State of California	Public Utilities Commission
	San Francisco
M E M O R A N D U M

Date : September 29, 2006

To : The Commission

Meeting on October 5, 2006

From : Gretchen Dumas - Legal Division

Subject : The Missoula Plan for Intercarrier Compensation Reform

FCC CC Docket No. 01-92, DA 06-1730

RECOMMENDATION: The CPUC should file Opening Comments in the Federal Communications Commission's (FCC) Public Notice seeking comments on the intercarrier compensation reform proposal known as the "Missoula Plan"; In the Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, DA 06-1730, rel. August 29, 2006. Opening Comments are due October 25, 2006.

BACKGROUND: Intercarrier compensation (ICC) consists of payments to telephone carriers by which these carriers compensate each other for the use of their respective networks to originate and terminate calls.

The existing ICC system is sometimes characterized as a patchwork quilt. The ICC rate levels and direction of payment vary by jurisdiction, as well as by carrier and call types. The main focus of the ICC debate centers on access charges (both intrastate and interstate) paid primarily by interexchange carriers and long distance providers for access to the originating caller (originating network) and the call recipient (terminating network) as well as reciprocal compensation payments for terminating local calls.¹

In April 2001, the FCC acknowledged a number of problems with the current ICC regimes. The FCC expressed an interest in identifying a unified approach to intercarrier compensation. As a result, the FCC issued a Notice of Proposed Rulemaking (NPRM) soliciting comment on alternative reform measures.

The FCC concluded from the record that a new regulatory scheme was needed and in February 2005, issued a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on the various alternative reforms proposals that had been filed in response to the NPRM, as well as requesting further reform proposals. The FCC asked parties to keep in mind several goals when reviewing the proposals: 1) inclusion of competitive and technological neutrality, 2) preservation of universal service, 3) promotion of economic efficiency, and 4) minimization of regulatory intervention. Consequently, the CPUC submitted Reply Comments on July 21, 2005 and it is attached to this memo.

On July 24, 2006, the National Association of Regulatory Utility Commissioners' Task Force on Intercarrier Compensation submitted an intercarrier compensation reform plan, known as the "Missoula Plan," to the FCC for consideration. The Missoula Plan is an industry proposal for intercarrier compensation reform. While NARUC acted as a facilitator, state Commissions were not part of the negotiations process. Supporters of the Plan include AT&T, BellSouth Corp., Cingular Wireless, Global Crossing, Level 3 Communications and 336 members of the Rural Alliance, and many others.

Brief Summary of Missoula Plan

The Missoula Plan is a multi-year plan that unifies intercarrier charges for the majority of lines, and moves all intercarrier rates charged for all traffic closer together. The Plan proposes to reduce the highest intercarrier compensation rates and provides opportunity for the carriers to recover lost intercarrier compensation revenues through supplemental sources of recovery to make carriers whole. However, the Plan ensures that certain rural carriers will not be required to reduce their intrastate access charges below their current rate levels for interstate access charges. For the most part, network cost recovery is shifted from intercarrier charges to a combination of (1) higher end user subscriber line charges (SLCs) (2) a new "Restructure Mechanism" (RM), which is designed to replace the intercarrier revenues lost by carriers not otherwise recovered through increased SLC rates.

The Missoula Plan also proposes default interconnection requirements, mechanisms for establishing both interim interconnection arrangements and formal interconnection agreements for the exchange of Non-Access Traffic, and comprehensive call signaling rules designed to solve the Phantom Traffic problem.

Additionally, the Plan's reductions to intercarrier rates and increases in SLC charges are transitioned in over a six-year period, although most of the revenue shift occurs in the first three years. In the fifth year, the SLC increases with inflation for Track 1 carriers. The Plan refers to these years as "Steps", with Step 1 beginning on day one of the Plan implementation. At the beginning of year four (Step 4), the FCC would conduct a proceeding to review the Plan and determine if any adjustments are necessary.

