[Code of Federal Regulations]
[Title 47, Volume 3]
[Revised as of October 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 47CFR61.48]

[Page 211-216]
 
                       TITLE 47--TELECOMMUNICATION
 
        CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION (CONTINUED)
 
PART 61_TARIFFS--Table of Contents
 
              Subpart E_General Rules for Dominant Carriers
 
Sec. 61.48  Transition rules for price cap formula calculations.

    (a)-(h) [Reserved]
    (i) Transport and Special Access Density Pricing Zone Transition 
Rules--(1) Definitions. The following definitions apply for purposes of 
paragraph (i) of this section:
    Earlier date is the earlier of the special access zone date and the 
transport zone date.
    Earlier service is special access if the special access zone date 
precedes the transport zone date, and is transport if the transport zone 
date precedes the special access zone date.
    Later date is the later of the special access zone date and the 
transport zone date.
    Later service is transport if the special access zone date precedes 
the transport zone date, and is special access if the transport zone 
date precedes the special access zone date.
    Revenue weight of a given group of services included in a zone 
category is the ratio of base period demand for the given service rate 
elements included in the category priced at existing rates, to the base 
period demand for the entire group of rate elements comprising the 
category priced at existing rates.

[[Page 212]]

    Special access zone date is the date on which a local exchange 
carrier tariff establishing divergent special access rates in different 
zones, as described in Sec. 69.123(c) of this chapter, becomes 
effective.
    Transport zone date is the date on which a local exchange carrier 
tariff establishing divergent switched transport rates in different 
zones, as described in Sec. 69.123(d) of this chapter, becomes 
effective.
    (2) Simultaneous Introduction of Special Access and Transport Zones. 
Local exchange carriers subject to price cap regulation that have 
established density pricing zones pursuant to Sec. 69.123 of this 
chapter, and whose special access zone date and transport zone date 
occur on the same date, shall initially establish density pricing zone 
SBIs and bands pursuant to the methodology in Sec. Sec. 61.47(e) 
through (f).
    (3) Sequential Introduction of Zones in the Same Tariff Year. 
Notwithstanding Sec. Sec. 61.47(e) through (f), local exchange carriers 
subject to price cap regulation that have established density pricing 
zones pursuant to Sec. 69.123 of this chapter, and whose special access 
zone date and transport zone date occur on different dates during the 
same tariff year, shall, on the earlier date, establish density pricing 
zone SBIs and pricing bands using the methodology described in 
Sec. Sec. 61.47(e) through (f), but applicable to the earlier service 
only. On the later date, such carriers shall recalculate the SBIs and 
pricing bands to limit the pricing flexibility of the services included 
in each density pricing zone category, as reflected in its SBI, as 
follows:
    (i) The upper pricing band shall be a weighted average of the 
following:
    (A) The upper pricing band that applied to the earlier services 
included in the zone category on the day preceding the later date, 
weighted by the revenue weight of the earlier services included in the 
zone category; and
    (B) 1.05 times the SBI value for the services included in the zone 
category on the day preceding the later date, weighted by the revenue 
weight of the later services included in the zone category.
    (ii) [Reserved]
    (iii) On the later date, the SBI value for the zone category shall 
be equal to the SBI value for the category on the day preceding the 
later date.
    (4) Introduction of Zones in Different Tariff Years. Notwithstanding 
Sec. Sec. 61.47(e) through (f), those local exchange carriers subject 
to price cap regulation that have established density pricing zones 
pursuant to Sec. 69.123 of this chapter, and whose special access zone 
date and transport zone date do not occur within the same tariff year, 
shall, on the earlier date, establish density pricing zone SBIs and 
pricing bands using the methodology described in Sec. Sec. 61.47(e) 
through (f), but applicable to the earlier service only.
    (i) On the later date, such carriers shall use the methodology set 
forth in paragraphs (a) through (d) of Sec. 61.47 to calculate separate 
SBIs in each zone for each of the following groups of services:
    (A) DS1 special access services;
    (B) DS3 special access services;
    (C) DS1 entrance facilities, DS1 direct-trunked transport, and DS1 
dedicated signalling transport;
    (D) DS3 entrance facilities, DS3 direct-trunked transport, and DS3 
dedicated signalling transport;
    (E) Voice grade entrance facilities, voice grade direct-trunked 
transport, and voice grade dedicated signalling transport;
    (F) Tandem-switched transport; and
    (G) Such other special access services as the Commission may 
designate by order.
    (ii) From the later date through the end of the following tariff 
year, the annual pricing flexibility for each of the subindexes 
specified in paragraph (i)(4)(i) of this section shall be limited to an 
annual increase of five percent or an annual decrease of fifteen 
percent, relative to the percentage change in the PCI for the trunking 
basket, measured from the levels in effect on the last day of the tariff 
year preceding the tariff year in which the later date occurs.
    (iii) On the first day of the second tariff year following the 
tariff year during which the later date occurs, the local exchange 
carriers to which this paragraph applies shall establish the separate 
subindexes provided in

