II. Background

III. Issues
The Payphone Marketplace
Compensation for Each and Every Completed Intrastate and Interstate Call Originated by Payphones
1. Payphone Calls Subject to this Rulemaking and Compensation Amount
2. Entities Required to Pay Compensation
3. Ability of Carriers to Track Calls from Payphones
4. Administration of Per-Call Compensation
5. Interim Compensation Mechanism

Reclassification of LEC-Owned Payphones
1. Classification of LEC Payphones as CPE
2. Transfer of Payphone Equipment to Unregulated Status
3. Termination of Access Charge Compensation and Other Subsidies
4. Deregulation of AT&T Payphones

Nonstructural Safeguards for BOC Provision of Payphone Service

Ability of BOCs to Negotiate with Location Providers on the Presubscribed InterLATA Carrier

Ability of Payphone Service Providers to Negotiate with Location Providers on the Presubscribed IntraLATA Carrier

Establishment of Public Interest Payphones

Other Issues
1. Dialing Parity
2. Letterless Keypads on Payphones
3. Oncor Petition

IV. Procedural Matters
1. Petitions for Reconsideration
2. Paperwork Reduction Act Analysis
3. Regulatory Flexibility Act Analysis

Conclusion

Ordering Clauses

Appendix A
Text of Section 276
Appendix B
List of Parties Filing Comments
Appendix C
List of Parties Filing Replies
Appendix D
Immediate Rules Adopted by This Order
Appendix E
Rules Adopted by This Order
Appendix F
Interim Compensation Obligations

Ability of Carriers to Track Calls From Payphones

a. The Notice

88. The Commission tentatively concluded, in the Notice, that tracking mechanisms and surrogates exist, or might readily be made available, to support the per-call compensation plan mandated by Section 276(b)(1)(A). We sought comment on what tracking options are currently, or may soon be, available. Additionally, we sought further comment on the ability of existing IXC-based tracking mechanisms to accommodate all payphone providers and IXCs. In the event that no standard technology or mechanism available for tracking exists, the Commission sought comment on alternative surrogate methodologies that could be devised. Finally, we sought comment on which party or parties, whether IXCs, PSPs, or intraLATA carriers, should be required to develop and maintain the tracking or surrogate methodologies.

     

89. The Commission also tentatively concluded that IXCs and intraLATA carriers should be required to initiate an annual independent verification of their per-call tracking functions, to be made available for FCC inspection, to ensure that they are tracking all of the calls for which they are obligated to pay compensation. Additionally, the Commission sought comment on whether BOCs and other LECs that provide network tracking for their own payphones should be required to make those tracking services available to independent payphone providers at the same rates, terms, and conditions as they provide themselves.

     

    b. Comments

90. The RBOCs support the Commission's tentative conclusion that the requisite technology currently exists for carriers to track calls routed to them from payphones. The RBOCs argue further that no standardized technology for tracking calls needs to be prescribed by the Commission, and that carriers should be permitted to use whatever technology they prefer to meet their tracking obligations. They request that, if the Commission requires the carrier receiving the call to provide the call tracking, then the Commission should not preclude LECs and PSPs from developing their own call tracking capabilities. The RBOCs also contend that the Commission should establish both a timeline for achieving full call tracking capabilities within 12 months after the effective date of the rules, and interim compensation rates based on average calling rates until then.

     

91. The RBOCs, USTA, Sprint, One Call, California PUC, and others argue that the Commission should require that IXCs that receive the calls from payphones be obligated to provide the call tracking necessary for compensation. These parties argue that only IXCs can track calls to completion, IXCs are the primary economic beneficiary of these calls, and that non-IXC tracking surrogates are not reliable. Ameritech argues, on the other hand, that the IXCs should not be required to track calls, except during a brief transition period.

     

92. Other commenters note difficulties that they argue are inherent with IXC tracking capabilities. MCI and Sprint argue that each payphone should be required to generate 07 or 27 coding digits within the automatic number identification ("ANI") for the carrier to track calls. AT&T states that it currently cannot track subscriber 800 calls because it receives only the ANI of the terminating telephone. Because it estimates that a per-call tracking ability for subscriber 800 calls will take one year to achieve, AT&T argues that the Commission should use a surrogate for these calls, which relies on "studies made from a representative weighted sample of central-office-implemented payphones." The RBOCs propose a year phase-in period for tracking subscriber 800 calls, but argue that AT&T's proposed surrogate would rely on central-office-implemented or "dumb" payphones, which are found in low usage areas and, therefore, would underestimate the volume of subscriber 800 calls. USTA also supports relying on a surrogate for subscriber 800 calls for a one year transition period. Some IXCs, such as MCI, Cable & Wireless, and CompTel, contend that carrier tracking is not practical or appropriate, and that it would involve substantial new investment. Cable & Wireless estimates that it would require a $1 million investment to establish a tracking mechanism for all of the calls that its network carries. Cable & Wireless also contends that requiring IXCs to track calls would lead to an impossible administrative task on the part of the carriers, because the IXCs would need to search all of their call records to identify and separate out calls from payphones.

     

93. APCC argues that the Commission has a number of options for mediating the per-call tracking burden of the small carriers. One option, according to APCC, would be to require the LECs to track calls on behalf of small IXCs. A second option, APCC argues, would be to relieve small carriers of the tracking obligation and have them pay per-call compensation, particularly for subscriber 800 calls, on a flat rate per month according to their percentage of toll revenue or, if possible, their percentage of overall payphone and non-payphone 800 service traffic. The RBOCs contend, on the other hand, that the small carriers should be required to track individual calls using payphones or contract out the tracking to another party, because carriers that benefit from being in the market must accept the responsibilities that go with it.

