[Federal Register: September 2, 2004 (Volume 69, Number 170)]
[Rules and Regulations]
[Page 53645-53652]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02se04-15]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 32, 51 and 65
[WC Docket No. 02-269; CC Docket No. 00-199; CC Docket No. 80-286; CC
Docket No. 99-301; FCC 04-149]
Federal-State Joint Conference on Accounting Issues
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission addresses recommendations
made by the Federal-State Joint Conference on Accounting Issues (Joint
Conference) in a report filed with the Commission on October 9, 2003.
It also makes recommendations on
[[Page 53646]]
other accounting related matters as well as resolves outstanding
petitions for reconsideration of the Commission's Phase II Report and
Order. Finally, this document further delays the effective date and
implementation of four previously adopted accounting and reporting rule
changes.
DATES: The effective date for amendments to 47 CFR 32.5200, 32.6560,
and 32.6620 published at 67 FR 5670 (February 6, 2002) is further
suspended from July 1, 2004, through December 31, 2004. The rules
contained in this document are effective March 2, 2005.
FOR FURTHER INFORMATION CONTACT: Jane E. Jackson, Associate Chief,
Wireline Competition Bureau, (202) 418-1500.
SUPPLEMENTARY INFORMATION: The full text of this document is available
for public inspection and copying during regular business hours at the
FCC Reference Information Center, Portals II, 445 12th Street, SW.,
Room CY-A257, Washington, DC 20554. This document may also be purchased
from the Commission's duplicating contractor, Best Copy and Printing,
Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC
20554, telephone (202) 488-5300, facsimile (202) 488-5563, e-mail
fcc@bcpiweb.com.
Background
1. On September 5, 2002, the Commission issued an order which was
published at 67 FR 66069 (October 30, 2002), convening the Joint
Conference ``to provide a forum for an ongoing dialogue between the
Commission and the states in order to ensure that regulatory accounting
data and related information filed by carriers are adequate, truthful,
and thorough.'' The Commission found that the ``Joint Conference would
provide a focused means by which it and interested state commissions
may conduct an open dialogue, collect and exchange information, and
consider initiatives that would improve the collection of adequate,
truthful, and thorough accounting data for regulatory purposes.'' In
charging the Joint Conference with the task of reexamining federal and
state accounting and reporting requirements, the Commission noted that
the Joint Conference has a broad mandate to perform its work, including
the ability to recommend additions to, or eliminations of, accounting
requirements.
2. On November 12, 2002, the Commission released an order which was
published at 67 FR 77432 (December 18, 2002), suspending the
implementation of the following four accounting and reporting
requirement rule changes until July 1, 2003: (1) The consolidation of
Accounts 6621 through 6623 into Account 6620, with subaccounts for
wholesale and retail; (2) the consolidation of Account 5230, Directory
revenue, into Account 5200 Miscellaneous revenue; (3) the consolidation
of the depreciation and amortization expense accounts (Accounts 6561
through 6565) into Account 6560, Depreciation and amortization
expenses; (4) the revised ``Loop Sheath Kilometers'' data collection in
Table II of ARMIS Report 43-07. The Commission adopted these accounting
rules and reporting requirements as part of the Commission's biennial
review of accounting requirements and Automated Reporting Management
Information System (ARMIS) reporting. The Commission suspended
implementation of these four accounting and reporting requirement rule
changes in order to allow the recently-established Joint Conference to
review these rules and requirements before carriers were required to
implement them. These rules had been adopted in 2001 in the Phase II
Report and Order which was published at 67 FR 5670 (February 6, 2002),
in which the Commission had eliminated many part 32 accounts, defined
ILECs subject to its accounting rules, streamlined its affiliate
transaction rules and revised some of its ARMIS reporting requirements.
(The Commission subsequently issued two additional orders further
suspending implementation of the four previously-adopted rules which
were published at 68 FR 38641 and 68 FR 75455 on June 30, 2003 and
December 31, 2003, respectively).
3. On December 12, 2002, as part of its comprehensive review of the
Commission's accounting and reporting requirements, the Joint
Conference issued a public notice requesting comment on a broad range
of regulatory accounting issues. The Joint Conference also sought
comment on four groups of specific issues related to the Phase II
Report and Order: (1) Certain accounts that had been requested by
states but not adopted by the Commission; (2) changes to the affiliate
transaction rules; (3) the accounting and recordkeeping rules that were
suspended by the Commission in its November 12, 2002 Order; and (4) the
issues raised by the outstanding petitions for reconsideration of the
Phase II Report and Order.
4. In a Notice of Proposed Rulemaking (NPRM) released on December
23, 2003, which was published at 68 FR 75478 (December 31, 2003), the
Commission sought comment on the recommendations of the Joint
Conference related to the issues it raised in its December 12, 2002
public notice and on other accounting-related matters.
Paperwork Reduction Act
5. This Order has been analyzed with respect to the Paperwork
Reduction Act of 1995 and found to impose new or modified reporting and
recordkeeping requirements or burdens on the public. Implementation of
these new or modified reporting and recordkeeping requirements will be
subject to approval by the Office of Management and Budget (OMB) as
prescribed by the Act, and will go into effect upon announcement in the
Federal Register of OMB approval.
Synopsis of Report and Order
I. Accounting Rules
6. The Commission adopts the following Joint Conference
recommendations: (1) Reinstates Account 5230, Directory revenue; (2)
Reinstates Accounts 6621, Call completion services; 6622, Number
services; and 6623, Customer services and requires wholesale/retail
information only for Account 6623. The wholesale/retail information for
Account 6623 will be reported in ARMIS Report 43-03 rather than a part
32 subaccount; (3) Reinstates Accounts 6561, Depreciation expense--
telecommunications plant in service; 6562, Depreciation expense--
property held for future telecommunications use; 6563, Amortization
expense--tangible; 6564, Amortization expense--intangible; and Account
6565, Amortization expense--other. The Commission rejects the Joint
Conference recommendation to add new part 32 accounts for: (1) Optical
switching; (2) switching software; (3) loop and inter-office transport;
(4) interconnection revenue; and (5) universal service revenue and
expense. While the Commission rejects the recommendation to add new
part 32 accounts, it does, however, require Class A companies to
maintain subsidiary record categories to identify interconnection
revenues. Finally, the part 32 definition of incumbent local exchange
carrier is modified to clarify that a successor/assign company that is
found to be nondominant will not be subject to the Commission's
accounting requirements.
II. Affiliate Transactions Rules
7. The Commission rejects the Joint Conference recommendations to
modify
[[Page 53647]]
its affiliate transactions rules pertaining to: (1) Fair market value
comparisons for assets totaling less than $500,000; (2) Establishment
of floor and ceiling threshold; (3) Prevailing price treatment
threshold; (4) Centralized services exception to the estimated fair
market value rule; (5) Nonregulated to nonregulated transactions; and
(6) Intra-holding company ILEC-to-ILEC transfers of assets or services.
III. Reporting Requirements
8. The Commission adopts the Joint Conference recommendation to
reinstate the title of the first section of Table II of the ARMIS
Report 43-07 from ``loop sheath kilometers'' back to ``sheath
kilometers''. The Joint Conference also recommended that the Commission
deny the petition for reconsideration regarding the reporting of
broadband infrastructure data in ARMIS Report 43-07. The Commission
adopts the recommendation and denies the petition for reconsideration.
IV. Suspension of Implementation of Four Accounting and Reporting
Requirement Rule Changes
9. As noted above, the Commission has suspended the implementation
of four previously-adopted accounting and recordkeeping rules to allow
the Joint Conference time to review them, and for the Commission to act
upon the Joint Conference's recommendation. The suspension currently is
effective through June 30, 2004. The Commission further suspends the
rule changes through December 31, 2004, which is the next date to
coincide with the start of a fiscal year after six months' notice
required by the Act for the rules to take effect.
V. Other Issues
10. Additional proposals and specific areas for investigation
submitted by commenters in response to the NPRM will continue to be
examined by the Joint Conference and the Commission.
Final Regulatory Flexibility Certification
11. The Regulatory Flexibility Act of 1980, as amended (RFA),
requires that a regulatory flexibility analysis be prepared for notice-
and-comment rule making proceedings, unless the agency certifies that
``the rule will not, if promulgated, have a significant economic impact
on a substantial number of small entities.'' The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. 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).
12. The SBA has developed a small business size standard for Wired
Telecommunications Carriers, which consists of all such firms having
1,500 or fewer employees. Under the Commission's rules, there are two
classes of ILECs for accounting purposes: Class A and Class B. Carriers
with annual revenues from regulated telecommunications operations that
are equal to or above the indexed revenue threshold, currently $123
million, are classified as Class A; those falling below that threshold
are considered Class B. Class A carriers are required to maintain a
more detailed level of accounts than Class B carriers. In addition,
Class A carriers are required to file ARMIS Reports annually while
Class B carriers are not subject to the ARMIS Reporting requirement.
Class A carriers with annual revenues in excess of $123 million but
less than $7.240 billion are classified as mid-sized carriers and are
permitted to maintain accounts at the less detailed Class B level. The
less detailed level of accounting required under Class B was
established to accommodate smaller carriers and relieve them of the
burdens associated with maintaining the more detailed level of
accounts. The accounting and reporting requirements adopted by the
Commission in this Report and Order are mandatory only for Class A non-
mid sized carriers. These carriers have annual revenues in excess of
$7.240 billion, therefore it is likely that these companies employ more
than 1,500 employees and are not small businesses under the SBA's
definition for Wired Telecommunications Carriers.
13. In this Report and Order the Commission adopts the Joint
Conference's recommendations to reinstate the following Part 32 Class A
accounts: Account 5230, Directory revenue, Account 6621, Call
completion services, Account 6622, Number services, Account 6623,
Customer services, Account 6561, Depreciation expense--
telecommunications plant in service; Account 6562, Depreciation
expense--property held for future telecommunications use; Account 6563,
Amortization expense--tangible; Account 6564 Amortization expense--
intangible; Account 6565, Amortization expense--other. These accounting
changes are mandatory only for non-mid-sized Class A ILECs. The
reinstatement of these accounts, however, will not impose any
additional burden on non-mid-sized Class A ILECs because the
Commission's prior action to aggregate the accounts has been suspended.
Similarly, the Commission's reinstatement of the sheath kilometer
reporting requirement in the ARMIS 43-07 will not impose any additional
burden on non-mid-sized Class A ILECs. Non-mid-sized Class A ILECs are
meeting these requirements at the current time, therefore the rule
changes in this Report and Order will impose no economic burden.
14. Although the Commission declines to adopt any new accounts, it
will require that non-mid-sized Class A ILECs maintain subsidiary
record categories for unbundled network element revenues, resale
revenues, reciprocal compensation revenues, and other interconnection
revenues in the accounts in which these revenues are currently
recorded. The use of subsidiary record categories allows carriers to
use whatever mechanisms they choose, including those currently in
place, to identify the relevant amounts as long as the information can
be made available to state and federal regulators upon request. Also,
the Commission is requiring the ARMIS reporting of the wholesale and
retail percentages applicable to Account 6623, Customer services. The
use of subsidiary record categories for interconnection revenue and the
ARMIS reporting of wholesale retail percentages do not require massive
changes to the ILECs' accounting systems and are far less burdensome
alternatives than the creation of new accounts and/or subaccounts.
15. Even if there are mid-sized Class A carriers or Class B
carriers that are small businesses within the SBA's definition (i.e.,
with fewer than 1,500 employees) that may elect to comply with the
rules, the impact of the rules is economically de minimis and
negligible. As discussed above, compliance with the rules adopted
herein imposes no new burdens. Accordingly, even if there is economic
impact on any such small carrier, it is not significant. Therefore, we
certify that the requirements of the Report and Order will not have a
significant economic impact on a substantial number of small entities.
16. The Commission will send a copy of the Report and Order,
including a copy of this Final Regulatory Flexibility Certification, in
a report to Congress pursuant to the Congressional Review Act. In
addition, the Report and Order and this final certification will be
sent to the Chief Counsel for Advocacy of the
[[Page 53648]]
SBA, and will be published in the Federal Register. Ordering Clauses
17. Accordingly, it is ordered that pursuant to sections 1, 4, 201-
205, 215 and 218-220 of the Communications Act of 1934, as amended, 47
U.S.C. 151, 154, 201-205, 215, and 218-220, Part 32 of the Commission's
rules, 47 CFR part 32, is amended as described above.
18. It is further ordered that pursuant to section 220(g) of the
Communications Act of 1934, as amended, 47 U.S.C. 220(g), changes to
our part 32, System of Accounts, adopted in this Report and Order shall
take effect six months after publication in the Federal Register
following OMB approval, unless a notice is published in the Federal
Register stating otherwise. We will, however, permit carriers to
implement Part 32 accounting changes as of January 1, 2005.
19. It is further ordered that pursuant to sections 1, 4, and 220
of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154, and
220, and section 1.401 of the Commission's rules, 47 CFR 1.401, the
Petition of BellSouth, SBC and Verizon for Reconsideration and the SBC
Communications, Inc. Petition for Reconsideration are granted in part,
to the extent indicated herein, and denied in part.
20. It is further ordered that pursuant to the authority contained
in sections 1, 4(i), 4(j), 201-205, 215, and 218-220 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j),
201-205, 215 and 218-220, FCC Report 43-07, the Infrastructure Report,
is revised as set forth above.
21. It is further ordered that pursuant to sections 1, 4(i), 4(j),
5(c), 201, 202, 219 and 220 of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i), 154(j), 155(c), 201, 202, 219 and 220,
section 1.3 of the Commission's rules, 47 CFR 1.3, and sections 553(b)
and 553(d)(3) of the Administrative Procedure Act, 5 U.S.C. 553(b),
553(d)(3), implementation of certain rule modifications described in
paragraph 3, above, is suspended from July 1, 2004, through December
31, 2004.
22. It is further ordered that pursuant to the authority contained
in section 0.291 of the Commission's rules, 47 CFR 0.291, the Wireline
Competition Bureau is delegated authority to implement all changes to
ARMIS reporting as set forth above.
23. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Report and Order, including the Final Regulatory
Flexibility Certification, to the Chief Counsel for Advocacy of the
Small Business Administration.
List of Subjects
47 CFR Part 32
Communications common carriers, Reporting and recordkeeping
requirements, Uniform System of Accounts.
47 CFR Part 51
Communications common carriers, Telecommunications.
47 CFR Part 65
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
Rule Changes
0
For the reasons set forth in the preamble, amend parts 32, 51, and 65
of title 47 of the Code of Federal Regulations as follows:
PART 32--UNIFORM SYSTEM OF ACCOUNTS FOR TELECOMMUNICATIONS
COMPANIES
0
1. The authority citation for part 32 continues to read as follows:
Authority: 47 U.S.C. 154(i), 154(j) and 220 as amended, unless
otherwise noted.
0
2. Section 32.11 is amended by revising paragraph (a) to read as
follows:
Sec. 32.11 Classification of companies.
(a) For purposes of this section, the term ``company'' or
``companies'' means incumbent local exchange carrier(s) as defined in
section 251(h) of the Communications Act, and any other carriers that
the Commission designates by Order. Incumbent local exchange carriers'
successor or assign companies, as defined in section 251(h)(1)(B)(ii)
of the Communications Act, that are found to be non-dominant by the
Commission, will not be subject to this Uniform System of Accounts.
* * * * *
0
3. Section 32.27 is amended by revising paragraph (a) to read as
follows:
Sec. 32.27 Transactions with affiliates.
(a) Unless otherwise approved by the Chief, Wireline Competition
Bureau, transactions with affiliates involving asset transfers into or
out of the regulated accounts shall be recorded by the carrier in its
regulated accounts as provided in paragraphs (b) through (f) of this
section.
* * * * *
0
4. Section 32.1280 is amended by revising paragraph (d) to read as
follows:
Sec. 32.1280 Prepayments.
* * * * *
(d) The cost of preparing, printing, binding, and delivering
directories and the cost of soliciting advertisements for directories,
except minor amounts which may be charged directly to Account 6622,
Number services. These prepaid directory expenses shall be cleared to
Account 6622 by monthly charges representing that portion of the
expenses applicable to each month.
* * * * *
0
5. Section 32.2000 is amended by revising paragraph (g)(5) to read as
follows:
Sec. 32.2000 Instructions for telecommunications plant accounts.
* * * * *
(g) * * *
(5) Upon direction or approval from this Commission, the company
shall credit Account 3100, Accumulated Depreciation, and charge Account
1438, Deferred Maintenance, retirements and other deferred charges,
with the unprovided-for loss in service value. Such amounts shall be
distributed from Account 1438 to Account 6561, Depreciation expense--
Telecommunications plant in service, or Account 6562, Depreciation
expense--property held for future telecommunications use, over such
period as this Commission may direct or approve.
* * * * *
0
6. Section 32.2005 is amended by revising paragraphs (b)(1) and (b)(4)
to read as follows:
Sec. 32.2005 Telecommunications Plant Adjustment.
* * * * *
(b) * * *
(1) Debit amounts may be charged in whole or in part, or amortized
over a reasonable period through charges to Account 7300, Nonoperating
income and expense, without further direction or approval by this
Commission. When specifically approved by this Commission, or when the
provisions of paragraph (b)(3) of this section apply, debit amounts
shall be amortized to Account 6565, Amortization expense--other.
* * * * *
(4) Within one year from the date of inclusion in this account of a
debit or credit amount with respect to a current acquisition, the
company may dispose of the total amount from an acquisition of
telephone plant by a lump-sum
[[Page 53649]]
charge or credit, as appropriate, to Account 6565 without further
approval of this Commission, provided that such amount does not exceed
$100,000 and that the plant was not acquired from an affiliated
company.
0
7. Section 32.2682 is amended by revising paragraph (c) to read as
follows:
Sec. 32.2682 Leasehold improvements.
* * * * *
(c) Amounts contained in this account shall be amortized over the
term of the related lease. For Class A companies, except mid-sized
incumbent local exchange carriers, the amortization associated with the
costs recorded in the Leasehold improvement account will be credited
directly to this asset account, leaving a balance representing the
unamortized cost.
0
8. Section 32.2690 is amended by revising paragraph (c) to read as
follows:
Sec. 32.2690 Intangibles.
* * * * *
(c) The cost of other intangible assets, not including software,
having a life of one year or less shall be charged directly to Account
6564, Amortization expense--intangible. Such intangibles acquired at
small cost may also be charged to Account 6564, irrespective of their
term of life. The cost of software having a life of one year or less
shall be charged directly to the applicable expense account with which
the software is associated.
* * * * *
0
9. Section 32.3000 is amended by revising paragraph (b) to read as
follows:
Sec. 32.3000 Instructions for balance sheet accounts--Depreciation
and amortization.
* * * * *
(b) Depreciation and Amortization Accounts to be Maintained by
Class A and Class B telephone companies, as indicated.
------------------------------------------------------------------------
Class A Class B
Account title account account
------------------------------------------------------------------------
Depreciation and amortization:
Accumulated depreciation............ 3100 3100
Accumulated depreciation--Held for 3200 3200
future telecommunications use......
Accumulated depreciation-- 3300 3300
Nonoperating.......................
Accumulated depreciation--Tangible.. .............. 3400
Accumulated depreciation-- 3410 ..............
Capitalized leases.................
------------------------------------------------------------------------
0
10. Section 32.3100 is amended by revising paragraphs (b) and (d) to
read as follows:
Sec. 32.3100 Accumulated depreciation.
* * * * *
(b) This account shall be credited with depreciation amounts
concurrently charged to Account 6561, Depreciation expense--
telecommunications plant in service. (Note also Account 3300,
Accumulated depreciation--nonoperating.)
* * * * *
(d) This account shall be credited with amounts charged to Account
1438, Deferred maintenance, retirements, and other deferred charges, as
provided in Sec. 32.2000(g)(4) of this subpart. This account shall be
credited with amounts charged to Account 6561 with respect to other
than relatively minor losses in service values suffered through
terminations of service when charges for such terminations are made to
recover the losses.
0
11. Section 32.3200 is amended by revising paragraph (b) to read as
follows:
Sec. 32.3200 Accumulated depreciation--held for future
telecommunications use.
* * * * *
(b) This account shall be credited with amounts concurrently
charged to Account 6562, Depreciation expense--property held for future
telecommunications use.
0
12. Section 32.3400 is revised to read as follows:
Sec. 32.3400 Accumulated amortization--tangible.
(a) This account shall be used by Class B companies and shall
include:
(1) the accumulated amortization associated with the investment
contained in Account 2681, Capital leases.
(2) the accumulated amortization associated with the investment
contained in Account 2682, Leasehold improvements.
(b) This account shall be credited with amounts for the
amortization of capital leases and leasehold improvements concurrently
charged to Account 6563, Amortization expense--tangible. (Note also
Account 3300, Accumulated depreciation--nonoperating.)
(c) When any item carried in Account 2681 or Account 2682 is sold,
is relinquished, or is otherwise retired from service, this account
shall be charged with the cost of the retired item. Remaining amounts
associated with the item shall be debited to Account 7100, Other
operating income and expenses, or Account 7300, Nonoperating income and
expense, as appropriate.
0
13. Section 32.3410 is amended by revising paragraph (b) to read as
follows:
Sec. 32.3410 Accumulated amortization--capitalized leases.
* * * * *
(b) This account shall be credited with amounts for the
amortization of capital leases concurrently charged to Account 6563,
Amortization expense--tangible. (Note also Account 3300, Accumulated
depreciation--nonoperating.)
* * * * *
0
14. Section 32.4999 is amended by revising paragraphs (c), (f) and (n)
to read as follows:
Sec. 32.4999 General.
* * * * *
(c) Commissions. Commissions paid to others or employees in place
of compensation or salaries for services rendered, such as public
telephone commissions, shall be charged to Account 6623, Customer
services, and not to the revenue accounts. Other commissions shall be
charged to the appropriate expense accounts.
