Federal Communications Commission DA 15-458 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Material to be Filed in Support of 2015 Annual Access Tariff Filings ) ) ) ) WC Docket No. 15-75 ORDER Adopted: April 14, 2015 Released: April 14, 2015 By the Acting Chief, Pricing Policy Division: I. INTRODUCTION 1. In this Order, we set forth the Tariff Review Plans (TRPs) that are available for all incumbent local exchange carriers (LECs) to use to support the annual revisions to the rates in their interstate access service tariffs. 1 The completion of the TRPs appended to this document will provide the supporting documentation to partially fulfill the requirements established in sections 61.41 through 61.49 of the Commission’s rules, and the requirements established in sections 51.700 through 51.715 and 51.901 through 51.919 of the Commission’s rules. 2 The TRPs display basic data on rate development in a consistent manner, thereby facilitating review of the incumbent LEC rate revisions by the Commission and interested parties. 3 The annual TRPs have served this purpose effectively for numerous years. 2. On November 18, 2011, the Commission released the USF/ICC Transformation Order and/or FNPRM, which established a number of rules requiring incumbent LECs to adjust, over a period of years, many of their switched access charges effective on July 1 of each of those years, with the ultimate goal of transitioning to a bill-and-keep regime at the end of the transition. 4 The Commission also adopted a recovery mechanism to mitigate the impact of reduced intercarrier revenues on carriers and to facilitate continued investment in broadband infrastructure, while providing greater certainty and predictability going forward than the status quo had been. 5 As part of the recovery mechanism, the Commission defined as “Eligible Recovery” the amount of intercarrier compensation revenue reductions that incumbent LECs would be eligible to recover through a combination of end-user charges (Access 1 The filing date and comment periods were released earlier in a separate order. See July 1, 2015 Annual Access Charge Tariff Filings, WC Docket No. 15-75, Order, DA 15-368 (Pricing Pol. Div. rel. Mar. 27, 2015). 2 47 C.F.R. §§ 61.41-.49, 51.700-.715 and 51.901-.919. 3 TRP formats for the annual filings are developed for the specific circumstances of the calendar year in which the revised rates will become effective. We refer to the TRPs discussed in this document as the 2015 TRPs. 4 See Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17934-35, para. 801 (2011) (USF/ICC Transformation Order and/or FNPRM) (stating that although many of the switched access rate elements are subject to the transition adopted, other rates were not being specifically reduced at that time), pets. for review denied sub nom. In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014). See also id. at 18109-115, paras. 1297-1314 (seeking comment on the appropriate transition for rate elements not specifically addressed in the Report and Order); id. at 18149, para. 1404. 5 Id. at 17677, para. 36. Federal Communications Commission DA 15-458 2 Recovery Charge (ARC) 6 and, where eligible and if a carrier elects to receive it, Connect America Fund support. 7 A carrier’s Eligible Recovery is based on a percentage of the reduction in revenue each year resulting from the intercarrier compensation reform transition. 8 3. Rate-of-return incumbent LECs subject to section 61.39 of the Commission's rules 9 are required to file access service tariff revisions this year, an odd-numbered year, 10 and are required to submit supporting documentation with their tariff filings. 11 These carriers should file the rate-of-return TRP to support these revisions. Rate-of-return incumbent LECs subject to section 61.38 of the Commission's rules 12 historically would not have been required to file access service tariffs this year, since they file revisions in even-numbered years. 13 Pursuant to the USF/ICC Transformation Order, however, rate-of-return incumbent LECs subject to section 61.38 of the Commission’s rules must file a TRP this year to comply with the requirements of sections 51.909(e), 51.917(d)(iv), and 51.917(e) of the Commission’s rules, and must file the TRP forms relevant to those rule sections. 