     

94. Various commenters, particularly some IXCs and Ameritech, argue that the Commission should place the obligation to track calls using a payphone on LECs, PSPs, or a combination of both. For example, CompTel argues that LECs should provide the tracking, and the PSPs should pay the LECs for this service. MCI and Indiana URC contend that LECs and PSPs should share the responsibility for tracking calls. WorldCom argues that per-call tracking should be the responsibility of the LECs, while Ameritech and Scherers argue that the PSPs should assume this obligation. These parties contend that LEC- or PSP-based tracking would be superior because those who want payment must keep count of compensable calls and bill for them, and all payphones will soon be able to obtain call detail information to make this possible. Ameritech argues that the Commission should require IXCs to process answer supervision for LECs engaged in tracking. The RBOCs, GTE, and NECA oppose a tracking system that would place the responsibility for tracking calls on LECs. They argue both that the Commission should not disproportionately burden the LECs while other parties receive the primary benefit for these calls, and that only IXCs can track calls to completion and detect multiple calls within a single dialing transaction. USTA contends that LECs are not able to track subscriber 800 calls.

     

95. The RBOCs support the Commission's tentative conclusion that carriers should be required to initiate an annual independent verification of their per-call tracking functions for a period of two years, provided that both the Commission and PSPs be allowed to inspect this verification. APCC argues that the Commission should require annual independent audits of carriers' per-call tracking functions and require the carriers to compare their data against parallel LEC or smart payphone data. Telaleasing argues that such an audit should occur on a quarterly basis.

     

    c. Discussion

96. Based on the information in the record, we conclude that the requisite technology exists for IXCs to track calls from payphones. We recognize, however, that tracking capabilities vary from carrier to carrier, and that it may be appropriate, for an interim period, for some carriers to pay compensation for "each and every completed intrastate and interstate call" on a flat-rate basis until per-call tracking capabilities are put into place, as discussed below.

     

97. We conclude further that, as stated in the Notice, it is the responsibility of the carrier, whether it provides intraLATA or interLATA services, as the primary economic beneficiary of the payphone calls, to track the calls it receives from payphones, although the carrier has the option of performing the tracking itself or contracting out these functions to another party, such as a LEC or clearinghouse. In other words, while we assign the burden of tracking on the carrier receiving the call from a payphone, parties to a contract may find it economically advantageous to place this tracking responsibility on another party. We decline to require LECs or PSPs to perform per-call tracking themselves. Neither LECs nor PSPs are the primary economic beneficiaries of payphone calls. We conclude, however, that LECs, PSPs, and the carriers receiving payphone calls should be able to take advantage of each other's technological capabilities through the contracting process. To this end, we agree with the RBOCs and conclude that no standardized technology for tracking calls is necessary, and that IXCs may use the technology of their choice to meet their tracking obligations.

     

98. MCI and Sprint contend that each payphone should be required to generate 07 or 27 coding digits within the ANI for the carrier to track calls. We agree. Currently under our rules, LECs are required to tariff federally originating line screening ("OLS") services that provide a discrete code to identify payphones that are maintained by non-LEC providers. We conclude that LECs should be required to provide similar coding digits for their own payphones.

     

99. AT&T states that it currently cannot track subscriber 800 calls because it receives only the ANI of the terminating telephone, and it estimates that a per-call tracking ability for subscriber 800 calls will take one year to achieve. Other commenters, such as the RBOCs and USTA, propose a one-year transition before carriers are required to track subscriber 800 calls. In view of the current difficulties in tracking such calls, we conclude that a transition is warranted for requiring carriers to track compensable calls. Therefore, we require carriers to provide for tracking of all compensable calls they receive from payphones, through any arrangement they choose, as soon as possible, but no later than one year from the effective date of the rules adopted in this proceeding. Until that date, carriers must pay flat-rate compensation, as specified below.

     

100. We recognize that implementing a per-call tracking capability will require new investments for some carriers, particularly small carriers, but we conclude that the mandate of Section 276 that we ensure a fair "per call compensation plan" for "each and every completed intrastate and interstate call" requires these carriers to provide tracking for calls for which they receive revenue, even though they previously did not have to compensate the PSP for many of these calls. We conclude further that, by permitting carriers to contract out their per-call tracking responsibility, and by allowing a transition for tracking subscriber 800 calls, we have taken the appropriate steps to minimize the per-call tracking burden on small carriers. In addition, we conclude that, to parallel the obligation of the facilities-based carrier to pay compensation, the underlying, facilities-based carrier has the burden of tracking calls to its reseller customers, and it may recover that cost from the reseller, if it chooses.

      

101. In the Notice, we tentatively concluded that carriers should be required to initiate an annual verification of their per-call tracking functions to be made available for FCC inspection upon request, to ensure that they are tracking all of the calls for which they are obligated to pay compensation. We require this verification for a one-year period, the 1998 calendar year, and delegate to the Chief, Common Carrier Bureau, the authority to establish the form and content, if necessary, of the verification documentation of these per-call tracking capabilities. We conclude that requiring carriers to maintain the appropriate records and certify as to the accuracy of both the data and the tracking methodology would facilitate the prompt and accurate payment of per-call compensation. We also conclude that PSPs should be allowed to inspect this certification, apart from any proprietary network data. In addition, we expect that the PSPs and carriers performing the tracking will work together to reconcile or explain any PSP data that are inconsistent with the annual certification. We decline to adopt, however, the suggestions of some commenters that we require a full-scale independent audit of a carrier's tracking capability, or mandate that the verification occur on a quarterly basis. A full-scale audit or a quarterly verification would impose too great of a burden on carriers in an area where we have encouraged them to use technology and other arrangements of their choice in implementing a per-call tracking capability.