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2014 Intercarrier Compensation Transition Clarification Order

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Released: March 31, 2014
Federal Communications Commission DA 14-434

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)
Connect America Fund
)
WC Docket No. 10-90
)
Developing an Unified Intercarrier Compensation
)
CC Docket No. 01-92
Regime
)

ORDER

Adopted: March 31, 2014

Released: March 31, 2014

By the Associate Chief, Wireline Competition Bureau:

TABLE OF CONTENTS

Heading
Paragraph #
I. INTRODUCTION.................................................................................................................................. 1
II. BACKGROUND.................................................................................................................................... 2
III. DISCUSSION ........................................................................................................................................ 4
A. Rate Parity for Interstate and Intrastate Terminating End Office Access Service........................... 4
B. Calculation of Terminating End Office Access Rates ..................................................................... 7
C. Other Corrections or Clarifications................................................................................................ 11
IV. PROCEDURAL MATTERS................................................................................................................ 20
V. ORDERING CLAUSES....................................................................................................................... 24
APPENDIX – Final Rules

I.

INTRODUCTION

1.
In the USF/ICC Transformation Order, the Commission delegated to the Wireline
Competition Bureau (Bureau) the authority to make any rule revisions necessary to ensure that the
reforms adopted by the Commission are properly reflected in the rules, including correction of any
conflicts between the new or revised rules and addressing of any omissions or oversights. 1 In this Order,
the Bureau acts pursuant to its delegated authority to clarify and correct certain rules relating to
implementation of the intercarrier compensation (ICC) transition adopted in the USF/ICC Transformation
Order
. Specifically, the Bureau clarifies language in sections 51.907 and 51.909 to reflect ongoing rate
parity in the transition process for price cap and rate-of-return local exchange carriers (LECs), consistent
with the intent of the USF/ICC Transformation Order. The Bureau also clarifies certain aspects of the
Commission’s rules relating to the transition of terminating end office access rates and the calculation of
Eligible Recovery for price cap and rate-of-return carriers beginning in 2014. Finally, the Bureau
clarifies issues related to duplicative recovery and the true-up of regulatory fees and revenue
calculations.2

1 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, 18149, para. 1404 (2011) (USF/ICC Transformation Order), pets. for review
pending sub nom. In re: FCC 11-161
, No. 11-9900 (10th Cir. filed Dec. 8, 2011).
2 See 47 C.F.R. §§ 51.907; 51.909; 51.915; 51.917.

Federal Communications Commission DA 14-434

II.

BACKGROUND

2.
The USF/ICC Transformation Order adopted, among other things, an ICC reform
timeline including rules that require carriers to adjust, over a period of years, many of their legacy ICC
rates effective on July 1 of each of those years, with the ultimate goal of transitioning to a bill-and-keep
regime.3 The Commission also adopted a recovery mechanism to mitigate the impact of reduced ICC
revenues on carriers and to facilitate continued investment in broadband infrastructure while providing
greater certainty and predictability going forward.4 The recovery mechanism allows incumbent LECs to
recover ICC revenues reduced due to the ICC reforms, up to an amount defined for each year of the
transition, which is referred to as “Eligible Recovery.”5 A carrier may recover a limited portion of its
Eligible Recovery each year from its end users through a fixed monthly charge called the Access
Recovery Charge (ARC), and the remainder of its Eligible Recovery for the year, if it so elects, from
Connect America Fund ICC support.6
3.
The Bureau previously clarified and corrected several rules adopted in the USF/ICC
Transformation Order in response to requests for clarification or correction in prior years.7 In this Order,
we clarify and correct several rules pertaining to future filings that price cap and rate-of-return carriers
will make in the 2014 annual access charge tariff filings and beyond.

III.

DISCUSSION

A.

Rate Parity for Interstate and Intrastate Terminating End Office Access Service

4.
In 2013, both price cap and rate-of-return regulated incumbent LECs were required to
reduce certain intrastate switched access rates that exceeded comparable interstate switched access rates
to interstate rate levels using the interstate rate structure.8 Carriers whose intrastate switched access rates
were below comparable interstate rates generally were not allowed to increase such rates.9 Beginning in
2014, price cap carriers must reduce terminating switched end office and reciprocal compensation rates
“by one-third of the differential between end office rates and $0.0007.”10 Rate-of-return carriers must
also begin making similar reductions using a target rate of $0.005 rather than $0.0007 to calculate the
reductions.11 Because some end office rate elements are assessed on a per-minute basis and others on a
flat-rated basis, the transition rules employed composite terminating end office access rates to determine