* * * * *
(f) Subsidiary records--jurisdictional subdivisions and
interconnection. Subsidiary record categories shall be maintained in
order that the company may separately report revenues derived from
charges imposed under intrastate, interstate and international tariff
filings. Class A carriers shall also maintain subsidiary record
categories in order that the companies may separately report
interconnection revenues derived from the following categories:
Unbundled network element revenues, Resale revenues, Reciprocal
compensation revenues, and Other interconnection revenues. Such
subsidiary record categories shall be reported as required by part 43
of this Commission's Rules and Regulations.
* * * * *
[[Page 53650]]
(n) Revenue accounts to be maintained.
------------------------------------------------------------------------
Class A Class B
Account title account account
------------------------------------------------------------------------
Local network services revenues:
Basic local service revenue......... .............. 5000
Basic area revenue.................. 5001 ..............
Private line revenue................ 5040 ..............
Other basic area revenue............ 5060 ..............
Network access service revenues:
End user revenue.................... 5081 5081
Switched access revenue............. 5082 5082
Special access revenue.............. 5083 5083
Long distance network services revenues:
Long distance message revenue....... 5100 5100
Miscellaneous revenues:
Miscellaneous revenue............... 5200 5200
Directory revenue................... 5230 ..............
Nonregulated revenues:
Nonregulated operating revenue...... 5280 5280
Uncollectible revenues:
Uncollectible revenue............... 5300 5300
------------------------------------------------------------------------
0
15. Section 32.5001 is amended to revise paragraph (b) to read as
follows:
Sec. 32.5001 Basic area revenue.
* * * * *
(b) Revenue derived from charges for nonpublished number or
additional and boldfaced listings in the alphabetical section of the
company's telephone directories shall be included in account 5230,
Directory revenue.
* * * * *
0
16. Section 32.5200 is revised to read as follows:
Sec. 32.5200 Miscellaneous revenue.
This account shall include revenue derived from the following
sources. For Class B companies, this account shall also include revenue
of the type and character required of Class A companies in Account
5230, Directory revenue.
(a) Rental or subrental to others of telecommunications plant
furnished apart from telecommunications services rendered by the
company (this revenue includes taxes when borne by the lessee). It
includes revenue from the rent of such items as space in conduit, pole
line space for attachments, and any allowance for return on property
used in joint operations and shared facilities agreements. The expense
of maintaining and operating the rented property, including
depreciation and insurance, shall be included in the appropriate
operating expense accounts. Taxes applicable to the rented property
shall be included by the owner of the rented property in appropriate
tax accounts. When land or buildings are rented on an incidental basis
for non-telecommunications use, the rental and expenses are included in
Account 7300, Nonoperating income and expense.
(b) Services rendered to other companies under a license agreement,
general services contract, or other arrangement providing for the
furnishing of general accounting, financial, legal, patent, and other
general services associated with the provision of regulated
telecommunications services. (See also Account 5230.)
(c) The provision, either under tariff or through contractual
arrangements, of special billing information to customers in the form
of magnetic tapes, cards or statements. Special billing information
provides detail in a format and/or at a level of detail not normally
provided in the standard billing rendered for the regulated telephone
services utilized by the customer.
(d) The performance of customer operations services for others
incident to the company's regulated telecommunications operations which
are not provided for elsewhere. (See also Sec. Sec. 32.14(e) and
32.4999(e)).
(e) Contract services (plant maintenance) performed for others
incident to the company's regulated telecommunications operations. This
includes revenue from the incidental performance of nontariffed
operating and maintenance activities for others which are similar in
nature to those activities which are performed by the company in
operating and maintaining its own telecommunications plant facilities.
The records supporting the entries in this account shall be maintained
with sufficient particularity to identify the revenue and associated
Plant Specific Operations Expenses related to each undertaking. This
account does not include revenue related to the performance of
operation or maintenance activities under a joint operating agreement.
(f) The provision of billing and collection services to other
telecommunications companies. This includes amounts charged for
services such as message recording, billing, collection, billing
analysis, and billing information services, whether rendered under
tariff or contractual arrangements.
(g) Charges and credits resulting from contractual revenue pooling
and/or sharing agreements for activities included in the miscellaneous
revenue accounts only when they are not identifiable by miscellaneous
revenue account in the settlement process. (See also Sec. 32.4999(e)).
The extent that the charges and credits resulting from a settlement
process can be identified by miscellaneous revenue accounts they shall
be recorded in the applicable account.
(h) The provision of transport and termination of local
telecommunications traffic pursuant to section 251(c) of the
Communications Act and part 51 of this chapter.
