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

Administration of Per-Call Compensation

a. The Notice

102. In the Notice, the Commission tentatively concluded that the direct-billing arrangement established for the payment of compensation from IXCs to PPOs should be used with the simple addition of requiring IXCs, and the intrastate interexchange operations of LECs, to send back to each PSP a statement indicating the number of toll-free and access code calls that each carrier has received from each of that PSP's payphones. The Commission also proposed to establish a requirement that the carrier responsible for paying compensation file annually a brief report with the Common Carrier Bureau listing the total amount of compensation paid, pursuant to the rules adopted in this proceeding, to PSPs for intrastate, interstate, and international calls; the number of compensable calls received by the carrier; and the number of payees. Such a requirement would help ensure that the carriers are tracking all of the calls for which they are obligated to pay compensation.

      

103. Because the compensation mechanism proposed in the Notice uses the ANI as the basis for tracking calls, the Commission tentatively concluded that minimal regulatory guidelines for the industry should be adopted regarding resolution of disputed ANIs in the per-call compensation context. Possible guidelines for which the Commission has sought comment are as follows: (1) intraLATA carrier provision of a list of payphone ANIs to IXCs (e.g., each quarter); (2) verification of disputed ANIs by intraLATA carrier on request; (3) maintenance of verification data for at least 18 months after the close of a compensation period; (4) acceptance of compensation claims once an intraLATA carrier makes a positive identification of an installed payphone; (5) IXC denial of payment for compensation claims that are submitted by a PSP over one year after the end of the period in question.

      

     b. Comments

104. APCC argues that the compensation payor should bear the costs associated with the administration of the compensation mechanism. Various commenters argue that the Commission should use a direct-billing arrangement for the payment of compensation from IXCs to PSPs that is similar to the one adopted in the access code call compensation proceeding. MCI argues that under the Commission's proposed direct-billing arrangement, carriers should be required to report to the Commission only the total amount of compensation paid to all PSPs annually. Other commenters, notably the small IXCs, contend that the LECs are better equipped than the IXCs and intraLATA carriers to administer the payment of per-call compensation. Some of these commenters argue that PSP-administered compensation would be preferable to that handled by the carriers receiving the payphone calls. SDN argues that compensation should be based on a national formula and administered by the individual states.

      

105. The RBOCs, Sprint, APCC, and Peoples support the Commission's tentative conclusion that minimal regulatory guidelines for the industry should be adopted regarding resolution of disputed ANIs. They argue that LECs must be given an incentive to provide accurate and timely verification of ANIs for independently provided payphones. MCI argues that a dispute resolution process is not necessary if payphones are required to transmit certain information digits associated with payphone-originated calls.

      

106. The commenters also make a number of suggestions on the possible dispute resolution guidelines articulated by the Commission in the Notice. GTE argues that mandatory procedures in this area are not necessary, because of the increased costs they will entail. In addition, GTE argues that PSPs are able to file a complaint with the Commission when they have a dispute regarding compensation. With regard to the list of payphone ANIs provided each quarter by the LECs, AT&T argues that it is the LEC that provides the payphone line that must provide the list, not the intraLATA carrier presubscribed to the payphone. GVNW argues that requiring LECs to furnish IXCs with a quarterly list of ANIs is too costly and burdensome, and technology-based solutions to tracking problems will eventually make this list unnecessary. AT&T requests that the Commission require the LECs to submit the ANI list to the IXCs within 30 days of the end of a compensation period.

      

107. AT&T and Sprint contend that if the LEC does not provide verification of a disputed payphone ANI, carriers should not be required to pay compensation. AT&T further contends that LECs should be required to provide verification in a timely fashion. MICPA argues that carriers should not be able to use delays in LEC verification to delay the payment of compensation to PSPs. APCC argues that the Commission should impose a penalty for LECs that do not make a verification when requested. MCI suggests that if a payphone is disconnected, the LEC should be required to notify the compensation-paying carriers within 24 hours. NTCA contends that the possible guidelines outlined by the Commission would impose too great of a burden on small LECs. MCI argues that the statute of limitations for the payment of compensation should not be tolled while ANIs are being disputed. Two state associations of independent payphone providers argue that the Commission must prohibit the carriers from imposing undue burdens on PSPs before paying compensation.