14 4. Based on the Wireline Competition Bureau’s (Bureau) experience in reviewing TRPs in prior years, the submission by price cap incumbent LECs of the attached Short Form TRP on May 18, 2015, together with comments and reply comments by interested parties, will aid the Bureau in analyzing the annual demand and rate revisions to be filed in June 2015. Section II of this Order describes the 2015 TRP for price cap incumbent LECs, and Section III describes the 2015 TRP for rate-of-return incumbent LECs. II. PRICE CAP TARIFF REVIEW PLAN 5. In the LEC Price Cap Order, 15 the Commission adopted price cap regulation for certain incumbent LECs, effective January 1, 1991. Companies that currently file interstate access tariffs pursuant to the price cap rules include the ACS Companies; Ameritech Operating Companies; BellSouth Telecommunications, LLC; CenturyLink Operating Companies; Cincinnati Bell Telephone; Consolidated Communications Companies; Frontier Telephone Companies; Hawaiian Telcom, Inc.; Illinois Consolidated Telephone Company; Micronesian Telecommunications Corporation; Nevada Bell Telephone Company; Pacific Bell Telephone Company; Puerto Rico Telephone Company; Southwestern Bell Telephone; SureWest Telephone; The FairPoint Telephone Companies; The Verizon Telephone Companies; Virgin Islands Telephone Corporation; and Windstream Telephone System. All companies that file pursuant to price cap regulation in the 2015 annual filing should also file the price cap TRPs outlined below and contained in the Appendix. 6 Id. at 17958, para 852. 7 Id. at 17957, para. 850. 8 Id. at 17957-58, paras. 850-51. In creating the recovery mechanism, the Commission concluded that “it is appropriate to first look to customers paying lower rates for some limited, reasonable recovery, and adopt[ed] a number of safeguards to ensure that rates remain affordable and that consumers are not required to contribute an inequitable share of lost intercarrier revenues.” Id. at 17957, para. 850. 9 47 C.F.R. § 61.39 (rate-of-return carriers that file tariffs based on historical costs and demand). 10 47 C.F.R. § 69.3(f)(2). 11 47 C.F.R. § 61.38(b). 12 47 C.F.R. § 61.38 (rate-of-return carriers that file tariffs based on projected costs and demand). 13 47 C.F.R. § 69.3(f)(1). 14 47 C.F.R. §§ 51.909(e), 51.917(d)(iv), 51.917(e). 15 Policy and Rules Concerning Rates for Dominant Carriers, CC Docket No. 87-313, Second Report and Order, 5 FCC Rcd 6786 (1990) (LEC Price Cap Order), aff’d, National Rural Telecom Ass’n v. FCC, 988 F.2d 174 (D.C. Cir. 1993). Federal Communications Commission DA 15-458 3 A. Price Cap TRP Spreadsheets and Workpapers 6. In the 2015 price cap annual access TRP, we adopt a number of changes to the 2014 TRP. The spreadsheets and workpapers are discussed in detail in Section B below and are contained in the Appendix. 1. ARC Spreadsheets 7. The ARC spreadsheets consist of five individual spreadsheets that demonstrate the calculations necessary to arrive at an ARC rate for filing carriers. These spreadsheets were created to comply with section 51.915(e) of the Commission’s rules, and include the Rate Ceiling CAF and No CAF spreadsheets, the Tariff Rate Comparison CAF and No CAF spreadsheets, and the True-up spreadsheet. This year, these spreadsheets have been modified to reflect the increase of the maximum ARC rates. 2. Access Reduction Spreadsheets 8. The Access Reduction spreadsheets (standalone and regional) identify the intrastate rates that are required to be reduced pursuant to section 51.907(b)-(g) of the Commission’s rules, and calculate the amount of the reductions. These are spreadsheets created to comply with sections 51.907(b)-(g) and 51.915(d) of the Commission’s rules. This year, the Access Reduction Spreadsheets have been modified to reflect rate reductions required by section 51.907(e) of the Commission’s rules. 3. Eligible Recovery Spreadsheet 9. The Eligible Recovery spreadsheet calculates the amount of Eligible Recovery a price cap incumbent LEC is entitled to receive pursuant to section 51.915(d) of the Commission’s rules. This year, the Eligible Recovery Spreadsheet has been modified to change formulas in compliance with section 51.915(d)(iv) of the Commission’s rules. 4. Reciprocal Compensation Spreadsheets 10. The Reciprocal Compensation spreadsheets demonstrate the calculations necessary to comply with section 51.705 of the Commission’s rules, and calculate the Eligible Recovery for reciprocal compensation rate reductions pursuant to section 51.915(d). These spreadsheets are the Non-CMRS Reciprocal Compensation and CMRS Reciprocal Compensation spreadsheets. This year, the Non-CMRS Reciprocal Compensation spreadsheet has been modified to reflect the rate adjustments required by sections 51.705(c)(3) and 51.907(e) of the Commission’s rules. 5. ICC Summary Spreadsheet 11. The ICC Summary Spreadsheet provides a summary of data contained in the ARC, Access Reduction, Eligible Recovery, Reciprocal Compensation, and True-up spreadsheets. 6. IND1 Spreadsheet 12. The IND1 spreadsheet displays price cap indices (PCIs), actual price indices (APIs), service band indices (SBIs), and upper SBI limits. It is unchanged from the version in the 2014 TRP. For the special access and interexchange baskets, to assist in verifying the historical indices reported in IND1, price cap incumbent LECs must continue to file workpapers that identify transmittals in which the current index levels became effective. 7. CAP Spreadsheets 13. Price cap incumbent LECs develop the End User Common Line Charge (EUCL), the Presubscribed Interexchange Carrier Charge (PICC), and Carrier Common Line (CCL) rates, the rates that recover common line, marketing and transport interconnection (CMT) revenue, on CAP-1, CAP-2, CAP-3, CAP-4, and CAP-5. 14. Price cap incumbent LECs that price certain common line rate elements separately by jurisdiction within a study area are required to provide such individual rates, instead of a roll up or average rate, on the CAP-1J form. Federal Communications Commission DA 15-458 4 8. PCI1 Spreadsheet 15. The PCI1 spreadsheet displays the calculation of the PCIs for the price cap baskets and includes the following data: (1) the Gross Domestic Product Price Index (GDP-PI) measuring inflation; (2) the productivity offset (X-Factor); 16 (4) the exogenous cost change (Z); (5) the base-year (calendar- year 2014) revenue R for each basket; and (6) the weighting factor (w) used in computing the PCIs. There are no revisions to these spreadsheets. 9. SUM1 Spreadsheet 16. This is a summary spreadsheet displaying the revenues in baskets and categories. It displays the base-year (calendar year 2014) service demand multiplied by: (1) current rates; and (2) proposed rates. SUM1 is used to calculate the difference in revenues using base-year demand, under current and proposed rates. There are no revisions to the SUM1 spreadsheet. 10. EXG Spreadsheets 17. The EXG1 spreadsheet displays the exogenous cost changes to the PCIs attributable to any: (1) sale of exchanges; (2) FCC regulatory fees; (3) excess deferred taxes; (4) amortization of investment tax credits; (5) low end adjustment calculations; (6) fees associated with Telecommunications Relay Service; (7) changes in the allocation of costs between regulated and unregulated activities; (8) North American Numbering Plan Administration expenses; (9) removal of thousand block number pooling; and (10) other exogenous cost changes the incumbent LECs may file. There are no revisions to the EXG1 spreadsheet. 18. The EXG2 spreadsheet displays the net exogenous shifts related to bands and zones. There are no revisions to the EXG2 spreadsheet. 11. Combined Indices 19. The TRP includes a subprogram or switch that allows price cap incumbent LECs to combine several study areas for purposes of calculating the PCIs. 17 Thus, price cap incumbent LECs may file different tariffed rates while combining indices across study areas to demonstrate compliance, i.e., that the API is no greater than the PCI. There are no revisions to these spreadsheets. 12. RTE1 Spreadsheets 20. These spreadsheets display information used to compute the APIs, SBIs, and upper SBI limits. They display calendar year 2014 demand, current rates, proposed rates, and revenues computed by multiplying the 2014 demand by current and proposed rates. The RTE1 spreadsheets enable the Commission to verify the accuracy of “R,” the revenue variable in the PCI formula that equals base period (2014) demand multiplied by rates. Demand and price data are reported in the aggregate under the primary rate elements of each category. The level of aggregation in the RTE1 spreadsheets allows rapid, consistent verification of index calculations across all companies. There are no revisions to these spreadsheets. 13. Rate Detail Spreadsheet 21. In their previous annual filings, each price cap incumbent LEC provided a spreadsheet that gave complete rate element detail, i.e., demand, existing rates, and proposed rates for each rate element subject to price caps. Price cap incumbent LECs should again file this spreadsheet with their 2015 annual access tariff filing. We leave unspecified the exact format of the rate detail spreadsheet because each price 16 The X-Factor is set pursuant to section 61.45 of the Commission’s rules. 47 C.F.R. § 61.45. 