9. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and Maribeth A. Bushey is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. Issued on November 18, 2011, the FCC's USF/ICC Transformation Order systematically changes the universal service and ICC systems.

2. Among other things, the FCC's Order adopted a multi-year transition process to phase out regulated per-minute ICC charges for terminating access for telecommunications traffic.

3. The FCC's Order, as modified, requires all LECs to begin a process to bring default reciprocal compensation rates and intrastate terminating access rates into parity with interstate terminating access rates, with the first phase being achieved by July 3, 2012.

4. On April 24, 2012, the assigned Commissioner issued an ACR that requested comments on the following proposals: lowering access charge caps to make them consistent with the FCC's Order, requiring competitive and incumbent LECs to file Tier 1 advice letters with revised tariffs and certain supporting data within 10 days of the effective date of this decision, and to provide their underlying data supporting the required tariff changes to other carriers, if requested subject to a non-disclosure agreement.

5. In D.06-04-071, we eliminated non-cost-based elements from the intrastate access charges of Verizon and AT&T and permitted them to impose a surcharge on local telephone service to recover lost revenues.

6. D.07-12-020 ordered all mid-size ILECs to remove the non-cost-based element or its equivalent, effective January 1, 2009.

7. D.07-12-020 ordered the expiration of the surcharges authorized by D.06-04-071 for AT&T and Verizon on January 1, 2009, the date that the rate freeze on basic residential telephone service was to be lifted.

8. D.07-12-020 ordered small ILECs to file a long-term plan, not to extend for more than two rate case cycles, to implement the policy requiring intrastate access charges to be based on cost.

9. D.07-12-020 ordered competitive local exchange carriers' intrastate access charges to be capped at the higher of AT&T or Verizon's intrastate access charges, plus 10%, with each rate element capped at the same rate.

10. The FCC Order requires certain terminating intrastate switched access rates and reciprocal compensation rates be reduced to parity with interstate access rates at the second step of the transition period by July 1, 2013.

11. The modification of D.07-12-020 does not modify the requirement that carriers eliminate the NIC and TIC charges from their rates.

12. It is reasonable to require that carriers provide data in a uniform format, so that Staff can more efficiently review and compare data.

13. In order to comply with the FCC's timeline and allow for timely Staff review, price cap and rate-of-return LECs should file Tier 1 Advice Letters and attach the relevant FCC TRP worksheets within seven days of the effective date of this decision.

14. In order to comply with the FCC's timeline and allow for timely Staff review, CLECS should file Tier 1 Advice Letters and provide the data in Appendices A and B, as appropriate.

15. In order to allow for sufficient Staff review, carriers that meet the exceptions outlined in this decision and in Ordering Paragraphs 2, 3, 5, and 7, should be required to submit Information Only Advice Letters within seven days of the effective date of this decision, and should include the data set forth in this decision.

16. Consistent with the FCC's Order, it is reasonable to permit a carrier the choice of either: a) applying the required revenue reduction to the rates in its intrastate rate structure, or b) applying the interstate rate structure and rates to its intrastate access service, plus the assessment of a transitional per-minute charge on end office switching minutes equal to its revenue reduction. It is reasonable to require carriers to notify the Commission of their selection, and to demonstrate how the adjustment of the intrastate tariff was accomplished, unless the carrier meets the exception set forth in Ordering Paragraph 6.

17. A carrier may file an Information Only Advice letters, with relevant tariff sheets attached, if a carrier's Transitional Intrastate Access Service rates already reflect the functionally equivalent interstate rates and the carrier is not assessing a transitional per-minute charge on Transitional Intrastate Access Service end office switching minutes. ILECs are still required to attaché the FCC TRP forms to their Advice Letters.

18. CLECs are not required to make changes to Access Reciprocal Compensation rates until July 1, 2013; therefore, these carriers do not need to include Access Reciprocal Compensation demand or rates in the data provided to Staff.

19. Carriers required to lower their default Non-Access Reciprocal Compensation rates should show the appropriate information on the relevant data worksheet.

20. Certain CLECs and ILECs have already filed tariffs to transition interstate and intrastate originating and terminating access rates for toll VoIP-PSTN traffic.

Conclusions of Law

1. Consistent with Pub. Util. Code § 1708, the April 24, 2012 ACR provided the requisite notice and opportunity to be heard regarding the proposed modifications to D.06-04-071 and D.07-12-020 necessary to implement the FCC's Order, and it is reasonable to ratify the ACR at this time.

2. It is reasonable to modify D.06-04-071 and D.07-12-020 to ensure that intrastate access charges are consistent with the FCC's objectives.