3 USF/ICC Transformation Order, 26 FCC Rcd at 17934-35, para. 801 and Fig. 9. The USF/ICC Transformation
Order
altered the regulatory treatment of interstate and intrastate switched access traffic, which is now subject to the
reciprocal compensation framework under section 251(b)(5) of the Communications Act, rather than the legacy
access charge regime. See USF/ICC Transformation Order, 26 FCC Rcd at 17914-16, paras. 760-64; see also 47
U.S.C. § 251(b)(5). In this Order, the term “legacy switched access” refers to switched access charges or rates under
the pre-USF/ICC Transformation Order access charge regulatory regime as opposed to the reciprocal compensation
framework adopted in the USF/ICC Transformation Order.
4 USF/ICC Transformation Order, 26 FCC Rcd at 17677, para. 36.
5 Id. at 17956-57, paras. 847, 850.
6 Id. at 17994-95, para. 918; 47 C.F.R. §§ 51.915(d)-f); 51.917(d-f).
7 See Connect America Fund et. al, WC Docket Nos. 10-90, 12-63, CC Docket No. 01-92 et. al, Order, 28 FCC Rcd
3319 (Wireline Comp. Bur. 2013) (2013 ICC Clarification Order).
8 See USF/ICC Transformation Order, 26 FCC Rcd at 17934-35, para. 801 and Fig. 9.
9 Carriers that had some intrastate switched access rates above the comparable interstate rate and some below were
allowed to increase the intrastate rate(s) that were below the comparable interstate(s) rate in a manner that was
revenue neutral. See, e.g., 2013 ICC Clarification Order,28 FCC Rcd 3319.
10 USF/ICC Transformation Order, 26 FCC Rcd at 17934-35, para. 801 and Fig. 9.
11 Id.
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Federal Communications Commission DA 14-434
the amount by which terminating end office access rates were required to be reduced in each year of the
transition. The rules also employed separate interstate and intrastate composite terminating end office
access rates to establish the actual rates. To the extent any flat-rated elements are included in end office
rates, the use of separate interstate and intrastate composites in determining rate reductions would take
interstate and intrastate rates out of parity as terminating end office access rates are reduced.
5.
Price cap carriers work cooperatively with Bureau staff each year to develop tariff review
plan spreadsheets that support their annual access filings. In the course of such discussions, some carriers
have questioned whether the use of separate interstate and intrastate rate composites to measure whether
intrastate terminating end office access rates do not exceed interstate terminating end office access rates is
consistent with the USF/ICC Transformation Order. These carriers assert that the Commission intended
for interstate and intrastate rates to remain at parity as the rate transition proceeds, which one
interpretation of the existing rules would not always achieve.12 We agree that the Commission intended
in the USF/ICC Transformation Order for rate parity to be maintained during the transition of terminating
end office access rates to bill-and-keep beginning in 2014 13 The Commission noted that varying access
rates “have created incentives for arbitrage and pervasive competitive distortions within the industry.”14
The Commission further noted that “[b]y transitioning all traffic in a coordinated manner, we will
minimize opportunities for arbitrage that could be presented by disparate intrastate rates.”15 Having
reached rate parity whenever possible in 2013, and reduced rate disparity in other cases, we find that a
methodology that could be interpreted to increase rate disparity for two years, only to return to rate parity
in the succeeding year, is inconsistent with the objectives described above.16 Thus, we clarify that the
Commission intended to achieve parity between interstate and intrastate rates, not interstate and intrastate
composite rates. While the composite rate is necessary to calculate the required rate reductions, we
clarify that sole reliance on composite rates, rather than the rates themselves, is unnecessary to ensure that
intrastate terminating end office access rates do not exceed comparable interstate terminating end office
access rates. Therefore, as set forth in the Appendix, we revise sections 51.907 and 51.909 to clarify that
achieving rate parity for the access rates themselves, not the composite rate for price cap and rate-of-
return LECs, was the intent of the USF/ICC Transformation Order.17 Under this approach, carriers may
continue to establish interstate terminating end office access rate caps that do not exceed the target
composite terminating end office access rate for each year in the transition in the manner the adopted

12 See id. at 17934, para. 801.
13 See id. at 17676-77, para. 35 (“To reduce the disparity between interstate and intrastate terminating end office
rates, we next require carriers to bring these rates to parity within two steps, by July 2013. Thereafter, we require
carriers to reduce their termination (and for some carriers also transport) rates to bill-and-keep, within six years for
price cap carriers and nine for rate-of-return carriers”). See also id. at 17930-31, para. 794, n. 1479 (citing with
approval Missouri Public Service Commission comments stating “Assuming the FCC’s initial goal of intercarrier
compensation reform is for parity between intrastate and interstate rates then the FCC should set a schedule for
achieving that objective”).
14 USF/ICC Transformation Order, 26 FCC Rcd at 17929-30, para. 791.
15 Id. at 17930, para. 792.
16 For instance, in the 2013 ICC Clarification Order, the Bureau clarified that rate changes to NECA’s switched
access rates resulting from carrier entry or exit from the NECA switched access tariff were to be reflected in
intrastate rates. The Bureau stated that “[b]ecause the Commission’s rules require intrastate switched access rate
levels to be set based on interstate rate levels, we clarify that if NECA’s interstate switched access rates decrease,
pooling carriers must also reduce their intrastate rates, consistent with the framework established in the USF/ICC
Transformation Order
. Similarly, we clarify that if NECA’s switched access rates increase, pooling carriers whose
intrastate rates would have been at parity with interstate rates in 2013 or that already were at parity with interstate
rates are required to increase their intrastate rates.” 2013 ICC Clarification Order, 28 FCC Rcd at 3326, para. 15.
17 Appendix at 47 C.F.R. §§ 51.907(d), (e), and (f); 51.909(d), (e), (f), (g), and (h).
3

Federal Communications Commission DA 14-434
rules require. To achieve rate parity, the interstate rate caps so determined will be used in setting
intrastate rate caps for the comparable intrastate terminating end office access elements rather than
developing new intrastate rate caps that would satisfy a separately determined intrastate composite
terminating end office access rate. To ensure the maximum rate parity, intrastate terminating end office
rates will be set at the interstate rate level for the comparable rate element unless the intrastate rate for
that rate element is lower, in which case the lower rate will be used.18 As terminating end office rates
decrease, intrastate terminating end office rates that are below comparable interstate rates will begin to be
reduced when rate parity is reached.19 This approach to developing reduced rates best achieves the
Commission’s goals of maintaining rate parity during the transition process.
6.
An overview of the calculations necessary for reducing terminating end office access
rates beginning July 1, 2014, as described above, is as follows. In broad terms, the reductions are based
on rates developed to comply with targets developed from interstate rates and demand, with the interstate
rates generally being used to establish intrastate rate levels. Using 2014 as a model, carriers first establish
the 2011 Baseline Composite Terminating End Office Access Rate, which reflects interstate rates and
demand.20 Next, carriers must calculate the 2014 Target Composite Terminating End Office Access Rate,
by reducing the 2011 Baseline Composite Terminating End Office Access Rate by one-third of the
difference between the 2011 Baseline Composite Terminating End Office Access Rate and $0.0007 for
price cap carriers and $0.005 for rate-of-return carriers.21 Carriers will then develop terminating interstate
end office access rates for their interstate tariffs that are consistent with the target composite rate. These
terminating interstate end office access rates will be used to establish terminating intrastate end office
access rates for comparable rate elements unless the intrastate rate for a rate element is lower than the
interstate rate for that element.22 Carriers have the option to elect to charge a single per minute rate
element for terminating end office access in both their interstate and intrastate tariffs that is no greater
than the target terminating end office access rate for the year in question. This option is contingent on
such an electing carrier’s intrastate terminating end office access rates being at parity with the interstate
rates if separate rates for different rate elements were used.23 Below, we clarify certain aspects of these
calculations to ensure consistent implementation among carriers.

B.

