Federal Communications Commission FCC 08-51 
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Federal-State Joint Board on
Universal Service
1998 Biennial Regulatory Review –
Streamlined Contributor Reporting
Requirements Associated with Administration
of Telecommunications Relay Service, North
American Numbering Plan, Local Number 
Portability, and Universal Service Support
Mechanisms
Telecommunications Services for Individuals
with Hearing and Speech Disabilities, and the
Americans with Disabilities Act of 1990
Administration of the North American
Numbering Plan and North American 
Numbering Plan Cost Recovery Contribution
Factor and Fund Size
Number Resource Optimization
Telephone Number Portability
Truth-in-Billing and Billing Format
American Public Communications Council 
Petition for Reconsideration 
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CC Docket No. 96-45
CC Docket No. 98-171
CC Docket No. 90-571
CC Docket No. 92-237
NSD File No. L-00-72
CC Docket No. 99-200
CC Docket No. 95-116
CC Docket No. 98-170
ORDER ON RECONSIDERATION
Adopted:  February 12, 2008 Released:  February 14, 2008
By the Commission:
I. INTRODUCTION
1. In this Order, we grant the relief sought in the Petition filed by the American Public 
Communications Council (APCC) seeking modification of the Commission’s March 14, 2003, order in 
the above-captioned dockets.1 In that order, the Commission waived the requirements of section 54.712 
  
1 See Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-
116, 98-170, American Public Communications Council, Petition for Reconsideration, filed Apr. 30, 2003 (APCC 
Petition).  The Commission issued a public notice on APCC’s petition on May 20, 2003.  See Petitions For 
Reconsideration of Action in Rulemaking Proceeding, Public Notice, Report No. 2608 (May 20, 2003).
Federal Communications Commission FCC 08-51
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of its rules to permit local exchange carriers (LECs) to continue to recover certain contribution costs 
associated with Centrex customers on a per-line basis from multi-line business customers through the 
federal universal service line item.2 For the reasons stated herein, we agree with APCC that, as applied to 
independent payphone service providers (PSP), the decision in the Centrex Waiver Order does not further 
the stated goal of section 276 to “promote the widespread deployment of payphone services to the general 
public.”3  
II. BACKGROUND
2. As the Commission has previously recognized, Congress enacted section 276 of the 
Telecommunications Act of 1996 to promote competition among payphone service providers and the 
widespread deployment of payphone services.4  In the Wisconsin Payphone Order, the Commission found 
that to advance the statutory goals of section 276, it was appropriate to terminate the then-current system 
of payphone regulation and eliminate discrimination between BOC and independent payphone providers 
and subsidies for BOC payphones.5  The Commission also affirmed the Wireline Competition Bureau’s 
conclusion that section 276 requires BOCs to set their intrastate payphone line rates in compliance with 
the Commission’s cost-based, forward-looking “new services” test.6  
3. On December 12, 2002, the Commission adopted interim modifications to the current 
revenue-based universal service assessment system to ensure the sufficiency and predictability of 
universal service while it considers reforms to sustain the universal service fund for the long term.7  
Among other things, the Commission adopted a general rule precluding telecommunications carriers from 
marking up universal service line-item amounts above the relevant contribution factor.8 The Commission 
concluded such action would prohibit carriers from recovering unrelated costs through universal service 
line items and from averaging contribution costs across all end-user customers.  In addition, it would 
alleviate end-user confusion regarding universal service line items.9 The Commission recognized this 
rule would require some carriers to implement modifications to billing systems, and therefore stated that 
the rule would not become effective until April 1, 2003.10
4. On March 14, 2003, the Commission granted certain petitions for interim waiver and 
petitions for reconsideration of rules recently adopted in the Interim Contribution Methodology Order 
regarding the assessment and recovery of contributions to the federal universal service support 
mechanisms.11 In relevant part, the Commission granted local exchange carriers’ request for an interim 
  