      

108. A number of independent payphone providers argue that the Commission should shorten the quarterly compensation period. Peoples and Telaleasing both suggest that carriers should pay compensation to PSPs on a monthly basis. MCI argues that it should not be required to pay compensation on claims more than three months old. Sprint argues that, to reduce the administrative burden and costs associated with the payment of compensation, carriers should be allowed to defer payment to PSPs until the PSP is due to receive a minimum of $10 from that carrier. The RBOCs contend that the Commission should impose a penalty on carriers who demonstrate a wilful failure to pay compensation. APCC argues that PSPs should be allowed to charge interest for payments that have been due for more than 90 days.

      

109. To facilitate the payment of compensation, CompTel argues that PSPs should register with a central resource all payphones for which carriers must pay compensation. It argues that this step would reduce administrative costs for all parties, avoid duplication of efforts, and negate the risk of multiple payments to separate parties claiming ownership of the same payphone. APCC argues that, to avoid additional payment disputes, each LEC bill for payphone service must affirmatively state that it is for payphone service.

      

     c. Discussion

110. We conclude that we should adopt a direct-billing arrangement between IXCs and PSPs, once tracking capabilities are in place, that would build on the arrangement established in the access code call compensation proceeding, with the addition of the requirement that these carriers must send back to each PSP a statement indicating the number of toll-free and access code calls that each carrier has received from each of that PSP's payphones. This arrangement places the burden of billing and collecting compensation on the parties who benefit the most from calls from payphones -- carriers and PSPs. For this reason, we conclude that it would not be appropriate to burden LECs with the administration of the per-call compensation mechanism, because their economic interest in the compensable calls is significantly less than that of the IXCs and PSPs. While PSPs could be efficient administrators of a compensation mechanism, we conclude that the carriers already responsible for tracking the calls and paying compensation for them have the greatest ability and incentive to establish the most efficient means of administering the payment of compensation. As with the tracking of calls, carrier-payors are free to use clearinghouses, similar to those that exist for access code call compensation, or to contract out the direct-billing arrangement associated with the payment of compensation. We decline to leave it to the individual states to administer compensation, as suggested by SDN, because we believe the parties can agree on a solution more efficient than the likely varying approaches adopted by each of the states.

      

111. We also proposed in the Notice to establish a requirement that the carrier responsible for paying compensation file each year a brief report with the Common Carrier Bureau listing the total compensation paid to PSPs for intrastate, interstate, and international calls; the number of compensable calls carried by the carrier; and the number of payees. Such a requirement would help ensure that the carriers are tracking all of the calls for which they are obligated to pay compensation. This requirement will apply to calendar year 1998, when tracking capabilities are in place and compensation is being paid on a per-call basis. While MCI argues that carriers should be required to report only the total amount of compensation to all PSPs annually, we conclude that more detailed reporting is necessary to monitor the per-call payphone compensation mechanism in its initial complete calendar year to help ensure that all IXCs are paying their respective compensation obligations. We conclude further that, once per-call compensation is routinely paid by IXCs, this reporting requirement will be terminated after the carriers have filed their reports for the 1998 calendar year. Carrier-payors should file their reports as soon as possible after the end of the calendar year, but no later than the end of the first quarter of the following year. To implement the reporting requirement, we delegate to the Chief, Common Carrier Bureau, the authority to establish the form and content, if necessary, of the annual report listing the total amount of compensation paid to PSPs, including the authority to extend or limit the scope of this report.

      

112. While we have elected to burden the LECs only insignificantly in creating the per-call compensation mechanism mandated by Section 276 of the Act, we conclude that we must establish minimal regulatory guidelines for the payphone industry regarding resolution of disputed ANIs to give LECs a greater incentive to provide accurate and timely verification of ANIs for independently provided payphones. While any party may file a complaint with the Commission about disputed ANIs, we conclude that the better practice is for LECs who maintain the list of ANIs to work with both carrier-payors and PSPs to resolve disputes more efficiently and quickly before lodging a complaint with the Commission. We also conclude that we should require that each LEC must submit to each carrier-payor on a quarterly basis a list of ANIs of all payphones in the LEC's service area (called the "COCOT list" in the access code call compensation proceeding). We disagree with GVNW's proposal that furnishing the quarterly list of ANIs is too costly and burdensome for LECs. As stated above, we have attempted to minimize the burdens on LECs, and no party has shown that there is currently an effective substitute for this list, despite the future promise of technological solutions.

