[Code of Federal Regulations]
[Title 47, Volume 3]
[Revised as of October 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 47CFR61.45]
[Page 204-207]
TITLE 47--TELECOMMUNICATION
CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION (CONTINUED)
PART 61_TARIFFS--Table of Contents
Subpart E_General Rules for Dominant Carriers
Sec. 61.45 Adjustments to the PCI for Local Exchange Carriers.
(a) Local exchange carriers subject to price cap regulation shall
file adjustments to the PCI for each basket as part of the annual price
cap tariff filing, and shall maintain updated PCIs to reflect the effect
of mid-year exogenous cost changes.
(b)(1)(i) Adjustments to local exchange carrier PCIs, in those
carriers' annual access tariff filings, the traffic sensitive basket
described in Sec. 61.42(d)(2), the trunking basket described in Sec.
61.42(d)(3), the special access basket described in Sec. 61.42(d)(5)
and the Interexchange Basket described in Sec. 61.42(d)(4)(i), shall be
made pursuant to the following formula:
``PCIt=PCIt-1[1+w[GDP--PI--X] + Z/R].''
PCIt-1 = PCIt-1[1+w[GDP-PI-X] + Z/R]
Where the terms in the equation are described:
GDP-PI = For annual filings only, the percentage change in the GDP-PI
between the quarter ending six months prior to the effective date of the
new annual tariff and the corresponding quarter of the previous year.
For all other filings, the value is zero.
X = For the CMT, traffic sensitive, and trunking baskets, for annual
filings only, the factor is set at the level prescribed in paragraphs
(b)(1)(ii) and (iii) of this section. For the interexchange basket, for
annual filings only, the factor is set at the level prescribed in
paragraph (b)(1)(v) of this section. For the special access basket, for
annual filings only, the factor is set at the level prescribed in
paragraph (b)(1)(iv) of this section. For all other filings, the value
is zero.
g = For annual filings for the CMT basket only, the ratio of minutes of
use per access line during the base period, to minutes of use per access
line during the previous base period, all minus 1.
Z = The dollar effect of current regulatory changes when compared to the
regulations in effect at the time the PCI was updated to
PCIt-1, measured at base period level of operations.
Targeted Reduction = the actual possible dollar value of the (GDP-PI--X)
reductions that will be targeted to the ATS Charge pursuant to Sec.
61.45(i)(3). The reductions calculated by applying the (GDP-PI--X)
portion of the formula to the CCL element within the CMT basket will
contain the ``g'' component, as defined above.
R = Base period quantities for each rate element ``I'', multiplied by
the price for each rate element ``I'' at the time the PCI was updated to
PCIt-1.
w = R + Z, all divided by R (used for the traffic sensitive, trunking,
and special access baskets).
wix = R--(access rate in effect at the time the PCI was
updated to PCIt-1 * base period demand) + Z, all divided by
R.
PCIt = The new PCI value.
PCIt-1 = the immediately preceding PCI value.
(ii) The X value applicable to the baskets specified in Sec. Sec.
61.42(d)(1), (d)(2), and (d)(3), shall be 6.5%, to the extent necessary
to reduce a tariff entity's ATS charge to its Target Rate as set forth
in Sec. 61.3(qq). Once any price cap local exchange carrier tariff
entity's ATS Charge is equal to the Target Rate as set forth in Sec.
61.3(qq) for the first time (the former NYNEX telephone companies may be
treated as a separate tariff entity), then, except as provided in
paragraph (b)(1)(iii) of this section, X is equal to GDP-PI and no
further reductions will be mandated (i.e., if applying the full X-factor
reduction for a given year would reduce the ATS charge below the Target
Rate as set forth in Sec. 61.3 (qq), the amount of X-factor reduction
applied that year will be the amount necessary to reach the Target Rate
as set forth in Sec. 61.3 (qq)). A filing entity does not reach the
Target Rate as set forth in Sec. 61.3(qq) in any year in which it
exercises an exogenous adjustment pursuant to Sec. 61.45(d)(vii). For
companies with separate tariff entities under a single price cap, the
following rules shall apply:
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(A) Targeting amounts as defined in Sec. 61.45(i)(1)(i) shall be
identified separately, using the revenue for each of the tariff entities
under the cap.
(B) Each tariff entity shall only be required to use the amount of
targeting necessary to get to the Target Rate as set forth in Sec. 61.3
(qq).
(iii)(A) Except as provided in paragraph (b)(1)(iii)(B) of this
section, once the Tariff Entity's Target Rate as set forth in Sec. 61.3
(qq) is achieved, the X-factor for the CMT basket will equal GDP-PI as
long as GDP-PI is less than or equal to 6.5% and greater than 0%. If
GDP-PI is greater than 6.5%, and an entity has eliminated its CCL and
multi-line business PICCs charges, the X-factor for the CMT basket will
equal 6.5%, and all End User Common Line charges, rates and nominal
caps, will be increased by the difference between GDP-PI and the 6.5% X-
factor. If GDP-PI is less than 0, the X-factor for the CMT basket will
be 0.