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Sec. 61.47(e), and shall set the initial SBIs for those density pricing 
zone categories that are combined (specified in paragraphs (i)(4)(i)(A), 
(i)(4)(i)(B), (i)(4)(i)(C), (i)(4)(i)(D), (i)(4)(i)(E), and (i)(4)(i)(G) 
of this section) by computing the weighted averages of the SBIs that 
applied to the formerly separate zone categories, weighted by the 
revenue weights of the respective services included in the zone 
categories.
    (j)-(k) [Reserved]
    (l) Average Traffic Sensitive Revenues. (1) In the July 1, 2000 
annual filing, price cap local exchange carriers will make an additional 
reduction to rates comprising ATS charge, and to associated SBI upper 
limits and PCIs. This reduction will be calculated to be the amount that 
would be necessary to achieve a total $2.1 billion reduction in carrier 
common line and ATS rates by all price cap local exchange carriers, 
compared with those rates as they existed on June 30, 2000 using 2000 
annual filing base period demand.
    (i) The net change in revenue associated with Carrier Common Line 
Rate elements resulting from:
    (A) The removal from access of price cap local exchange carrier 
contributions to the Federal universal service mechanisms;
    (B) Price cap local exchange carrier receipts of interstate access 
universal service support pursuant to subpart J of part 54;
    (C) Changes in End User Common Line Charges and PICC rates;
    (D) Changes in Carrier Common Line charges due to GDP-PI--X 
targeting for $0.0095 filing entities.
    (ii) Reductions in Average Traffic Sensitive charges resulting from:
    (A) Targeting of the application of the (GDP-PI--X) portion of the 
formula in Sec. 61.45(b), and any applicable ``g'' adjustments;
    (B) The removal from access of price cap local exchange carrier 
contributions to the Federal universal service mechanisms;
    (C) Additional ATS charge reductions defined in paragraph (2) of 
this section.
    (2) Once the reductions in paragraph (l)(1)(i) and paragraphs 
(l)(1)(ii)(A) and (l)(1)(ii)(B) of this section are identified, the 
difference between those reductions and $2.1 billion is the total amount 
of additional reductions that would be made to ATS rates of price cap 
local exchange carriers. This amount will then be restated as the 
percentage of total price cap local exchange carrier Local Switching 
revenues as of June 30, 2000 using 2000 annual filing base period demand 
(``June 30 Local Switching revenues'') necessary to yield the total 
amount of additional reductions and taking into account the fact that, 
if participating, a price cap local exchange carrier would not reduce 
ATS rates below its Target Rate as set forth in Sec. 61.3(qq). Each 
price cap local exchange carrier then reduces ATS rate elements, and 
associated SBI upper limits and PCIs, by a dollar amount equivalent to 
the percentage times the June 30 Local Switching revenues for that 
filing entity, provided that no price cap local exchange carrier shall 
be required to reduce its ATS rates below its Target Rate as set forth 
in Sec. 61.3(qq). Each carrier can take its additional reductions 
against any of the ATS rate elements, provided that at least a 
proportional share must be taken against Local Switching rates.
    (m) Pooled Local Switching Revenues. (1) Price cap local exchange 
carriers are permitted to pool local switching revenues in their CMT 
basket under one of the following conditions.
    (i) Any price cap local exchange carrier that would otherwise have 
July 1, 2000 price cap reductions as a percentage of Base Period Price 
Cap Revenues at the holding company level greater than the industry wide 
total July 1, 2000 price cap revenue reduction as a percentage of Base 
Period Price Cap Revenues may elect temporarily to pool the amount of 
the additional reductions above 25% of the Local Switching element 
revenues necessary to yield that carrier's proportionate share of a 
total $2.1 billion reduction in switched access usage rates on July 1, 
2000. The basis of the reduction calculation will be R at 
PCIt-1 for the upcoming tariff year. The percentage 
reductions per line amounts will be calculated as follows: (Total Price 
Cap Revenue Reduction / Base Period Price Cap Revenues)
    Pooled local switching revenue for each filing entity within a 
holding

[[Page 214]]

company that qualifies under this paragraph (i) will continue until such 
pooled revenues are eliminated under this paragraph. Notwithstanding the 
provisions of Sec. 61.45(b)(1), once the Average Traffic Sensitive 
(ATS) rate reaches the applicable Target Rate as set forth in Sec. 
61.3(qq), the Targeted Revenue Differential as defined in Sec. 61.45(i) 
shall be targeted to reducing pooled local switching revenue until the 
pooled local switching revenue is eliminated. Thereafter, the X-factor 
for these baskets will be determined in accordance with Sec. 
61.45(b)(1).
    (ii) Price cap local exchange carriers other than the Bell companies 
and GTE with at least 20% of total holding company lines operated by 
companies that as of December 31, 1999 were certified to the Commission 
as rural carriers, may elect to pool up to the following amounts:
    (A) For a price cap holding company's predominantly non-rural filing 
entities (i.e., filing entities within which more than 50% of all lines 
are operated by telephone companies other than those that as of December 
31, 1999 were certified to the Commission as rural telephone companies), 
the amount of the additional reductions to Average Traffic Sensitive 
Charge rates as defined in paragraph (l)(2) of this section, to the 
extent such reductions exceed 25% of the Local Switching element 
revenues (measured in terms of June 30, 2000 rates times 1999 base 
period demand);
    (B) For a price cap holding company's predominantly rural filing 
entities (i.e., filing entities with greater than 50% of lines operated 
by telephone companies that as of December 31, 1999 were certified to 
the Commission as rural telephone companies), the amount of the 
additional reductions to Average Traffic Sensitive Charge rates as 
defined in paragraph (l)(2) of this section.
    (2) Allocation of Pooled Local Switching Revenue to Certain CMT 
Elements
    (i) The pooled local switching revenue for each filing entity is 
shifted to the CMT basket within price caps. Pooled local switching 
revenue will not be included in calculations to determine the 
eligibility for interstate access universal service funding.
    (ii) Pooled local switching revenue will be capped on a revenue per 
line basis.
    (iii) Pooled local switching revenue is included in the total 
revenue for the CMT basket in calculating the X-factor reduction 
targeted to the traffic sensitive rate elements, and for companies 
qualified under paragraph (m)(1)(i) of this section, to pooled elements 
after the Average Traffic Sensitive Charge reaches the target level. For 
the purpose of targeting X-factor reductions, companies that allocate 
pooled local switching revenue to other filing entities pursuant to 
paragraph (m)(2)(vii) of this section shall include pooled local 
switching revenue in the total revenue of the CMT basket of the filing 
entity from which the pooled local switching revenue originated.
    (iv) Pooled local switching revenue shall be kept separate from CMT 
revenue in the CMT basket. CMT rate elements for each filing entity 
shall first be set based on CMT revenue per line without regard to the 
presence of pooled local switching revenue for each filing entity.
    (v) If the rates generated without regard to the presence of pooled 
local switching revenue for multi-line business PICC and/or multi-line 
business SLC are below the nominal caps of $4.31 and $9.20, 
respectively, pooled amounts can be added to these rate elements to the 
extent permitted by the nominal caps.
    (vi) Notwithstanding the provisions of Sec. 69.152(k) of this 
chapter, pooled local switching revenue is first added to the multi-line 
business SLC until the rate equals the nominal cap ($9.20) or the pooled 
local switching revenue is fully allocated. If pooled local switching 
revenue remains after applying amounts to the multi-line business SLC, 
notwithstanding the provisions of Sec. 69.153 of this chapter, the 
remaining pooled local switching revenue may be added to the multi-line 
business PICC until the rate equals the nominal cap ($4.31) or the 
pooled local switching revenue is fully allocated. Unallocated pooled 
local switching revenue may still remain. For companies pooling pursuant 
to paragraph (m)(1)(i) of this

[[Page 215]]

section, these unallocated amounts may not be recovered from the CCL 
charge, the primary residential and single-line business SLC, a non-
primary residential SLC, or from CMT elements in any other filing 
entity.
    (vii) For companies pooling pursuant to paragraph (m)(1)(ii) of this 
section, pooled local switching revenue that can not be allocated to the 
multi-line business PICC and multi-line business SLC rates within an 
individual filing entity may not be recovered from the CCL charge, 
primary residential and single-line business SLC or residential/single-
line business SLC charges, but may be allocated to other filing entities 
within the holding company, and collected by adding these amounts to the 
multi-line business PICC and multi-line business SLC rates. The 
allocation of pooled local switching revenue among filing entities will 
be re-calculated at each annual filing. In subsequent annual filings, 
pooled local switching revenue that was allocated to another filing 
entity will be reallocated to the filing entity from where it 
originated, to the full extent permitted by the nominal caps of $9.20 
and $4.31.
    (viii) Notwithstanding the provisions of Sec. 69.152(k) of this 
chapter, these unallocated local switching revenues that cannot be 
recovered fully pursuant to paragraph (m)(2)(vii) of this section are 
first added to the multi-line business SLC of other filing entities 
until the resulting rate equals the nominal cap ($9.20) or the pooled 
local switching revenue for the holding company is fully allocated. If 
the pooled local switching revenue can be fully allocated to the multi-
line business SLC, the amount is distributed to each filing entity with 
a rate below the nominal cap ($9.20) based on its below-cap multi-line 
business SLC revenue as a percentage of the total holding company's 
below-cap multi-line business SLC revenue.
    (ix) If pooled local switching revenue remains after applying 
amounts to the multi-line business SLC of all filing entities in the 
holding company, pooled local switching revenue may be added to the 
multi-line business PICC of other filing entities. Notwithstanding the 
provisions of Sec. 69.153 of this chapter, the remaining pooled local 
switching revenue is distributed to each filing entity with a rate below 
the nominal cap ($4.31) based on its below-cap multi-line business PICC 
revenue as a percentage of the total holding company's below-cap multi-
line business PICC revenue.
    (x) If pooled local switching revenue is added to the multi-line 
business SLC but not to the multi-line business PICC for a filing entity 
that qualified to deaverage SLCs without regard to pooled local 
switching revenue, the resulting SLC rates can still be deaveraged. 
Total pooled local switching revenue is added to the deaveraged zone 1 
multi-line business SLC rate until the per line rate in zone 1 equals 
the rate in zone 2 or until the pooled local switching revenue is fully 
allocated to the deaveraged multi-line business SLC rate for zone 1. If 
pooled local switching revenue remains after the rate in zone 1 equals 
zone 2, the deaveraged rates of zone 1 and zone 2 are increased until 
the pooled local switching revenue is fully allocated to the deaveraged 
multi-line business SLC rates of zone 1 and 2 or until those rates reach 
the zone 3 multi-line business SLC rate level. This process continues 
until pooled local switching revenue is fully allocated to the zone 
deaveraged rates.
    (n) Establishment of the special access basket, effective July 1, 
2000.
    (1) On the effective date, the PCI value for the special access 
basket, as defined in Sec. 61.42(d)(5) shall be equal to the PCI for 
the trunking basket on the day preceding the establishment of the 
special access basket.
    (2) On the effective date, the API value for the special access 
basket, as defined in Sec. 61.42(d)(5) shall be equal to the API for 
the trunking basket on the day preceding the establishment of the 
special access basket.
    (3) Service Category, Subcategory, and Density Zone SBIs and Upper 
Limits.
    (i) Interconnection, Tandem Switched Transport, and Signalling 
Interconnec- tion will retain the SBIs and upper limits and remain in 
the trunking basket.
    (ii) Audio/Video and Wideband will retain the SBIs and upper limits 
and be moved into the special access basket.