Calculation of Terminating End Office Access Rates

7.
2011 Baseline Composite Terminating End Office Access Rate. Section 51.907(d) and
51.909(d) of the Commission’s rules specify the access charge rate reductions that price cap and rate-of-
return carriers, respectively, must make to terminating end office access rates in 2014. The first step in
this process is for carriers to calculate the “2011 Baseline Composite Terminating End Office Access
Rate,” which is calculated using Fiscal Year 2011 demand and the End Office Access Service rates at the
levels in effect on December 29, 2011.24 This composite rate is calculated this one time, and is used in
making calculations in subsequent years. Section 51.907(d)(2)(i), which is applicable to price cap
carriers, does not specify whether price cap carriers should use interstate or intrastate demand and rates in
making this calculation, although the comparable rule applicable to rate-of-return carriers specifies that it
should be interstate rates and demand.25 The absence of a jurisdictional designation for the demand and

18 See id.; see also para. 6 infra.
19 USF/ICC Transformation Order, 26 FCC Rcd at 17936, para. 804.
20 See 47 C.F.R. §§ 51.907(d)(2)(i); 51.909(d)(3)(i).
21 See 47 C.F.R. §§ 51.907(d)(2)(ii); 51.909(d)(3)(ii).
22 See 47 C.F.R. §§ 51.907(d)(2)(iii); 51.909(d)(3)(iii).
23 See para. 5 supra.
24 47 C.F.R. §§ 51.907(d); 51.909(d).
25 See 47 C.F.R. §§ 51.909(d)(3)(i).
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Federal Communications Commission DA 14-434
rates to be used by price cap carriers creates potential ambiguity in the calculation of the required rate
reductions.
8.
We clarify that the 2011 Fiscal Year interstate demand and rates are to be utilized for the
reasons explained below. The ICC rate transition started by capping interstate and intrastate switched
access rates for price cap carriers at December 29, 2011, levels. The 2012 and 2013 transition steps
reduced “Transitional Intrastate Access Service” rates (which included reduction of end office rates that
were above interstate switched access rates to interstate switched access rate levels),26 but did not require
any changes to interstate switched access rates during that period. The 2014 annual access tariff filing
begins the transition process of focusing annual rate reductions to interstate and intrastate Terminating
End Office Access rates from their 2013-14 rate levels. Because intrastate switched access rates above
comparable interstate rates are now reduced to interstate levels, 2011 intrastate rate and demand data are
no longer relevant to the calculation of a baseline from which to reduce Terminating End Office Access
Service rates in 2014. The calculation of the 2011 Baseline Composite Terminating End Office Access
Rate, which is made for the first time this year, thus should only include 2011 Fiscal Year interstate
demand and rates.27 We revise section 51.907(d)(2)(i) accordingly, as set forth in the Appendix, to
eliminate any ambiguity and to facilitate the annual tariff filing process. We note further that using
interstate rates and demand in calculating the required terminating end office access rate reductions for
price cap carriers is consistent with how we require rate-of-return carriers to calculate their 2011 Baseline
Composite Terminating End Office Access Rates.
9.
Target Composite Terminating End Office Access Rate. Beginning this year, the ICC
transition steps require carriers to calculate a Target Composite Terminating End Office Access Rate in
certain years in which a target rate is not specified to determine the amount of reductions that must be
made that year.28 Carriers have raised the question of whether separate interstate and intrastate target
composite rates are required. The above clarification that the Commission intended rate parity between
interstate and intrastate rates to apply during the reductions in terminating end office access rates renders
this question moot. We therefore clarify that there is only one Target Composite Terminating End Office
Access Rate each year, which is to be determined consistent with sections 51.907(d)(2)(iii) and
51.909(d)(3)(ii).
10.
To begin the implementation of rate parity, a carrier may develop terminating end office
access rates for the interstate jurisdiction whose composite rate does not exceed the composite target
terminating end office access rate for the year in question.29 The carrier’s intrastate terminating end office
access rates may not exceed the carrier’s interstate terminating end office access rates so developed for
the comparable rate elements. A carrier’s terminating intrastate end office access rates are further
constrained in that the carrier may not increase any existing intrastate rate during this transition.
Alternatively, the carrier may assess the target terminating end office access rate in both the interstate and

26 See 47 C.F.R. §§ 51.907(b) and (c). Transitional Intrastate Access Service is defined at 47 C.F.R. 51.903(j).
27 We also clarify that, for both price cap and rate-of-return carriers that file interstate tariffs assessing a single rate
applicable in different states, the interstate demand used shall be the sum of the demand for all of the states included
in the tariff, rather than making separate state-by-state calculations.
28 See 47 C.F.R. §§ 51.907(d)(2)(ii), (e)(1)(i); 51.909(d)(3)(ii), (e)(1)(i), (g)(1)(i), and (h)(1)(i).
29 To facilitate consistent calculation of the Composite Terminating End Office Access Rate to determine
compliance, we clarify that price cap carriers shall use the relevant Fiscal Year 2011 demand multiplied by the
respective interstate rates as of July 1 of the year in question and then divide by 2011 terminating end office local
switching minutes. In calculating their Composite Terminating End Office Access Rate to determine compliance,
rate-of–return carriers shall use the relevant projected demand for the tariff period multiplied by the respective
interstate and intrastate rates as of July 1 of the year in question and then divide by the relevant projected
terminating end office local switching demand for the tariff period.
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Federal Communications Commission DA 14-434
intrastate jurisdictions as long as the carrier’s intrastate terminating end office access rates would all be at
parity with the interstate rates under the preceding approach. We amend the rules accordingly, as set
forth in the Appendix.

C.