3. The new FCC rules require that once the intrastate rates are equal to their functionally equivalent interstate rates on July 1, 2013, the intrastate rates will be subject to the same rate structure and rate modification as found in interstate tariffs.

4. Once differences between a carrier's FCC and Commission-approved access service tariffs are eliminated, it is reasonable to require carriers to file tariff changes in subsequent years consistent with the FCC Order, including any FCC modifications and clarifications to the Order.

5. It is reasonable to provide a 45-day protest period for the Tier 1 Advice Letters that will be filed in compliance with this decision.

6. Although implied by allowing a 45-day protest period, it is reasonable to determine that Staff has the usual 10-day period to review and dispose of the advice letters, if necessary, after the end of the protest period, i.e., Staff may dispose of the advice letters by the 55th day after the advice letters are filed.

7. Review of the compliance advice letters is a ministerial action and, if required, Staff has the authority to order true-ups of the implementation of the tariff filings.

8. Good cause being shown, it is reasonable to grant Comcast's motion to become a party to this proceeding.

9. In order to comply with the FCC's timeline, this decision should be effective immediately.

10. R.03-08-018 should be closed.

ORDER

IT IS ORDERED that:

1. Decision (D.) 06-04-071 and D.07-12-020 are modified as set forth in this decision to implement the changes to intrastate access charges, required by the Federal Communications Commission's Universal Service Fund and Intercarrier Compensation Transformation Order.

2. Within seven days of the effective date of this decision, Incumbent Local Exchange Carriers and Competitive Local Exchange Carriers (CLECs) operating in the State of California that provide switched access services shall file Tier 1 Advice Letters or Information Only Advice Letters that include all relevant supporting documentation and calculations, in compliance with this decision and shall attach Tariff Review Plan (TRP) worksheets filed with the Federal Communications Commission or the data required in Appendices A and B of this decision as follows:

· a. For federal Price Cap carriers: The calculations and filings of the July 3, 2012 required intrastate tariff changes shall be filed in compliance with 47 CFR § 51.907 and any modifications thereto, with TRP worksheets attached.

· b. For federal Rate-of-Return carriers: The calculations and filings of the July 3, 2012 required intrastate tariff changes shall be filed in compliance with 47 CFR § 51.909 and any modifications thereto, with TRP worksheets attached.

· c. For CLECs: The calculations and filings of the July 3, 2012 required intrastate tariff changes shall be filed in compliance with 47 CFR § 51.911 and any modifications thereto, Appendices A and B attached.

3. Carriers shall also file the Supplemental Advice Letter Transmittal Form in Appendix C.

4. Carriers that have transitioned to intrastate access rates that are lower than their corresponding interstate access rates shall file Information Only Advice Letters and shall attach: a) a copy of the current intrastate tariff sheets containing the rates and elements impacted and the functionally equivalent interstate tariffs and; b) a copy of the appropriate data spreadsheet containing the total revenue from the relevant interstate and intrastate tariffs Transitional Intrastate Access Service at the carrier's interstate access rates in effect on December 29, 2011, using Fiscal Year 2011 intrastate switched access demand for each rate element and the total revenue from Transitional Intrastate Access Service at the carrier's intrastate access rates in effect on December 29, 2011, using Fiscal Year 2011 intrastate switched access demand for each rate element.

5. Competitive Local Exchange Carriers are exempt from filing Access Reciprocal Compensation demand or rates in the worksheets filed with their Advice Letter filings.

6. If a carrier has reduced its intrastate access rates to parity with its interstate access rates, and the carrier's Transitional Intrastate Access Service rates already reflect the functionally equivalent interstate rates, and the carrier is not assessing a transitional per-minute charge on Transitional Intrastate Access Service end office switching minutes, such carriers must file an Information Only Advice Letter and must attach copies of the relevant interstate and intrastate tariffs. Such carriers are not required to submit cost studies or revenue data in support of such rates.

7. If the Local Exchange Carrier's default Non-Access Reciprocal Compensation rates in effect on December 29, 2011, or established pursuant to the Federal Communications Commission Order subsequent to that date, exceed that carrier's interstate access rates for functionally equivalent service in effect in the same state on December 29, 2011, that carrier must reduce its reciprocal compensation rate by one-half of the difference between the Non-Access Reciprocal Compensation rate and the corresponding functionally equivalent interstate access rate.

8. This decision does not apply to tariffs filed consistent with the Federal Communications Commission's rules on access rates applicable to toll Voice over Internet Protocol-Public Switched Telephone Network traffic.

9. The Tier 1 Advice Letters filed in compliance with this decision shall be effective pending disposition on July 3, 2012 and a 45-day protest period shall apply for these Advice Letters. Staff may dispose of the advice letters, if necessary, by the 55th day after the Tier 1 Advice Letters are filed.

10. The motion of Comcast Phone of California, LLC for party status is granted.

11. The Assigned Commissioner Ruling issued on April 24, 2012 is ratified.

12. Rulemaking 03-08-018 is closed.

This order is effective today.

Dated June 21, 2012, at San Francisco, California.

APPENDIX A
CLEC California Intrastate Transitional Access Service Charges Supporting Data Worksheet

   

APPENDIX B
CLEC Non-Access Reciprocal Compensation Supporting Data Worksheet

APPENDIX C

Supplemental Advice Letter Transmittal Form

Appendix C

Supplemental Advice Letter Transmittal Form

Instructions: LECs shall select one of the two options: Information Only or Tier 1. Within each option, LECs shall mark the selections(s) which apply to its filing.

LECs may add more detailed narrative in the "Other" section as needed to more accurately describe its filing.

Information Only A.L. - exempt from required rate reduction

(Exemption 5.1)

(Exemption 5.2)

(Exemption 5.3.2)

Tier 1 A.L. - required rate reduction

Other:

(END OF APPENDIX C)

APPENDIX D

47 CFR § 51.903 (h)

Definitions.

For the purposes of this subpart:

(a) Competitive Local Exchange Carrier. A Competitive Local Exchange Carrier is any local exchange carrier, as defined in §51.5, that is not an incumbent local exchange carrier .

(b) Composite Terminating End Office Access Rate means terminating End Office Access Service revenue, calculated using demand for a given time period, divided by end office switching minutes for the same time period.

(c) Dedicated Transport Access Service means originating and terminating transport on circuits dedicated to the use of a single carrier or other customer provided by an incumbent local exchange carrier or any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier. Dedicated Transport Access Service rate elements for an incumbent local exchange carrier include the entrance facility rate elements specified in §69.110 of this chapter, the dedicated transport rate elements specified in §69.111 of this chapter, the direct-trunked transport rate elements specified in §69.112 of this chapter, and the intrastate rate elements for functionally equivalent access services. Dedicated Transport Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access services.

(d) End Office Access Service means:

(1) The switching of access traffic at the carrier's end office switch and the delivery to or from of such traffic to the called party's premises;

(2) The routing of interexchange telecommunications traffic to or from the called party's premises, either directly or via contractual or other arrangements with an affiliated or unaffiliated entity, regardless of the specific functions provided or facilities used; or

(3) Any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier. End Office Access Service rate elements for an incumbent local exchange carrier include the local switching rate elements specified in §69.106 of this chapter, the carrier common line rate elements specified in §69.154 of this chapter, and the intrastate rate elements for functionally equivalent access services. End Office Access Service rate elements for an incumbent local exchange carrier also include any rate elements assessed on local switching access minutes, including the information surcharge and residual rate elements. End office Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access service.

Note to paragraph (d): For incumbent local exchange carriers, residual rate elements may include, for example, state Transport Interconnection Charges, Residual Interconnection Charges, and PICCs. For non-incumbent local exchange carriers, residual rate elements may include any functionally equivalent access service.

(e) Fiscal Year 2011 means October 1, 2010 through September 30, 2011.

(f) Price Cap Carrier has the same meaning as that term is defined in §61.3(aa) of this chapter.

(g) Rate-of-Return Carrier is any incumbent local exchange carrier not subject to price cap regulation as that term is defined in §61.3(aa) of this chapter, but only with respect to the territory in which it operates as an incumbent local exchange carrier.

(h) Access Reciprocal Compensation means telecommunications traffic exchanged between telecommunications service providers that is interstate or intrastate exchange access, information access, or exchange services for such access, other than special access.

(i) Tandem-Switched Transport Access Service means:

(1) Tandem switching and common transport between the tandem switch and end office; or

(2) Any functional equivalent of the incumbent local exchange carrier access service provided by a non-incumbent local exchange carrier via other facilities. Tandem-Switched Transport rate elements for an incumbent local exchange carrier include the rate elements specified in §69.111 of this chapter, except for the dedicated transport rate elements specified in that section, and intrastate rate elements for functionally equivalent service. Tandem Switched Transport Access Service rate elements for a non-incumbent local exchange carrier include any functionally equivalent access service.

(j) Transitional Intrastate Access Service means terminating End Office Access Service that was subject to intrastate access rates as of December 31, 2011; terminating Tandem-Switched Transport Access Service that was subject to intrastate access rates as of December 31, 2011; and originating and terminating Dedicated Transport Access Service that was subject to intrastate access rates as of December 31, 2011.

(END OF APPENDIX D)

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