While ICC reform improves economic efficiency by sending more accurate price signals and reducing costs to some carriers, keeping other carriers whole for ICC revenue losses result in higher costs to consumers. The Plan increases SLCs and federal surcharges to fund the RM, as well as other USF revenue funding mechanisms, some of which may be

unrelated to lost revenues to unify intercarrier rates. The Plan proposes a total increase in federal universal support of $2.25 billion² which represent a 32% increase over the existing USF fund of $7 billion.³

In addition, although carriers will receive RM funding to compensate for any lost revenues, the Plan does not mandate any cost-saving flow-through by carriers to their customers. In the best of circumstances, even assuming 100% flow-through of cost savings to California customers, only wireline urban customers with high long distance usage see any significant savings, approximately $8 to $11 per month. The impact on wireline urban customer with medium usage is an increase in the total bill of about $1.00 to $3.00 per month. Rural wireline medium usage customers receive a decrease of over $1.00 per month. All wireline low usage customers see a higher bill.⁴

Below are some key specifics of the Plan:

I. Creation of Three Carrier Categories or "Tracks"

The Missoula Plan divides carriers into three categories or "Tracks", based on the size and existing regulatory classification of a company and tailors the ICC reform and the pace of the reform for each of the three Tracks.

Track 1 - Carriers in this Track serve the majority of lines in the United States and include the Regional Bell Operating Companies (RBOCs), non-rural incumbent local exchange carriers (ILECs), competitive LECs (CLECs), wireless providers, interexchange carriers (IXCs) and other non-ILEC providers. Track 1 comprises 92 ILEC study areas with approximately 146.2 million ILEC lines. (AT&T, Verizon and SureWest Telephone Company fall into this category.)

Track 2 - Carriers is this Track include most mid-sized rural ILECs. Track 2 comprises 158 ILEC study areas with approximately 12.5 million ILEC lines. (Citizens Telecommunications Company of California dba Frontier is in this category.)

Track 3 -- This Track includes the small rate-of-return rural ILECs. Track 3 comprises 1,185 study areas with approximately 7.3 million ILEC lines. (Rural telephone companies)

II. Intercarrier Rate Reductions

Overall the Plan eliminates the current intercarrier compensation regime and creates a plan that reduces terminating intercarrier charges, unifies most terminating charges and reduces or, in some cases eliminates, originating charges. After step 3 of the Plan, Track 1 and 2 carriers will charge a single unified termination rate for all calls, whether interstate or intrastate, whether local or long distance, and whether wireless or wireline. For Track 1 carriers, the termination rate will be lowered from $0.0007 to $0.0005 at the beginning of step 4. The reciprocal compensation rate will cover all usage-sensitive functions by the terminating Track 1 carrier for traffic dropped off at the relevant "edge" of that carrier's network (usually a tandem switch, end office, or comparable switching facility). For Track 2 carriers, they will charge a unified rate of $0.0005 for terminating end-office switching and up to $0.0075 to $0.105 for tandem switching and common transport, depending on whether they are subject to price cap, incentive or rate-of return regulation.

Originating access charges for Track 1 and 2 carriers will be capped at $0.0020 for originating end office switching by the fourth step of the Missoula Plan's implementation. Track 1 and 2 carriers may charge up to $0.0025, $0.0075 or $0.0105 for tandem switching and common transport, depending on whether the carrier is subject to price cap, incentive, or rate-of-return regulation. However, in defined circumstances, carriers may adopt lower (or no) originating access charges and make up the difference through alternative revenue mechanisms.

Track 3 carriers will reduce their intrastate switched access charges (both originating and terminating) over four years and unify them with the level of their corresponding access charges. Generally, reciprocal compensation rates that exceed interstate access charges are reduced the first year of the Missoula Plan to the level of those interstate access charges. (Please refer to Appendix A.)

For Track 1 and 2 carriers States are required to reduce rates, except for originating intrastate access charges. In contrast, State adoption of the Missoula Plan's Track 3 proposal for all intrastate originating and terminating intrastate access traffic will be voluntary. However, at step two, carriers may petition the FCC to preempt State authority over track one and two carriers' intrastate originating access rates in order to fully implement all of the Plan's terms for those carriers.

III. Subscriber Line Charge Increases

To recover the lost revenues as a result of intercarrier rates reduction, carriers may make a gradual increase in federal SLC, subject to a $10.00 cap at step four for Track 1 carriers and an $8.75 cap at step three for Track 2 carriers of the Plan. For Track 1 carriers the SLC increases with inflation at step 5. (Please see Appendix B.)

IV. Restructure Mechanism

This mechanism is designed to help carriers replace their lost revenues, to the extent that they are not already recovered through the other mechanisms discussed above. Currently, proponents' best estimate of the RM by the end of the transition period is approximately $1.5 billion.

V. Phantom Traffic

The Missoula Plan helps mitigate phantom traffic (i.e., traffic whose origin is unidentified and thus cannot be accurately billed) by establishing call signaling rules to require the delivery of accurate telephone number signaling information to both intermediate and terminating providers to ensure that traffic can be properly identified and classified for purposes of the intercarrier compensation provisions of the Plan.

VI. Interconnection at the "Edge"

The Missoula Plan proposes comprehensive rules to minimize interconnection disputes by requiring carriers to offer and accept terminating traffic at specified network "edges" and prescribes each carrier's financial obligations regarding traffic delivery to those edges.

VII. Traffic Classification for Compensation Purposes

The Missoula Plan proposes that for ICC purposes, traffic be classified on the basis of the telephone numbers of the calling and called parties. It is hoped that such scheme would reduce gaming of the system and help resolve ICC disputes among all types of traffic, including VoIP-to-PSTN, intra-MTA wireless, and many others.

VIII. Other Universal Service Mechanisms and Miscellaneous Plan Proposals

In addition to the RM, the Plan also makes changes to a number of existing universal service mechanisms, including the rural and non-rural high-cost loop support mechanism and the safety-valve support mechanism.

A. The Early Adopter Fund (EAF)

The Plan also creates a federal Early Adopter Fund (EAF) to enable States that have rebalanced their intrastate access charges through explicit state funds prior to adoption of the Missoula Plan to recover some of these funds. The EAF is supposed to help ensure that consumers in these states are not disproportionately burdened when the ICC reforms and the new RM are implemented nationwide. The Plan proposes a minimum $200 million allocation for the EAF, but the Plan supporters are working with States to determine the appropriate size of this fund and how it should be implemented.

B. High Cost Loop Fund Modifications (HCLF)

The Missoula Plan provides approximately $300 million to help defray the loop costs incurred by several rural and non-rural in high cost areas.

C. Additional Lifeline Support

The Missoula Plan also provides approximately $225 million additional Lifeline support to insulate low income consumers from SLC increases.

D. Incentive Regulation

The Missoula Plan creates an incentive regulation option for qualifying rate-of-return ILECs.

DISCUSSION: The following issues are important to California and therefore should be addressed in the Commission opening comments to this proceeding due on October 25, 2006.

1. Fair Allocation of SLC and RM Revenues to States

A key concern is the allocation of the SLC and Restructure Mechanism (RM) fund. Under the Plan, carriers would recover reductions in both interstate and intrastate carrier compensation charges through the SLC increase and if necessary RM. However, because the SLC is a federal charge, SLC revenues are booked to interstate revenues.

Absent an equitable allocation of SLC and RM revenues to States, California's universal service programs could be adversely impacted. Generally, the revenue base for all five of California's public programs would be reduced, leading potentially to a higher surcharge rate for every program. SLC increases and Restructure Mechanism draws must be booked, in part, as intrastate revenues in order to sustain California`s public programs.

The FCC should develop an appropriate methodology for allocating revenues between state and federal jurisdictions, or alternative methods for offsetting reduced intrastate access charges should be found.

2. State Flexibility in Implementing ICC Rate Reductions and Corresponding Rate Rebalancing

The Missoula Plan proposes mandatory intercarrier rate reductions for Track 1 and 2 carriers, except for originating intrastate access charges. Under the proposal, States are obligated to phase in the unification of the three types of intercarrier charges (intrastate access charges, interstate access charges, and reciprocal compensation rates) in the manner and within the timeframe proposed by the plan. As these ICC reductions are phased in, carriers can phase-in SLC increases, with limitations on how much they can increase their SLCs in each year of the Plan to recover the lost revenue. If the SLC increase is insufficient to recover the lost revenues, carriers will be able to draw against the RM.

States should be granted flexibility to implement intrastate rate changes to meet the standards set by the FCC. Eligible carriers would still be able to draw from the RM to compensate for any intrastate revenue deficit not met through state rate rebalancing.

The FCC would set the target unifying rate and the deadline for achieving that rate. States would have the discretion with respect to the rate design used for intrastate rate rebalancing. For example, States could adopt a state SLC or use a surcharge mechanism to compensate for intrastate access charge rate reductions. Also in lieu of the Plan's proposal to establish unified rates for carriers by years three and four, depending on the carrier's classification, or its proposal to increase the SLC to the $10 cap over a four-year period, a State may opt to meet these goals over a shorter period of time. Absent state action, the reductions to intrastate access and corresponding SLC increases would be ordered by the FCC.

3. Unified Rates Should Be Higher

Recently the California Commission adopted new UNE rates for Verizon and AT&T California (formerly known as SBC).⁵ These Decisions established new total element long run incremental costs (TELRIC) rates which are based on forward-looking costs for unbundled network elements (UNEs) for both companies.

California's UNE rates for these two carriers are higher than the final rates proposed for Track 1 carriers under the Missoula Plan (refer to Appendices A and C). The Plan's ultimate combined rate for all three functions: end-office switching, common transport, and tandem switching is $.0005 per minute, which is approximately half of the California UNE rate of $.001 per minute for end-office switching alone.

Based on this data, the FCC should examine the TELRIC-based UNE rates established by the States and consider using those rates as a basis for establishing a unified rate for Track 1 carriers. One advantage of using UNE rates is that it would provide a cost-basis for the unified ICC rates. Another benefit of a higher UNE rate is that a smaller RM fund would be required.

Although a higher cost-based rate is recommended, consistent with the Plan, the unifying rates should be default rates. Where competitive markets have supported a lower intercarrier compensation rate, that lower market rate should prevail and not be raised to the higher default level.

4. Early Adopter Fund (EAF)

The Early Adopter Fund (EAF) was added as an incentive to help persuade early adopter States to support the Missoula Plan by reducing the burden on consumers in states that have already reduced intrastate access rates,

The EAF proposal is not developed fully in the Plan as filed with the FCC on July 24, 2006. Left unanswered is the appropriate size of the EAF, i.e. how much reimbursement should early adopter States expect to receive from the EAF, and the manner in which the EAF would be funded.

The Plan allocates a minimum $200 million allocation for the EAF. This amount appears to be insufficient to provide adequate funding to those states that have already rebalanced their intrastate access charges through state funds, local rate increases, and/or new line items. In California alone, Verizon and AT&T, as required by California Commission Decision 06-04-071, have recently reduced their intrastate access charges by approximately $160 million by eliminating their non-cost based access charge elements, known as the network interconnection charge (NIC) and transport interconnection charge (TIC). Additionally, Verizon and AT&T may have also reduced their access charges prior to 2006, pursuant to D.96-10-066. It is anticipated that these reductions will be eligible for EAF funding.