Other Corrections or Clarifications

11.
Recovery Mechanism Calculations. Sections 51.915(d)(1)(iii)(C), (iv)(C), and (v)(C)
refer to the “[i]ntrastate 2014 Composite Terminating End Office Access Rate” in the process for
establishing the rate level from which reductions in terminating end office rates are to be measured for
purposes of determining a price cap carrier’s Eligible Recovery for 2014. However, no methodology for
calculating a 2014 Composite Terminating End Office Access Rate is specified in the rules. We clarify
the procedure to be used by adding a definition of “Intrastate 2014 Composite Terminating End Office
Access Rate” that specifies the required calculation method for price cap carriers.30 This definition is
consistent with the calculation required under section 51.907(d) and uses 2011 Fiscal Year demand to
weight the different rates used in calculating the composite rate in the same manner that the
corresponding price cap carrier ICC rate transition rules weight different rates used to calculate
composites.31 Consistent with the clarification that rate parity was to be maintained during the transition,
we revise the introductory language in sections 51.915(d)(1)(iii)(C), (iv)(C) and (v)(C) that relied on
composite rate comparisons to determine if rates had been reduced. The clarifying language makes clear
that the recovery permitted by subparagraphs (d), (e), and (f) is allowed only if intrastate Terminating End
Office Access Service rates are reduced in the year in question.
12.
We also correct an inadvertent omission in section 51.907(f) by adding language
clarifying that a price cap carrier has the option, in 2016, to implement a single per minute rate element
for terminating End Office Access Service at a rate no greater than the 2016 Target Composite
Terminating End Office Access Rate. This clarification is consistent with price cap carrier options in
2014 and 2015 and thus tracks the description in Sections 51.907(d)(2)(iii) and (e)(1)(ii) of the
Commission’s rules specifying a price cap carrier’s pricing options for terminating end office access
service in those years.32
13.
We also make the following clarifications and corrections to the rate-of-return ICC
transition and recovery rules. First, we delete the word “interstate” in each instance when it referred to a
particular year’s target composite rate. This change reflects our clarification that there is only one target
composite rate each year starting in 2014, not separate interstate and intrastate target composite rates.33
Second, we clarify that in calculating the target composite terminating end office access rates in 2017 and
2018, rate-of-return carriers should use the 2016 Target Composite Terminating End Office Access Rate
rather than the Terminating End Office Access Service Rate as of July 1, 2016 as the initial rate to reflect
the uniform transition the Commission intended rather than requiring a carrier with a very low
terminating rate to have to further reduce its rates before the uniform target rate falls below its rates.34
Finally, we add or delete “interstate” or “intrastate” in several places to more clearly reflect the intended
rates.35
14.
Access Recovery Charge True-Up. Section 51.917(d) outlines the process for
determining Eligible Recovery for rate-of-return carriers. The Eligible Recovery calculation set forth in

30 See Appendix at 47 C.F.R. § 51.915(b)(14).
31 See 47 C.F.R. § 51.907(d)(2).
32 See 47 C.F.R. §§ 51.907(d)(2)(iii); 51.907(e)(1)(ii).
33 See Appendix at 47 C.F.R. §§ 51.909(d)(3)(ii); 51.909(e)(1)(i); 51.909(g)(1)(i); 51.909(h)(1)(i).
34 See Appendix at 47 C.F.R. §§ 51.909(g)(1)(i); 51.909(h)(1)(i).
35 See Appendix at 47 C.F.R. §§ ; 51.909(f); 51.909(g)(1); 51.909(h)(1).
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Federal Communications Commission DA 14-434
section 51.917(d)(1)(iii)(D) requires rate-of-return carriers to, among other things, subtract from their
Base Period Revenues (as reduced by multiplying these revenues by the Rate-of-Return Carrier Baseline
Adjustment Factor) “an amount equal to True-up Revenues for Access Recovery Charges for the year
beginning July 1, 2012.”36 In the 2013 ICC Clarification Order, we substituted a defined term for the
previous calculation of the ARC true-up.37 This substitution resulted in inadvertently reversing the order
of the calculation, which would have the effect of reducing Eligible Recovery when it should have been
increased, or vice versa. To correct this error in the rule language, we add the clause “multiplied by
negative one” to the rule language in order to have the calculation described in the rule produce the
intended result.38
15.
True-Up of Regulatory Fees. For rate-of-return carriers, telecommunications relay
services (TRS) fees, regulatory fees, and North American Numbering Plan administration (NANPA) fees
were historically recovered, in part, through interstate switched access rates. When the Commission
adopted a cap on interstate switched access rate elements in the USF/ICC Transformation Order, it did
not address how carriers should recover any increases in these regulatory fees, or reflect any reductions in
such fees in future years. In 2012, we clarified that increases in these regulatory fees that would have
been assigned to capped interstate switched access services could be recovered through subscriber line
charges (SLC) and/or Eligible Recovery under certain conditions.39 We have been asked informally
whether any regulatory fees recovered pursuant to this methodology in the 2012-13 tariff period are to be
trued-up in the calculation of 2014-15 Eligible Recovery. Regulatory fees are based on projected
amounts just as is going-forward, tariff-year demand for rate elements in the calculation of a carrier’s
Eligible Recovery. Given the projected nature of these items, similar treatment in the true-up process is
warranted. We clarify that if a rate-of-return carrier included an amount for these fees in its Eligible
Recovery calculation in any year, it should reflect the amounts of any true-ups for the referenced
regulatory fees as increases in, or reductions to, Eligible Recovery calculations on the same schedule that
ARCs are trued-up -- i.e., two years following their initial inclusion.
16.
Duplicative Recovery. Sections 51.915(d)(1)(viii)(2) and 51.917(d)(1)(vii) prohibit price
cap and rate-of-return carriers, respectively, from duplicative recovery. Specifically, the rules provide
that if a carrier “recovers any costs or revenues that are already being recovered as Eligible Recovery
through Access Recovery Charges or the Connect America Fund from another source, that carrier’s
ability to recover reduced switched access revenue from Access Recovery Charges or the Connect
America Fund shall be reduced to the extent it receives duplicative recovery.”40 The rules do not,
however, specify how Eligible Recovery should be adjusted to reflect any duplicative recovery, and
carriers have informally inquired about how such adjustments should be made. We address this omission
by revising the rules as set forth in the Appendix to provide that any duplicative recovery shall be
reflected through reductions to the carrier’s Eligible Recovery in its annual tariff supporting materials.
This approach to addressing duplicative recovery is appropriate because it is carrier-specific and narrowly
tailored to result in necessary Eligible Recovery reductions in specific years.
17.
Single Per-Minute Rate Element for Terminating End Office Access Service. Beginning
in 2014, the ICC transition rules permit both price cap and rate-of-return carriers, under certain
conditions, to elect to implement a single per-minute rate element for Terminating End Office Access