(B) For tariff filing entities with a Target Rate of $0.0095, or for
the portion of a filing entity consolidated pursuant to Sec. 61.48(o)
that, prior to such consolidation, had a Target Rate of $0.0095, in
which the ATS charge has achieved the Target Rate but in which the
carrier common line (CCL) charge has not been eliminated, the X-factor
for the CMT basket will be 6.5% until the earlier of June 30, 2004, or
until CCL charges are eliminated pursuant to paragraph (i)(4) of this
section. Thereafter, in any filing entity in which a CCL charge remains
after July 1, 2004, the X-factor for the CMT basket will be determined
pursuant to paragraph (b)(1)(iii)(A) of this section as if CCL charges
were eliminated.
(iv) For the special access basket specified in Sec. 61.42(d)(5),
the value of X shall be 3.0% for the 2000 annual filing. The value of X
shall be 6.5% for the 2001, 2002 and 2003 annual filings. Starting in
the 2004 annual filing, X shall be equal to GDP-PI for the special
access basket.
(v) For the interexchange basket specified in Sec. 61.42(d)(4), the
value of X shall be 3.0% for all annual filings.
(b)(2) Adjustments to price cap local exchange carrier PCIs and
average price cap CMT revenue per line, in tariff filings other than the
annual access tariff filing, for the CMT basket described in Sec.
61.42(d)(1), the traffic sensitive basket described in Sec.
61.42(d)(2), the trunking basket described in Sec. 61.42(d)(3), the
interexchange basket described in Sec. 61.42(d)(4), and the special
access basket described in Sec. 61.42(d)(5), shall be made pursuant to
the formulas set forth in paragraph (b)(1)(i) of this section, except
that the ``w(GDP-PI--X)'' component of those PCI formulas shall not be
employed.
(c) Effective July 1, 2000, the prices of the CMT basket rate
elements, excluding special access surcharges under Sec. 69.115 of this
chapter and line ports in excess of basic under Sec. 69.157 of this
chapter, shall be set based upon Average Price Cap CMT Revenue per Line
month.
(d) The exogenous cost changes represented by the term ``Z'' in the
formula detailed in paragraph (b)(1)(i) of this section shall be limited
to those cost changes that the Commission shall permit or require by
rule, rule waiver, or declaratory ruling.
(1) Subject to further order of the Commission, those exogenous
changes shall include cost changes caused by:
(i) The completion of the amortization of depreciation reserve
deficiencies;
(ii) Such changes in the Uniform System of Accounts, including
changes in the Uniform System of Accounts requirements made pursuant to
Sec. 32.16 of this chapter, as the Commission shall permit or require
be treated as exogenous by rule, rule waiver, or declaratory ruling;
(iii) Changes in the Separations Manual;
(iv) [Reserved]
(v) The reallocation of investment from regulated to nonregulated
activities pursuant to Sec. 64.901 of this chapter;
(vi) Such tax law changes and other extraordinary cost changes as
the Commission shall permit or require be treated as exogenous by rule,
rule waiver, or declaratory ruling;
(vii) Retargeting the PCI to the level specified by the Commission
for carriers whose base year earnings are below the level of the lower
adjustment mark, subject to the limitation in Sec. 69.731 of this
chapter. The allocation of LFAM amounts will be allocated
[[Page 206]]
pursuant to Sec. 61.45(d)(3). This section shall not be applicable to
tariff filings during the tariff year beginning July 1, 2000, but is
applicable in subsequent years;
(viii) Inside wire amortizations;
(ix) The completion of amortization of equal access expenses.
(2) Local exchange carriers specified in Sec. Sec. 61.41(a)(2) or
(a)(3) shall, in their annual access tariff filing, recognize all
exogenous cost changes attributable to modifications during the coming
tariff year in their Subscriber Plant Factor and the Dial Equipment
Minutes factor, and completions of inside wire amortizations and reserve
deficiency amortizations.
(3) Exogenous cost changes shall be apportioned on a cost-causative
basis between price cap services as a group, and excluded services as a
group. Total exogenous cost changes thus attributed to price cap
services shall be recovered from services other than those used to
calculate the ATS charge.
(e) [Reserved]
(f) The exogenous costs caused by new services subject to price cap
regulation must be included in the appropriate PCI calculations under
paragraphs (b) and (c) of this section beginning at the first annual
price cap tariff filing following completion of the base period in which
such services are introduced.
(g) In the event that a price cap tariff becomes effective, which
tariff results in an API value (calculated pursuant to Sec. 61.46) that
exceeds the currently applicable PCI value, the PCI value shall be
adjusted upward to equal the API value.
(h) [Reserved]
(i)(1)(i) Price cap local exchange carriers that are recovering
revenues through rates pursuant to Sec. Sec. 69.106, 69.108, 69.109,
69.110, 69.111, 69.112, 69.113, 69.118, 69.123, 69.124, 69.125, 69.129,
or Sec. 69.155 of this chapter shall target, to the extent necessary to
reduce the ATS Charge to the Target Rate as set forth in Sec. 61.3 (qq)
for the first time, any PCI reductions associated with the dollar impact
of application of the (GDP-PI--X) portion of the formula in Sec.
