission adopted to implement the transition to bill-and-keep for terminating end office access services in the USF/ICC Transformation Order, we propose to require carriers to first convert their originating 8YY access charges to single composite per-minute rates for each of the four categories of services being transitioned (interstate originating end office access, intrastate originating end office access, interstate originating tandem switched transport access, and intrastate originating tandem switched transport access). Our proposed rules require LECs to calculate their baseline rates--which will be the starting point for the rate reductions described above--by dividing their baseline revenues from a particular category of access charges (e.g., interstate originating end office access charges for toll free calls) by the corresponding minutes of use for that category. We seek comment on this proposed approach. What lessons can be learned from implementation of the transition to bill-and-keep for terminating end office access services that we should apply here? Would this approach be reasonably straightforward to implement? Are there potential gaming or other implementation concerns about which we should be concerned? 52. In the alternative, should we require LECs to reduce all rate elements for originating end office and tandem switching and transport for toll free calls by one-third the first year, by an additional one- third the second year, and to bill-and-keep the third year? Would such an approach be simpler for carriers to implement from a tariffing and billing perspective? Does it make any difference to the carriers paying these access charges whether the transition involves composite rates? What are the advantages and disadvantages to one approach as compared to the other? Are there potential gaming or other implementation concerns about which we should be concerned if we adopt this three-year transition approach? 53. Unlike the rules the Commission adopted in the Transformation Order, our proposed rules do not specifically address the treatment of fixed charges (e.g., non-recurring charges and some monthly recurring charges, such as those billed on a per-DS1 or per-DS3 basis). We seek comment on whether we should address such charges in connection with toll free calls by, for example, requiring LECs to allocate their fixed charges between 8YY and non-8YY calls. Or, should we bring per-minute charges related to originating toll free calls to bill-and-keep but defer action on fixed charges until we address originating access charges more broadly outside of the toll free context? Does the answer to this question depend on whether we require LECs to adopt composite rates as part of the transition of 8YY originating access charges to bill-and-keep? 54. If we decide to include fixed charges as part of our reforms of originating access charges for 8YY calls, should we dictate a specific methodology for allocating such charges between toll free and other originating traffic? If so, how should the rules allocate fixed charges between 8YY and non-8YY calls? In the USF/ICC Transformation Order, the Commission directed carriers to allocate fifty percent of their fixed charges to terminating access and fifty percent to originating access. Should we take a similar approach here and direct LECs to allocate half of their fixed charges for originating access to toll free traffic? Or should a greater percentage of fixed charges be allocated to toll free originating traffic, particularly given that filings in the record suggest that toll free calls account for significantly more than half of all originating access minutes billed to IXCs? In the alternative, should we allow LECs to allocate based on their particular traffic data, but establish a default allocation for carriers that lack sufficient information regarding their traffic data? If we establish a default allocation, should the percentage be fifty percent allocated to 8YY calls? Or should the percentage be different? 55. In the USF/ICC Transformation Order, the Commission modified the CLEC benchmarking rule and adopted ``a limited allowance of additional time to make tariff filings during the transition period'' in order ``to ensure smooth operation of our transition'' to bill-and- keep. We seek comment on whether a similar allowance is warranted here. For example, should we allow competitive LECs that benchmark their originating 8YY access charges to a competing incumbent LEC an additional 15 days from the effective date of the tariff to which a competitive LEC is benchmarking to make its modified tariff filing? Would such an allowance be necessary if we adopted our alternative proposal and required LECs to reduce their individual rate elements for toll free calls rather than converting their existing charges to composite per-minute rates? If all LECs were required to reduce their originating access rates for 8YY calls by the same proportions, would it be necessary to give competitive LECs additional time after incumbent LECs file their tariffs to come into compliance with the proposed reductions? We invite comments on these issues, as well as any other suggested modifications to the application of the CLEC benchmarking rule during the transition period, based on lessons learned during the transition to bill-and-keep for terminating access charges. 56. We seek comment on any costs and burdens on small entities associated with the proposed rule, including data quantifying the extent of those costs or burdens. We also invite suggested modifications to the proposed transition. Are there other issues we should consider? Are there lessons learned during the transition to bill-and-keep for terminating access charges that should inform our approach here? Any alternative approaches should also be supported by data and other evidence showing their relative advantages and disadvantages. We welcome specific comments on the language and the potential impact of the proposed rules accompanying this item. C. Revenue Recovery 57. Some commenters express concerns about the financial impact of moving 8YY calls to bill-and-keep and argue that some carriers may need a source of revenue recovery to mitigate the impact of lost access revenues. Other commenters express concern that moving originating access for 8YY calls to bill-and-keep might deter consumers [[Page 31106]] from making toll free calls. The latter concerns appear to be based on an assumption that carriers will directly bill consumers for originating 8YY access on a per-call or per-minute basis. We do not propose that carriers should recover any lost revenue through 8YY- specific charges, whether billed per-call, per-minute, or on a flat- rated monthly basis. Such an approach would be inconsistent with the way most customers are billed for voice services today (e.g., flat- rated, unlimited calling plans). We seek comment on whether there are additional steps we should take to address concerns that our proposed reforms might discourage legitimate 8YY calls. 58. In the USF/ICC Transformation Order, the Commission adopted a transitional recovery mechanism to partially mitigate revenue reductions incumbent LECs would experience because of these intercarrier compensation reform measures. The recovery mechanism had two basic components. First, the Commission defined the revenue incumbent LECs were eligible to recover--referred to as ``Eligible Recovery.'' The Eligible Recovery calculation was different for price cap carriers and rate-of-return carriers, with the rate-of-return calculation based on a more complex formula, which included such carriers' 2011 interstate switched access revenue requirement. Second, the Commission specified that incumbent LECs may recover Eligible Recovery through limited end-user charges, and, where eligible, and a carrier elects to receive it, support from the CAF. The recovery mechanism differed between price cap carriers and rate-of-return carriers, with CAF ICC support for price cap carriers eventually phasing out, but no similar sunset for rate-of return carriers. The Commission declined to permit competitive LECs to participate in the recovery mechanism, explaining that, because competitive LECs lack market power for the provision of these services, they were free to recover reduced access revenue through regular end-user charges. 59. More recently, in the Technology Transitions Order, the Commission concluded that incumbent LECs, like competitive LECs, are ``non-dominant in their provision of interstate switched access services.'' Accordingly, incumbent LECs, like competitive LECs, should be able to recover revenues they may lose as a result of our proposals directly from their end users, subject only to the discipline of the market. This is similar to the approach the Commission took with competitive LECs in the USF/ICC Transformation Order, and to the approach the Commission adopted with CMRS providers. When those providers were transitioned to bill-and-keep, the Commission did not provide any revenue recovery mechanisms. Instead, the Commission relied on the competitive market to determine whether, and how much, those providers could increase their rates to recover any revenues lost due to the transition to bill-and-keep. 60. We seek comment on whether incumbent LECs, like competitive LECs, should be able to recover their lost access charge revenues from their end users. Should the market determine whether any rate increases are reasonable? Is there any reason consumers would not be able to switch providers--for example, moving from a wireline LEC to a wireless provider--if their existing carrier charges too much for its services? Is there any reason LECs cannot adjust their end-user rates to recover revenues they may lose due to our proposed changes to the intercarrier compensation regime for originating 8YY calls? Should we provide any additional revenue recovery? For example, should we allow incumbent LECs to recover lost revenue through mechanisms, such as the Access Recovery Charge (ARC)? Why would carriers need to rely on ARCs if they are nondominant in the provision of the originating switched access services at issue here? If we allow carriers to recover lost revenues through ARCs, would we need to raise the Residential Rate Ceiling, which currently prohibits providers from imposing an ARC on any consumer paying an inclusive local monthly phone rate of $30 or more, in order to allow sufficient revenue recovery? Would we need to increase the existing cap on ARCs? Are there other issues to consider if we allow price cap carriers and competitive LECs to rely on increased ARCs? Are there any regulatory barriers that might impede incumbent LECs' ability to recover a reasonable amount of lost revenue from their end users? Are there any state or local regulations that would prevent LECs from raising their end-user rates to recover reasonable lost revenues related to intrastate 8YY calls? 61. We also propose to exclude from any recovery mechanism revenues generated by illegitimate or unlawful 8YY calls, such as those involving autodialed calls to toll free numbers, because it would be unreasonable for a LEC to rely on access revenues generated by such calls. We seek comment on this issue. We also seek comment on how we should determine which portion of originating carriers' 8YY revenues are legitimate for purposes of establishing the need for revenue recovery. Do we need to make any determinations regarding what revenues LECs should reasonably be allowed to recover from their end users, or can we rely on the competitive market to discipline carriers' switched access rates? 62. Rate-of-return carriers. While we propose to allow rate-of- return carriers to recover their legitimate 8YY costs through reasonable increases in end-user rates--though not through new line items--we recognize that many rate-of-return carriers, particularly those serving rural areas, already require CAF ICC support to keep end- user rates at acceptable levels. We seek detailed comment on the effect transitioning originating 8YY charges to bill-and-keep will have on rural and high-cost areas. Would rate-of-return carriers be disproportionately affected compared to price cap and competitive LECs? For example, for rate-of-return carriers, what proportion of originating access revenues are attributable to 8YY calls? Does this proportion differ significantly from that of price cap carriers? What effect would our existing rate-averaging and rate-integration rules have on our proposed reforms? We seek comment on the need for originating LECs to replace the revenues they currently obtain from 8YY calls. We urge commenters, whenever possible, to provide quantifiable data or evidence supporting their views. 63. We also seek comment on whether we should provide rate-of- return carriers additional CAF ICC support to help cover the costs of originating 8YY access or to replace some or all of the revenue such carriers currently earn from originating access on legitimate 8YY calls. Would using CAF ICC support in this manner comport with the Commission's mandate under section 254 to advance universal service through ``specific, predictable and sufficient'' mechanisms? D. Limiting Database Query Charges 1. Adopting a Uniform Cap 64. According to at least one commenter, database query charges comprise a significant proportion of the charges IXCs currently pay to originating LECs for 8YY calls. From the originating carrier's perspective, the database query is a cost a LEC must incur in order to route an 8YY call to the proper IXC, either by maintaining its own SCP database or by paying a third-party SCP for the database query. 65. Nonetheless, we recognize the need to rein in any unreasonable [[Page 31107]] charges for database queries. IXCs point out that 8YY database query rates vary widely among carriers and are typically untethered from the costs incurred in querying a database. We propose to address concerns about excessive and irrationally priced rates for database query charges by capping those charges nationwide at the lowest rate currently charged by any price cap LEC. We also propose to allow only one database query charge per 8YY call. 66. We invite comment on these proposals. In this item, we do not propose to move database query charges to bill-and-keep. Are there reasons that we should consider doing so immediately? Should we revisit that question after a set period of time? Are there harms that might arise if we moved other elements of originating access for 8YY to bill- and-keep, before we moved database query charges to bill-and-keep? We also seek comment on alternative methods of ensuring that database dip charges are just and reasonable. 67. Is the proposed cap on database query charges reasonable? Should we adopt a transition period for carriers to lower their rates to the proposed cap? If so, how should we structure such a transition period? Should we adopt a firm cap, as we propose, or should we establish a rebuttable presumption that rates above a certain threshold are presumptively unjust and unreasonable? Should we provide a specific waiver process for carriers that can demonstrate that their costs for database queries exceed the national cap? Should we build in automatic reductions to the permissible data base query charge to account for improvements in technology? If so, what amounts and over what timeframe? Conversely, should we allow adjustments to any rate caps to account for inflation? Does this proposal create the proper incentives for carriers to minimize access costs and route 8YY traffic as efficiently as possible? We also seek comment on any costs and burdens on small entities associated with this proposal, including data quantifying the extent of those costs or burdens. 2. Determining the Appropriate Cap 68. AT&T alleges that query rates currently range from $0.0015 to $0.015 per query, and that rates can vary widely even among corporate affiliates. We seek comment and additional data on the variability of 8YY database query rates. Do the rate examples provided by AT&T accurately reflect carriers' rates for database queries? We recognize that the rates were capped at their then-current levels by the adoption of the USF/ICC Transformation Order, but we seek comment on the underlying reason for the extreme variability in rates for database queries. Are these rates reflective of the costs carriers incur in providing database dip services? Do querying costs vary by geographic region? Do query rates (or costs) vary by the type of customer? How do incumbent LECs set their database query rates? What impact have high database query rates had on IXCs and 8YY subscribers? 69. Evidence provided by AT&T indicates that the lowest rate currently charged by a price cap LEC is $0.0015 per query, charged by CenturyTel. Is this correct? If so, is there any reason this rate should not serve as a nationwide cap for all 8YY database query charges? Are rates above $0.0015 per query unjust and unreasonable? Is there any reason to believe this rate is below the cost of querying the database? Inteliquent observes that, [r]ate structures between incumbent local exchange carriers trade off non-recurring setup charges, monthly recurring interconnect charges, 8YY query charge, per minute of use switching charges, and per minute per mile transport charges. For example, although some carriers charge a materially higher non-recurring set up charge or monthly recurring interconnect charge, those higher rates typically are offset by a lower per minute of use switching charge. Similarly, the 8YY DIP query charge may be high because the switched per minute of use charge is low, and vice versa. 70. Is this a correct representation of how LECs allocate their charges? Is there any reason to believe that CenturyTel's rate of $0.0015 is artificially low because CenturyTel allocates some database dip costs to other originating charges? Should we consider a cap based on the average or median rates currently charged by LECs? 71. What infrastructure is necessary to conduct a database query? How expensive is it to become an SCP owner/operator? How many SCP owner/operators are there? Is the market for database queries competitive? We encourage commenters to provide detailed information about the rates SCP's charge for database dips, the costs LECs incur in connecting to SCPs, and any other costs associated with database queries. Are there economies of scale associated with database dips? 72. We understand that Somos is offering a new product--RouteLink, which ``provides direct access to authoritative Toll-Free data,'' thus eliminating any need for an SCP intermediary. How many carriers, Responsible Organizations (``RespOrgs''), or other entities use Somos's RouteLink? What advantages does RouteLink provide compared to other ways to connect to Somos's database? What effect, if any, does the introduction of RouteLink have on what constitutes a reasonable rate for database queries? 3. One Dip per Call 73. Regarding our proposal to limit carriers to one database query charge per call, we recognize that the Commission has previously declined to impose such a requirement on LECs. Instead, the Commission deferred the matter to an industry association, the Ordering and Billing Forum of the Exchange Carrier Standards Association. Did this Association take any action on database query charges? Should the Commission act now, given the current concerns about carriers billing IXCs for more than one query per call? Specifically, we seek comment on whether billing for more than one query charge per 8YY call is an unjust and unreasonable practice, even if the duplicative queries are performed by different carriers in the call chain. Is there any legitimate reason that an IXC should reasonably be expected to pay for multiple database queries in connection with a single 8YY call? E. Legal Authority 74. In the USF/ICC Transformation Order, the Commission determined that it had the authority to comprehensively reform intercarrier compensation and move all interstate and intrastate access charges to bill-and-keep, explaining that ``the legal authority to adopt the bill- and-keep methodology described herein applies to all intercarrier compensation traffic.'' Pursuant to this authority, the Commission adopted bill-and-keep as the end state for all traffic exchanged between carriers and adopted a glide path toward that methodology for all terminating access charges. 75. The Commission's actions in the USF/ICC Transformation Order were upheld on appeal, including the Commission's decision to prescribe bill-and-keep as the default methodology for intercarrier compensation for various categories of traffic. The Court specifically rejected challenges to Commission's regulation of originating charges, noting that the FCC's inclusion of originating access charges in its reform effort was ``reasonable'' and entitled to deference. 76. Our statutory authority to implement changes to pricing methodology governing the exchange of traffic with LECs flows directly from sections 251(b)(5) and 201(b) of the Act. [[Page 31108]] Section 251(b)(5) states that LECs have a ``duty to establish reciprocal compensation arrangements for the transport and termination of telecommunications.'' In addition to providing the substantive authority for various rules and requirements, the Supreme Court in AT&T Corp. v. Iowa Utilities Board, held that ``the grant in Sec. 201(b) means what it says: The FCC has rulemaking authority to carry out the `provisions of this Act,' which include Sec. Sec. 251 and 252.'' 77. In addition to our authority to reform originating 8YY access charges, we also have authority to establish a transition plan for moving toward that ultimate objective in a manner that will minimize market disruptions. Indeed, the Commission's pre-existing regimes for establishing reciprocal compensation rates for section 251(b)(5) traffic have been upheld as lawful, and can be applied to originating 8YY traffic, as provided by our transitional intercarrier compensation rules related to ``ultimately phasing down'' originating access charges. As the U.S. Court of Appeals for the D.C. Circuit has recognized, ``[w]hen necessary to avoid excessively burdening carriers, the gradual implementation of new rates and policies is a standard tool of the Commission,'' and the transition ``may certainly be accomplished gradually to permit the affected carriers, subscribers and state regulators to adjust to the new pricing system, thus preserving the efficient operation of the interstate telephone network during the interim.'' 78. We invite comment on our legal authority to adopt the changes to the 8YY intercarrier compensation system that we are proposing in this Notice. Is there any reason that the precedents cited above would not apply to our current proposals? Does the Commission have the authority to create a revenue recovery mechanism and to cap database query charges as part of its reform of 8YY originating access? Does the Commission have the authority to make these changes pursuant to one or more different statutory provisions, other than sections 201(b) and 251(b)(5)? F. Related Issues 1. Role of Intermediate Providers 79. To better inform our reform efforts, we seek comment on the role intermediate providers, such as third-party tandem providers, or other providers that are interposed in the call path between an originating carrier and 8YY providers, play in the 8YY market. We also seek comment on how wireless 8YY calls have been affected by the fact that CMRS providers cannot charge originating access charges. 80. Several parties express frustration with certain practices employed by intermediate providers in the 8YY call flow. In particular, some carriers complain about the role intermediate providers play in facilitating abuses of the 8YY intercarrier compensation system. We seek comment on whether intermediate providers perform a legitimate function that should be preserved. Once originating 8YY traffic moves to bill-and-keep, we expect the market will determine how much, if anything, aggregators or other ``middlemen'' should be paid for their services (including database queries). Should the Commission provide any regulations or guidance regarding the offering of these services or compensation for these services? Or can we rely on the marketplace? 2. Network Edge 81. Although we have issued a separate Public Notice to refresh the record on other intercarrier compensation issues, including the network edge, we seek comment on whether the network edge requires a distinct approach in the 8YY context, particularly in a scenario where an IXC seeks a direct connection for 8YY originating traffic. Parties argue that some carriers take advantage of the Commission's current rules by specifying inefficient transport routes for 8YY traffic. Should originating carriers be allowed to specify a certain transport route, particularly if they are financially responsible for the transport? Should we develop separate rules for certain locations (e.g., Alaska) with respect to 8YY traffic? What role, if any, should states continue to play in determining the network edge for 8YY traffic? 3. Traffic Imbalances 82. Some parties argue that bill-and-keep is inappropriate for toll free calls because the traffic flow is unbalanced, i.e., 8YY subscribers are unlikely to call consumers and, therefore, the traffic always flows from the consumer to the 8YY subscriber. These arguments do not strike us as persuasive. As the Commission explained in the USF/ ICC Transformation Order, ``both parties generally benefit from participating in a call, and therefore . . . both parties should split the cost of the call.'' This reasoning applies to 8YY calls. If callers did not benefit from placing an 8YY call, then we would expect to see a decline in demand for 8YY numbers as well as in volume of 8YY calls, especially as more and more consumers have moved to wireless-only methods of telecommunications. This is not the case, however, as demand for 8YY numbers appears to be growing, as do minutes of use. Thus, it is clear that 8YY calls confer some benefit not only to the 8YY subscriber, but also to the calling party. 83. Indeed, the Commission has previously ``reject[ed] claims that, as a policy matter, bill-and-keep is only appropriate in the case of roughly balanced traffic.'' We continue to reject such claims and reiterate that ``bill-and-keep is most consistent with the models used for wireless and IP networks, models that have flourished and promoted innovation and investment without any symmetry or balanced traffic requirement.'' Nonetheless, we seek comment on whether there is a legitimate reason to find that traffic imbalances make 8YY calls ill- suited for bill-and-keep. 4. CMRS Providers 84. We do not include CMRS providers in our proposals because wireless carriers are already subject to bill-and-keep for 8YY calls and their end-user rates remain largely unregulated. We seek comment on whether there are any CMRS-related issues we need to address in this proceeding. Have CMRS providers been able to meet their revenue needs for originating 8YY calls through pre-existing end-user charges? If not, what other mechanisms have CMRS providers used to meet their revenue needs related to originating 8YY calls? 85. Some commenters assert that CMRS providers collect revenue for originating 8YY calls pursuant to revenue sharing arrangements with intermediate providers. We seek comment on this allegation. Are there wireless carriers that refuse to connect directly with other providers in order to facilitate revenue sharing arrangements? If so, how prevalent is this practice? What rationale do wireless providers use for refusing direct connection? How are 8YY access charges and database dips affected by a refusal of direct connection? 86. We also seek comment on what lessons we can learn from the wireless experience with bill-and-keep as we reform originating access for wireline 8YY calls. What is the typical call path for wireless 8YY calls? Does it differ materially from the call path for wireline 8YY calls? Have wireless rates increased to account for access costs for which CMRS providers cannot charge other carriers? If so, how large have these rate increases been? Has competition effectively disciplined [[Page 31109]] CMRS providers' ability to increase their rates to account for ``lost'' access charge revenues? 5. Unintended Consequences 87. Although we expect our proposals to bring numerous benefits to both carriers and end users, we do not want to overlook any potentially negative unintended consequences that could result from our proposed reforms. We therefore seek comment on the potential risks related to our proposals. a. Potential Effects on Consumers 88. Some commenters object that moving 8YY calls to bill-and-keep would undermine consumer expectations that 8YY calls are ``free'' to the calling party. Other parties counter that, ``from the beginning,'' the term ``toll-free'' has meant that ``the caller doesn't pay toll-- i.e., long distance--charges, not that the caller's monthly charge on his or her local bill will never change.'' Under our proposal, 8YY calls will remain ``toll free'' because originating callers will not be charged for the long-distance portion of the call. Nonetheless, we seek comment on whether 8YY calls will continue to meet consumers' expectations of ``toll free.'' Would it still be accurate to label these calls ``toll free'' since the long distance, or ``toll'' portion of the call would be free to the caller and paid by the 8YY subscriber? 89. Some carriers claim they will need to educate their customers if toll free calls are no longer ``free.'' Would any consumer education be necessary or appropriate if we were to adopt our proposals? Do consumers need to be informed of the change in our originating access charge regime for 8YY calls? If so, what would it cost to disseminate such information? Who should bear the costs of educating consumers about these changes? Is there any merit to claims that transitioning 8YY to bill-and-keep would leave providers open to ``false advertising'' claims because ``toll free'' calls will not be completely free? Are there any other possible negative consequences for consumers resulting from transitioning 8YY traffic to bill-and-keep? b. Potential Effects on 8YY Subscribers 90. Some commenters argue that moving originating 8YY access charges to bill-and-keep would harm 8YY subscribers, because consumers will be reluctant to place 8YY calls. Despite these concerns, the largest toll free subscribers appear to favor transitioning 8YY traffic to bill-and-keep. Would our proposed reforms disproportionately affect some 8YY subscribers more than others? From the 8YY subscriber perspective, do the benefits of transitioning to bill-and-keep outweigh the adverse consequences from it? 91. What is the proportion of the originating 8YY access charges (including end office, tandem switching and transport) to the remaining 8YY charges that 8YY subscribers pay, on average? Will 8YY subscribers continue to pay a larger proportion of the total costs of an 8YY call, or will the callers be responsible for the larger share? Will this calculus vary by geography? 92. We also note that, despite evidence of abuse, 8YY numbers continue to be in high demand. What factors explain this dynamic? It is our understanding that this growth in demand is at least partially due to businesses using 8YY numbers in new ways, such as call tracking to determine which advertisements generate the most responses. Will the transition to bill-and-keep reduce the benefits of 8YY calls? c. Other Consequences 93. In this Notice, we propose to move 8YY originating end office and tandem switching and transport charges to bill-and-keep before reforming the remaining rate elements not yet affected by changes in the USF/ICC Transformation Order, including non-8YY originating traffic. Would doing so create new opportunities for abuses of the intercarrier compensation system, or shift abuses to other forms of originating access? If so, how? How would our proposed changes affect network efficiency? 94. Are there any other possible unintended negative consequences of our proposals? Would our proposed reforms result in call completion issues, as predicted by some commenters? Would they ``lead smaller competitors to exit all or part of the market?'' 6. Additional Proposals for Reform 95. We invite parties to propose additional, or alternative, methods for reforming originating 8YY access charges. We also seek comment on proposals already in the record. We encourage commenters to consider how any proposal would reduce abusive practices related to 8YY calls. We particularly invite comparison of the relative benefits and drawbacks of these proposals compared to the proposals we have set forth in the Notice. IV. Rule Revisions 96. We seek comment on the rule changes proposed in Appendix A. Among other changes, we propose to add new definitions for the following terms: Baseline Composite Interstate Originating End Office Access Rate for Toll Free Calls, Baseline Composite Interstate Tandem- Switched Transport Access Service Rate for Toll Free Calls, Baseline Composite Intrastate Originating End Office Access Rate for Toll Free Calls, Baseline Composite Intrastate Tandem-Switched Transport Access Service Rate for Toll Free Calls, Database Query Charge, and Toll Free Call. The proposed rules also discuss the proposed transition of originating access charges for toll free calls to bill-and-keep, proposed new limitations on database query charges for toll free calls, and proposed modifications to the CLEC benchmarking rules. What, if any, other rule additions or modifications would need to be made to codify these proposals? Are there any conforming rule changes that commenters consider necessary? Are there any conflicts or inconsistencies between existing rules and those proposed herein? We ask commenters to provide any other proposed actions and rule additions or modifications we should consider to address the issues regarding 8YY calls described in this Notice including updates to any relevant comments or proposals made in response to the USF/ICC Transformation FNPRM, and the June 29, 2017 Public Notice. V. Procedural Matters 97. Filing Instructions. Pursuant to Sec. Sec. 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 on the first page of this document. 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. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. 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. [[Page 31110]] 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. 98. 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). 99. Ex Parte Requirements. This proceeding shall be treated as a ``permit-but-disclose'' proceeding in accordance with the Commission's ex parte rules. 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). 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 Rule 1.1206(b). In proceedings governed by Rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules. 100. Paperwork Reduction Act Analysis. This document contains proposed new and modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget 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), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees. 101. Initial Regulatory Flexibility Act Analysis. Pursuant to the Regulatory Flexibility Act (RFA), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities of the policies and actions considered in this Notice. The text of the IRFA is set forth in Appendix B. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of the NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration. 102. Contact Person. For further information about this proceeding, please contact Irina Asoskov, FCC, Wireline Competition Bureau, Pricing Policy Division, Room 5-A235, 445 12th Street SW, Washington, DC 20554, (202) 418-2196, [email protected]. VI. Initial Regulatory Flexibility Analysis 103. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this FNPRM. The Commission requests written public comments on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments provided on the first page of the FNPRM. The Commission will send a copy of the Further Notice of Proposed Rulemaking, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register. A. Need for, and Objectives of, the Proposed Rules 104. In the USF/ICC Transformation Order, the Commission adopted a bill-and-keep framework--under which a carrier generally looks to its end users to pay for its network costs--``as the default methodology for all intercarrier compensation traffic.'' In the FNPRM portion of that item, the Commission also sought comment on additional steps to implement a bill-and-keep cost recovery mechanism for certain access charges and sought comment on outstanding issues subject to reform in the future, including originating access charges and cost recovery for toll free (8YY) calls. In this FNPRM, we propose transitioning interstate and intrastate originating end office and tandem switching and transport charges for 8YY traffic to bill-and-keep, consistent with the Commission's reforms and policy directives in the USF/ICC Transformation Order. In the FNPRM we also propose capping database query charges associated with 8YY calls. We also propose amending our rules to limit charges to one database query per 8YY call. The FNPRM also asks for comment on various issues related to the 8YY network generally and 8YY cost recovery specifically. B. Legal Basis 105. The legal basis for any action that may be taken pursuant to this Notice is contained in sections 1, 2, 4(i), 201-206, 251, 252, 254, 256, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201-206, 251, 252, 254, 256, 303(r), and 403. C. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply 106. 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 [[Page 31111]] meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction.'' 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. 107. Small Businesses, Small Organizations, Small Governmental Jurisdictions. Our actions, over time, may affect small entities that are not easily categorized at present. We therefore describe here, 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 28.8 million businesses. 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.'' Nationwide, as of August 2016, there were approximately 356,494 small organizations, based on registration and tax data filed by nonprofits with the Internal Revenue Service (IRS). 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.'' U.S. Census Bureau data from the 2012 Census of Governments indicate that there were 90,056 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number, there were 37,132 General Purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,184 Special Purpose governments (independent school districts and special districts) with populations of less than 50,000. The 2012 U.S. Census Bureau data for most types of governments in the local government category show that the majority of these governments have populations of less than 50,000. Based on this data, we estimate that at least 49,316 local government jurisdictions fall in the category of ``small governmental jurisdictions.'' 108. 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. Census 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. 109. 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 as defined above. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, census 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. The Commission therefore estimates that most providers of local exchange carrier service are small entities that may be affected by the proposed rules. 110. 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 as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 3,117 firms operated in that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted. Three hundred and seven (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. 111. 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. 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, 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 Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers are small entities. 112. We have included small incumbent LECs in this RFA analysis. As noted above, a ``small business'' under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and ``is not dominant in its field of operation.'' The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not ``national'' in scope. We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no [[Page 31112]] effect on Commission analyses and determinations in other, non-RFA contexts. 113. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a definition for Interexchange Carriers. The closest NAICS Code category is Wired Telecommunications Carriers, as defined above. The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. 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. 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 IXCs are small entities. 114. 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. Census data for 2012 show that 1,341 firms provided resale services during that year, all of which operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, all of these resellers can be considered small entities. 115. Toll Resellers. The Commission has not developed a definition for Toll Resellers. The closest NAICS Code Category is 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. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 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. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of this total, an estimated 857 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of toll resellers are small entities. 116. Other Toll Carriers. Neither the Commission nor the SBA has developed a definition for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of IXCs, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable NAICS Code category is for Wired Telecommunications Carriers, as defined above. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. Census 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 category and the associated small business size standard, the majority of Other Toll Carriers can be considered small. According to internally developed Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage. Of these, an estimated 279 have 1,500 or fewer employees. Consequently, the Commission estimates that most Other Toll Carriers are small entities that may be affected by the rules proposed in the Notice. 117. Prepaid Calling Card Providers. The SBA has developed a definition for small businesses within the category of Telecommunications Resellers. Under that SBA definition, such a business is small if it has 1,500 or fewer employees. According to the Commission's Form 499 Filer Database, 500 companies reported that they were engaged in the provision of prepaid calling cards. The Commission does not have data regarding how many of these 500 companies have 1,500 or fewer employees. Consequently, the Commission estimates that there are 500 or fewer prepaid calling card providers that may be affected by the rules proposed in the Notice. 118. Wireless Telecommunications Carriers (except Satellite). This industry is comprised of establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1,000 employees or more. Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities. 119. The Commission's own data--available in its Universal Licensing System--indicate that, as of October 25, 2016, there are 280 Cellular licensees that may be affected by our proposed rules. The Commission does not know how many of these licensees are small, as the Commission does not collect that information for these types of entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service, and Specialized Mobile Radio Telephony services. Of this total, an estimated 261 have 1,500 or fewer employees, and 152 have more than 1,500 employees. Thus, using available data, we estimate that the majority of wireless firms can be considered small. 120. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined ``small business'' for the wireless communications services auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a ``very small business'' as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions. 121. Wireless Telephony. Wireless telephony includes cellular, personal [[Page 31113]] communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to Commission data, 413 carriers reported that they were engaged in wireless telephony. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Therefore, a little less than two thirds of these entities can be considered small. 122. All Other Telecommunications. The ``All Other Telecommunications'' industry is comprised of establishments that are 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 gross annual receipts of $32.5 million or less. For this category, U.S. Census data for 2012 show that there were 1,442 firms that operated for the entire year. Of these firms, a total of 1,400 had gross annual receipts of less than $25 million. Thus a majority of ``All Other Telecommunications'' firms potentially affected by our action can be considered small. D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities 123. In this FNPRM, the Commission seeks public comment on additional steps to complete its intercarrier compensation reform regarding toll free or 8YY calls. The transition to complete the reform of new intercarrier compensation rules could affect all carriers, including small entities, and may include new administrative processes. In proposing these reforms, we seek comment on various reporting, recordkeeping, and other compliance requirements that may apply to all carriers, including small entities. We seek comment on any costs and burdens on small entities associated with the proposed rules, including data quantifying the extent of those costs or burdens. These issues include the appropriate path or transition to move 8YY originating access charges to bill-and-keep and on the appropriate recovery of 8YY database costs. We also seek data to analyze the effects of proposed reforms and need for revenue recovery. 124. Compliance with a transition to a new system for 8YY originating access may impact some small entities and may include new or reduced administrative processes. For carriers that may be affected, obligations may include certain reporting and recordkeeping requirements to determine and establish their eligibility to receive recovery from other sources as 8YY originating access revenue is reduced. Modifications to the rules to address potential arbitrage opportunities will affect certain carriers, potentially including small entities. However, these impacts are mitigated by the certainty and reduced litigation that should occur as a result of the reforms adopted. The FNPRM seeks comment on several issues relating to bill- and-keep implementation for 8YY originating access as well as cost recovery for 8YY database dips. The FNPRM also seeks comment on how reduced intercarrier compensation revenues in the future would impact carriers, and how recovery, if any, for those reduced revenues should be addressed. The Commission asks if the recovery approach adopted should be different depending on the type of carrier or regulation. E. Steps Taken To Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered 125. The RFA requires an agency to describe any significant alternatives it has considered to the proposed rule which minimize any significant impact on small entities. These alternatives may include (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. 126. This FNPRM invites comment on a number of proposals and alternatives to modify or adopt 8YY originating access and database dip rules. As a general matter, actions taken as a result of our actions should benefit all service providers, including small entities, by providing greater regulatory certainty and by moving toward the Commission's goal of bill-and-keep for all access charges. In the FNPRM, we encourage small entities to bring to the Commission's attention any specific concerns that they have, including on any issues or measures that may apply to small entities in a unique fashion. We especially encourage commenters to discuss the proposed transitional recovery mechanism to help transition LECs away from existing revenues. Our proposed tailored approach to transitional recovery is designed to balance the different circumstances facing the different carrier types and provide all carriers with necessary predictability, certainty, and stability to transition from the current intercarrier compensation system. The FNPRM also seeks comment on other actions the Commission could take to further discourage or eliminate abuse of the intercarrier compensation regime that governs 8YY calls. Finally, we seek comment on alternatives to our proposals that we should consider to achieve our objectives with less impact on small entities. F. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules 127. None. I. Ordering Clauses 128. Accordingly, it is ordered that, pursuant to sections 1, 2, 4(i), 201-206, 251, 252, 254, 256, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201-206, 251, 252, 254, 256, 303(r), 403, and Sec. 1.1 of the Commission's rules, 47 CFR 1.1, this Further Notice of Proposed Rulemaking is adopted. 129. It is further ordered that pursuant to applicable procedures set forth in Sec. Sec. 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on this Further Notice of Proposed Rulemaking on or before September 4, 2018 and reply comments on or before October 1, 2018. 130. It is further ordered that the Commission's Consumer Information Bureau, Reference Information Center, SHALL SEND a copy of the Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. [[Page 31114]] List of Subjects in 47 CFR Parts 51 and 61 Telephone. Federal Communications Commission. Katura Jackson, Federal Register Liaison Officer, Office of the Secretary. Proposed Rules For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR parts 51 and 61 as follows: PART 51--INTERCONNECTION 0 1. The authority citation for part 51 continues to read as follows: Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 220, 225-27, 251-54, 256, 271, 303(r), 332, 1302. 0 2. Revise Sec. 51.903 to read as follows: Sec. 51.903 Definitions. (a) Access Reciprocal Compensation means telecommunications traffic exchanged between telecommunications service providers that is interstate or intrastate exchange access, information access, or exchange services for such access, other than special access. (b) Baseline Composite Interstate Originating End Office Access Rate for Toll Free Calls means originating End Office Access Service billed revenue from interstate Toll Free Calls for [Base Year - 1] divided by end office switching interstate Toll Free calling minutes for [Base Year - 1]. (c) Baseline Composite Interstate Tandem-Switched Transport Access Service Rate for Toll Free Calls means originating Tandem-Switched Transport Access Service billed revenue from interstate Toll Free Calls for [Base Year - 1] divided by tandem-switched interstate Toll Free calling minutes for [Base Year - 1]. (d) Baseline Composite Intrastate Originating End Office Access Rate for Toll Free Calls means originating End Office Access Service billed revenue from intrastate Toll Free Calls for [Base Year - 1] divided by end office switching intrastate Toll Free calling minutes for [Base Year - 1]. (e) Baseline Composite Intrastate Tandem-Switched Transport Access Service Rate for Toll Free Calls means originating Tandem-Switched Transport Access Service billed revenue from intrastate Toll Free Calls for [Base Year - 1] divided by tandem-switched intrastate Toll Free calling minutes for [Base Year - 1]. (f) Competitive Local Exchange Carrier. A Competitive Local Exchange Carrier is any local exchange carrier, as defined in Sec. 51.5, that is not an incumbent local exchange carrier. (g) Composite Terminating End Office Access Rate means terminating End Office Access Service revenue, calculated using demand for a given time period, divided by end office switching minutes for the same time period. (h) Database Query Charge means a charge that is expressed in dollars and cents that an originating carrier or tandem switch provider assesses upon an interexchange carrier for obtaining routing information for a Toll Free Call and includes any charges for signaling or transport services used to obtain such routing information. (i) Dedicated Transport Access Service means originating and terminating transport on circuits dedicated to the use of a single carrier or other customer provided by an incumbent local exchange carrier or any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier. Dedicated Transport Access Service rate elements for an incumbent local exchange carrier include the entrance facility rate elements specified in Sec. 69.110 of this chapter, the dedicated transport rate elements specified in Sec. 69.111 of this chapter, the direct-trunked transport rate elements specified in Sec. 69.112 of this chapter, and the intrastate rate elements for functionally equivalent access services. Dedicated Transport Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access services. (j) End Office Access Service means: (1) The switching of access traffic at the carrier's end office switch and the delivery to or from of such traffic to the called party's premises; (2) The routing of interexchange telecommunications traffic to or from the called party's premises, either directly or via contractual or other arrangements with an affiliated or unaffiliated entity, regardless of the specific functions provided or facilities used; or (3) Any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier. End Office Access Service rate elements for an incumbent local exchange carrier include the local switching rate elements specified in Sec. 69.106 of this chapter, the carrier common line rate elements specified in Sec. 69.154 of this chapter, and the intrastate rate elements for functionally equivalent access services. End Office Access Service rate elements for an incumbent local exchange carrier also include any rate elements assessed on local switching access minutes, including the information surcharge and residual rate elements. End office Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access service. Note to paragraph (j): For incumbent local exchange carriers, residual rate elements may include, for example, state Transport Interconnection Charges, Residual Interconnection Charges, and PICCs. For non-incumbent local exchange carriers, residual rate elements may include any functionally equivalent access service. (k) Fiscal Year 2011 means October 1, 2010 through September 30, 2011. (l) Incumbent Local Exchange Carrier means a Price Cap Carrier or Rate-of-Return Carrier. (m) Price Cap Carrier has the same meaning as that term is defined in Sec. 61.3(aa) of this chapter. (n) Rate-of-Return Carrier is any incumbent local exchange carrier not subject to price cap regulation as that term is defined in Sec. 61.3(aa) of this chapter, but only with respect to the territory in which it operates as an incumbent local exchange carrier. (o) Tandem-Switched Transport Access Service means: (1) Tandem switching and common transport between the tandem switch and end office; or (2) Any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier via other facilities. Tandem-Switched Transport rate elements for an incumbent local exchange carrier include the rate elements specified in Sec. 69.111 of this chapter, except for the dedicated transport rate elements specified in that section, and intrastate rate elements for functionally equivalent service. Tandem Switched Transport Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access service. (p) Toll Free Call means a call to a toll free number, as defined in Sec. 52.101(f) of this subchapter. (q) Transitional Intrastate Access Service means terminating End Office Access Service that was subject to intrastate access rates as of December 31, 2011; terminating Tandem-Switched Transport Access Service that was subject to intrastate access rates as of December 31, 2011; and originating and terminating Dedicated Transport Access Service that was subject to intrastate access rates as of December 31, 2011. 