36 47 C.F.R. § 51.917(d)(1)(iii)(D).
37 2013 ICC Clarification Order, 28 FCC Rcd at 3333, para. 32.
38 See Appendix at 47 C.F.R. § 51.917(d)(1)(iii)(D).
39 See Material to be Filed in Support of 2012 Annual Access Tariff Filings, WCB/Pricing File No. 12-08, Order, 27
FCC Rcd 3960, 3962-63, para. 7 (Wireline Comp. Bur. 2012).
40 47 C.F.R. §§ 51.915(d)(1)(viii)(2); 51.917(d)(1)(vii).
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Federal Communications Commission DA 14-434
Service that is no greater than the Target Composite Terminating End Office Access rate for the
respective year.41 Beginning on July 1, 2014, many carriers will begin to assess rates for several
terminating end office rate elements, one of which will be a local switching charge assessed on all
terminating minutes of use. Several carriers have informally asked whether, if they assess the single
composite rate, which would be assessed on all terminating end office traffic, they can tariff it as a
terminating switched access rate to avoid the expenses associated with revising their billing systems to
create a new rate element. We believe that this approach implements the reforms adopted in the USF/ICC
Transformation Order
in a manner that would reduce implementation costs and burdens without any
offsetting negative concerns.42 We thus clarify that both price cap and rate-of-return carriers may tariff
the single composite rate as a terminating local switching access rate, consistent with the ICC transition,
as long as all other rate elements associated with terminating end office access service are reduced to
zero.43 If its Target Composite Terminating End Office Access Rate is higher than the terminating local
switching rate such carrier tariffed the previous year that will not constitute an impermissible rate
increase.
18.
Revenue True-Ups. Carriers are required this year to begin making true-ups to certain
revenue amounts projected in 2012 to reflect differences between projected and actual demand.44 To
measure actual demand for purposes of making the true-up calculation, carriers will need to establish a
cutoff date for finalizing the measured demand. Sections 51.917(d)(1)(v) and (vi) direct rate-of-return
carriers who receive ARC or other revenues after the period used to measure the adjustments to reflect the
differences between estimated and actual revenues, to treat such payments as actual revenue in the year
the payment is received, and to reflect this as an additional adjustment for that year.45 This requirement
addresses the potential that carriers could affect the true-up calculation by shifting the timing of the
collection of revenues absent a requirement that later collections will need to be recognized in subsequent
filings. The codified price cap rules are silent as to how to apply ARC revenues received after the cutoff
date to adjust price cap carriers’ eligible recovery in future years. This was clearly an omission because
the USF/ICC Transformation Order did not specify that it was treating carriers differently in this regard --
thus, the silence in the price cap rules is best interpreted consistently with the approach expressly adopted
for rate-of-return carriers. To correct this omission, we amend the codified rules, as set forth in the
Appendix, to make clear that price cap carriers will comply with the same requirements as rate-of-return
carriers with respect to ARC revenues. We also take this opportunity to clarify that carriers should use
revenues for services provided in tariff year 2012-13, collected through December 31, 2013, as a cut-off
for making their true-ups this year. This will ensure that filings are consistent among carriers and will
ease review, and the December 31 date gives carriers sufficient time to prepare their filings. Carriers
shall also use December 31 as the cutoff date in future true-up calculations.
19.
NECA has asked whether, in making the true-up calculations, it could use the difference
between projected revenues and realized revenues. The rules generally provide for this calculation to be
made by multiplying the rate for the service in question by projected demand less actual realized
demand.46 Because projected and realized revenues are summations of the results of the calculations
(including rates and demand), the proposed methodology should produce the same results as the process

41 See, e.g., 47 C.F.R. §§ 51.907(d)(2)(iii); 51.907(e)(1)(ii).
42 See, e.g., USF/ICC Transformation Order, 26 FCC Rcd at 17932-33, para 798.
43 The terminating local switching rate element is used for this purpose because it is assessed on all terminating
minutes of use, just as a composite terminating end office access rate would be assessed on all terminating minutes
of use.
44 See 47 C.F.R. §§ 51.915(d)(iii); 51.917(d)(iii).
45 See 47 C.F.R. §§ 51.917(d)(1)(v); 51.917(d)(1)(vi).
46 See 47 C.F.R. §§ 51.915(b)(13); 51.917(b)(5)-(6).
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Federal Communications Commission DA 14-434
provided for in the rules, as long as the carrier is charging the maximum allowed rate.47 We find that the
proposed methodology will significantly simplify the process and therefore clarify that all carriers may
use revenue differences in making their true-up adjustments, as long as the carrier is charging the
maximum allowed rate

IV.

PROCEDURAL MATTERS

A.

Paperwork Reduction Act

20.
This document does not contain any new or modified information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA).48 Therefore, the Order does not
contain any new or modified information collection burdens for small businesses with fewer than 25
employees, pursuant to the Small Business Paperwork Relief Act of 2002.49

B.

Final Regulatory Flexibility Act Certification

21.
The Regulatory Flexibility Act of 1980, as amended (RFA),50 requires agencies to
prepare a regulatory flexibility analysis for rulemaking proceedings, unless the agency certifies that “the
rule will not have a significant economic impact on a substantial number of small entities.”51 The RFA
generally defines “small entity” as having the same meaning as the terms “small business,” “small
organization,” and “small governmental jurisdiction.”52 In addition, the term “small business” has the
same meaning as the term “small business concern” under the Small Business Act.53 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 Small Business Administration
(SBA).54
22.
We hereby certify that the rule revisions adopted in this Order will not have a significant
economic impact on a substantial number of small entities. This Order amends rules adopted in the
USF/ICC Transformation Order by correcting conflicts between the new or revised rules and existing
rules, as well as addressing omissions or oversights. These revisions do not create any burdens, benefits,
or requirements that were not addressed by the Final Regulatory Flexibility Analysis attached to the
USF/ICC Transformation Order.55 The Commission will send a copy of this Order, including a copy of

47 Id.
48 Pub. Law No. 104-13; 44 U.S.C. Part 35.
49 Pub. Law No. 107-198; see 44 U.S.C. § 3606(c)(4).
50 The RFA, see 5 U.S.C. § 601 et seq., has been amended by the Contract with America Advancement Act of 1996,
Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA).
51 5 U.S.C. § 605(b).
52 5 U.S.C. § 601(b).
53 5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in Small Business Act,
15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.” 5 U.S.C. § 601(3).
54 Small Business Act, 15 U.S.C. § 632.
55 See USF/ICC Transformation Order, 26 FCC Rcd at 18324-63, App O.
9

Federal Communications Commission DA 14-434
this final certification, to the Chief Counsel for Advocacy of the SBA.56 In addition, the Order (or a
summary thereof) and certification will be published in the Federal Register.57

C.

Congressional Review Act

23.
The Commission will send a copy of this Order to Congress and the Government
Accountability Office pursuant to the Congressional Review Act.58

V.

ORDERING CLAUSES

24.
Accordingly, IT IS ORDERED, that pursuant to the authority contained in sections 1, 2,
4(i), 201-203, 220, 251, 252, 254, 303(r) and 403 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 151, 152, 154(i), 201-203, 220, 251, 252, 254, 303(r) and 403, and pursuant to sections 0.91,
0.201(d), 0.291, 1.3, and 1.427 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.201(d), 0.291, 1.3 and
1.427, and pursuant to the delegation of authority in paragraph 1404 of 26 FCC Rcd 17663 (2011), this
Order is ADOPTED, effective thirty (30) days after publication of the text or summary thereof in the
Federal Register.
25.
IT IS FURTHER ORDERED that Part 51 of the Commission’s rules, 47 C.F.R. sections
51.907, 51.909, 51.915, and 51.917 are AMENDED as set forth in the Appendix, and such rule
amendments shall be effective 30 days after the date of publication of the rule amendments in the Federal
Register.
26.
IT IS FURTHER ORDERED that the Commission SHALL SEND a copy of this Order
to Congress and the Government Accountability Office pursuant to the Congressional Review Act.59
27.
IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Order, including the Final
Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business
Administration.
FEDERAL COMMUNICATIONS COMMISSION
Deena M. Shetler
Associate Chief, Wireline Competition Bureau

56 15 U.S.C. § 632.
57 Id.
58 See 5 U.S.C. § 801(a)(1)(A).
59 Id.
10

Federal Communications Commission DA 14-434

APPENDIX

Final Rules

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 C.F.R.
part 51.

PART 51—INTERCONNECTION

1.
The authority citation for part 51 continues to read as follows:
AUTHORITY: Sections 1–5, 7, 201–05, 207–09, 218, 220, 225–27, 251–54, 256, 271, 303(r), 332, 706
of the Telecommunication Act of 1996, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 151–55, 157, 201–
05, 207–09, 218, 220, 225–27, 251–54, 256, 271, 303(r), 332, 1302, 47 U.S.C. 157 note, unless otherwise
noted.

Subpart J—Transitional Access Service Pricing

2.
Amend 47 C.F.R. § 51.907 by revising (d)(2)(i), (d)(2)(iii), (e)(1)(ii), and (f) to read as follows:
§ 51.907 Transition of price cap carrier access charges.
* * * * *
(d) * * *
(1)
(2) * * *
(i) Each Price Cap Carrier shall calculate the 2011 Baseline Composite Terminating End
Office Access Rate. The 2011 Baseline Composite Terminating End Office Access Rate
means the Composite Terminating End Office Access Rate calculated using Fiscal Year
2011 interstate demand multiplied by the interstate End Office Access Service rates at the
levels in effect on December 29, 2011, and then dividing the result by 2011 Fiscal Year
interstate local switching demand.
(ii) * * *
(iii) Beginning July 1, 2014, no Price Cap Carrier's interstate Composite Terminating End
Office Access Rate shall exceed its 2014 Target Composite Terminating End Office
Access Rate. A price cap carrier shall determine compliance by calculating interstate
Composite Terminating End Office Access Rates using the relevant Fiscal Year 2011
interstate demand multiplied by the respective interstate rates as of July 1, 2014, and
then dividing the result by the relevant 2011 Fiscal Year interstate terminating local
switching demand. A price cap carrier’s intrastate terminating end office access rates
may not exceed the comparable interstate terminating end office access rates. In the
alternative, any Price Cap Carrier may elect to implement a single per minute rate
element for both interstate and intrastate terminating End Office Access Service no
greater than the 2014 Target Composite Terminating End Office Access Rate if its
intrastate terminating end office access rates would be at rate parity with its interstate
terminating end office access rates.
11

Federal Communications Commission DA 14-434
* * * * *
(e) * * *
(1) * * *
(ii) Beginning July 1, 2015, no Price Cap Carrier's interstate Composite Terminating End
Office Access Rate shall exceed its 2015 Target Composite Terminating End Office
Access Rate. A price cap carrier shall determine compliance by calculating interstate
Composite Terminating End Office Access Rates using the relevant Fiscal Year 2011
interstate demand multiplied by the respective interstate rates as of July 1, 2015, and then
dividing the result by the relevant 2011 Fiscal Year interstate terminating local switching
demand. A price cap carrier’s intrastate terminating end office access rates may not
exceed the comparable interstate terminating end office access rates. In the alternative,
any Price Cap Carrier may elect to implement a single per minute rate element for both
interstate and intrastate terminating End Office Access Service no greater than the 2015
Target Composite Terminating End Office Access Rate if its intrastate terminating end
office access rates would be at rate parity with its interstate terminating end office access
rates.
* * * * *
(f) Step 5. Beginning July 1, 2016, notwithstanding any other provision of the Commission's rules, each
Price Cap Carrier shall establish interstate terminating End Office Access Service rates such that its
Composite Terminating End Office Access Service rate does not exceed $0.0007 per minute. A price cap
carrier shall determine compliance by calculating interstate Composite Terminating End Office Access
Rates using the relevant Fiscal Year 2011 interstate demand multiplied by the respective interstate rates as
of July 1, 2016, and then dividing the result by the relevant 2011 Fiscal Year interstate terminating local
switching demand. A price cap carrier’s intrastate terminating end office access rates may not exceed the
comparable interstate terminating end office access rates. In the alternative, any Price Cap Carrier may
elect to implement a single per-minute rate element for both interstate and intrastate Terminating End
Office Access Service no greater than the 2016 Target Composite Terminating End Office Access Rate if
its intrastate terminating end office access rates would be at rate parity with its interstate terminating end
office access rates. Nothing in this section obligates or allows a Price Cap Carrier that has intrastate rates
lower than its functionally equivalent interstate rates to make any intrastate tariff filing or intrastate tariff
revisions raising such rates.
* * * * *
12

