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Bureau Releases Compliance Order

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Released: April 19, 2013

Federal Communications Commission

DA 13-790

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

WC Docket No. 12-233
Investigation of Certain 2012 Annual
)
Access Tariffs
)
WCB/Pricing No. 12-09
)
)

ORDER

Adopted: April 19, 2013

Released: April 19, 2013

By the Chief, Wireline Competition Bureau:

I.

INTRODUCTION

1.
On November 18, 2011, the Commission released the USF/ICC Transformation Order,1
which created an incentive-based, market-driven approach to the intercarrier compensation (ICC)
systems, designed to reduce arbitrage and competitive distortions in the marketplace. Since the release of
the USF/ICC Transformation Order, the Commission, the states and the carriers have been working to
implement the first phase of the transition. In July 2012, the Wireline Competition Bureau (Bureau)
initiated an investigation of all ILEC Access Recovery Charge (ARC) rates contained in the 2012 Annual
Access Tariff Filings. On December 3, 2012, the Commission released an order concluding this
investigation. 2 The Termination Order concluded that the vast majority of ARC rates under investigation
were just and reasonable, and therefore lawful.3 The Commission, however, identified certain carriers in
the National Exchange Carrier Association’s (NECA) Tariff F.C.C. No. 5 (NECA Issuing Carriers) that
had not properly justified their ARC rates. The Commission required NECA to make further compliance
filings with the Commission on behalf of these carriers.4 Specifically, the Commission directed NECA to
file: (1) compliance documents demonstrating that the NECA Issuing Carriers have reasonably
determined the amount of their Base Period Revenue for Eligible Recovery purposes; and (2) new Tariff


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 (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 Investigation of Certain 2012 Annual Access Tariffs, WC Docket No. 12-233, WCB/Pricing No. 12-09, Order, 27
FCC Rcd 15577 (2012) (Termination Order).
3 Id. at 15577-8, para. 2. In two prior orders, we held that certain ILECs’ suspended tariff filings were reasonable
and therefore were in compliance with the Commission’s rules and no longer subject to the tariff investigation
process. See July 3, 2012 Annual Access Tariff Filings, WCB/Pricing No. 12-09, Order on Reconsideration, 27
FCC Rcd 8948 (Wireline Comp. Bur. 2012) (Reconsideration Order) and Investigation of Certain 2012 Annual
Access Tariffs
, WC Docket No. 12-233, WCB/Pricing No. 12-09, Order Designating Issues for Investigation, 27
FCC Rcd 10311 (Wireline Comp. Bur. 2012) (Designation Order).
4 Id.

Federal Communications Commission

DA 13-790

Review Plans (TRPs) that provide sufficient justification for the NECA Issuing Carriers’ annualized
projected demand loss for intrastate switched access minutes of use.5
2.
In this Order, the Bureau concludes that the NECA Issuing Carriers listed in Appendices
A and B of the Termination Order and listed in the attached appendix to this order have provided
sufficient justification to demonstrate that the currently effective ARC rates are just and reasonable, and
therefore lawful. On January 17, 2013, NECA filed the required compliance documents and revised
TRPs with the Bureau on behalf of the NECA Issuing Carriers.6 In addition, NECA filed with the Bureau
revised explanations for a handful of the NECA Issuing Carriers on February 11, 2013.7 The Bureau has
reviewed these compliance documents and revised TRPs and finds that they provide sufficient
justification for the currently effective ARC rates filed by NECA on behalf of the NECA Issuing
Carriers.8

II.

DISCUSSION

A.

Whether Each NECA Issuing Carrier Reasonably Determined the Amount of Its

Base Period Revenue

3.
The Commission’s rules require ILECs to calculate their Eligible Recovery amounts by
using revenues “received” (rather than simply billed) by March 31, 2011, for services provided between
October 1, 2010, and September 30, 2011.9 In the Termination Order, the Commission concluded that
the NECA Issuing Carriers listed in Appendix A of that Order had failed to demonstrate that they
reasonably determined the amount of their Base Period Revenue to be used as the starting point for
calculating their Eligible Recovery.10 Because of this failure, the Commission directed NECA, on behalf
of each NECA Issuing Carrier listed in Appendix A of the Termination Order, to make a compliance
filing with the Commission within sixty days of the release date of the Termination Order.11
Additionally, in cases in which the amount of collected revenue changed any Base Period Revenue
amount in the filed TRP, the Commission directed NECA to file a revised TRP on behalf of each NECA
Issuing Carrier listed in Appendix A of the Termination Order that reflected the carrier’s revised Base
Period Revenue in all of the TRP calculations where Base Period Revenue is used.12 The Commission
also extended the accounting order for the NECA Issuing Carriers listed in Appendix A of the


