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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Pacific Bell Petition for Interim ) Waiver of Part 69 to Offer ) ISDN-Equipped Access Lines ) to California Schools, Libraries, ) and Community Colleges ) MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted: September 20, 1996 Released: September 24, 1996 By the Commission: I. INTRODUCTION 1. On December 11, 1995, the Commission adopted an order waiving application of Section 69.104 of its rules so that Pacific Bell (Pacific) could provide integrated services digital network (ISDN)- equipped access lines to public and private schools, libraries, and community colleges at no charge. The Pacific program associated with this waiver is called "Education First." On January 11, 1996, MCI Telecommunications Corporation (MCI) filed a petition for clarification or, in the alternative, reconsideration of the Waiver Order. Only Pacific responded to MCI's petition. For the reasons set forth below, we deny MCI's petition. II. BACKGROUND AND SUMMARY OF PLEADINGS 2. Section 69.104 of the Commission's rules requires local exchange carriers (LECs) to assess a charge on end users that subscribe to local exchange service -- the end user common line (EUCL) charge. The EUCL charge, which is also known as the subscriber line charge, is part of a comprehensive system of tariffed access charges for recovery of LEC costs associated with the origination and termination of interstate calls. Twenty-five percent of the costs of the local loop -- the telephone lines that connect end-users' premises to LEC switches at local central offices -- are assigned to the interstate jurisdiction. The EUCL charge is a monthly charge intended to recover a major portion of a LEC's interstate loop costs from subscribers on a flat-rate basis. The portion of local loop costs that is assigned to the interstate jurisdiction but not recovered through the EUCL charge is recovered from interexchange carriers through the per-minute carrier common line (CCL) charge. 3. Section 61.46(d) of the Commission's rules sets forth a formula by which LECs that are subject to price cap regulation, such as Pacific, must calculate the maximum allowable CCL charge. Essentially, the CCL charge is calculated by subtracting the revenues to be recovered through EUCL charges from the common line revenue requirement and dividing by historical common line minutes of use.CCL_MOU~=~[{CL_MOU~*~(1`+~%` DELTA ~CL~PCI`)}]~-~[`EUCL_MOU~*~{1}over{(1+{g}over{2})}] 4. In the Waiver Order, the Commission granted Pacific a limited waiver of Section 69.104 of its rules to provide ISDN-equipped access lines to public and private schools, libraries, and community colleges without charge. Pursuant to the Waiver Order, Pacific may forego charging eligible schools and libraries the EUCL for two years, as long as the benefits of the waiver apply to each institution for no more than one 12-month period. This waiver is subject to three conditions. First, Pacific was required to guarantee that it would not attempt to recover any costs associated with its Education First program by increasing its interstate access rates, including CCL charges. Second, in the event that Pacific elects an "X"-Factor that makes it subject to a potential sharing obligation or potentially eligible for a low-end adjustment, the Commission required Pacific to impute the revenues foregone under the Waiver Order for purposes of calculating its interstate access earnings. Third, Pacific was required to submit to the Common Carrier Bureau those portions of the state monitoring reports that contain data on administrative costs and on the amount of service being provided under its Education First program. 5. In its petition, MCI asks the Commission to clarify that, "in computing the CCL cap, Pacific must use the EUCL rate that is being waived, not the zero rate that results from the waiver." In essence, MCI wants this Commission to ensure that Pacific does not inflate its CCL rate cap by not assessing a EUCL charge on the access lines provided under the Education First program. MCI contends that, "[i]f the rates and demand for the ISDN lines sold to the schools are not treated consistently in the computations of the [common line] per minute rate and the EUCL per minute rate, the CCL cap may be higher than it otherwise would be, in violation of the [Waiver] Order." MCI also contends that such a clarification is consistent with the conditions imposed on Pacific in granting the waiver. In the alternative, MCI asks that the Commission reconsider its order if this was not its original intent. 6. Pacific responds by urging the Commission to dismiss summarily MCI's petition. Pacific contends that MCI's petition serves only to create delay and administrative cost because the issue MCI raises is not in controversy. Pacific notes that, in its original petition for waiver, it stated that its shareholders would absorb the cost of the Education First program. Pacific asserts that, for purposes of calculating its CCL rate, it will treat the telephone lines provided pursuant to the Education First program as if they were assessed EUCL charges. III. DISCUSSION 7. In the Waiver Order, the Commission found that Pacific's proposal to offer free ISDN-equipped access lines to schools and libraries would not create a new internal subsidy because the waiver would neither result in increasing other rates nor affecting sharing or low-end adjustments. As a condition to granting the waiver, the Commission required Pacific to guarantee that it would not attempt to recover any costs associated with its Education First program by increasing interstate access rates, including the CCL charge. MCI's concern is that Pacific might inflate the CCL rate cap by not assessing a EUCL charge on the access lines provided under the Education First program. This concern is addressed by the condition that the Commission placed on grant of Pacific's request in the Waiver Order. That order clearly prohibits Pacific from increasing its interstate access rates, including its CCL rate, to recover the costs of its Education First program. Moreover, for purposes of calculating the level of its CCL charge pursuant to Section 61.46(d), Pacific has committed to treating the telephone lines provided to the schools and libraries under the Education First program as if they were assessed EUCL charges. Accordingly, we conclude that our Waiver Order does not require the clarification or reconsideration that MCI requests. IV. ORDERING CLAUSE 8. Accordingly, IT IS ORDERED that, pursuant to Sections 201- 205 and Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  201-205 and 154(i), MCI's petition for clarification or, in the alternative, reconsideration IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary