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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 97-1081 In the Matter of ) Material to be Filed in Support of ) 1997 Annual Access Tariff Filings ) for Price Cap Companies ) TARIFF REVIEW PLAN REVISIONS Adopted: May 22, 1997; Released: May 22, 1997 By the Chief, Competitive Pricing Division: I. INTRODUCTION 1. We herein direct the price cap local exchange carriers (LECs) to re-submit the tariff review plans (TRP) that each price cap LEC filed on April 2, 1997, and to incorporate the changes to the price cap plan as set forth in the Commission's Price Cap Fourth Report and Order and Access Reform First Report and Order. This revised 1997 TRP, including any subsequent modifications, must be filed by June 2, 1997. 2. Based on these recent changes to the price cap plan, we are modifying Chart PCI-1 in the 1997 TRP, showing the development of the annual Price Cap Index (PCI) revisions. This revised chart is modeled after modifications made to the 1995 TRP, Chart PCI-1, under a similar circumstance involved a one-time X-factor adjustment. In Section II, we discuss this modification and other modifications due to the recent changes to the price cap plan. II. TRP REVISIONS A. Revisions to Existing and Proposed PCIs 3. The Commission's Price Cap Fourth Report and Order requires each price cap LEC to reduce its PCIs to the levels that would have been in effect had we adopted the 6.5 percent X-Factor on July 1, 1996. Accordingly, we are adding Line 234 to Chart PCI-1 to show the recalibrated PCIs. These recalibrated PCIs (Line 234) should be the PCIs that will be updated with the annual PCI revisions. 4. These recalibrated PCIs (Line 234) can be obtained by first recalculating the old PCIs that became effective on July 1, 1996, substituting the 6.5 X-Factor for the interim factor. Second, carry forward these recalculated July 1, 1996 PCIs to the next PCI revision during the 1996-97 tariff period from July 1, 1997 through June 30, 1997. Repeat this process until the old PCIs that would have been in effect have been recalibrated to the 6.5 percent X- Factor. B. Targeted PCIs and SBIs 5. The Commission's Access Reform First Report and Order requires the price cap LECs to allocate PCIs reductions to the remaining revenue in the interconnection charge category of the trunking basket. Any PCI reduction that would otherwise apply to the common line or traffic sensitive basket is to be transferred to the trunking basket, leaving the common line and traffic sensitive PCIs unchanged until which time the interconnection charge equals zero. 6. To target the PCI reductions in the common line and traffic sensitive baskets, we are adding Line 238 to Chart PCI-1, to include a targeting factor for the trunking basket. The proposed trunking basket PCI (Line 236) will be multiplied by one plus this target factor (Line 238) to obtain the targeted PCI (Line 240) to become effective on July 1, 1997. The targeting factor (Line 238) is not applicable to the common line or traffic sensitive baskets, unless the PCI reductions exceed the base year revenue remaining in the transport interconnection charge category, as will be discussed. The targeted PCIs (Line 240) for the common line and traffic sensitive basket equal the old PCIs on Line 230. 7. To calculate the targeting factor (Line 238) for the trunking basket, it is necessary first to calculate the basket revenue reductions associated with PCI changes that would have otherwise have applied to the common line and traffic sensitive baskets. To make this calculation, the basket revenue (R) for common line and traffic sensitive should be multiplied by one minus the proposed PCI (Line 236) divided by the old PCIs (Line 230). Sum these revenue reductions across the common line and traffic sensitive baskets and divide this sum by the trunking basket revenue (R) to obtain the targeting factor (Line 238) for the trunking basket. 8. The Commission's Access Reform First Report and Order requires PCI reductions, both the targeted common line and traffic sensitive PCI reductions and the trunking basket PCI reductions, to be allocated to the service band index (SBI) of the transport interconnection charge (TIC) category. The LECs' should not target the TIC revenues anticipated to be recovered in the future through rate elements other than the per minute TIC. If the PCI reductions exceed the remaining TIC revenue (the base year revenue minus what is anticipated to be recovered elsewhere), then allocate the excess PCI reductions among the common line, traffic sensitive and trunking baskets relative to the PCI revenue reductions before targeting. These changes will necessitate revisions to the proposed upper SBI limits. C. Equal Access Expense and MLB SLC Caps 9. There are two other changes that result in revisions. First, LECs should report the exogenous cost change for the completed amortization of equal access expense in Column P of Chart EXG-1. Second, LECs should revise the proposed subscriber line charges (SLCs) for multiline business (MLB) to reflect the $9.00 cap, and use this revised rate to calculate the maximum CCL rate in Chart CCL-1. 10. Finally, we recognize that the changes we are making to the price cap plan, including the changes to Chart PCI-1, will necessitate modifications to the LECs' software programs. To refine this method herein and to reduce the reporting burden on LECs, we will work with United States Telephone Association. FEDERAL COMMUNICATIONS COMMISSION James D. Schlichting Chief, Competitive Pricing Division Common Carrier Bureau