The Plan requires the Early Adopter Fund to be used to decrease the size of explicit State funding mechanisms only. AT&T California and Verizon have been assessing a surcharge on local rates, in lieu of local rate increases or explicit state funding, to recover their lost NIC and TIC revenues. The EAF funding of first adopter revenue losses should be distributed to eligible carriers regardless of the manner in which the revenues were recovered, provided the carriers/States demonstrate that the revenue losses are attributed solely to intrastate access charge reductions.

Even though full funding of all first adopter revenue losses is preferred, this may not be a realistic option. One fair and straightforward method of allocating a finite but less than full funding of first adopter revenue losses is to allocate based on the percentage of each state's contribution to total dollars reduced. The Plan should first determine the total amount of access charge reduction by all States, and then compare each state's access charge reduction with the total amount of the funding.

California reserves the right to comment on the contribution methodology in reply comments.

5. High-Cost Loop Support

The High Cost Loop Fund (HCLF) is a federal universal service mechanism used to partially defray costs incurred by rural telephone companies in high cost areas. The Fund provides support to carriers in study areas where costs of the ILEC's local loop exceeds 115 percent of the national average cost per line. The amount of support for any ILEC is based on the number of loops within a service area. The support is tilted toward smaller carriers with fewer loops. Carriers with less than 200,000 loops per service area receive a higher level of support than larger providers.

The fund is capped at a level established by the FCC. Each year the cap is adjusted by what is called the rural growth factor. The payments to average schedule companies under the formula approved by the FCC for HCLF support is expected to be $45.3 million.⁶ Competitive entrants receive the same per line subsidy as the ILECs with whom they compete. The total funding available for competitors is not constrained by the cap.

The Missoula Plan would re-index the (HCLF) based on the current nationwide average cost per loop for rural telephone companies. After the size of the fund has been recalculated under the new index, the total amount of HCLF support will be increased in three equal steps over a 24-month period and then recapped at that level. Thereafter, the size of the fund will be subject to annual adjustments based on a rural growth factor.

There is no incentive for relatively high costs recipients to control their costs. Despite the cap, the actual mechanics of the fund result in higher-cost carriers not having their payments bound by the cap.⁷ Support should be lowered in order to spur carriers to operate in a more economically efficient manner. Therefore, the re-indexing of the HCLF as proposed by the Missoula Plan proponents should be rejected, absent other changes to the HCLF that would offset the increase.

The Missoula Plan also eliminates the FCC's rules that base a carrier's rural HCLF support on the size of the carrier's study area. This proposal would increase HCLF support received by large carriers and thus increase the costs of the Fund without justification. The existing FCC rules for determining study areas for HCLF support should be retained.

Should the FCC entertain modifications to the HCLF support in this docket, it should consider methods to restructure the targeting of support. One method for restructuring the HCLF is to increase the eligibility threshold for HCLF support from the current 115 % to 150% of the national average cost per line.⁸ Concurrent with raising the eligibility threshold, the stratification of expense adjustments above the national average cost per loop should be increased by corresponding 25% increments. After such modifications have been implemented, there would be no need to retain an upper cap on HCLF support payments.

6. Phantom Traffic

The Missoula Plan proposes to mitigate the problems created by carriers who do not identify themselves or their numbers and therefore can not be billed accordingly. This problem, also known as "Phantom Traffic," is unfair to those carriers who carry the traffic and are not compensated for it. The Missoula Plan establishes call signaling rules to require originating carriers to provide, and intermediate carriers to transmit, traffic identification information. The Plan proposes the FCC establish an expedited review procedure to adjudicate alleged violations of the signaling rules.⁹ The FCC could assess forfeitures against violators and/or award damages to aggrieved carriers, as appropriate. Stiffer penalties could be imposed on chronic violators, such as prohibiting indirect connection.

The Plan also proposes an interim Phantom Traffic solution which the Missoula Plan proponents urge the FCC to adopt immediately and which would remain in place until a comprehensive ICC plan is adopted.