0 3. Add Sec. 51.921 to Subpart J to read as follows: [[Page 31115]] Sec. 51.921 Transition of Originating Access Charges for Toll Free Calls. (a) Effective [July 1, base year], notwithstanding any other provision of the Commission's rules, each Incumbent LEC shall calculate: (1) A single per-minute Baseline Composite Intrastate Originating End Office Access Rate for Toll Free Calls for each state in which it provides such service; (2) A single per-minute Baseline Composite Interstate Originating End Office Access Rate for Toll Free Calls; (3) A single per-minute Baseline Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls for each state in which it provides such service; and (4) A single per-minute Baseline Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. (b) Step 1. Beginning July 1, [base year], notwithstanding any other provision of the Commission's rules: (1) Each Incumbent LEC shall establish rates for intrastate originating End Office Access Service for Toll Free Calls in each state in which it provides such service using the following methodology: (i) Each Incumbent LEC shall calculate its [base year] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls. The [base year] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls means two-thirds of the Baseline Composite Intrastate Originating End Office Access Rate for Toll Free Calls. (ii) Beginning [July 1, base year], a LEC is prohibited from filing an intrastate access tariff that includes an Originating End Office Rate for intrastate Toll Free Calls that exceeds its [base year] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls for that particular state. (2) Each Incumbent LEC shall establish rates for interstate originating End Office Access Service for Toll Free Calls using the following methodology: (i) Each Incumbent LEC shall calculate its [base year] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls. The [base year] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls means two-thirds of the Baseline Composite Interstate Originating End Office Access Rate for Toll Free Calls. (ii) Beginning [July 1, base year], a LEC is prohibited from filing an interstate access tariff that includes an Originating End Office Rate for interstate Toll Free Calls that exceeds its [base year] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls. (3) Each Incumbent LEC shall establish rates for intrastate originating Tandem-Switched Transport Access Service for Toll Free Calls in each state in which it provides such service using the following methodology: (i) Each Incumbent LEC shall calculate its [base year] Target Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. The [base year] Target Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls means two-thirds of the Baseline Composite Intrastate Tandem-Switched Transport Access Service Rate for Toll Free Calls. (ii) Beginning [July 1, base year], a LEC is prohibited from filing an intrastate access tariff that includes an originating Tandem- Switched Transport Access Service Rate for intrastate Toll Free Calls that exceeds its [base year] Target Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls for that particular state. (4) Each Incumbent LEC shall establish rates for interstate originating Tandem-Switched Transport Access Service for Toll Free Calls using the following methodology: (i) Each Incumbent LEC shall calculate its [base year] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. The [base year] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls means two-thirds of the Baseline Composite Interstate Tandem-Switched Transport Access Service Rate for Toll Free Calls. (ii) Beginning [July 1, base year], a LEC is prohibited from filing an interstate access tariff that includes an originating Tandem- Switched Transport Access Service Rate for interstate Toll Free Calls that exceeds its [base year] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. (c) Step 2. Beginning July 1, [base year + 1], notwithstanding any other provision of the Commission's rules: (1) Each Incumbent LEC shall establish intrastate rates for originating End Office Access Service for Toll Free Calls in each state in which it provides such service using the following methodology: (i) Each Incumbent LEC shall calculate its [base year + 1] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls. The [base year + 1] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls means one-third of the Baseline Composite Intrastate Originating End Office Access Rate for Toll Free Calls. (ii) Beginning July 1, [base year + 1], a LEC is prohibited from filing an intrastate access tariff that includes an Originating End Office Access Rate for intrastate Toll Free Calls that exceeds its [base year + 1] Target Composite Intrastate Originating End Office Access Rate for Toll Free Calls for that particular state. (2) Each Incumbent LEC shall establish interstate rates for originating End Office Access Service for Toll Free Calls using the following methodology: (i) Each Incumbent LEC shall calculate its [base year + 1] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls. The [base year + 1] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls means one-third of the Baseline Composite Interstate Originating End Office Access Rate for Toll Free Calls. (ii) Beginning July 1, [base year + 1], a LEC is prohibited from filing an interstate access tariff that includes an Originating End Office Access Rate for interstate Toll Free Calls that exceeds its [base year + 1] Target Composite Interstate Originating End Office Access Rate for Toll Free Calls. (3) Each Incumbent LEC shall establish rates for originating Tandem-Switched Transport Access Service for intrastate Toll Free Calls in each state in which it provides such service using the following methodology: (i) Each Incumbent LEC shall calculate its [base year + 2] Target Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. The [base year + 2] Target Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for intrastate Toll Free Calls means one-third of the [base year] Baseline Composite Intrastate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. (ii) Beginning July 1, [base year + 2], a LEC is prohibited from filing an intrastate access tariff that includes an Originating Tandem- Switched Transport Access Service Rate for intrastate Toll Free Calls that exceeds its [base year + 2] Target Composite Originating Tandem- Switched Transport Access Service Rate for intrastate Toll Free Calls for that particular state. [[Page 31116]] (4) Each Incumbent LEC shall establish rates for interstate originating Tandem-Switched Transport Access Service for Toll Free Calls using the following methodology: (i) Each Incumbent LEC shall calculate its [base year + 2] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. The [base year + 2] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls means one-third of the [base year] Baseline Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. (ii) Beginning July 1, [base year + 2], a LEC is prohibited from filing an interstate access tariff that includes an Originating Tandem- Switched Transport Access Service Rate for interstate Toll Free Calls that exceeds its [base year + 2] Target Composite Interstate Originating Tandem-Switched Transport Access Service Rate for Toll Free Calls. (d) Step 3. Beginning July 1, [base year + 2], notwithstanding any other provision of the Commission's rules, all LECs shall, in accordance with bill-and-keep, revise and refile their interstate and intrastate switched access reciprocal compensation tariffs and any state tariffs to remove any intercarrier charges applicable to interstate and intrastate originating End Office Access Service and Tandem-Switched Transport Access Service for all interstate and intrastate rate elements for Toll Free Calls. (e) Nothing in this section shall prevent a LEC from negotiating a rate for Originating End Office Access Service for Toll Free Calls or for Originating Tandem-Switched Transport Access Service for Toll Free Calls that is different from its tariffed rates, or that is different from bill-and-keep if there is no tariffed rate for such services. 0 4. Add Sec. 51.923 to Subpart J to read as follows: Sec. 51.923 Limitation on Database Query Charges for Toll Free Calls. (a) Notwithstanding any other provision of the Commission's rules, on [the first July 1/annual tariff filing after rule adoption], every Incumbent LEC shall cap the rates for database query charges in its interstate or intrastate tariffs at $.0015 per Toll Free Call. (b) Notwithstanding any other provision of the Commission's rules, on [the first July 1/annual tariff filing after rule adoption], LECs involved in the routing of a Toll Free Call to a provider of Toll Free calling services may not, collectively, charge the provider of Toll Free calling services more than one database query charge per Toll Free Call. PART 61--TARIFFS 0 5. The authority citation for part 61 continues to read as follows: Authority: Secs 1, 4(i), 4(j), 201-205 and 403 of the Communications Act of 1934, as amended; 47 U.S.C. 151, 154(i), 154(j), 201-205 and 403, unless otherwise noted. 0 6. Amend Sec. 61.26 by revising paragraphs (a)(3)(i) and (e) to read as follows: Sec. 61.26 Tariffing of Competitive Interstate Switched Exchange Access Services. (a) * * * (3) * * * (i) The functional equivalent of the ILEC interstate exchange access services typically associated with the following rate elements: Carrier common line (originating); carrier common line (terminating); local end office switching; interconnection charge; information surcharge; tandem switched transport termination (fixed); tandem switched transport facility (per mile); tandem switching; and Database Query Charge, as that term is defined in section [51.903(m)] of this chapter; * * * * * (e) Rural exemption. Except as provided in paragraph (g) of this section, and notwithstanding paragraphs (b) through (d) of this section, a rural CLEC competing with a non-rural ILEC shall not file a tariff for its interstate exchange access services that prices those services above the rate prescribed in the NECA access tariff, assuming the highest rate band for local switching. In addition to that NECA rate, the rural CLEC may assess a presubscribed interexchange carrier charge if, and only to the extent that, the competing ILEC assesses this charge. Beginning July 1, 2013, all CLEC reciprocal compensation rates for intrastate switched exchange access services subject to this subpart also shall be no higher than that NECA rate. The rural exemption in this section does not apply to Toll Free Calls. * * * * * [FR Doc. 2018-14150 Filed 7-2-18; 8:45 am] BILLING CODE 6712-01-P
![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31099
EPA may publish any comment received ICC Transformation Order. The advent of the internet and other
to its public docket. Do not submit Commission also proposes to cap 8YY advances in communications have
electronically any information you database query rates at the lowest rate reduced the financial benefit to the
consider to be Confidential Business charged by any price cap local exchange calling party of being able to make a
Information (CBI) or other information carrier, and to limit charges to one telephone call and not pay for the toll
whose disclosure is restricted by statute. database query charge per call, portion of the call.
Multimedia submissions (audio, video, regardless of the number of carriers are 2. Nonetheless, many businesses and
etc.) must be accompanied by a written in the call path or the number of consumers continue to find 8YY
comment. The written comment is database queries conducted. These numbers useful. Demand for 8YY
considered the official comment and proposals should limit unreasonably numbers continues to grow. In fact, the
should include discussion of all points inflated charges and reduce or eliminate Commission recently authorized a new
you wish to make. EPA will generally incentives for parties to engage in the 833 code to supplement the 800, 888,
not consider comments or comment types of abuse described in the record. 877, 866, 855, and 844 codes already in
contents located outside of the primary DATES: Comments must be submitted on use for 8YY calling. The record offers
submission (i.e. on the web, cloud, or or before September 4, 2018. Reply several explanations for the continued
other file sharing system). comments must be submitted on or demand for 8YY numbers. A toll free
For additional submission methods, before October 1, 2018. number can give a business a national
the full EPA public comment policy, presence and ‘‘project a professional
ADDRESSES: You may submit comments,
information about CBI or multimedia image.’’ Toll free numbers can also act
identified by WC Docket No. 18–156, by
submissions, and general guidance on as a powerful branding tool, particularly
any of the following methods:
making effective comments, please visit if the subscriber can obtain a vanity
• Federal Communications
https://www2.epa.gov/dockets/ number, such as 1–800–FLOWERS, that
Commission’s Website: http://
commenting-epa-dockets. promotes its business. Many businesses
apps.fcc.gov/ecfs//. Follow the
FOR FURTHER INFORMATION CONTACT: For also use toll free numbers to track the
instructions for submitting comments.
effectiveness of their advertising and
further information on this document, • People with Disabilities: Contact the
please contact Elizabeth Kopits, marketing strategy. These marketing
FCC to request reasonable
National Center for Environmental efforts increase the demand for toll free
accommodations (accessible format
Economics, Office of Policy, 1200 numbers, as businesses need to assign
documents, sign language interpreters,
Pennsylvania Avenue NW, Mail Code unique numbers to each advertising
CART, etc.) by email: FCC504@fcc.gov
1809T, Washington, DC 20460, Phone: campaign or even to different segments
or phone: 202–418–0530 or TTY: 888–
(202) 566–2299; kopits.elizabeth@ of the same advertising campaign.
835–5322. 3. The record indicates that 8YY
epa.gov. For detailed instructions for
minutes of use appear to be increasing,
SUPPLEMENTARY INFORMATION: This submitting comments and additional at least relative to other originating
document extends the public comment information on the rulemaking process, access minutes. As a result, according to
period for the proposed rule to ensure see the SUPPLEMENTARY INFORMATION some commenters, 8YY calls account for
that the public has sufficient time to section of this document. a substantial majority of originating
review and comment on the proposal. FOR FURTHER INFORMATION CONTACT: Irina access minutes. We seek comment on
EPA is proposing this rule under Asoskov, Wireline Competition Bureau, parties’ experiences regarding demand
authority of 5 U.S.C. 301, in addition to Pricing Policy Division at 202–418–2196 for 8YY numbers and legitimate minutes
the authorities listed in the April 30th or at Irina.Asoskov@fcc.gov. of use. We also invite parties to provide
document. SUPPLEMENTARY INFORMATION: This is a additional information regarding the
Dated: June 27, 2018. summary of the Commission’s Further usefulness of 8YY numbers and demand
Brittany Bolen, Notice of Proposed Rulemaking (FNPRM for 8YY services.