(i) The provision of unbundled network elements pursuant to section
251(c) of the Communications Act and part 51 of this chapter.
(j) This account shall also include other incidental regulated
revenue such as:
(1) Collection overages (collection shortages shall be charged to
Account 6623, Customer services);
(2) Unclaimed refunds for telecommunications services when not
subject to escheats;
[[Page 53651]]
(3) Charges (penalties) imposed by the company for customer checks
returned for non-payment;
(4) Discounts allowed customers for prompt payment;
(5) Late-payment charges;
(6) Revenue from private mobile telephone services which do not
have access to the public switched network; and
(7) Other incidental revenue not provided for elsewhere in other
Revenue accounts.
(k) Any definitely known amounts of losses of revenue collections
due to fire or theft, at customers' coin-box stations, at public or
semipublic telephone stations, in the possession of collectors en route
to collection offices, on hand at collection offices, and between
collection offices and banks shall be charged to Account 6720, General
and Administrative.
0
17. Section 32.5999 is amended by revising paragraphs (b)(4), (c) and
(g) as follows:
Sec. 32.5999 General.
* * * * *
(b) * * *
(4) In addition to the activities specified in paragraph (b)(3) of
this section, the appropriate Plant Specific Operations Expense
accounts shall include the cost of personnel whose principal job is the
operation of plant equipment, such as general purpose computer
operators, aircraft pilots, chauffeurs and shuttle bus drivers.
However, when the operation of equipment is performed as part of other
identifiable functions (such as the use of office equipment, capital
tools or motor vehicles), the operators' cost shall be charged to
accounts appropriate for those functions. (For costs of operator
services personnel, see Accounts 6621, Call completion services, and
6622, Number services, and for costs of test board personnel see
Account 6533.)
(c) Plant nonspecific operations expense. The Plant Nonspecific
Operations Expense accounts shall include expenses related to property
held for future telecommunications use, provisioning expenses, network
operations expenses, and depreciation and amortization expenses.
Accounts in this group (except for Account 6540, Access expense, and
Accounts 6560 through 6565) shall include the costs of performing
activities described in narratives for individual accounts. These costs
shall also include the costs of supervision and office support of these
activities.
* * * * *
(g) Expense accounts to be maintained.
------------------------------------------------------------------------
Class A Class B
Account title account account
------------------------------------------------------------------------
Income Statement Accounts
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬
Plant specific operations expense:
Network support expense............. .............. 6110
Motor vehicle expense............... 6112 ..............
Aircraft expense.................... 6113 ..............
Tools and other work equipment 6114 ..............
expense............................
General support expenses............ .............. 6120
Land and building expenses.......... 6121 ..............
Furniture and artworks expense...... 6122 ..............
Office equipment expense............ 6123 ..............
General purpose computers expense... 6124 ..............
Central office switching expense.... .............. 6210
Non-digital switching expense....... 6211 ..............
Digital electronic switching expense 6212 ..............
Operators system expense............ 6220 6220
Central office transmission expenses .............. 6230
Radio systems expense............... 6231 ..............
Circuit equipment expense........... 6232 ..............
Information origination/termination .............. 6310
expense............................
Station apparatus expense........... 6311 ..............
Large private branch exchange 6341 ..............
expense............................
Public telephone terminal equipment 6351 ..............
expense............................
Other terminal equipment expense.... 6362 ..............
Cable and wire facilities expenses.. .............. 6410
Poles expense....................... 6411 ..............
Aerial cable expense................ 6421 ..............
Underground cable expense........... 6422 ..............
Buried cable expense................ 6423 ..............
Submarine and deep sea cable expense 6424 ..............
Intrabuilding network cable expense. 6426 ..............
Aerial wire expense................. 6431 ..............
Conduit systems expense............. 6441 ..............
Plant nonspecific operations expense:
Other property plant and equipment .............. 6510
expenses...........................
Property held for future 6511 ..............
telecommunications use expense.....
Provisioning expense................ 6512 ..............
Network operations expenses......... .............. 6530
Power expense....................... 6531 ..............
Network administration expense...... 6532 ..............
Testing expense..................... 6533 ..............
Plant operations administration 6534 ..............
expense............................
Engineering expense................. 6535 ..............
Access expense...................... 6540 6540
Depreciation and amortization .............. 6560
expenses...........................
Depreciation expense-- 6561 ..............
telecommunications plant in service
Depreciation expense--property held 6562 ..............
for future telecommunications use..
[[Page 53652]]
Amortization expense--tangible...... 6563 ..............
Amortization expense--intangible.... 6564 ..............