17 This switch in the program would apply, for example, to Verizon and CenturyLink, which have submitted TRPs where basket indices and service bands have been aggregated even though some study area tariffs have been kept separated. Federal Communications Commission DA 15-458 5 cap incumbent LEC has a different number of rate elements. For each rate element, however, price cap incumbent LECs should display the rate element name, jurisdiction, base period demand, current rates, and proposed rates. Price cap incumbent LECs also may include a rate identifying code. The revenue amounts for baskets and categories should be totaled to assist in verifying the agreement between this form and the revenue amounts in RTE1. The variation in the number of rate elements among price cap incumbent LECs prevents us from specifying the row numbers, but each row of this form should correspond to only one rate element. The rows should reflect the basket and service category sequence used in RTE1. There are no revisions to this spreadsheet. 14. Services Excluded from Price Caps 22. For the 2015 filing, we request that price cap incumbent LECs provide a list of services that are tariffed, but are excluded from price caps. The list should identify the tariff section containing each service. Rate element details must be provided for the following categories: Special Construction/Individual Case Basis; Packet Services (e.g., ATM, Frame Relay); End User Charges (e.g., USF charges, LNP); Government Services (e.g., FTS); Miscellaneous/Other (e.g., engineering services); and services that were in price caps but have been removed (e.g., interexchange services, special access). Incumbent LECs do not have to include in this list the services removed pursuant to the USF/ICC Transformation Order. For the remaining services included in the list, incumbent LECs must identify the major service, indicate whether the rate is recurring or non-recurring, and the authority relied on to remove the service. Incumbent LECs must also clearly state in their cover letter where this information can be found in their TRP. B. Miscellaneous 23. In addition to the above specifications, price cap incumbent LECs must include with their support materials a list of all currently applicable Part 69 waivers. The list should include the following information: (1) a citation to the Commission or Bureau order granting the waiver; (2) a brief description of the waiver, including whether any new rate elements were authorized; and (3) the basket and, if applicable, service category of each rate element affected by the waiver. III. RATE-OF-RETURN TARIFF REVIEW PLAN A. Modifications to the Rate-of-Return TRP 24. In the 2015 rate-of-return TRP, we adopt certain modifications to the 2014 rate-of-return TRP in order to implement the USF/ICC Transformation Order. These modifications are noted in the forms and workpapers. The TRP for rate-of-return carriers is contained in the Appendix. 25. For special access and common line services, the 2015 rate-of-return TRP will be similar to the TRP in previous years. For switched access services, incumbent LECs regulated pursuant to sections 61.38 and 61.39 of the Commission’s rules must complete the ARC spreadsheets and the RoR- ILEC-ICC-data workbook, which contains several tabs with spreadsheets. The ARC spreadsheets will be the same as the spreadsheets filed by the price cap incumbent LECs described in paragraph 7 above. The RoR-ILEC-ICC-data workbook will contain two spreadsheets for carriers to determine their intrastate and interstate rates and Eligible Recovery pursuant to sections 51.909(b)-(g) and 51.917(d) of the Commission’s rules. In addition, there will be a spreadsheet for carriers to calculate their reciprocal compensation rates and Eligible Recovery pursuant to sections 51.705 and 51.917(d) of the Commission’s rules and a spreadsheet to summarize the carrier’s Eligible Recovery. These spreadsheets have all been modified from the 2014 spreadsheets to the extent necessary in order to implement the requirements of the USF/ICC Transformation Order for the step of the transition required for the July 1, 2015 annual access charge tariff filing, and the requirements of the recent 2015 ICC Clarification Order addressing limited issues regarding the Eligible Recovery true-up process for rate-of-return carriers. 18 These carriers 18 See Connect America Fund; Developing a Unified Intercarrier Compensation Regime, WC Docket No. 10-90, CC Docket No. 01-92, Order, DA 15-249 (Wireline Comp. Bur. rel. Feb. 24, 2015) (2015 ICC Clarification Order). Federal Communications Commission DA 15-458 6 also must provide a summary of the data from these spreadsheets in a new spreadsheet, the RoR ILEC Summary spreadsheet. 