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SUMMARY OF CALLS PROPOSAL ACCESS CHARGE PROVISIONS


Elimination of the Residential and Single-Line Business PICC:

• This charge would be eliminated on July 1, 2000, in conjunction with the increase to the SLC cap.

Increases to the Primary Residential and Single-Line Business SLC Caps:

• SLC caps would begin at $4.35 on July 1, 2000 and gradually increase to an amount no higher than $6.50 on July 1, 2003.
• Price cap LECs must justify any increases to the SLC cap above $5.00.
• Commission will review SLC rates prior to the increase scheduled for July 1, 2002, including evaluation of price cap LECs’ forward-looking costs.

Targeting of an X-factor to Switched Access Services:

• Reductions from an X-factor set at 6.5% would be targeted to reduce switched access and switched transport rate elements until those rates reach the following levels:
  • 0.55 cents for the BOC LECs and GTE;
  • 0.95 cents for primarily rural price cap LECs; and
  • 0.65 cents for all other price cap LECs.
• Once average traffic sensitive rates reach the target levels, the X-factor would equal inflation and switched access rate caps would be frozen.

Creating a Separate Special Access Basket:

• Special access services are removed from the trunking basket.
• An X-factor of 3.0% is applied to the special access basket in 2000, and an X-factor of 6.5% would apply for the next three years. Thereafter, special access rate caps would be frozen.

$2.1 Billion in Switched Access Usage Charge Reductions:

• Reductions would be made immediately, on July 1, 2000.
• Reductions will be taken by
  • targeting the 6.5% X-factor to switching and switched transport services until the target rates are reached;
  • reducing CCL charges through application of $650 million in universal service support;
  • reducing CCL charges through application of primarily rural carriers’ 6.5% X-factor to the common line basket.
• If these reduction do not total $2.1 billion on July 1, 2000, price cap LECs will make additional reductions to switched access usage charges to equal that amount.

IXC Commitments in Return for $2.1 Billion Access Charge Reduction:

• Sprint and AT&T commit to:
  • Eliminate minimum usage charges on at least one basic rate calling plan;
  • Freeze the per-minute usage rates on at least one domestic interstate calling plan for one year;
  • Inform customers of these frozen rates;
  • Eliminate the PICC pass-through to consumers once price cap LECs eliminate the residential and single-line business PICC; and
  • Flow-through the reductions in access charges to consumers over the life of the CALLS Proposal.

The CALLS Proposal will be Adopted on an Interim Mandatory Basis.

• If not all price cap LECs participated in the CALLS Proposal, switched access usage charge reductions would not reach $2.1 billion and customers would not receive the benefits of the IXC commitments.
• Failure of all price cap LECs to participate in the CALLS Proposal would also delay the creation of an explicit and portable universal service fund.
• Therefore, the CALLS Proposal access charge rate structure is mandatory for all price cap LECs on July 1, 2000. Certain rate level components are mandatory only on an interim basis. Price cap LECs that opt out of the CALLS Proposal for these rate level component will submit forward-looking cost studies and their rates will be reinitialized based on these studies.