Federal Communications Commission DA 14-434
3.
Amend 47 C.F.R. § 51.909 by revising (d)(3)(ii)-(iii), (e)(1)(i)-(ii), (f), (g)(1), (g)(1)(i)-(ii), (h)(1),
and (h)(1)(i)-(ii) to read as follows:
§ 51.909 Transition of rate-of-return carrier access charges.
* * * * *
(d) * * *
(3) * * *
(ii) Each Rate-of-Return Carrier shall calculate its 2014 Target Composite Terminating
End Office Access Rate. The 2014 Target Composite Terminating End Office Access
Rate means $0.005 per minute plus two-thirds of any difference between the 2011
Baseline Composite Terminating End Office Access Rate and $0.005 per minute.
(iii) Beginning July 1, 2014, no Rate-of-Return Carrier's interstate Composite
Terminating End Office Access Rate shall exceed its 2014 Target Composite
Terminating End Office Access Rate. A rate-of-return carrier shall determine compliance
by calculating interstate Composite Terminating End Office Access Rates using the
relevant projected interstate demand for the tariff period multiplied by the respective
interstate rates as of July 1, 2014, and then dividing by the projected interstate
terminating end office local switching demand for the tariff period. A rate-of-return
carrier’s intrastate terminating end office access rates may not exceed the comparable
interstate terminating end office access rates. In the alternative, any Rate-of-Return
Carrier may elect to implement a single per minute rate element for both interstate and
intrastate terminating End Office Access Service no greater than the 2014 Target
Composite Terminating End Office Access Rate if its intrastate terminating end office
access rates would be at rate parity with its interstate terminating end office access rates.
* * * * *
(e) * * *
(1) * * *
(i) Each Rate-of-Return Carrier shall calculate its 2015 Target Composite Terminating
End Office Access Rate. The 2015 Target Composite Terminating End Office Access
Rate means $0.005 per minute plus one-third of any difference between the 2011
Baseline Composite Terminating End Office Access Rate and $0.005 per minute.
(ii) Beginning July 1, 2015, no Rate-of-Return Carrier's interstate Composite Terminating
End Office Access Rate shall exceed its 2015 Target Composite Terminating End Office
Access Rate. A rate-of-return carrier shall determine compliance by calculating interstate
Composite Terminating End Office Access Rates using the relevant projected interstate
demand for the tariff period multiplied by the respective interstate rates as of July 1,
2015, and then dividing by the projected interstate terminating end office local switching
demand for the tariff period. A rate-of-return carrier’s intrastate terminating end office
access rates may not exceed the comparable interstate terminating end office access rates.
In the alternative, any Rate-of-Return Carrier may elect to implement a single per minute
rate element for both interstate and intrastate terminating End Office Access Service no
13

Federal Communications Commission DA 14-434
greater than the 2015 Target Composite Terminating End Office Access Rate if its
intrastate terminating end office access rates would be at rate parity with its interstate
terminating end office access rates. Nothing in this section obligates or allows a Rate-of–
Return Carrier that has intrastate rates lower than its functionally equivalent interstate
rates to make any intrastate tariff filing or intrastate tariff revisions raising such rates.
* * * * *
(f) Step 5. Beginning July 1, 2016, notwithstanding any other provision of the Commission's rules, each
Rate-of-Return Carrier shall establish interstate terminating End Office Access Service rates such that its
interstate Composite Terminating End Office Access Service rate does not exceed $0.005 per minute. A
rate-of-return carrier shall determine compliance by calculating interstate Composite Terminating End
Office Access Rates using the relevant projected interstate demand for the tariff period multiplied by the
respective interstate rates as of July 1, 2016, and then dividing by the projected interstate terminating end
office local switching demand for the tariff period. A rate-of-return carrier’s intrastate terminating end
office access rates may not exceed the comparable interstate terminating end office access rates. In the
alternative, any Rate-of-Return Carrier may elect to implement a single per minute rate element for both
interstate and intrastate terminating End Office Access Service no greater than the 2016 Target Composite
Terminating End Office Access Rate if its intrastate terminating end office access rates would be at rate
parity with its interstate terminating end office access rates. Nothing in this section obligates or allows a
Rate-of-Return Carrier that has intrastate rates lower than its functionally equivalent interstate rates to
make any intrastate tariff filing or intrastate tariff revisions raising such rates.
(g) * * *
(1) Each Rate-of-Return Carrier shall establish interstate and intrastate rates for terminating End
Office Access Service using the following methodology:
(i) Each Rate-of-Return Carrier shall calculate its 2017 Target Composite Terminating
End Office Access Rate. The 2017 Target Composite Terminating End Office Access
Rate means $0.0007 per minute plus two-thirds of any difference between that carrier’s
2016 Target Composite Terminating End Office Access Rate and $0.0007 per minute.
(ii) Beginning July 1, 2017, no Rate-of–Return Carrier's interstate Composite
Terminating End Office Access Rate shall exceed its 2017 Target Composite
Terminating End Office Access Rate. A rate-of-return carrier shall determine compliance
by calculating interstate Composite Terminating End Office Access Rates using the
relevant projected interstate demand for the tariff period multiplied by the respective
interstate rates as of July 1, 2017, and then dividing by the projected interstate
terminating end office local switching demand for the tariff period. A rate-of-return
carrier’s intrastate terminating end office access rates may not exceed the comparable
interstate terminating end office access rates. In the alternative, any Rate-of-Return
Carrier may elect to implement a single per minute rate element for both interstate and
intrastate terminating End Office Access Service no greater than the 2017 Target
Composite Terminating End Office Access Rate if its intrastate terminating end office
access rates would be at rate parity with its interstate terminating end office access rates.
Nothing in this section obligates or allows a Rate-of–Return Carrier that has intrastate
rates lower than its functionally equivalent interstate rates to make any intrastate tariff
filing or intrastate tariff revisions raising such rates.
* * * * *
14

Federal Communications Commission DA 14-434
(h) * * *
(1) Each Rate-of-Return Carrier shall establish interstate and intrastate rates for terminating End
Office Access Service using the following methodology:
(i) Each Rate-of-Return Carrier shall calculate its 2018 Target Composite Terminating
End Office Access Rate. The 2018 Target Composite Terminating End Office Access
Rate means $0.0007 per minute plus one-third of any difference between that carrier’s
2016 Target Composite Terminating End Office Access Rate and $0.0007 per minute.
(ii) Beginning July 1, 2018, no Rate-of-Return Carrier's interstate Composite Terminating
End Office Access Rate shall exceed its 2018 Target Composite Terminating End Office
Access Rate. A rate-of-return carrier shall determine compliance by calculating interstate
Composite Terminating End Office Access Rates using the relevant projected interstate
demand for the tariff period multiplied by the respective interstate rates as of July 1, 2018
and then dividing by the projected interstate terminating end office local switching
demand for the tariff period. A rate-of-return carrier’s intrastate terminating end office
access rates may not exceed the comparable interstate terminating end office access rates.
In the alternative, any Rate-of-Return Carrier may elect to implement a single per minute
rate element for both interstate and intrastate terminating End Office Access Service no
greater than the 2018 interstate Target Composite Terminating End Office Access Rate if
its intrastate terminating end office access rates would be at rate parity with its interstate
terminating end office access rates. Nothing in this section obligates or allows a Rate-of–
Return Carrier that has intrastate rates lower than its functionally equivalent interstate
rates to make any intrastate tariff filing or intrastate tariff revisions raising such rates.
* * * * *
15

