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

COMPENSATION FOR EACH AND EVERY COMPLETED INTRASTATE AND INTERSTATE CALL ORIGINATED BY PAYPHONES

20. Section 276 requires that we establish a plan to ensure fair compensation for all calls. As discussed below, fair compensation can be ensured best when the PSP can track the calls made from the payphone on a call-by-call basis and be assured efficient payment for those calls; when the market can set a fair rate for the call; and when the caller has the information necessary to make an informed choice as to whether to make the call and incur the compensation charge.

     

    1. Payphone Calls Subject to this Rulemaking and Compensation Amount

    a. The Notice

21. Most calls originated on payphones are within one of the following categories: (1) coin calls; (2) directory assistance calls; (3) operator service ("0+" and "0-") calls; (4) access code calls (using, e.g., "10XXX" codes and "1-800" or "950" carrier access numbers); and (5) subscriber 800 calls. Each of these categories can be further subdivided between local, intraLATA toll, intrastate interLATA, interstate interLATA, and international. In the Notice, the Commission sought comment on what constitutes "fair" compensation; whether international calls should be included in the compensation plan; and whether calls for which the PSP currently receives compensation should be included in the plan. The Commission tentatively concluded that we must at least prescribe standards for determining fair compensation for all access code calls, subscriber 800 and other toll-free number calls, and debit card calls. The Commission tentatively concluded that it was not necessary to prescribe per-call compensation for 0+ calls originated by payphones, because these calls were compensated pursuant to contracts between the PSP and the presubscribed IXC. The Commission sought comment on whether intraLATA 0+ calls carried by the presubscribed intraLATA carrier should be treated differently than local coin calls.

     

22. With regard to local rates, the Commission stated that there is some evidence that the rate may not necessarily fairly compensate the PSP. We sought comment on how to fulfill the Act's mandate in this regard. The Commission proposed a range of options for ensuring fair compensation for local coin calls. One was to set a nationwide local coin rate for all calls originated by payphones. Another was for the Commission to prescribe specific national guidelines that states would use to establish a local rate to ensure that all PSPs are fairly compensated. A third was for the states to continue to set the coin rates for local payphone calls according to factors within their discretion. Under each approach, the Commission sought comment on what specific public interest benefits commenters believe would result from adoption of a particular option.

     

23. In addition, the Commission tentatively concluded that international calls originated by payphones should be compensated, because we found no evidence of congressional intent to leave these calls uncompensated. The Commission also sought comment on what rules, if any, should be adopted to prevent the improper use of subscriber 800 numbers to increase compensation, as well as other types of fraud.

     

24. Citing the lack of reliable independent payphone provider specific cost data, the Commission tentatively concluded in the Notice that PSPs should be compensated for their costs in originating the types of calls for which compensation is deemed appropriate, and that these costs should be measured by appropriate cost-based surrogates. For appropriate cost-based surrogates, the Commission sought comment on whether some measure of generic or industry-wide costs is available, whether incumbent LECs' costs would be a reasonable surrogate for independent payphone providers' costs, and whether some other existing set of rates, such as state-established rates for local coin calls, would be a reasonable surrogate. The Commission also sought comment on whether we should prescribe different per-call compensation amounts for the different types of calls originated by payphones. The Commission requested comment on how compensation levels should be permitted to change in the future, and whether some cost index or price cap system would be appropriate to ensure that compensation levels reflect expected changes in unit costs over time.

     