Acting Associate Administrator, Office of
or Notice), FCC 18–76, released on June
A. History of Intercarrier Compensation
Policy. 8, 2018. A full-text version of the
for 8YY Calls
[FR Doc. 2018–14330 Filed 7–2–18; 8:45 am]
Further Notice of Proposed Rulemaking
may be obtained at the following 4. Following the breakup of AT&T,
BILLING CODE 6560–50–P
internet address: https://docs.fcc.gov/ the Commission analyzed the treatment
public/attachments/fcc-18-76a1.pdf. of toll free originating and terminating
switched access charges for purposes of
FEDERAL COMMUNICATIONS I. Background carrier revenue recovery. In addition to
COMMISSION 1. AT&T first introduced interstate end office rate elements, the
toll free service, using 800 numbers, in Commission allowed LECs to recover a
47 CFR Parts 51 and 61
1967. The defining characteristic of that portion of fixed local loop costs through
[WC Docket No. 18–156; FCC 18–76] service, then known as Inward Wide the carrier common line (CCL) charge
Area Telecommunications Service that LECs were allowed to recover from
8YY Access Charge Reform (WATS), was that such calls were paid IXCs. In devising the CCL rate element
AGENCY: Federal Communications for by the company that received the for toll free calls, the Commission
Commission. calls and had subscribed to the toll free recognized that toll free calls generally
service. At the time, and for many years ‘‘originated over regular local loops and
sradovich on DSK3GMQ082PROD with PROPOSALS
ACTION: Proposed rule.
after, interstate calling rates were terminated over a dedicated access line
SUMMARY: In this document, the substantial, so the calling party received to the 8YY subscriber’s premises.’’ The
Commission proposes to migrate significant financial benefit from Commission referred to the originating
interstate and intrastate originating end making a toll free call rather than a end of such calls as the ‘‘open end’’ and
office and tandem switching and direct-dialed long distance (or toll) call. the terminating end as the ‘‘closed end.’’
transport charges for toll free (8YY) calls Today, by contrast, the prevalence of In the 1986 WATS Order, the
to bill-and-keep, continuing the reform unlimited minutes plans for both Commission placed the bulk of CCL
efforts that began with the 2011 USF/ wireless and wireline service and the charges on terminating access minutes,
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![31100 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules
allowing carriers to recover the rest of in which their CCS7 networks would be traffic exchanged with a LEC. As the
their loop costs through traffic-sensitive linked with databases containing the first step in implementing that
charges. The Commission also exempted 800 service information. The framework, the Commission adopted a
the ‘‘closed end’’ of the call from the Commission established a separate multi-year transition to bill-and-keep for
CCL charges, based on a finding that the access element for the database cost many terminating access charges,
costs of the closed end of a toll free call recovery. The Commission required determined that ‘‘the originating access
were covered by special access charges. LECs to ‘‘develop rates for 800 data base regime should be reformed,’’ and
Exempting the ‘‘closed end’’ of 8YY access based only on their data-base- capped most originating access charges,
calls from CCL charges, however, meant specific costs’’ and expressed an with the exception of intrastate
that ‘‘800 traffic would be exempt from expectation that the costs associated originating access charges of rate-of-
carrier common line charges altogether, with the 800 number database would be return carriers. The cap applied to a
despite the fact that it makes use of the ‘‘relatively modest.’’ wide range of originating access charges,
public switched network.’’ In other 7. In 1993, the Commission including, but not limited to, database
words, because LECs recovered the bulk determined that the newly-created 800 query charges. The Commission also
of their loop costs from terminating database was ‘‘absolutely necessary to adopted bill-and-keep as the default
access charges, and the terminating end the provision of 800 service using the compensation regime for non-access
of toll free calls was exempt from the data base access system’’ and concluded traffic between LECs and commercial
CCL charge, LECs were not able to that access to the database must be mobile radio service (CMRS) providers,
recover from IXCs the loop costs provided pursuant to tariff. In contrast thus bringing that traffic into parity with
associated with originating 8YY calls. to NXX-based routing, which relied on CMRS-related access traffic, which had
The Commission allowed LECs to LECs using their central office switches long been subject to bill-and-keep.
recover their loop costs by treating the to process 800 calls, the new routing 10. Based on a determination that
originating (open) end of interstate 8YY technology required originating LECs to concerns regarding network
calls as terminating for purposes of route 8YY calls through a switch inefficiencies, arbitrage, and costly
assessing the CCL charge. equipped with a ‘‘service switching litigation were ‘‘less pressing with
5. In 1997, the Commission reaffirmed point’’ (SSP). The SSP would then respect to originating access’’ than with
its prior decision that the ‘‘open end’’ of ‘‘suspend’’ routing of the call until it respect to terminating access, the
an 8YY call should be treated as the determined where to send it by Commission did not adopt any further
terminating end for access charge transmitting a query over the signaling reforms to originating access charges. In
purposes. The Commission noted that system 7 (SS7) to a regional service a Further Notice of Proposed
‘‘an IXC is unable to influence the end control point (SCP). The SCP would Rulemaking that accompanied the USF/
user’s choice of access provider for regularly obtain routing information ICC Transformation Order, the
originating access services because the from the central (SMS/800) database. Commission sought comment on the
end user on the terminating end is Not all end offices of the LECs that steps it should take to transition
paying for the [8YY] call.’’ In the early owned an SCP were connected to the originating access and transport to bill-
2000s, the Commission eliminated the SCP. 8YY calls from consumers served and-keep, as well as issues related to
CCL charge, but did not specifically by end offices that were not connected 8YY traffic. The Commission sought
address 8YY services. At present, to an SCP were routed to one of the comment on the timing, transition, and
originating carriers receive payments LEC’s tandem switches equipped with possible need for a recovery mechanism
from 8YY providers for originating an SCP and the call would be processed for the remaining rate elements. The
interstate toll free calls through from there. Those LECs that did not own Commission explained that access
originating end office, tandem switching an SCP could purchase query services charges for originating 8YY traffic have
and transport, and database query from a LEC that did. been treated similarly to terminating
charges. 8. In a series of orders, the access charges for non-8YY calls. It
6. Database query charges. From Commission determined that certain sought comment on ‘‘the appropriate
1967, when AT&T first introduced toll costs associated with the provision of treatment of 8YY originated minutes’’
free service, until late 1986, ‘‘LECs were 8YY database query services were and on whether 8YY access reform
unable to provide access for 800 service reasonable and allowed price cap and should be treated differently from
to any IXC other than AT&T.’’ In 1986, rate-of-return carriers to include them in originating access reform more
the Bell Operating Companies (BOCs) their rate calculations. generally. Comments regarding these
and other LECs began offering other issues were mixed.
B. Access Charge Reforms Adopted in
IXCs 8YY access through an NXX-based
the USF/ICC Transformation Order C. 8YY Routing and Related Access
methodology, whereby the first three
digits following the 800 prefix of the 9. In the USF/ICC Transformation Elements
dialed number were associated with a Order, the Commission found that, over 11. To understand how the current
specific IXC. Toll free subscribers time, the intercarrier compensation 8YY system allows for arbitrage and
seeking a particular 800 number had to system had become ‘‘riddled with fraud, it is necessary to understand the
obtain it from the IXC to which the NXX inefficiencies and opportunities for typical wireline call path for, and
in that number had been assigned and wasteful arbitrage.’’ To rid the system of intercarrier charges associated with,
could not change carriers without arbitrage schemes that impose ‘‘undue 8YY calls. As described by various
changing their 800 number. For costs on consumers, inefficiently commenters, when a wireline customer
sradovich on DSK3GMQ082PROD with PROPOSALS
example, if MCI had been assigned all diverting capital away from more places a call to an 8YY number, the call
numbers beginning with 800–468, then productive uses such as broadband is initially carried by the caller’s LEC to
someone who wanted to subscribe to deployment’’ and to provide incentives that carrier’s end office switch. At that
800–468–3927 (800–GO–TEXAS) would to transition telecommunications point, the LEC may conduct the
have to do business with MCI. In 1989, networks to IP technology, the database query from the end office
the BOCs and some other carriers began Commission adopted a national, default switch to the SCP, where it obtains the
developing ‘‘common channel signaling bill-and-keep framework as the ultimate routing information. Then the LEC may
networks based on the CCS7 protocol,’’ end state of all telecommunications route the call to a tandem switch which
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![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31101
may or may not be owned by the same record, to further our understanding of compensation regime. Based on the
LEC. If the LEC did not conduct the the issues, we invite commenters to current record in this proceeding, we
database query at its end office, then it provide additional information about propose to revise our rules to change the
may conduct the query from a tandem their experiences with various call paths incentives that are leading to these
office, or it may rely on a third-party associated with 8YY calls. reported abuses.
tandem provider to perform the 20. In the USF/ICC Transformation
D. More Recent Procedural History Order, the Commission acted to ‘‘reduce
database query. Once the routing
information has been obtained, the call 15. On September 30, 2016, AT&T arbitrage and competitive distortions’’
is then routed to the IXC—either filed a petition seeking forbearance which had occurred over time.
directly, or through an intermediate from, among other things, rules related However, commenters allege that
provider—and, ultimately, the 8YY to the tariffing of 8YY database query because the Commission left originating
customer. charges. AT&T alleged that ‘‘some LECs access charges ‘‘largely unreformed and
12. Under our current rules, the LEC are engaged in schemes to overcharge’’ expensive,’’ abuses of the intercarrier
that originates an 8YY call is entitled to for certain originating 8YY traffic and compensation system with respect to
charge the IXC that terminates the 8YY claimed that ‘‘arbitrage schemes are 8YY service have flourished. The record
call originating access charges for the increasingly shifting to 8YY.’’ AT&T currently includes descriptions of at
specific services provided, which would pointed to a ‘‘wide variation in the least four different categories of schemes
typically include originating end office tariffed charges’’ for 8YY database by which carriers are reported to be
switching, database queries, interoffice queries and asserted that the rates it had exploiting the current regime governing
transport and, often, tandem switching negotiated in contracts with some intercarrier compensation for
and transport. The amount of access providers were generally lower—and originating 8YY traffic. In the interest of
charges an originating LEC receives for more uniform—than the tariffed rates having a robust record, we seek
such calls is dependent on the for those services. additional comment on the existence,
applicable switching and transport 16. Other IXCs echoed many of prevalence, and impact of each of these
rates, including the number of miles AT&T’s concerns. Verizon argued that reported schemes and on any other
that are subject to the transport charge, ‘‘[t]raffic pumping involving sham 8YY 8YY-related schemes that commenters
which is billed on a per-minute, per- calls already is a serious arbitrage propose we address.
mile basis. In some cases, the problem’’ and Sprint agreed that the 21. Benchmarking abuse. Currently,
originating LEC and a third-party charges for 8YY database queries are pursuant to the competitive LEC
tandem provider bill the IXC separately, ‘‘unjustifiably high.’’ Even parties that benchmarking rule, competitive LECs
but some intermediate carriers submit opposed the forbearance petition are permitted to tariff interstate access
one bill for originating and tandem and acknowledged that the variances in 8YY charges at a level no higher than the
transport charges to the IXC and database query charges may create tariffed rate for such services offered by
subsequently reimburse the originating arbitrage opportunities. AT&T withdrew the incumbent LEC serving the same
carrier pursuant to an agreement its petition before the Commission geographic area. Commenters complain
between the originating LEC and the reached a decision. that some competitive LECs aggregate
tandem carrier. Because database 17. Subsequently, on May 19, 2017, 8YY traffic from originating LECs and
queries can originate from either an end the Ad Hoc Telecommunications Users instead of ‘‘benchmark[ing] its
office or a tandem office, tandem Committee (Ad Hoc) filed an ex parte originating tandem switched transport
providers can also charge the IXC for letter, urging the Commission to require rates to the rates tariffed by the
database queries. According to AT&T, it carriers to ‘‘apply the per minute incumbent LEC in the area where the
is not unusual for an IXC to be assessed charges for terminating traffic to the call originated, the CLEC bills the higher
a database dip charge by both the LEC originating or ‘open’ end of 8YY calls.’’ rates tariffed by the incumbent LEC in
that originates an 8YY call, and by the Ad Hoc asserts that the Commission the area where the call is handed off to
tandem provider that picks up that call. could reduce or eliminate incentives to the IXC.’’ We seek comment on this
AT&T claims that database queries use 8YY for arbitrage and access practice and on whether it is a
account for a significant share— stimulation schemes if it were to treat legitimate practice or an improper
approximately 19 percent—of the originating 8YY calls the same as attempt to exploit a loophole in the
originating access charges it is billed for terminating access calls for purposes of Commission’s rules. Are there examples
8YY calls. intercarrier compensation. of other forms of potential
13. Thus, in the case of 8YY traffic, 18. In a public notice dated June 29, benchmarking abuse in addition to the
originating carriers involved in the call 2017, the Wireline Competition Bureau one we describe here? How prevalent is
have incentives to route calls in ways invited interested parties to update the benchmarking abuse? How much does it
that maximize the compensation they record on issues raised by the cost individual IXCs or 8YY subscribers
receive—regardless of whether they Commission in the USF/ICC in additional access charges? Are there
receive those access revenues directly or Transformation Order with respect to legitimate reasons a LEC would choose
indirectly, via shared revenue access charges for 8YY. We incorporate to hand off 8YY traffic in an area other
arrangements. Moreover, the current the comments from the June 29, 2017 than where the call originated?
system encourages bad actors to place Public Notice and the FNPRM portion of 22. Mileage pumping. Because
fraudulent, or otherwise illegitimate, the USF/ICC Transformation Order into originating carriers charge IXCs for
robocalls with the sole purpose of transport on a per-minute, per-mile
sradovich on DSK3GMQ082PROD with PROPOSALS
this record and seek further comment on
generating originating access revenues. issues related to 8YY access charge basis, the farther they transport the
These inflated charges raise costs for reform, as discussed in greater detail originating traffic, the greater the
both IXCs and 8YY subscribers, which below. compensation they receive from the IXC
have no control over the choice of serving the 8YY subscriber. As a result,
originating and intermediate providers. II. Alleged Abuses of the 8YY originating carriers have an incentive to
14. While we have described the Intercarrier Compensation Regime artificially inflate their mileage in order
typical call paths for 8YY calls as laid 19. Parties raise concerns about to maximize the transport rates they
out by commenters in the current abuses of the 8YY intercarrier charge to the IXC, particularly if
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transport rates are materially higher database query to a LEC compared to the and transport to bill-and-keep only
than transport costs, as some amount IXCs are being assessed for the where the originating carrier also owns
commenters’ filings suggest. In fact, database dips. We also seek comment on the tandem.
