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

Dialing Parity

a. The Notice

287. We tentatively concluded in the Notice that the benefits of the dialing parity requirements to be adopted pursuant to Section 251(b)(3) of the 1996 Act should extend to all payphone location providers. We sought comment on this and other methods for achieving dialing parity for payphone location providers, and users, of payphones that are consistent with the definition of dialing parity under Section 3(15) of the 1934 Act, as amended. As a related matter, we also sought comment on whether we should extend the unblocking requirements established in TOCSIA to all local and long distance calls.

      

     b. Comments

      

288. AT&T, MCI, Sprint and the Virginia SCC all agree with the Commission's tentative conclusion that the benefits of the dialing parity requirements to be adopted pursuant to Section 251(b)(3) of the 1996 Act should extend to all payphone location providers. While the RBOCs agree with the tentative conclusion, they assert that such benefits should be exercised indirectly through the PSP's programming of their "smart" payphones to select a presubscribed intraLATA carrier, as opposed to directly through presubscription at the LEC's central office switch. The Florida PSC contends that a PSP should be able to "program" its payphones to route 1+ and 0+ toll calls to the preferred carrier. GVNW argues that it is the states who should be given the discretion of determining when and how dialing parity for intraLATA calls should be applied to payphones.

      

289. AT&T requests that the Commission mandate inclusion of all incumbent LEC payphones in the presubscription process in the 15 states with toll dialing parity orders issued prior to December 15, 1995 as well as immediate intraLATA presubscription for all BOC payphones located in territories where intraLATA presubscription is now technically available. The RBOCs argue that the Commission should deny AT&T's immediate intraLATA presubscription request, contending that this request is without basis in Section 276 and cannot be implemented for intraLATA payphone calls, apart from intraLATA residential and business calls. According to the RBOCs, intraLATA dialing parity for payphone calls should operate on the same timetable as for all other calls.

      

290. AT&T and MCI both argue that the Commission should adopt intraLATA unblocking requirements similar to the interLATA carrier unblocking requirements established in TOCSIA. Sprint argues that the interLATA unblocking requirements established pursuant to TOCSIA should extend to all local and long distance calls. Ameritech argues that the existing anti-blocking rules promulgated under TOCSIA remain sufficient to prevent aggregators from defeating LEC equal access features, so long as all LECs are mandated to continue providing these features. According to Ameritech, Section 251(b)(3) of the 1996 Act does not incorporate the full list of equal access features in that it relies on a definition of dialing parity which includes only presubscription and omits mention of 10XXX or other dialed access codes. Therefore, Ameritech argues that because the dialing parity rules of Section 251(b)(3) do not include an express reaffirmation of the LECs' duty to honor 10XXX and other access codes, the Commission should expressly articulate such a reaffirmation in its implementation of Section 251(b)(3).

      

     c. Discussion

      

291. In our recently issued order implementing the Section 251(b)(3) dialing parity requirements, we concluded that dialing parity was an important element in fostering vigorous local exchange and long distance competition "by ensuring that each customer has the freedom and the flexibility to choose among different carriers for different services without the burden of dialing access codes." We believe that this statement is equally applicable to fostering vigorous competition in the payphone industry, and accordingly affirm our tentative conclusion that the benefits of dialing parity requirements adopted pursuant to Section 251(b)(3) of the 1996 Act should extend to all payphone location providers.

      

292. We also conclude that the technical and timing requirements established pursuant to Section 251(b)(3), and Section 271(c)(2)(B), should apply equally to payphones. We find that burden on the LECs in requiring them to provide dialing parity for payphones, prior to all other phones, outweighs any competitive benefit that might result. In this respect, we note that independent payphone service providers' "smart payphones" can adequately create dialing parity within the payphone unit pending the implementation of true dialing parity.

      

293. Finally, we conclude that the unblocking of carrier access codes mandated by TOCSIA and our rules for interstate calls should also apply to intrastate (including local) access code calls. This may already be normal within the industry, and no party objected to our proposal. Allowing unrestricted access to a caller's preferred carrier is an essential feature of creating a competitive payphone industry, and we have created a mechanism that ensures that the PSP will receive compensation for all access code calls, including intrastate calls. Given the existence of compensation and the pro-competitive purpose of Section 276 of the 1996 Act, and in the absence of any technical limitations, we find that unblocked access for all access code calls from payphones is required.