Amortization expense--other......... 6565 ..............
Customer operations expense:
Marketing........................... .............. 6610
Product management and sales........ 6611 ..............
Product advertising................. 6613 ..............
Services............................ .............. 6620
Call completion services............ 6621 ..............
Number services..................... 6622 ..............
Customer services................... 6623 ..............
Corporate operations expense:
General and administrative.......... 6720 6720
Provision for uncollectible notes 6790 6790
receivable.........................
------------------------------------------------------------------------
0
18. Section 32.6560 is revised to read as follows:
Sec. 32.6560 Depreciation and amortization expenses.
Class B telephone companies shall use this account for expenses of
the type and character required of Class A companies in Accounts 6561
through 6565.
0
19. Add Sec. 32.6562 to read as follows:
Sec. 32.6562 Depreciation expense--property held for future
telecommunications use.
This account shall include the depreciation expense of capitalized
costs included in Account 2002, Property held for future
telecommunications use.
0
20. Section 32.6620 is revised as follows:
Sec. 32.6620 Services.
Class B telephone companies shall use this account for expenses of
the type and character required of Class A companies in Accounts 6621
through 6623.
PART 51--INTERCONNECTION
0
21. The authority citation for part 51 continues to read:
Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54,
256, 271, 303(r), 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C.
151-55, 157, 201-05, 207-09, 218, 225-27, 251-54, 256, 271, 303(r),
332, 47 U.S.C. 157 note, unless otherwise noted.
0
22. Section 51.609 is amended by revising paragraphs (c)(1), (c)(3),
and (d) to read as follows:
Sec. 51.609 Determination of avoided retail costs.
* * * * *
(c) * * *
(1) Include as direct costs, the costs recorded in USOA accounts
6611 (product management and sales), 6613 (product advertising), 6621
(call completion services), 6622, (number services), and 6623 (customer
services) (Sec. Sec. 32.6611, 32.6613, 32.6621, 32.6622, and 32.6623
of this chapter);
* * * * *
(3) Not include plant-specific expenses and plant non-specific
expenses, other than general support expenses (Sec. Sec. 32.6112-6114,
32.6211-6565 of this chapter).
(d) Costs included in accounts 6611, 6613 and 6621-6623 described
in paragraph (c) of this section (Sec. Sec. 32.6611, 32.6613, and
32.6621-6623 of this chapter) may be included in wholesale rates only
to the extent that the incumbent LEC proves to a state commission that
specific costs in these accounts will be incurred and are not avoidable
with respect to services sold at wholesale, or that specific costs in
these accounts are not included in the retail prices of resold
services. Costs included in accounts 6112-6114 and 6211-6565 described
in paragraph (c) of this section (Sec. Sec. 32.6112-32.6114, 32.6211-
32.6565 of this chapter) may be treated as avoided retail costs, and
excluded from wholesale rates, only to the extent that a party proves
to a state commission that specific costs in these accounts can
reasonably be avoided when an incumbent LEC provides a
telecommunications service for resale to a requesting carrier.
* * * * *
PART 65--INTERSTATE RATE OF RETURN PRESCRIPTION PROCEDURES AND
METHODOLOGIES
0
23. The authority citation for part 65 continues to read:
Authority: Secs. 4, 201, 202, 203, 205, 218, 403, 48 Stat.,
1066, 1072, 1077, 1094, as amended, 47 U.S.C. 151, 154, 201, 202,
203, 204, 205, 218, 219, 220, 403.
0
24. Section 65.450 is amended by revising paragraphs (a) and (b)(1) to
read as follows:
Sec. 65.450 Net income.
(a) Net income shall consist of all revenues derived from the
provision of interstate telecommunications services regulated by this
Commission less expenses recognized by the Commission as necessary to
the provision of these services. The calculation of expenses entering
into the determination of net income shall include the interstate
portion of plant specific operations (Accounts 6110-6441), plant
nonspecific operations (Accounts 6510-6565), customer operations
(Accounts 6610-6623), corporate operations (Accounts 6720-6790), other
operating income and expense (Account 7100), and operating taxes
(Accounts 7200-7250), except to the extent this Commission specifically
provides to the contrary.
(b) * * *
(1) Gains related to property sold to others and leased back under
capital leases for use in telecommunications services shall be recorded
in Account 4300, Other long-term liabilities and deferred credits, and
credited to Account 6563, Amortization expense--tangible, over the
amortization period established for the capital lease;
* * * * *
[FR Doc. 04-18934 Filed 9-1-04; 8:45 am]
BILLING CODE 6712-01-P