AT&T alleges that carriers engage in the impact on IXCs and their customers
1. Moving Most Elements of Originating
‘‘mileage pumping’’ schemes, in which of paying these database charges. Are
8YY Access Charges to Bill-and-Keep
‘‘a CLEC tariffs a per-mile charge for there ways for IXCs to determine
Should Curtail Abuses of 8YY Calls
transport and then either (i) bills the whether a call has been ‘‘dipped’’ more
IXC for transport it does not actually than once? Is there any legitimate reason 28. The current record shows that toll
provide . . . or (ii) inefficiently routes for a call to be subjected to multiple free subscribers are burdened by
traffic long distances—sometimes more dips? unpredictable and uncontrollable call
than a hundred miles—to inflate the 25. Other abuses. We also seek volumes and associated charges for calls
number of miles applied to the per-mile comment on whether there are any other to their 8YY numbers. With the
transport charge.’’ We seek comment on abuses related to 8YY access charges proliferation of unlawful robocalls, the
this practice. Are there other examples that are not described above. If so, what volume of traffic routed to 8YY numbers
of mileage pumping schemes that differ are they? What impact do any other no longer depends on the ‘‘promotional
from the ones described by AT&T? If so, 8YY-related abuses have on carriers and efforts’’ of the 8YY subscriber. Indeed,
please describe them. How prevalent are on 8YY subscribers? To the extent that just the opposite is true—fraudulent
mileage pumping schemes? How much commenters identify other abuses of the calls are only ‘‘controllable from the
do they cost 8YY providers or 8YY system, we seek comment on originating point.’’ And there is
subscribers in inflated charges? Are whether our proposed reforms would significant evidence that some carriers
there legitimate reasons a carrier would sufficiently address those abuses. If not, are exploiting loopholes in the current
haul traffic 100 miles or more before what additional measures would we intercarrier compensation system to
handing it off to an IXC? need to take to eliminate those abuses? inflate their bills to IXCs that serve 8YY
23. Traffic pumping. There is also customers. The intercarrier
III. Addressing Alleged Abuses of the compensation system needs to adapt to
evidence in the record that companies
8YY Intercarrier Compensation Regime this new reality.
are using traffic pumping schemes to
exploit inflated access rates. As 26. To address abuses of the current 29. Accordingly, in an effort to
described by commenters, in these 8YY intercarrier compensation system, combat the abuses that appear to plague
schemes, a traffic pumper enters into a we propose to move, over time, all the existing 8YY regime, we propose to
revenue sharing agreement with a LEC originating interstate and intrastate end move interstate and intrastate
and subsequently uses automated office and tandem switching and originating 8YY end office, tandem
software to place illegitimate calls to transport charges related to 8YY calls to switching and transport access charges
8YY numbers. These calls often use auto bill-and-keep. To avoid a flash cut to to bill-and-keep. Consistent with the
dialers or ‘‘robocallers’’ to target bill-and-keep for originating 8YY access USF/ICC Transformation Order, we
Interactive Voice Response (IVR) charges, we propose a three-year propose to allow carriers to negotiate
systems and use varying means to keep transition period. We propose to allow private agreements that depart from bill-
the IVR engaged, preventing the call originating carriers to recover their costs and-keep, but not permit carriers to
from ending. The LEC then bills the IXC primarily through end-user charges, tariff any originating end office or
for the calls—including the artificially though we invite comment on allowing tandem switching and transport charges
inflated minutes of use—and shares the some recovery through Connect related to 8YY traffic. We seek comment
proceeds with the traffic pumper. These America Fund (CAF) support. We also on this approach. Are there any
‘‘[a]nnoying and disruptive 8YY calls’’ propose to cap 8YY database query rates obstacles that would prevent carriers
waste the targeted businesses’ resources nationwide and to prohibit carriers from from moving to bill-and-keep for these
and ‘‘devalue [providers’] 8YY assessing more than one database query charges? Would our proposal adequately
products.’’ We seek comment on this charge per call, even if more than one address the problems currently plaguing
practice. How prevalent are traffic carrier handles the call before it is the 8YY industry? As explained below,
pumping schemes involving toll free handed off to an IXC. Additionally, we we expect our proposed changes to have
calls? Are there examples of 8YY traffic seek comment on other issues related to numerous benefits, including: Removing
pumping schemes that differ materially 8YY traffic, including alternative incentives for abuse, reducing costs for
from those already described in the approaches to address abuses related to consumers, potentially lowering rates or
record? We encourage parties to 8YY calls. improving service for 8YY subscribers,
quantify the costs these schemes impose encouraging the transition to IP services,
A. Moving 8YY Originating End Office and reducing the number of disputes
on 8YY providers and subscribers.
and Tandem Switching and Transport over intercarrier compensation.
24. Database queries. As the least
regulated rate element of the 8YY traffic Charges to Bill-and-Keep 30. The basic logic underpinning our
flow, database queries also appear to 27. Consistent with the bill-and-keep proposal is that each carrier should be
have been the subject of abuse. framework the Commission adopted as responsible for the costs of the parts of
Commenters point out substantial ‘‘a default framework and end state for the call path which it has discretion to
variance in database charges and all intercarrier compensation traffic,’’ choose. Should we adopt any
contend that query charges are excessive we propose moving all interstate and exceptions to the proposal? For
and unrelated to actual costs. For intrastate originating access charges example, are there instances where an
sradovich on DSK3GMQ082PROD with PROPOSALS
example, AT&T provides numerous related to 8YY calls to bill-and-keep, IXC, or some other party, may require
examples of database query charges, except for database query charges. We the originating LEC to route traffic
ranging from as low as $0.0015 to as seek comment on this proposal. We also through a specific tandem? If so, should
high as $0.015. IXCs also claim that seek comment on an alternative the originating LEC be allowed to charge
there are times when they are billed for approach that would transition all the IXC for the costs it incurs in using
multiple queries on a single call. We originating interstate and intrastate end that tandem? If the originating LEC
invite commenters to provide office 8YY access charges to bill-and- routes 8YY traffic over a tandem that it
information about the actual cost of a keep but move 8YY tandem switching does not own, how should the
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originating LEC and the tandem owner 34. At least one competitive LEC that effective price of calling, through
recover their respective costs? Should offers toll free services to businesses and reduced charges and/or improved
the originating LEC be required to pay also provides originating 8YY services service quality.’’ The Commission
the tandem owner for the use of the opposes proposals to move originating further predicted that these ‘‘reduced
tandem and recover those costs from its access charges to bill-and-keep. This quality-adjusted prices will lead to
own end users? Are there situations carrier asserts that fraudulent toll free substantial savings on calls made, and
where such an arrangement would not calls should be addressed on a case-by- to increased calling.’’ This prediction
be just and reasonable? case basis through inter-carrier appears to have proven true. For
31. Curtailing abuses. We seek cooperation and by the Commission’s example, while there are several factors
comment on the extent to which our Enforcement Bureau and the Federal that may explain increased calling,
proposals will curtail 8YY abuses. In the Bureau of Investigation. This carrier’s significant growth has occurred in
USF/ICC Transformation Order, the contracts require its customers to adopt wireless subscribership since the
Commission found that, over time, bill- anti-fraud measures and provide Commission moved all CMRS traffic to
and-keep will ‘‘eliminate wasteful remedies against customers that are bill-and-keep.
arbitrage schemes and other behaviors suspected of engaging in unlawful 37. We recognize that consumers
designed to take advantage of or avoid activity. Do other carriers use similar appear to find toll free calling an
above-cost interconnection rates.’’ The contract provisions? How effective are attractive way to reach certain
Commission’s prediction has proven they? What efforts do carriers or their businesses and do not expect that to
accurate, as filings submitted in this customers make to identify illegitimate change if we move originating access
proceeding indicate that the transition 8YY calls? How effective are those charges for 8YY calls to bill-and-keep.
to bill-and-keep has reduced fraud and efforts? What security mechanisms do Given that the Commission has already
abuse related to terminating traffic. wholesalers or traffic aggregators moved wireless calls—including 8YY
However, the reforms adopted in the employ to screen incoming calls? What calls from wireless numbers—to bill-
USF/ICC Transformation Order did not obstacles do carriers or 8YY subscribers and-keep, consumers’ use of wireless
address 8YY traffic, and the record in face in distinguishing illegitimate traffic services may be instructive in helping
this proceeding shows an increase in from legitimate traffic? We seek predict the effects our proposed changes
certain types of abuses ‘‘designed to take comment on these and other issues will have on consumers’ use of toll free
advantage’’ of the intercarrier related to the alternative approach of services. Are there any lessons we can
compensation system, such as the addressing unlawful toll free calls on a learn from the effect bill-and-keep has
inefficient routing of 8YY calls. case-by-case basis. had on wireless 8YY calls? We seek data
32. In light of the positive outcome of on whether wireless 8YY originating
bill-and-keep for terminating traffic, we a. Benefits to Consumers calls have increased or decreased over
expect that our proposed reforms to 8YY 35. We seek comment on the extent to the past five years. Do consumers make
originating access charges will eliminate which our proposals will benefit fewer toll free calls from wireless
abuses—including benchmarking, consumers. In the USF/ICC phones than they do from wireline
mileage pumping, and traffic pumping Transformation Order, the Commission phones? Has the number of 8YY calls
schemes—related to 8YY calls. All of concluded that the intercarrier decreased as more people have switched
these schemes arise from carriers’ ability compensation regime distorted to wireless phones as their primary
to bill IXCs inflated access charges competition because carriers shifted method of telecommunications?
relating to 8YY traffic. Moving the their network costs onto other carriers 38. We expect that transitioning 8YY
access elements associated with these and, as a result, consumers could not calls to bill-and-keep will ultimately
abuses to bill-and-keep should eliminate identify and switch to more efficient benefit consumers. We invite comment
any ability to profit from these providers. At the same time, the on this view and welcome commenters
activities. We expect the proposed Commission observed that ‘‘because the to provide economic analysis and data
reforms will provide originating carriers calling party chooses the access in support of their views.
with the incentive to be as efficient and provider but does not pay for the toll
cost-effective as possible in routing 8YY call, it has no incentive to select a b. Benefits to 8YY Subscribers
traffic. We seek comment on this provider with lower originating access 39. We seek comment on the extent to
expectation. rates.’’ In the 8YY industry, consumers which our proposals will benefit 8YY
33. Based on the current record in this who call 8YY telephone numbers are subscribers. Because incentives in the
proceeding, we propose to revise our not charged directly for the calls, do not 8YY industry are misaligned (8YY
rules to change the incentives that are know what their originating carrier is subscribers are paying originating
leading to abuses of the intercarrier charging for routing their 8YY call and, carriers that they did not select), 8YY
compensation system for 8YY. We seek therefore, cannot exercise effective subscribers are likely paying higher
comment on each of these alleged consumer choice. Yet, inefficiencies and rates than they otherwise would, even
abuses, including mileage pumping, abuses of the intercarrier compensation for legitimate 8YY traffic. We anticipate
traffic pumping, benchmarking abuse, system result in higher prices to 8YY that, by correctly aligning carriers’
and excessive and unnecessary database subscribers, who must recover their incentives and pricing signals, bill-and-
dips. How should our rules be modified costs from their customers—a group that keep will lead to increased competition
to curb such abuses? Will moving likely includes originating 8YY callers. and ‘‘reduced quality-adjusted prices’’
originating end office and tandem Thus, in the end, consumers indirectly for 8YY subscribers. In addition, we
sradovich on DSK3GMQ082PROD with PROPOSALS
switching and transport rates for 8YY subsidize inefficiencies and abuses of predict that moving to bill-and-keep
calls to bill-and-keep discourage carriers the 8YY intercarrier compensation will prompt ‘‘carriers [to] engage in
from engaging in traffic or mileage system. substantial innovation to attract and
pumping? We seek comment on any 36. In the USF/ICC Transformation retain’’ customers.
costs and burdens on small entities Order, the Commission reviewed 40. We seek comment on these
associated with the proposed rules, economic evidence and concluded that, expectations and predictions. Are our
including data quantifying the extent of upon transitioning to bill-and-keep, proposed changes to the 8YY access
those costs or burdens. ‘‘carriers will reduce consumers’ charge regime likely to result in lower
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charges for database queries. IXCs point USF/ICC Transformation Order, but we (‘‘RespOrgs’’), or other entities use
out that 8YY database query rates vary seek comment on the underlying reason Somos’s RouteLink? What advantages
widely among carriers and are typically for the extreme variability in rates for does RouteLink provide compared to
untethered from the costs incurred in database queries. Are these rates other ways to connect to Somos’s
querying a database. We propose to reflective of the costs carriers incur in database? What effect, if any, does the
address concerns about excessive and providing database dip services? Do introduction of RouteLink have on what
irrationally priced rates for database querying costs vary by geographic constitutes a reasonable rate for
query charges by capping those charges region? Do query rates (or costs) vary by database queries?
nationwide at the lowest rate currently the type of customer? How do 3. One Dip per Call
charged by any price cap LEC. We also incumbent LECs set their database query
propose to allow only one database rates? What impact have high database 73. Regarding our proposal to limit
query charge per 8YY call. query rates had on IXCs and 8YY carriers to one database query charge
66. We invite comment on these subscribers? per call, we recognize that the
proposals. In this item, we do not 69. Evidence provided by AT&T Commission has previously declined to
propose to move database query charges indicates that the lowest rate currently impose such a requirement on LECs.
to bill-and-keep. Are there reasons that charged by a price cap LEC is $0.0015 Instead, the Commission deferred the
we should consider doing so per query, charged by CenturyTel. Is matter to an industry association, the
immediately? Should we revisit that this correct? If so, is there any reason Ordering and Billing Forum of the
question after a set period of time? Are this rate should not serve as a Exchange Carrier Standards Association.
there harms that might arise if we nationwide cap for all 8YY database Did this Association take any action on
moved other elements of originating query charges? Are rates above $0.0015 database query charges? Should the
access for 8YY to bill-and-keep, before per query unjust and unreasonable? Is Commission act now, given the current
we moved database query charges to there any reason to believe this rate is concerns about carriers billing IXCs for
bill-and-keep? We also seek comment below the cost of querying the database? more than one query per call?
on alternative methods of ensuring that Inteliquent observes that, Specifically, we seek comment on
database dip charges are just and whether billing for more than one query
[r]ate structures between incumbent local charge per 8YY call is an unjust and
reasonable.
exchange carriers trade off non-recurring
67. Is the proposed cap on database unreasonable practice, even if the
setup charges, monthly recurring
query charges reasonable? Should we interconnect charges, 8YY query charge, per duplicative queries are performed by
adopt a transition period for carriers to minute of use switching charges, and per different carriers in the call chain. Is
lower their rates to the proposed cap? If minute per mile transport charges. For there any legitimate reason that an IXC
so, how should we structure such a example, although some carriers charge a should reasonably be expected to pay
transition period? Should we adopt a materially higher non-recurring set up charge for multiple database queries in
firm cap, as we propose, or should we or monthly recurring interconnect charge, connection with a single 8YY call?
establish a rebuttable presumption that those higher rates typically are offset by a
lower per minute of use switching charge. E. Legal Authority
rates above a certain threshold are
presumptively unjust and unreasonable? Similarly, the 8YY DIP query charge may be 74. In the USF/ICC Transformation
high because the switched per minute of use Order, the Commission determined that
Should we provide a specific waiver
charge is low, and vice versa.
process for carriers that can demonstrate it had the authority to comprehensively
that their costs for database queries 70. Is this a correct representation of reform intercarrier compensation and
exceed the national cap? Should we how LECs allocate their charges? Is move all interstate and intrastate access
build in automatic reductions to the there any reason to believe that charges to bill-and-keep, explaining that
permissible data base query charge to CenturyTel’s rate of $0.0015 is ‘‘the legal authority to adopt the bill-
account for improvements in artificially low because CenturyTel and-keep methodology described herein
technology? If so, what amounts and allocates some database dip costs to applies to all intercarrier compensation
over what timeframe? Conversely, other originating charges? Should we traffic.’’ Pursuant to this authority, the
should we allow adjustments to any rate consider a cap based on the average or Commission adopted bill-and-keep as
caps to account for inflation? Does this median rates currently charged by the end state for all traffic exchanged
proposal create the proper incentives for LECs? between carriers and adopted a glide
carriers to minimize access costs and 71. What infrastructure is necessary to path toward that methodology for all
route 8YY traffic as efficiently as conduct a database query? How terminating access charges.
possible? We also seek comment on any expensive is it to become an SCP owner/ 75. The Commission’s actions in the
costs and burdens on small entities operator? How many SCP owner/ USF/ICC Transformation Order were
associated with this proposal, including operators are there? Is the market for upheld on appeal, including the
data quantifying the extent of those database queries competitive? We Commission’s decision to prescribe bill-
costs or burdens. encourage commenters to provide and-keep as the default methodology for
detailed information about the rates intercarrier compensation for various
2. Determining the Appropriate Cap SCP’s charge for database dips, the costs categories of traffic. The Court
68. AT&T alleges that query rates LECs incur in connecting to SCPs, and specifically rejected challenges to
currently range from $0.0015 to $0.015 any other costs associated with database Commission’s regulation of originating
per query, and that rates can vary queries. Are there economies of scale charges, noting that the FCC’s inclusion
sradovich on DSK3GMQ082PROD with PROPOSALS
widely even among corporate affiliates. associated with database dips? of originating access charges in its
We seek comment and additional data 72. We understand that Somos is reform effort was ‘‘reasonable’’ and
on the variability of 8YY database query offering a new product—RouteLink, entitled to deference.
rates. Do the rate examples provided by which ‘‘provides direct access to 76. Our statutory authority to
AT&T accurately reflect carriers’ rates authoritative Toll-Free data,’’ thus implement changes to pricing
for database queries? We recognize that eliminating any need for an SCP methodology governing the exchange of
the rates were capped at their then- intermediary. How many carriers, traffic with LECs flows directly from
current levels by the adoption of the Responsible Organizations sections 251(b)(5) and 201(b) of the Act.
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Section 251(b)(5) states that LECs have that CMRS providers cannot charge have moved to wireless-only methods of
a ‘‘duty to establish reciprocal originating access charges. telecommunications. This is not the
compensation arrangements for the 80. Several parties express frustration case, however, as demand for 8YY
transport and termination of with certain practices employed by numbers appears to be growing, as do
telecommunications.’’ In addition to intermediate providers in the 8YY call minutes of use. Thus, it is clear that
providing the substantive authority for flow. In particular, some carriers 8YY calls confer some benefit not only
various rules and requirements, the complain about the role intermediate to the 8YY subscriber, but also to the
Supreme Court in AT&T Corp. v. Iowa providers play in facilitating abuses of calling party.
Utilities Board, held that ‘‘the grant in the 8YY intercarrier compensation 83. Indeed, the Commission has
§ 201(b) means what it says: The FCC system. We seek comment on whether previously ‘‘reject[ed] claims that, as a
has rulemaking authority to carry out intermediate providers perform a policy matter, bill-and-keep is only
the ‘provisions of this Act,’ which legitimate function that should be appropriate in the case of roughly
include §§ 251 and 252.’’ preserved. Once originating 8YY traffic balanced traffic.’’ We continue to reject
77. In addition to our authority to moves to bill-and-keep, we expect the such claims and reiterate that ‘‘bill-and-
reform originating 8YY access charges, market will determine how much, if keep is most consistent with the models
we also have authority to establish a anything, aggregators or other used for wireless and IP networks,
transition plan for moving toward that ‘‘middlemen’’ should be paid for their models that have flourished and
ultimate objective in a manner that will services (including database queries). promoted innovation and investment
minimize market disruptions. Indeed, Should the Commission provide any without any symmetry or balanced
the Commission’s pre-existing regimes regulations or guidance regarding the traffic requirement.’’ Nonetheless, we
for establishing reciprocal compensation offering of these services or seek comment on whether there is a
rates for section 251(b)(5) traffic have compensation for these services? Or can legitimate reason to find that traffic
been upheld as lawful, and can be we rely on the marketplace? imbalances make 8YY calls ill-suited for
applied to originating 8YY traffic, as bill-and-keep.
2. Network Edge
provided by our transitional intercarrier 4. CMRS Providers
compensation rules related to 81. Although we have issued a
‘‘ultimately phasing down’’ originating separate Public Notice to refresh the 84. We do not include CMRS
access charges. As the U.S. Court of record on other intercarrier providers in our proposals because
compensation issues, including the wireless carriers are already subject to
Appeals for the D.C. Circuit has
network edge, we seek comment on bill-and-keep for 8YY calls and their
recognized, ‘‘[w]hen necessary to avoid
whether the network edge requires a end-user rates remain largely
excessively burdening carriers, the
distinct approach in the 8YY context, unregulated. We seek comment on
gradual implementation of new rates
particularly in a scenario where an IXC whether there are any CMRS-related
and policies is a standard tool of the
seeks a direct connection for 8YY issues we need to address in this
Commission,’’ and the transition ‘‘may
originating traffic. Parties argue that proceeding. Have CMRS providers been
certainly be accomplished gradually to
some carriers take advantage of the able to meet their revenue needs for
permit the affected carriers, subscribers
Commission’s current rules by originating 8YY calls through pre-
and state regulators to adjust to the new
specifying inefficient transport routes existing end-user charges? If not, what
pricing system, thus preserving the other mechanisms have CMRS providers
for 8YY traffic. Should originating
efficient operation of the interstate used to meet their revenue needs related
carriers be allowed to specify a certain
telephone network during the interim.’’ to originating 8YY calls?
transport route, particularly if they are
78. We invite comment on our legal 85. Some commenters assert that
financially responsible for the transport?
authority to adopt the changes to the CMRS providers collect revenue for
Should we develop separate rules for
8YY intercarrier compensation system originating 8YY calls pursuant to
certain locations (e.g., Alaska) with
that we are proposing in this Notice. Is revenue sharing arrangements with
respect to 8YY traffic? What role, if any,
there any reason that the precedents intermediate providers. We seek
should states continue to play in
cited above would not apply to our comment on this allegation. Are there
determining the network edge for 8YY
current proposals? Does the wireless carriers that refuse to connect
traffic?
Commission have the authority to create directly with other providers in order to
a revenue recovery mechanism and to 3. Traffic Imbalances facilitate revenue sharing arrangements?
cap database query charges as part of its 82. Some parties argue that bill-and- If so, how prevalent is this practice?
reform of 8YY originating access? Does keep is inappropriate for toll free calls What rationale do wireless providers
the Commission have the authority to because the traffic flow is unbalanced, use for refusing direct connection? How
make these changes pursuant to one or i.e., 8YY subscribers are unlikely to call are 8YY access charges and database
more different statutory provisions, consumers and, therefore, the traffic dips affected by a refusal of direct
other than sections 201(b) and always flows from the consumer to the connection?
251(b)(5)? 8YY subscriber. These arguments do not 86. We also seek comment on what
F. Related Issues strike us as persuasive. As the lessons we can learn from the wireless
Commission explained in the USF/ICC experience with bill-and-keep as we
1. Role of Intermediate Providers Transformation Order, ‘‘both parties reform originating access for wireline
79. To better inform our reform generally benefit from participating in a 8YY calls. What is the typical call path
sradovich on DSK3GMQ082PROD with PROPOSALS
efforts, we seek comment on the role call, and therefore . . . both parties for wireless 8YY calls? Does it differ
intermediate providers, such as third- should split the cost of the call.’’ This materially from the call path for
party tandem providers, or other reasoning applies to 8YY calls. If callers wireline 8YY calls? Have wireless rates
providers that are interposed in the call did not benefit from placing an 8YY increased to account for access costs for
path between an originating carrier and call, then we would expect to see a which CMRS providers cannot charge
8YY providers, play in the 8YY market. decline in demand for 8YY numbers as other carriers? If so, how large have
We also seek comment on how wireless well as in volume of 8YY calls, these rate increases been? Has
8YY calls have been affected by the fact especially as more and more consumers competition effectively disciplined
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List of Subjects in 47 CFR Parts 51 and defined in § 51.5, that is not an elements for an incumbent local
61 incumbent local exchange carrier. exchange carrier also include any rate
(g) Composite Terminating End Office elements assessed on local switching
Telephone.
Access Rate means terminating End access minutes, including the
Federal Communications Commission. Office Access Service revenue, information surcharge and residual rate
Katura Jackson, calculated using demand for a given elements. End office Access Service rate
Federal Register Liaison Officer, Office of the time period, divided by end office elements for a non-incumbent local
Secretary. switching minutes for the same time exchange carrier include any
Proposed Rules period. functionally equivalent access service.
(h) Database Query Charge means a
For the reasons discussed in the Note to paragraph (j): For incumbent local
charge that is expressed in dollars and exchange carriers, residual rate elements may
preamble, the Federal Communications cents that an originating carrier or include, for example, state Transport
Commission proposes to amend 47 CFR tandem switch provider assesses upon Interconnection Charges, Residual
parts 51 and 61 as follows: an interexchange carrier for obtaining Interconnection Charges, and PICCs. For non-
routing information for a Toll Free Call incumbent local exchange carriers, residual
PART 51—INTERCONNECTION and includes any charges for signaling rate elements may include any functionally
or transport services used to obtain such equivalent access service.
■ 1. The authority citation for part 51 routing information.
continues to read as follows: (k) Fiscal Year 2011 means October 1,
(i) Dedicated Transport Access 2010 through September 30, 2011.
Authority: 47 U.S.C. 151–55, 201–05, 207– Service means originating and (l) Incumbent Local Exchange Carrier
09, 218, 220, 225–27, 251–54, 256, 271, terminating transport on circuits means a Price Cap Carrier or Rate-of-
303(r), 332, 1302. dedicated to the use of a single carrier Return Carrier.
■ 2. Revise § 51.903 to read as follows: or other customer provided by an (m) Price Cap Carrier has the same
incumbent local exchange carrier or any meaning as that term is defined in
§ 51.903 Definitions.
functional equivalent of the incumbent § 61.3(aa) of this chapter.
(a) Access Reciprocal Compensation local exchange carrier access service (n) Rate-of-Return Carrier is any
means telecommunications traffic provided by a non-incumbent local incumbent local exchange carrier not
exchanged between telecommunications exchange carrier. Dedicated Transport subject to price cap regulation as that
service providers that is interstate or Access Service rate elements for an term is defined in § 61.3(aa) of this
intrastate exchange access, information incumbent local exchange carrier chapter, but only with respect to the
access, or exchange services for such include the entrance facility rate territory in which it operates as an
access, other than special access. elements specified in § 69.110 of this incumbent local exchange carrier.