[[Page 216]]

    (iii) For Voice Grade, the SBIs and upper limits in both baskets 
will be equal to the SBIs and upper limits in the existing trunking 
basket on the day preceding the establishment of the special access 
basket. Voice Grade density zones in the trunking basket will retain 
their indices and upper limits. Voice Grade density zones will be 
initialized in the special access basket when services are first offered 
in them.
    (iv) For High Cap/DDS, DS1, and DS3 category and subcategories, the 
SBIs and upper limits in both baskets will be equal to the SBIs and 
upper limits in the existing trunking basket on the day preceding the 
establishment of the special access basket. SBIs and upper limits for 
services that are in both combined density zones and either DTT/EF or 
special access density zones will be calculated by using weighted 
averages of the indices in the affected zones.
    (v) For each DTT/EF-related zone remaining in the trunking basket, 
the values will be calculated by taking the sum of the products of the 
DTT/EF revenues times the DTT/EF index (or upper limit) and the DTT/EF-
related revenues in the combined zone times the combined index (or upper 
limit), and dividing by the total DTT/EF-related revenues for that zone.
    (vi) For each special access-related zone in the special access 
basket, the values will be calculated by taking the sum of the products 
of the special access revenues times the special access index (or upper 
limit) and the special access-related revenues in the combined zone 
times the combined index (or upper limit), and dividing by the total 
special access-related revenues for that zone.
    (o) Treatment of acquisitions of exchanges with different ATS Target 
Rates as set forth in Sec. 61.3(qq):
    (1) In the event that a price cap local exchange carrier acquires a 
filing entity or portion thereof from a price cap local exchange carrier 
after July 1, 2000, and the price cap local exchange carrier did not 
have a binding and executed contract to purchase that filing entity or 
portion thereof as of April 1, 2000, those properties retain their pre-
existing Target Rates as set forth in Sec. 61.3(qq). If those 
properties are merged into a filing entity with a different Target Rate 
as set forth in Sec. 61.3(qq), the Target Rate as set forth in Sec. 
61.3(qq) for the merged filing entity will be the weighted average of 
the Target Rates as set forth in Sec. 61.3(qq) for the properties being 
combined into a single filing entity, with the average weighted by local 
switching minutes. When a property acquired as a result of a contract 
for purchase executed after April 1, 2000 is merged with $0.0095 Target 
Rate properties, the obligation to apply price cap reductions to reduce 
CCL, pursuant to Sec. 61.45(b)(iii) does not apply to the properties 
purchased under contracts executed after April 1, 2000, but continues to 
apply to the other properties.
    (2) For sale of properties for which a holding company was, as of 
April 1, 2000, under a binding and executed contract to purchase but 
which close after June 30, 2000, but during tariff year 2000, and that 
are subject to the $0.0095 Target Rate as set forth in Sec. 61.3(qq), 
the Average Traffic Sensitive Rate charged by the purchaser for that 
property will be the greater of $0.0095 or the Average Traffic Sensitive 
Rate for that property.

[54 FR 19843, May 8, 1989, as amended at 55 FR 42384, Oct. 19, 1990; 56 
FR 21617, May 10, 1991; 56 FR 55239, Oct. 25, 1991; 59 FR 10302, Mar. 4, 
1994; 60 FR 19528, Apr. 19, 1995; 60 FR 52346, Oct. 6, 1995; 62 FR 
31932, June 11, 1997; 64 FR 46590, Aug. 26, 1999; 65 FR 38699, June 21, 
2000; 65 FR 57742, 57743, Sept. 26, 2000]