California commends the Missoula Plan task force committee on its phantom traffic solution and fully supports the Plan on this issue. Regardless of when an ICC reform proposal is adopted, the immediate implementation of an interim proposal that alleviates the unfair burden placed on impacted carriers will create a just and fair marketplace for all carriers.

7. Limit Revenue Recovery to Losses

The Plan attempts to ensure revenue neutrality for all carriers. To recover revenue losses associated with access charge reductions, companies can raise the SLC and draw from the RM fund, when SLC increases are insufficient.

For some carriers, the Plan's current mechanisms coupled with the lack of explicit direction on revenue neutrality may allow them to recover revenues in excess of their losses after the fourth year of the Plan. To minimize rate impacts on ratepayers and to maintain competitive equity, revenue recovery should be limited to only revenue losses. Similarly, the FCC should mandate that the reductions in ICC charges be passed through to end user customers.

8. Modify the Restructure Mechanism Fund's Methodology to Reduce Fund Size

The Restructure Mechanism (RM) is based on existing rates and minutes of use (MOUs). This methodology builds in a subsidy since the ILECs' MOUs are declining. In D.06-06-071 on intrastate access charges, the CPUC recognized the MOUs downward trend and ordered revenue recovery based on projected MOUs, which are based on the percentage change in MOUs from prior years.

Separate from the use of existing MOUs, the RM fund is further inflated because most carriers, except Track 1 carriers, are made whole even if they lose lines. Track 2 carriers during part of the Plan period and rate of return carriers for the entire Plan period are compensated for lines losses. The RM provides revenue recovery on a per line basis. For example, if the recovery per line is $10 per line and the rate of return carrier that had 10 lines prior to the plan, but after the plan has 8 lines, would receive $100 not $80 from the RM fund.

The RM should be modified to reflect current MOU trends and carriers should not receive recovery for lines that they no longer serve.

9. Eliminate the Automatic SLC Increases that are tied to Inflation

For Track 1 carriers only, at Step 5 of the Plan, the SLC cap increases annually with inflation. Plan proponents explain that increasing the cap reduces pressure on the RM fund.

A SLC inflation factor is flawed for a number of reasons. First, with competition, there should be limited pressure on the RM. In a competitive environment, rates should be decreasing not increasing. Second, the Plan's treatment of SLCs is asymmetric. While the Plan acknowledges potential inflationary effects, it does not similarly recognize offsetting productive gains. Both the FCC and the CPUC have indexed rates to reflect both inflation and productivity. Moreover, industry attributes such as declining cost structure should also lead to lower and not higher rates. Last, using regulatory fiat as a basis for increasing rates is inconsistent with the Plan's proposal for pricing flexibility to address competitive market conditions. Therefore, there should be no automatic rate increases.

GTD:nas

Attachments

Appendix A - Missoula Plan Proposed Access Rates¹⁰

Track	Terminating Rates		Originating Rates
Track 1 (Beginning at Step 4)	End Office Switching	$0.0005	End Office Switching	≤ $0.002
	Tandem Switching and Common Transport		Tandem Switching and Common Transport	≤ $0.0025
Track 2	Beginning of Step 3		Beginning of Step 4
Rate of Return	End Office Switching	≤ $0.0005	End Office Switching	≤ $0.002
	Tandem Switching and Common Transport	≤ $0.0105	Tandem Switching and Common Transport	≤ $0.0105
Price Cap and Carriers Electing Incentive Regulation	End Office Switching	≤ $0.0005	End Office Switching	≤ $0.002
	Tandem Switching and Common Transport	≤ $0.0075	Tandem Switching and Common Transport	≤ $0.0075
Price Cap or Incentive Regulation Carriers who Reduce Orig. rates to $0	End Office Switching	≤ $0.0005	End Office Switching	$0
	Tandem Switching and Common Transport	≤ $0.0097	Tandem Switching and Common Transport	$0
Track 3 (Beginning at Step 4)	Terminating Access	Interstate Access Rate Level	Originating Access	Interstate Access Rate Level