(b) Baseline Composite Interstate chapter, the dedicated transport rate (o) Tandem-Switched Transport
Originating End Office Access Rate for elements specified in § 69.111 of this Access Service means:
Toll Free Calls means originating End chapter, the direct-trunked transport (1) Tandem switching and common
Office Access Service billed revenue rate elements specified in § 69.112 of transport between the tandem switch
from interstate Toll Free Calls for [Base this chapter, and the intrastate rate and end office; or
Year ¥ 1] divided by end office elements for functionally equivalent (2) Any functional equivalent of the
switching interstate Toll Free calling access services. Dedicated Transport incumbent local exchange carrier access
minutes for [Base Year ¥ 1]. Access Service rate elements for a non- service provided by a non-incumbent
(c) Baseline Composite Interstate incumbent local exchange carrier local exchange carrier via other
Tandem-Switched Transport Access include any functionally equivalent facilities. Tandem-Switched Transport
Service Rate for Toll Free Calls means access services. rate elements for an incumbent local
originating Tandem-Switched Transport (j) End Office Access Service means: exchange carrier include the rate
Access Service billed revenue from (1) The switching of access traffic at elements specified in § 69.111 of this
interstate Toll Free Calls for [Base Year the carrier’s end office switch and the chapter, except for the dedicated
¥ 1] divided by tandem-switched delivery to or from of such traffic to the transport rate elements specified in that
interstate Toll Free calling minutes for called party’s premises; section, and intrastate rate elements for
[Base Year ¥ 1]. (2) The routing of interexchange functionally equivalent service. Tandem
(d) Baseline Composite Intrastate telecommunications traffic to or from Switched Transport Access Service rate
Originating End Office Access Rate for the called party’s premises, either elements for a non-incumbent local
Toll Free Calls means originating End directly or via contractual or other exchange carrier include any
Office Access Service billed revenue arrangements with an affiliated or functionally equivalent access service.
from intrastate Toll Free Calls for [Base unaffiliated entity, regardless of the (p) Toll Free Call means a call to a toll
Year ¥ 1] divided by end office specific functions provided or facilities free number, as defined in § 52.101(f) of
switching intrastate Toll Free calling used; or this subchapter.
minutes for [Base Year ¥ 1]. (3) Any functional equivalent of the (q) Transitional Intrastate Access
(e) Baseline Composite Intrastate incumbent local exchange carrier access Service means terminating End Office
Tandem-Switched Transport Access service provided by a non-incumbent Access Service that was subject to
Service Rate for Toll Free Calls means local exchange carrier. End Office intrastate access rates as of December
originating Tandem-Switched Transport Access Service rate elements for an 31, 2011; terminating Tandem-Switched
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Access Service billed revenue from incumbent local exchange carrier Transport Access Service that was
intrastate Toll Free Calls for [Base Year include the local switching rate subject to intrastate access rates as of
¥ 1] divided by tandem-switched elements specified in § 69.106 of this December 31, 2011; and originating and
intrastate Toll Free calling minutes for chapter, the carrier common line rate terminating Dedicated Transport Access
[Base Year ¥ 1]. elements specified in § 69.154 of this Service that was subject to intrastate
(f) Competitive Local Exchange chapter, and the intrastate rate elements access rates as of December 31, 2011.
Carrier. A Competitive Local Exchange for functionally equivalent access ■ 3. Add § 51.921 to Subpart J to read
Carrier is any local exchange carrier, as services. End Office Access Service rate as follows:
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![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules 31115
§ 51.921 Transition of Originating Access interstate Toll Free Calls that exceeds its Composite Intrastate Originating End
Charges for Toll Free Calls. [base year] Target Composite Interstate Office Access Rate for Toll Free Calls.
(a) Effective [July 1, base year], Originating End Office Access Rate for The [base year + 1] Target Composite
notwithstanding any other provision of Toll Free Calls. Intrastate Originating End Office Access
the Commission’s rules, each Incumbent (3) Each Incumbent LEC shall Rate for Toll Free Calls means one-third
LEC shall calculate: establish rates for intrastate originating of the Baseline Composite Intrastate
(1) A single per-minute Baseline Tandem-Switched Transport Access Originating End Office Access Rate for
Composite Intrastate Originating End Service for Toll Free Calls in each state Toll Free Calls.
Office Access Rate for Toll Free Calls for in which it provides such service using (ii) Beginning July 1, [base year + 1],
each state in which it provides such the following methodology: a LEC is prohibited from filing an
service; (i) Each Incumbent LEC shall intrastate access tariff that includes an
(2) A single per-minute Baseline calculate its [base year] Target Originating End Office Access Rate for
Composite Interstate Originating End Composite Intrastate Originating intrastate Toll Free Calls that exceeds its
Office Access Rate for Toll Free Calls; Tandem-Switched Transport Access [base year + 1] Target Composite
(3) A single per-minute Baseline Service Rate for Toll Free Calls. The Intrastate Originating End Office Access
Composite Intrastate Originating [base year] Target Composite Intrastate Rate for Toll Free Calls for that
Tandem-Switched Transport Access Originating Tandem-Switched particular state.
Service Rate for Toll Free Calls for each Transport Access Service Rate for Toll (2) Each Incumbent LEC shall
state in which it provides such service; Free Calls means two-thirds of the establish interstate rates for originating
and Baseline Composite Intrastate Tandem- End Office Access Service for Toll Free
(4) A single per-minute Baseline Switched Transport Access Service Rate Calls using the following methodology:
Composite Interstate Originating for Toll Free Calls. (i) Each Incumbent LEC shall
Tandem-Switched Transport Access (ii) Beginning [July 1, base year], a calculate its [base year + 1] Target
Service Rate for Toll Free Calls. LEC is prohibited from filing an Composite Interstate Originating End
(b) Step 1. Beginning July 1, [base intrastate access tariff that includes an Office Access Rate for Toll Free Calls.
year], notwithstanding any other originating Tandem-Switched Transport The [base year + 1] Target Composite
provision of the Commission’s rules: Access Service Rate for intrastate Toll Interstate Originating End Office Access
(1) Each Incumbent LEC shall Free Calls that exceeds its [base year] Rate for Toll Free Calls means one-third
establish rates for intrastate originating Target Composite Intrastate Originating of the Baseline Composite Interstate
End Office Access Service for Toll Free Tandem-Switched Transport Access Originating End Office Access Rate for
Calls in each state in which it provides Service Rate for Toll Free Calls for that Toll Free Calls.
such service using the following particular state. (ii) Beginning July 1, [base year + 1],
methodology: (4) Each Incumbent LEC shall a LEC is prohibited from filing an
(i) Each Incumbent LEC shall establish rates for interstate originating interstate access tariff that includes an
calculate its [base year] Target Tandem-Switched Transport Access Originating End Office Access Rate for
Composite Intrastate Originating End Service for Toll Free Calls using the interstate Toll Free Calls that exceeds its
Office Access Rate for Toll Free Calls. following methodology: [base year + 1] Target Composite
The [base year] Target Composite (i) Each Incumbent LEC shall Interstate Originating End Office Access
Intrastate Originating End Office Access calculate its [base year] Target Rate for Toll Free Calls.
Rate for Toll Free Calls means two- Composite Interstate Originating (3) Each Incumbent LEC shall
thirds of the Baseline Composite Tandem-Switched Transport Access establish rates for originating Tandem-
Intrastate Originating End Office Access Service Rate for Toll Free Calls. The Switched Transport Access Service for
Rate for Toll Free Calls. [base year] Target Composite Interstate intrastate Toll Free Calls in each state in
(ii) Beginning [July 1, base year], a Originating Tandem-Switched which it provides such service using the
LEC is prohibited from filing an Transport Access Service Rate for Toll following methodology:
intrastate access tariff that includes an Free Calls means two-thirds of the (i) Each Incumbent LEC shall
Originating End Office Rate for Baseline Composite Interstate Tandem- calculate its [base year + 2] Target
intrastate Toll Free Calls that exceeds its Switched Transport Access Service Rate Composite Intrastate Originating
[base year] Target Composite Intrastate for Toll Free Calls. Tandem-Switched Transport Access
Originating End Office Access Rate for (ii) Beginning [July 1, base year], a Service Rate for Toll Free Calls. The
Toll Free Calls for that particular state. LEC is prohibited from filing an [base year + 2] Target Composite
(2) Each Incumbent LEC shall interstate access tariff that includes an Intrastate Originating Tandem-Switched
establish rates for interstate originating originating Tandem-Switched Transport Transport Access Service Rate for
End Office Access Service for Toll Free Access Service Rate for interstate Toll intrastate Toll Free Calls means one-
Calls using the following methodology: Free Calls that exceeds its [base year] third of the [base year] Baseline
(i) Each Incumbent LEC shall Target Composite Interstate Originating Composite Intrastate Originating
calculate its [base year] Target Tandem-Switched Transport Access Tandem-Switched Transport Access
Composite Interstate Originating End Service Rate for Toll Free Calls. Service Rate for Toll Free Calls.
Office Access Rate for Toll Free Calls. (c) Step 2. Beginning July 1, [base year (ii) Beginning July 1, [base year + 2],
The [base year] Target Composite + 1], notwithstanding any other a LEC is prohibited from filing an
Interstate Originating End Office Access provision of the Commission’s rules: intrastate access tariff that includes an
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Rate for Toll Free Calls means two- (1) Each Incumbent LEC shall Originating Tandem-Switched
thirds of the Baseline Composite establish intrastate rates for originating Transport Access Service Rate for
Interstate Originating End Office Access End Office Access Service for Toll Free intrastate Toll Free Calls that exceeds its
Rate for Toll Free Calls. Calls in each state in which it provides [base year + 2] Target Composite
(ii) Beginning [July 1, base year], a such service using the following Originating Tandem-Switched
LEC is prohibited from filing an methodology: Transport Access Service Rate for
interstate access tariff that includes an (i) Each Incumbent LEC shall intrastate Toll Free Calls for that
Originating End Office Rate for calculate its [base year + 1] Target particular state.
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![31116 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Proposed Rules
(4) Each Incumbent LEC shall Originating End Office Access Service (3) * * *
establish rates for interstate originating for Toll Free Calls or for Originating (i) The functional equivalent of the
Tandem-Switched Transport Access Tandem-Switched Transport Access ILEC interstate exchange access services
Service for Toll Free Calls using the Service for Toll Free Calls that is typically associated with the following
following methodology: different from its tariffed rates, or that
(i) Each Incumbent LEC shall rate elements: Carrier common line
is different from bill-and-keep if there is
calculate its [base year + 2] Target (originating); carrier common line
no tariffed rate for such services.
Composite Interstate Originating ■ 4. Add § 51.923 to Subpart J to read (terminating); local end office switching;
Tandem-Switched Transport Access as follows: interconnection charge; information
Service Rate for Toll Free Calls. The surcharge; tandem switched transport
[base year + 2] Target Composite § 51.923 Limitation on Database Query termination (fixed); tandem switched
Charges for Toll Free Calls. transport facility (per mile); tandem
Interstate Originating Tandem-Switched
Transport Access Service Rate for Toll (a) Notwithstanding any other switching; and Database Query Charge,
Free Calls means one-third of the [base provision of the Commission’s rules, on as that term is defined in section
year] Baseline Composite Interstate [the first July 1/annual tariff filing after [51.903(m)] of this chapter;
Originating Tandem-Switched rule adoption], every Incumbent LEC
shall cap the rates for database query * * * * *
Transport Access Service Rate for Toll
Free Calls. charges in its interstate or intrastate (e) Rural exemption. Except as
(ii) Beginning July 1, [base year + 2], tariffs at $.0015 per Toll Free Call. provided in paragraph (g) of this
a LEC is prohibited from filing an (b) Notwithstanding any other section, and notwithstanding
interstate access tariff that includes an provision of the Commission’s rules, on paragraphs (b) through (d) of this
Originating Tandem-Switched [the first July 1/annual tariff filing after section, a rural CLEC competing with a
Transport Access Service Rate for rule adoption], LECs involved in the non-rural ILEC shall not file a tariff for
interstate Toll Free Calls that exceeds its routing of a Toll Free Call to a provider its interstate exchange access services
[base year + 2] Target Composite of Toll Free calling services may not, that prices those services above the rate
Interstate Originating Tandem-Switched collectively, charge the provider of Toll
prescribed in the NECA access tariff,
Transport Access Service Rate for Toll Free calling services more than one
assuming the highest rate band for local
Free Calls. database query charge per Toll Free
switching. In addition to that NECA
(d) Step 3. Beginning July 1, [base Call.
rate, the rural CLEC may assess a
year + 2], notwithstanding any other presubscribed interexchange carrier
provision of the Commission’s rules, all PART 61—TARIFFS
charge if, and only to the extent that, the
LECs shall, in accordance with bill-and- ■ 5. The authority citation for part 61 competing ILEC assesses this charge.
keep, revise and refile their interstate continues to read as follows: Beginning July 1, 2013, all CLEC
and intrastate switched access Authority: Secs 1, 4(i), 4(j), 201–205 and
reciprocal compensation tariffs and any reciprocal compensation rates for
403 of the Communications Act of 1934, as intrastate switched exchange access
state tariffs to remove any intercarrier amended; 47 U.S.C. 151, 154(i), 154(j), 201–
charges applicable to interstate and 205 and 403, unless otherwise noted. services subject to this subpart also shall
intrastate originating End Office Access be no higher than that NECA rate. The
■ 6. Amend § 61.26 by revising rural exemption in this section does not
Service and Tandem-Switched paragraphs (a)(3)(i) and (e) to read as
Transport Access Service for all apply to Toll Free Calls.
follows:
interstate and intrastate rate elements * * * * *
for Toll Free Calls. § 61.26 Tariffing of Competitive Interstate [FR Doc. 2018–14150 Filed 7–2–18; 8:45 am]
(e) Nothing in this section shall Switched Exchange Access Services. BILLING CODE 6712–01–P
prevent a LEC from negotiating a rate for (a) * * *
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Document Created: 2018-07-02 23:56:12
Document Modified: 2018-07-02 23:56:12
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | Comments must be submitted on or before September 4, 2018. Reply comments must be submitted on or before October 1, 2018. | |
| Contact | Irina Asoskov, Wireline Competition Bureau, Pricing Policy Division at 202-418-2196 or at [email protected] | |
| FR Citation | 83 FR 31099 | |
| CFR Citation | 47
CFR
51 47 CFR 61 |
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