      

113. In response to the various arguments made by commenters, we conclude that the following guidelines will facilitate the proper verification of payphone ANIs by LECs. First, LECs must provide a list of payphone ANIs to carrier-payors within 30 days of the close of each compensation period (i.e., each quarter). Second, LECs must provide verification of disputed ANIs on request, in a timely fashion. Such verification data must be maintained and available for at least 18 months after the close of a compensation period. Third, once a LEC makes a positive identification of an installed payphone, the carrier-payor must accept claims for that payphone's ANI until the LEC provides information, on a timely basis, that the payphone has been disconnected. Fourth, a LEC must respond to all requests for ANI verification, even if the verification is a negative response. Carrier-payors are not required to pay compensation once the LEC verifies that the particular ANI is not associated with a COCOT line for which compensation must be paid. Fifth, carrier-payors should be able to refuse payment for compensation claims that are submitted long after they were due. Carriers should not refuse payment on timeliness grounds, however, for ANIs submitted by a PSP up to one year after the end of the period in question. Further, the period for a PSP to bring a complaint to the Commission based on an ANI disputed by the carrier-payor will not begin to accrue until the carrier-payor issues a final denial of the claim.

      

114. We conclude that the guidelines, as outlined above, will facilitate the proper verification of payphones without imposing undue burdens on LECs, PSPs, or carrier-payors. In adopting these guidelines, we reject a number of proposals by commenters. First, in response to the argument of AT&T and Sprint that they not be required to pay compensation when a LEC fails to verify a particular ANI, we conclude that by directing LECs to respond to all requests for verification, carriers should be able to avoid payment only when the LEC issues a negative response to the verification inquiry. Second, we conclude that mandating a penalty on the LEC, as urged by APCC, for failing to respond to a verification request in a timely manner, is not necessary when the Commission's complaint process is available. Similarly, the complaint process is available to PSPs for instances of a carrier's wilful failure to pay compensation, as discussed by the RBOCs. We note that we will aggressively take action on such complaints. Third, we conclude that requiring a LEC to notify all carrier-payors of a payphone disconnection within 24 hours would be too great a burden to place on LECs, particularly when they are required to provide ANI lists only on a quarterly basis. Such notification, however, should occur on a basis as timely as possible. Fourth, we conclude that, for purposes of bringing a complaint before the Commission concerning a carrier's payment of payphone compensation, the time period for the statute of limitations does not begin to run until after the carrier-payor considers a compensation claim and issues a final denial of the claim. To conclude otherwise, as suggested by MCI, would permit a carrier-payor to delay a denial of the claim to preclude a PSP's complaint remedy before the Commission.

      

115. Various independent payphone providers argue that we should require compensation to be paid on a monthly basis. In the access code call compensation proceeding, we allowed the parties to determine how and when compensation would be paid, and quarterly compensation period was adopted by the industry through consensus. While the industry may decide upon a similar compensation period for per-call compensation, we leave the details associated with the administration of this compensation mechanism to the parties to determine for themselves through mutual agreement. We disagree, however, with MCI's proposal that carriers not be required to pay compensation claims that are more than three months old. Because a carrier-payor's administrative expenses are presumably reduced through the payment of compensation on a quarterly, as opposed to monthly, basis, we conclude that the reasonable trade-off is that the carrier remains liable, as discussed above, for compensation claims that are submitted within one year of the end of the compensation period in question. The parties may themselves revisit this issue if they elect a shorter compensation period. Sprint argues that a carrier should be allowed to defer payments to individual PSPs until the amount due aggregates to $10 from that carrier to the particular PSP for all of its payphones. We agree and conclude that such a requirement would reduce the administrative expenses associated with the payment of compensation. If PSPs would like to charge interest on overdue payments from IXCs, as suggested by APCC, they should negotiate such a provision in their compensation agreement with the particular carrier.

      

116. We agree with APCC that the payment of compensation would be facilitated and some disputes avoided if LECs were required to state affirmatively on their bills to PSPs that the bills are for payphone service. We conclude that LECs who have knowledge that a particular phone line is used for a payphone, must indicate on that payphone's monthly bill that the amount due is for payphone service. We also agree with CompTel's suggestion that the registration of all payphones with a central resource or clearinghouse would reduce administrative costs for all parties and would avoid duplication of efforts. We decline, however, to mandate the creation of a central resource or clearinghouse for compensation purposes, and believe that the parties themselves are better able to establish such a resource that would be directly connected to the payment of compensation.