Appendix B - Missoula Plan Proposed SLC Caps¹¹

Track	Subscriber Line Charge (SLC) Cap	Step 0	Step 1	Step 2	Step 3	Step 4	SLC Cap Rate	Step 5
Track 1 (Monthly Increase)	Primary Residential / Single Line Business (SLB) Cap	$6.50	$7.25	$8.00	$9.00	$10.00	$10.00	SLC Cap may only increase with inflation
	Non-Primary Residential	$7.00	$7.25	$8.00	$9.00	$10.00	$10.00
	Multi-Line Business (MLB)	$9.20	$9.20	$9.20	$9.20	$10.00	$10.00
	Max SLC Rate Increase (Must be under cap)	< $6.50	+ ≤ $0.95	+ ≤ $0.95	+ ≤ $1.20	+ ≤ $1.20	≤ $4.30 over Step 0 rate	Constraint Lifted
Track 2 (monthly Increase)	Primary Residential / Single Line Business (SLB) Cap	$6.50	$7.25	$8.00	$8.75		$8.75	No further Increase
	Multi-Line Business (MLB)	$9.20	$9.20	$9.20	$10.00		$10.00
	Average SLC within each Service Category	current	+ ≤ $0.75	+ ≤ $0.75	+ ≤ $0.75		≤ $2.25 over Step 0 rate	Constraint Lifted
Track 3 (monthly Increase)	Primary Residential / Single Line Business (SLB) Cap	$6.50	$7.25	$8.00	$8.75		$8.75	No further Increase
	Multi-Line Business (MLB)	$9.20	$9.20	$9.20	$9.20		$9.20

Appendix C - TELRIC UNE Rates Comparison

Switched Access Rates	SBCTELRIC Rates (D.05-03-026)		Verizon TELRIC Rates (D.06-03-025)
	Fixed	MOU	Fixed	MOU
Local Switching - 6.8.3(A)	$0.001536 per call	$0.001360 per MOU	$0.001401 per call	$0.001184per MOU
Direct Trunked Transport - 6.8.2(B)
DS1 (per transport channel)	$33.49 MRC	$0.25 per Mile	$9.77 per termination	$0.13 per Mile
Common Switched Transport - 6.8.2(C)(1)		$ 0.001330 Fixed Mile per MOU		$ 0.000000 Fixed Mile per MOU
		$0.000021 Variable Mile per MOU		$0.000053 Variable Mile per MOU
		(from D. 99-11-050)
Tandem Switching - 6.8.2(C)(2)	$0.000629 per Completed Msg	$0.000453 per MOU	$0.000217 per Completed Msg	$0.000309 per MOU

¹ Other contentious ICC rates are for transiting services where a third carrier provides interconnection between two carriers that are not directly connected.

² $2.25 billion is the sum of $1.5 billion RM, $.2 billion EAF, $.225 additional Lifeline, and $.3 billion high cost loop fund modifications.

³ Congressional Budget Office Paper: Factors That May Increase Future Spending from the Universal Service Fund, June 2006,p.vii

⁴ Based on assumptions provided by Missoula Plan proponents and SLC at the maximum cap.

⁵ D.05-03-026 for SBC and D.06-03-025 for Verizon

⁶ Source: Filing by NECA with FCC, dated August 30, 2006, Pg. 23: "NECA 2007 Modification of the Average Schedule Universal Service High Cost Loop Support Formula, CC Docket No. 96-45."

⁷ Congressional Budget Office Paper: Factors That May Increase Future spending from the Universal Service Fund, June 2006, pp 6-7

⁸ See 47 C.F.R. §36.631.

⁹ Missoula Plan p. 59.

¹⁰ Rosenberg, E, Pérez-Chavolla, L. and Liu, J. Commissioner Briefing Paper Intercarrier Compensation and the Missoula Plan. August 11, 2006. (p. iii)

¹¹ Ibid., p. 35.