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 NEWS  News  media  Information  202  /  418-  0500  TTY  202  /  418-  2555  Fax-  On-  Demand  202  /  418-  2830  Internet:  http://  www.  fcc.  gov  ftp.  fcc.  gov  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order  constitutes  official  action.  See  MCI  v.  FCC.  515  F  2d  385  (D.  C.  Circ  1974).  FOR  IMMEDIATE  RELEASE:  NEWS  MEDIA  CONTACT: 
 February  12,  2004  Michael  Balmoris  202-  418-  0253  Email:  michael.  balmoris@  fcc.  gov 
 FCC  ADOPTS  FURTHER  MEASURES  TO  REFORM  INTERSTATE  ACCESS  CHARGE  SYSTEM  FOR  RURAL  CARRIERS 
 Washington,  D.  C.  –  The  Federal  Communications  Commission  (FCC)  today  adopted  further  measures  to  reform  interstate  access  charges  and  the  universal  service 
 support  system  for  rate-  of-  return  incumbent  local  exchange  carriers  (LECs).  These  measures  are  designed  streamline  the  FCC’s  rules  and  increase  rural  carriers  flexibility  to 
 respond  to  market  conditions. 
 Rate-  of-  return  carriers,  as  opposed  to  price  cap  carriers,  are  typically  small,  rural  telephone  companies,  ranging  in  size  from  a  few  hundred  lines  to  approximately  one 
 million.  They  generally  have  higher  operating  and  equipment  costs  than  price  cap  carriers  due  to  lower  subscriber  density,  smaller  exchanges,  and  limited  economies  of  scale.  Rate-of- 
 return  carriers  also  rely  more  heavily  on  revenues  from  interstate  access  charges  and  universal  service  support.  They  number  roughly  1,250  carriers  and  serve  approximately 
 seven  percent  of  the  nation’s  phone  lines. 
 The  Report  and  Order  adopted  today  resolves  a  number  of  issues  on  which  the  FCC  sought  comment  in  the  October  2001  Multi-  Association  Group  (MAG)  Order  and 
 Further  Notice,  including: 
 1.  Reduce  Costs  and  Uncertainties  –  Modifies  the  “all-  or-  nothing”  rule  to  permit  rate-  of-  return  carriers  to  bring  recently  acquired  price  cap  carrier  lines  back  to 
 rate-  of-  return  regulation  without  obtaining  a  waiver. 
 2.  Pricing  Flexibility  –  Grants  rate-  of-  return  carriers  the  authority  to  provide  geographically  deaveraged  transport  and  special  access  rates,  subject  to  certain 
 limitations. 
 3.  Simplify  Support  Mechanism  –  Merges  Long  Term  Support  (LTS),  a  legacy  universal  service  mechanism  established  following  the  divestiture  of  AT&  T, 
 into  Interstate  Common  Line  Support  (ICLS),  a  new  universal  service  mechanism  established  in  the  MAG  order  to  replace  implicit  support  in  access 
 charges.  This  measure  will  not  affect  existing  support  levels  for  rate-  of-  return  carriers. 


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 The  FCC  also  adopted  a  Second  Further  Notice  of  Proposed  Rulemaking  to  seek  comment  on  two  specific  plans  filed  by  rate-  of-  return  carriers  that  propose  establishing 
 optional  alternative  regulation  mechanisms  for  rate-  of-  return  carriers. 


 -FCC- 
 Docket  No.:  CC  00-  256 
 Action  by  the  Commission,  February  12,  2004,  by  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rulemaking  (FCC  04-  31).  Chairman  Powell,  Commissioners 
 Abernathy,  Copps,  Martin,  and  Adelstein  with  Commissioners  Copps,  Martin,  and  Adelstein  issuing  separate  statements. 


 Wireline  Competition  Bureau  Staff  Contact:  Doug  Slotten  at  202-  418-  1572 
 News  about  the  Federal  Communications  Commission  can  also  be  found  on  the  Commission’s  web  site  www.  fcc.  gov. 
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