61.45(b)(1)(i) to the traffic sensitive and trunking baskets. In order
to calculate the actual dollars to transfer to the trunking and traffic
sensitive baskets, carriers will first determine the ``Targeted Revenue
Differential'' that will be transferred to the trunking and traffic
sensitive baskets to reduce the ATS Charge to the Target Rate as set
forth in Sec. 61.3(qq). The Targeted Revenue Differential shall be
applied only to the trunking and traffic sensitive baskets to the extent
necessary to reduce the ATS charge to the Target Rate as set forth in
Sec. 61.3 (qq), and shall not be applied to reduce the PCIs in any
other basket or to reduce Average Price Cap CMT Revenue per Line month,
except as provided in Sec. 61.45(i)(4).
(ii) For the purposes of Sec. 61.45(i)(1)(i), Targeted Revenue
Differential will be determined by adding together the following
amounts:
(A) R * (GDP-PI-X) for the traffic sensitive basket, trunking
basket, and the CMT basket excluding CCL revenues; and
(B) CCL Revenues * [(GDP-PI-X-(g/2)]/[1 + (g/2)]
Where ``g'' is defined in Sec. 61.45(b)(1)(i).
(2) Until a tariff entity's ATS Charge equals the Target Rate as set
forth in Sec. 61.3 (qq) for the first time, the Targeted Revenue
Differential will be targeted to reduce the following rates for that
tariff filing entity, in order of priority:
(i) To the residual per minute Transport Interconnection Charge,
until that rate is $0.00; then
(ii) To the Information Surcharge, until that rate is $0.00; then
(iii) To the other Local Switching charges and Switched Transport
charges until the tariff entity's ATS Rate equals the Target Rate as set
forth in Sec. 61.3(qq) for the first time. In making these reductions,
the reductions to Local Switching rates as a percentage of total X-
factor reductions must be greater than or equal to the percentage
proportion of Local Switching revenues to the total sum of revenues for
Local Switching, Local Switching Trunk Ports, Signalling Transfer Point
Port Termination, Switched Direct Trunked Transport, Signalling for
Switched Direct
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Trunked Transport, Entrance Facilities for switched access traffic,
Tandem Switched Transport, and Signalling for Tandem Switching (i.e.,
Local Switching gets at least its proportionate share of reductions).
(3) After a price cap local exchange carrier reaches the Target Rate
as set forth in Sec. 61.3(qq), the ATS Rate will be recalculated each
subsequent Annual Filing. This process will identify the new ATS Charge
for the new base period level. Due to change in base period demand and
inclusion of new services for that annual filing, the absolute level of
a tariff entity's ATS Charge may change. The resulting new ATS Charge
level will be what that tariff entity will be measured against during
that base period. For example, if a company whose target is $0.0055
reached the Target Rate during the 2000 annual filing, that level may
change to $0.0058 in the 2001 annual filing due to change in demand and
inclusion of new services. Therefore, it will be the $0.0058 average
rate that the tariff entity will be measured against for all non-annual
filings. Likewise, if that same company was at the Target Rate during
the 2000 filing, that level may change to $0.0053 average rate in the
2001 annual filing due to change in demand and inclusion of new
services. In that case, it will be at the $0.0053 average rate that the
tariff entity will be measured.
(4) A company electing a $0.0095 Target Rate will, in the tariff
year it reaches the Target Rate, apply any Targeted Revenue Differential
remaining after reaching the Target Rate to reduce Average Price Cap CMT
Revenue per Line month until the CCL charge is eliminated. In subsequent
years, until the earlier of June 30, 2004 or when the CCL charge is
eliminated, tariff filing entities with a Target Rate of $0.0095, or the
portion of a filing entity consolidated pursuant to Sec. 61.48(o) that,
prior to such consolidation, had a Target Rate of $0.0095, will reduce
Average Price Cap CMT Revenue per Line month according to the following
method:
(i) Filing entity calculates the maximum allowable carrier common
line revenue, as defined in Sec. 61.46(d)(1), that would be permitted
in the absence of further adjustment pursuant to this paragraph;
(ii) Filing entity identifies maximum amount of dollars available to
reduce Average Price Cap CMT Revenue per Line month by the following:
(CMT revenue in a $0.0095 Area--CCL revenue in a $0.0095 Area) * (GDP-
PI--X) + (CCL Revenue in a $0.0095 Area) * [(GDP-PI--X)-(g/2)]/
[1+(g/2)]
(iii) The Average Price Cap CMT Revenue per Line month shall then be
reduced by the lesser of the amount described in paragraph (i)(4)(i) of
this section and the amount described in paragraph (i)(4)(ii) of this
section, divided by base period Switched Access End User Common Line
Charge lines.
[65 FR 38696, June 21, 2000; 65 FR 57741, Sept. 26, 2000]