Federal Communications Commission DA 14-434
4.
Amend 47 C.F.R. § 51.915 by adding (b)(14) and (d)(4) and by revising (d)(1)(iii)(B)-(C),
(d)(1)(iv)(B)-(C), (d)(1)(v)(B)-(C), (d)(1)(vi)(B), (d)(1)(vii)(B), and (d)(1)(viii)(2) to read as follows:
§ 51.915 Recovery mechanism for price cap carriers.
* * * * *
(b) * * *
(14) Intrastate 2014 Composite Terminating End Office Access Rate. The Intrastate 2014
Composite Terminating End Office Access Rate as used in this section is determined by (1) if a separate
terminating rate is not already generally available, developing separate intrastate originating and
terminating end office rates in accordance with section 51.907(d)(1) of this part using end office access
rates at their June 30, 2014, rate caps; (2) multiplying the existing terminating June 30, 2014, intrastate
end office access rates, or the terminating rates developed in (1), by the relevant Fiscal Year 2011
intrastate demand; and (3) dividing the sum of the revenues determined in (2) by 2011 Fiscal Year
intrastate terminating local switching minutes.

(c) * * *
(d) * * *
(1) * * *
(iii) * * *
(B) The reduction in interstate switched access revenues equal to the difference
between the 2011 Baseline Composite Terminating End Office Access Rate and
the 2014 Target Composite Terminating End Office Access Rate determined
pursuant to § 51.907(d) using Fiscal Year 2011 terminating interstate end office
switching minutes, and then multiply by the Price Cap Carrier Traffic Demand
Factor;
(C) If the carrier reduced its 2014 Intrastate Terminating End Office Access
Rate(s) pursuant to section 51.907(d)(2), the reduction in revenues equal to the
difference between either the Intrastate 2014 Composite Terminating End Office
Access Rate and the Composite Terminating End Office Access Rate based on
the maximum terminating end office rates that could have been charged on July
1, 2014, or the 2014 Target Composite Terminating End Office Access Rate, as
applicable, using Fiscal Year 2011 terminating intrastate end office switching
minutes, and then multiply by the Price Cap Carrier Traffic Demand Factor;
* * * * *
(iv) * * *
(B) The reduction in interstate switched access revenues equal to the difference
between the 2011 Baseline Composite Terminating End Office Access Rate and
the 2015 Target Composite Terminating End Office Access Rate determined
pursuant to § 51.907(e) using Fiscal Year 2011 terminating interstate end office
switching minutes, and then multiply by the Price Cap Carrier Traffic Demand
Factor;
16

Federal Communications Commission DA 14-434
(C) If the carrier reduced its Intrastate Terminating End Office Access Rate(s)
pursuant to section 51.907(e)(1), the reduction in intrastate switched access
revenues equal to the difference between either the intrastate 2014 Composite
Terminating End Office Access Rate and the Composite Terminating End Office
Access Rate based on the maximum terminating end office rates that could have
been charged on July 1, 2015, or the 2015 Target Composite Terminating End
Office Access Rate, as applicable, using Fiscal Year 2011 terminating intrastate
end office switching minutes, and then multiply by the Price Cap Carrier Traffic
Demand Factor; and
* * * * *
(v) * * *
(B) The reduction in interstate switched access revenues equal to the difference
between the 2011 Baseline Composite Terminating End Office Access Rate and
$0.0007 determined pursuant to § 51.907(f) using Fiscal Year 2011 terminating
interstate end office switching minutes, and then multiply by the Price Cap
Carrier Traffic Demand Factor;
(C) If the carrier reduced its Intrastate Terminating End Office Access Rate(s)
pursuant to section 51.907(f), the reduction in revenues equal to the difference
between either the Intrastate 2014 Composite Terminating End Office Access
Rate and $0.0007 based on the maximum terminating end office rates that could
have been charged on July 1, 2016, or the 2016 Target Composite Terminating
End Office Access Rate, as applicable, using Fiscal Year 2011 terminating
intrastate end office minutes, and then multiply by the Price Cap Carrier Traffic
Demand Factor;
* * * * *
(vi) * * *
(B) The reduction in interstate switched access revenues equal to the 2011
Baseline Composite Terminating End Office Access Rate using Fiscal Year 2011
terminating interstate end office switching minutes, and then multiply by the
Price Cap Carrier Traffic Demand Factor;
* * * * *
(vii) * * *
(B) The reduction in interstate switched access revenues equal to the 2011
Baseline Composite Terminating End Office Access Rate using Fiscal Year 2011
terminating interstate end office switching minutes, and then multiply by the
Price Cap Carrier Traffic Demand Factor;
17

Federal Communications Commission DA 14-434
* * * * *
(viii) * * *
(2) If a Price Cap Carrier recovers any costs or revenues that are already being
recovered through Access Recovery Charges or the Connect America Fund from
another source, that carrier’s ability to recover reduced switched access revenue
from Access Recovery Charges or the Connect America Fund shall be reduced to
the extent it receives duplicative recovery. Any duplicative recovery shall be
reflected as a reduction to a carrier’s Eligible Recovery calculated pursuant to
section 51.915(d) of this Part.
* * * * *
(4) If a Price Cap Carrier receives payment for Access Recovery Charges after the period used to
measure the adjustment to reflect the differences between estimated and actual revenues, it shall
treat such payments as actual revenues in the year the payment is received and shall reflect this as
an additional adjustment for that year.
18

Federal Communications Commission DA 14-434
5.
Amend 47 C.F.R. § 51.917 by revising (d)(1)(iii)(D) and (d)(1)(vii) as follows:
§ 51.917 Revenue recovery for rate-of-return carriers.
* * * * *
(d) * * *
(1) * * *
(iii) * * *
(D) An amount equal to True-up Revenues for Access Recovery Charges for the
year beginning July 1, 2012 multiplied by negative one.
* * * * *
(vii) If a Rate-of-Return Carrier recovers any costs or revenues that are already
being recovered as Eligible Recovery through Access Recovery Charges or the
Connect America Fund from another source, that carrier’s ability to recover
reduced switched access revenue from Access Recovery Charges or the Connect
America Fund shall be reduced to the extent it receives duplicative recovery.
Any duplicative recovery shall be reflected as a reduction to a carrier’s Eligible
Recovery calculated pursuant to section 51.917(d) of this Part. A Rate-of-Return
Carrier seeking revenue recovery must annually certify as part of its tariff filings
to the Commission and to the relevant state commission that the carrier is not
seeking duplicative recovery in the state jurisdiction for any Eligible Recovery
subject to the recovery mechanism.
19

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