5 Id. at paras. 12, 20.
6 See Letter from Richard A. Askoff, Executive Director-Regulatory, National Exchange Carrier Association, Inc.,
to Marlene H. Dortch, Secretary, FCC, WC Docket No. 12-233, WCB/Pricing No. 12-09 (filed Jan. 17, 2013).
7 See Letter from Richard A. Askoff, Executive Director-Regulatory, National Exchange Carrier Association, Inc.,
to Marlene H. Dortch, Secretary, FCC, WC Docket No. 12-233, WCB/Pricing No. 12-09 (filed Feb. 11, 2013).
8 We note that there are three study areas for which the ARC rates will be increasing based on the revised data
NECA submitted in its compliance filing. We conclude that NECA has provided sufficient justification for these
revised ARC rates.
9 See 47 C.F.R. 51.917(b)(7), 2011 Rate-of-Return Carrier Base Period Revenue. 2011 Rate-of-Return Carrier Base
Period Revenue
is the sum of: (i) 2011 Interstate Switched Access Revenue Requirement; (ii) Fiscal Year 2011
revenues from Transitional Intrastate Access Service received by March 31, 2012; and (iii) Fiscal Year 2011
reciprocal compensation revenues received by March 31, 2012, less Fiscal Year 2011 reciprocal compensation
payments paid and/or payable by March 31, 2012 (as of March 12, 2013).
10 See Termination Order, 27 FCC Rcd at 15581-2, para. 12.
11 Id.
12 Id.
2

Federal Communications Commission

DA 13-790

Termination Order that would require refunds if modifications to a NECA Issuing Carrier’s Base Period
Revenues result in lower allowed ARC rate(s) for a carrier than the rate(s) contained in the revised NECA
tariff.13
4.
After reviewing NECA’s compliance filings and revised TRPs, the Bureau finds that each
of the NECA Issuing Carriers listed in Appendix A complied with the requirements of the Designation
Order
, and we conclude that these carriers have reasonably determined the amount of their Base Period
Revenue to be used as the starting point for calculating their Eligible Recovery.14 The Bureau further
finds that no refunds of ARC rates are required for the NECA Issuing Carriers listed in Appendix A.

B.

Whether Each NECA Issuing Carrier Reasonably Estimated its Projected Interstate

and Intrastate Switched Access Demand
5.
In the Designation Order, the Bureau directed NECA to determine whether the NECA
Issuing Carriers had reasonably estimated their projected interstate and intrastate switched access demand
loss for the 2012-13 tariff filing year.15 In the Termination Order, the Commission noted that 42 carriers
filed TRPs that reflected annualized intrastate demand loss of greater than 15 percent16 and the
Commission determined that the NECA Issuing Carriers listed in Appendix B of the Termination Order17
provided insufficient justification for their intrastate demand loss in excess of 15 percent.18 Therefore, the
Commission directed NECA to refile, within sixty days from the release date of the Termination Order,
new TRPs reflecting an annualized projected intrastate demand loss of no greater than 15 percent for each
of the NECA Issuing Carriers listed in Appendix B.19 Finally, the Commission extended the accounting
order established in the 2012 Annual Access Tariff Suspension Order for these NECA Issuing Carriers
requiring refunds to the extent that carriers’ demand adjustments resulted in lower ARC rates.20
6.
The Bureau finds that the NECA Issuing Carriers listed in Appendix B have reasonably
utilized an annual intrastate demand loss projection no greater than 15 percent and that NECA filed
amended TRPs on their behalf that implemented revised demand loss projections. Further, the Bureau
concludes that these carriers have reasonably estimated their projected interstate and intrastate switched
access demand. Thus, the Bureau finds that the revised TRPs filed by NECA on behalf of the NECA
Issuing Carriers establish that their current ARC rates are just and reasonable, and lawful for the NECA
Issuing Carriers listed in Appendix B, and that no refunds are required.


13 Id.
14 See Designation Order, 27 FCC Rcd at 10314-16, paras. 8-12. Here, the Bureau provided specific guidance as
to how the ILECs should comply with the requirements of the USF/ICC Transformation Order and these ILECs
made the sufficient requisite filings.
15 Id., 27 FCC Rcd at 10318, para. 21.
16 See Termination Order, 27 FCC Rcd at 15584, para. 19. The Designation Order also required justification of
interstate demand losses greater than 15%, given, in part, NECA’s methodology for allocating projected revenues.
See Designation Order, 27 FCC Rcd at 10318, para. 21. The Bureau determined that the administrative cost of
revising the pool allocation of projected revenue to reflect the small number of carriers with unsupported interstate
demand losses greater than 15% exceeded any benefits from requiring NECA to reallocate what would likely be a
de minimis reduction in projected revenues.
17 Id., 27 FCC Rcd at 15593, Appendix B.
18 Id., 27 FCC Rcd at 15584-5, para. 20.
19 Id.
20 Id.
3

Federal Communications Commission

DA 13-790

III.

ORDERING CLAUSES

7.
ACCORDINGLY, IT IS ORDERED that, the currently effective Access Recovery
Charge rates filed by the National Exchange Carrier Association on behalf of the NECA Issuing Carriers
listed in Appendices A and B are just and reasonable, and therefore lawful.
8.
IT IS FURTHER ORDERED that, pursuant to the authority delegated by sections 0.91
and 0.291 of the Commission’s rules, 47 C.F.R. §§ 0.91 and 0.291, the accounting order applicable to the
NECA Issuing Carriers listed in Appendices A and B IS TERMINATED.
9.
IT IS FURTHER ORDERED that each NECA Issuing Carrier listed in Appendices A and
B whose ICC replacement Connect America Fund recovery amount has changed as a result of this
proceeding SHALL FILE a revised Tariff Review Plan with USAC within thirty (30) days from the
release date of this Order, and USAC shall process the revised filings and make the necessary adjustments
to the carrier’s Connect America Fund support.
FEDERAL COMMUNICATIONS COMMISSION
Julie A. Veach
Chief, Wireline Competition Bureau
4

Federal Communications Commission

DA 13-790

APPENDIX A

STUDY AREA ID

ISSUING CARRIER NAME

120042
DIXVILLE TELEPHONE COMPANY
140053
FRANKLIN TELEPHONE COMPANY
170171
HICKORY TELEPHONE COMPANY
170215
YUKON-WALTZ TELEPHONE COMPANY
190248
SCOTT COUNTY TELEPHONE COOPERATIVE, INC.
270432
KAPLAN TELEPHONE COMPANY
290562
DEKALB TELEPHONE COOPERATIVE, INC.
WEST KENTUCKY RURAL TELEPHONE COOPERATIVE
290598
CORPORATION, INC.
310688
CLIMAX TELEPHONE COMPANY
310703
KALEVA TELEPHONE COMPANY
310704
ACE TEL. CO. OF MICHIGAN INC.
310725
SAND CREEK TELEPHONE COMPANY
330971
WEST WISCONSIN TELCOM COOP., INC.
431977
CENTRAL OKLAHOMA TELEPHONE COMPANY
431979
CHEROKEE TELEPHONE COMPANY
462188
FARMERS TELEPHONE COMPANY, INC.
462201
RICO TELEPHONE COMPANY
492262
E.N.M.R. TEL. COOPERATIVE, INC.-NM
502279
GUNNISON TELEPHONE COMPANY
5

Federal Communications Commission

DA 13-790

APPENDIX B

STUDY AREA ID

ISSUING CARRIER NAME

522419
HOOD CANAL TELEPHONE CO.
613013
KETCHIKAN PUBLIC UTILITIES TELEPHONE DIVISION
140069
WAITSFIELD/FAYSTON TELEPHONE CO., INC.
190239
NEW HOPE TELEPHONE COOPERATIVE
220381
PUBLIC SERVICE TELEPHONE COMPANY
230491
NORTH STATE TELEPHONE COMPANY. D/B/A NORTH
STATE COMMUNICATIONS
250283
BRINDLEE MOUNTAIN TELEPHONE LLC
250290
FARMERS TELECOMUNICATIONS COOPERATIVE, INC.
250300
HOPPER TELECOMMUNICATIONS LLC
250322
UNION SPRINGS TELEPHONE COMPANY, INC.
270433
LAFOURCHE TELEPHONE COMPANY, L.L.C.
290565
HIGHLAND TELEPHONE COMPANY, INC.
300606
CONNEAUT TELEPHONE COMPANY
300634
MINFORD TELEPHONE COMPANY
310777
ACE TELEPHONE COMPANY OF MICHIGAN, INC. - OLD
MISSION
330920
NIAGARA TELEPHONE COMPANY
341025
SHAWNEE TELEPHONE. COMPANY
341060
MOULTRIE INDEPENDENT TELEPHONE COMPANY
341062
NEW WINDSOR TELEPHONE COMPANY
351346
ACE TELEPHONE ASSOCIATION-IA
361346
ACE TELEPHONE ASSOCIATION-MN
371537
DALTON TELEPHONE COMPANY
452176
VALLEY TELEPHONE COOPERATIVE, INC.-AZ
482242
INTERBEL TEL. COOP., INC.
482244
LINCOLN TELEPHONE COMPANY, INC.
532364
COLTON TELEPHONE COMPANY
532371
CASCADE UTILIITES, INC.
532378
TRANS-CASCADE TELEPHONE COMPANY
532388
NORTH STATE TELEPHONE COMPANY
542338
SIERRA TELEPHONE COMPANY, INC.
552351
LINCOLN COUNTY TELEPHONE SYSTEM, INC.
432016
PANHANDLE TELEPHONE COOPERATIVE, INC.
472423
INLAND TELEPHONE COMPANY-ID
6

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