2 See Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-
116, 98-170, Order and Second Order on Reconsideration, 18 FCC Rcd 4818 (2003) (Centrex Waiver Order).
3 See APCC Petition at 3 (citing Wisconsin Public Service Commission Order Directing Filings, Memorandum 
Opinion and Order, Bureau/CPD No. 00-01, 17 FCC Rcd 2051 (2002) (Wisconsin Payphone Order)); 47 U.S.C. § 
276(b).
4  See Wisconsin Payphone Order, 17 FCC Rcd at 2052, para. 2; see also 47 U.S.C. § 276(b).
5  See Wisconsin Payphone Order, 17 FCC Rcd at 2052, para. 2.
6  Id.
7 See Federal-State Joint Board on Universal Service, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-
116, 98-170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952 (2002) 
(Interim Contribution Methodology Order). 
8 See id. at 24974-83, paras. 40-63.
9 47 C.F.R. § 54.712 (“[T]he amount of the federal universal service line-item charge may not exceed the interstate 
telecommunications portion of that customer’s bill times the relevant contribution factor.”).
10 See Interim Contribution Methodology Order, 17 FCC Rcd at 24979, para. 52.
11 See Centrex Waiver Order, 18 FCC Rcd 4818.
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waiver of section 54.712 of the Commission’s rules to permit such carriers to continue to recover certain 
contribution costs associated with Centrex customers on a per-line basis from multi-line business 
customers through the federal universal service line item.12 The Commission’s action permitted local 
exchange carriers that utilize the presubscribed interexchange carrier charge (PICC) equivalency ratios 
when recovering universal service contribution costs from Centrex customers to recover a share of their 
contributions associated with the subscriber line charge for a specific Centrex line from their multi-line 
business customers in a given state.13  
III. DISCUSSION
5. In this Order, we grant the petition for reconsideration filed by APCC. We find that APCC 
has demonstrated that, as applied to PSPs, the Commission’s action in the Centrex Waiver Order unfairly 
burdens PSPs and is inconsistent with Congress’ desire to “promote the widespread deployment of 
payphone services to the benefit of the general public.”14
6. In its petition, APCC provides data from BOC tariffs that show, absent our decision in the 
Centrex Waiver Order, PSPs would pay less in the USF contribution pass-through charges.15  In one 
example, the additional USF pass-through assessed as a result of the Centrex Waiver Order results in an 
approximate 39 percent markup of the line item.16 APCC contends that this evidences the extent of the 
“Centrex subsidy portion of the [federal] USF.”17 APCC further contends that this result is contrary to 
Commission precedent as established in the Wisconsin Payphone Order.  Specifically, APCC asserts that 
in the Wisconsin Payphone Order, the Commission “specifically rejected an argument that BOC 
payphone line rates ‘may include subsidies for other BOC services.’”18  
7. As stated above, our actions in the Wisconsin Payphone Order were taken to ensure that 
Congress’ pro-competitive statutory goals were realized.19  Subsequent to the Wisconsin Payphone Order, 
the Commission, in the Centrex Waiver Order, determined that incumbent LECs could, on an interim 
basis, continue to recover universal service contributions costs associated with Centrex customers on a 
per-line basis from multi-line business customers through the federal universal service line item.20 We
agree with APCC that this action contravenes our goal to advance the pro-competitive statutory aims of 
section 276, as enunciated in the Wisconsin Payphone Order and further explained in the PICC Order.21  
As the Commission noted in those orders, in implementing section 276, the Commission required that 
payphone line rates be cost-based.22  In the PICC Order, the Commission, elaborating on the requirement 
that payphone rates be cost-based, held that incumbent LECs could not charge payphone providers the
multi-line business (MLB) PICC, because that charge does not recover the costs of  the lines upon which 
  
12 Id. at 4821-22, paras. 3-9.
13 Id. at 4821-22, para.8.
14 See 47 U.S.C. § 276(b)(1).  
15 APCC Petition at n.12.
16 Id.
17 Id. at 5.
18 Id. at 3 (citing Wisconsin Payphone Order at 2068-69, paras. 55-56).
19 See supra para. 2.
20 Centrex Waiver Order, 18 FCC Rcd at 4821-22, paras. 3-9.
21 See supra para. 2; see also Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, 
CC Docket Nos. 96-262, 94-1, Order on Reconsideration, 18 FCC Rcd 12626, 12629, para. 8 (2003) (PICC Order) 
(exempting payphone lines from PICCs).
22 Id.
Federal Communications Commission FCC 08-51
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it is assessed but instead allows incumbent LECs to make up a common-line revenue shortage associated 
with residential and single-line business lines. 23  The Commission noted that, even though the PICC does 
not  subsidize the LEC’s payphone service it would be inappropriate to assess PICCs on PSPs because 
imposition of the PICC may limit the deployment of payphone services that fulfill the universal service 
function intended by section 276.24  
8. We conclude here that allowing for an upward adjustment of the universal service line-item 
to compensate for the Commission’s treatment of Centrex services results in charges associated with 
payphone lines that are not cost-based.  As such, application of the Centrex-adjusted portion of the 
universal service line item to PSPs would, like the application of the PICC, be inconsistent with 
Congress’ direction in 276(b).  We therefore conclude that LECs may not charge additional USF line-item 
amounts related to the Centrex adjustments to PSPs.  As a result, section 54.712 of our rules, which 
addresses contribution recovery of universal service costs from end users, applies to PSPs.25
9. In order to give effect to our decision in this order, PSPs should identify themselves within 30 
calendar days to their respective underlying LEC so the LEC can ensure its compliance with this order.  
We also provide LECs with 90 days after the effective date of this order to ensure their compliance with 
the decision contained herein.
IV. ORDERING CLAUSES
10. Accordingly, IT IS ORDERED that pursuant to the authority contained in Sections 1, 4(i), 
4(j), 201(b), 202(a), 254, and 276 of the Communications Act of 1934, as amended, 47 USC §§ 151, 
154(i), 154(j), 201(b), 202(a), 254, and 276, the Petition for Reconsideration filed by the American Public 
Communication Council, IS HEREBY GRANTED to the extent provided herein.
11. IT IS FURTHER ORDERED that, pursuant to section 408 of the Communications Act of 
1934, as amended, 47 U.S.C. § 408, this Order SHALL BE EFFECTIVE upon release.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
  
23 See PICC Order, 18 FCC Rcd at 12629, paras. 7-8.
24 See PICC Order, 18 FCC Rcd at 12629, para. 8.
25 47 C.F.R. § 54.712 (limiting the amount a contributor may recover through its federal universal service line item 
to the interstate telecommunications portion of the customer’s bill times the relevant contribution factor).