26. Carriers that file under section 61.38 also must file the ROR TRP spreadsheet this year. These carriers are required to set forth on this TRP cost, demand, and other data and calculations underlying the development of rates for special access and common line services. B. General Guidelines Applicable to NECA 27. We have not adopted a TRP for the National Exchange Carrier Association (NECA), although NECA should refer to the rate-of-return TRP for guidance on the level of support materials to provide in its annual filing. As in the past, NECA should provide: (1) earnings data for special access services using the ERN-1 format; and (2) average schedule company settlements using the COS-1 format. IV. GENERAL INSTRUCTIONS 28. The following general instructions apply to all incumbent LECs. These instructions pertain to the TRPs and other documentation filed in support of access charges. A. Revised TRPs 29. If an incumbent LEC files to revise its TRP after June 16, 2015, the TRP should be refiled in its entirety, rather than just the parts of the TRP that are changed. The latest TRP filed becomes the TRP of record. Other parts of the original filing, e.g., portions of the explanations, description and justification, and workpapers, may be omitted if unchanged by the revision. B. Certification 30. The filing of inaccurate or incomplete data may seriously detract from the ability of the Commission and interested parties to evaluate the revised rates. All incumbent LECs must certify that their historical and forecast data are accurate by including a signed statement that the support data are true, correct, and complete to the best of the carrier’s knowledge. This certification will apply to all data submitted in support of revised rates, including the data that are filed in the TRP. Moreover, carriers are required to make several additional certifications pursuant to the USF/ICC Transformation Order. 19 These certifications should be displayed as the last pages in each company’s filing containing its TRP. Incumbent LECs are also under a continuing legal obligation to correct any inaccurate or incomplete data subsequently discovered in the TRP or other support data. C. Compliance with the Paperwork Reduction Act 31. This Order contains modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA). 20 The information collection requirements, including the modifications contained in this Order, have been submitted to the Office of Management and Budget (OMB) for review under section 3507(h) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the modified information collection requirements contained in this proceeding. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, 21 we have sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. 19 See USF/ICC Transformation Order, 26 FCC Rcd at 17987, para. 905 (“Carriers recovering eligible recovery will be required to certify annually that they are entitled to receive the recovery they are claiming and that they are complying with all rules pertaining to such recovery.”); see also id. at 17964-65, para. 862 n.1664 (incumbent LECs receiving Eligible Recovery must certify as part of their tariff filings to both the FCC and any state commission exercising jurisdiction over the incumbent LEC’s intrastate costs that they are not seeking duplicative recovery in the state jurisdiction for any Eligible Recovery subject to the recovery mechanism). 20 Public Law 104-13. 21 Public Law 107-198; see 44 U.S.C. § 3506(c)(4). Federal Communications Commission DA 15-458 7 32. In this Order, we have assessed the effects of filing the TRP on incumbent LECs and believe we have minimized the burden to the extent possible. We minimize the regulatory burden on the incumbent LECs by deleting obsolete sections of the TRP that have not proven to be useful, and carriers need not file historical data that was filed in previous years. 22 V. ORDERING CLAUSES 33. Accordingly, IT IS ORDERED that, pursuant to sections 1, 4 (i) and (j), 5, and 201-209 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i)-(j), 155, 201-209, and sections 0.91 and 0.291 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, this Order IS ADOPTED. FEDERAL COMMUNICATIONS COMMISSION Pamela S. Arluk Acting Chief Pricing Policy Division Wireline Competition Bureau 22 See, e.g., supra para. 22. Federal Communications Commission DA 15-458 8 APPENDIX All Tariff Review Plans http://fcc.gov/encyclopedia/tariff-review-plans