    b. Comments

    i. Compensable Calls

25. A wide range of commenters, including IXCs, RBOCs, independent LECs, states, and independent payphone providers, support the Commission's tentative conclusion that we must at least prescribe standards for determining fair compensation for all access code calls, subscriber 800 and other toll-free number calls, and debit card calls. Many of these commenters also agree with the Commission's tentative conclusion that it is not necessary to prescribe compensation for 0+ calls carried by a payphone's presubscribed carrier. They argue that compensation agreements between the presubscribed carrier and PSP or location provider ensure that the PSP will be fairly compensated for these calls. CompTel further contends that mandating per-call compensation for 0+ calls in addition to that provided by contract would overlap with the Commission's intent to address operator service rates for payphones in the OSP Reform proceeding. The RBOCs argue that the Commission need not prescribe compensation for 0+ calls as a general rule, although the Commission must require OSPs to pay compensation on all presubscribed calls made on BOC payphones to compensate the BOCs for use of their payphones when the BOC does not have a contractual relationship with the presubscribed carrier. The RBOCs contend that because Section 276(b)(3) expressly grandfathers contracts existing before the date of the statute's enactment between the location provider and the presubscribed carrier on many BOC payphones, the BOCs would not otherwise receive any compensation for these 0+ calls. Sprint argues that the Commission should not mandate compensation for any calls that make use of a payphone's presubscribed carrier, because any call using the presubscribed carrier would be compensated under the terms of the contract. The RBOCs contend, however, that the amount of dial-around calls has no relationship to a payphone's presubscribed carrier, and that the PSP has no authority to block these calls to force revenue generating calls. Conquest argues that the Commission should exempt 0+ calls that make use of an 800 number as a presubscription device, which is transparent to the caller.

     

26. Other commenters, notably USTA and APCC, argue that the statutory duty to mandate compensation for "each and every completed intrastate and interstate call" requires the Commission to mandate a per-call compensation rate for 0+ calls, regardless of any compensation agreements between the presubscribed carrier and the PSP. APCC argues that state-imposed rate ceilings on intrastate 0+ calls prevent PSPs from receiving fair compensation. In addition, it contends that 0+ commission payments are for the value to the IXC of receiving the presubscribed traffic and do not address the need for use of the payphone. The RBOCs, Ameritech, and GTE argue that 0+ compensation could be established as a default rate, which could be eliminated or supplanted through negotiations between the requisite parties.

     

27. The commenters take varying positions on what action the Commission should take to ensure fair compensation for local coin calls from payphones. The independent payphone providers support the Commission's option of a nationwide local coin call rate. They argue that a nationwide rate is necessary to override inconsistent state rules, to ensure predictability of rates for interstate travelers, to break the dependence of PSPs on 0+ commissions, and to establish a single, uniform rate for all local coin calls. APCC contends that this nationwide rate would serve as the maximum rate that PSPs could receive for a local coin call, and PSPs would likely respond to competition in local areas by lowering this per-call rate. Other parties specifically oppose a nationwide local coin rate. They argue that regional differences in handling payphone calls make a single nationwide rate impractical. Several commenters state that the Commission lacks authority to set local coin rates under both Section 276 and the Act. They argue that the ability to ensure compensation is different than jurisdiction over retail rates, and that nothing in Section 276 suggests that Congress intended to remove local coin rates from the jurisdiction of the states. APCC contends, however, that the Commission has the requisite authority to impose a nationwide local coin rate, because Section 276's mandate to ensure fair compensation extends to setting local coin rates.

     

28. Other commenters, including USTA, Ameritech, and GTE, argue that the Commission should adopt federal guidelines that the states would use to adopt local coin rates that fairly compensate PSPs for the use of their payphones. They argue that the guidelines must recognize that costs associated with local calls vary and have individual market characteristics, and that the states must be directed to eliminate all subsidies from other local exchange operations and from interexchange carriers. US West argues that the Commission should not require the states to reexamine their respective local coin rates unless the per-call rate is below the nationwide predominant rate of $.25.

     

29. Many states argue that the Commission must defer to the states in setting the local coin rates. They argue that the states must maintain their wide discretion in setting the specific local coin rates. Florida PSC, Indiana URC, and Tennessee contend that the Commission should prescribe a nationwide local coin rate or price cap and allow the states to petition for a variance. APCC states that it would support a variance approach. Ohio PUC asserts that it is within its authority to keep local coin rates low by requiring LECs to reduce the costs of various payphone services to PSPs. California PUC argues that the Commission should adopt an approach to local coin rates that is a hybrid of setting federal guidelines and deferring to the states. It argues that federal guidelines should allow states maximum participation in setting rates for payphones generally, and should recognize the interest of states in setting end-user rates for local calls and directory assistance calls.

     

30. The RBOCs argue that the Commission should deregulate local coin rates entirely and allow the market to determine the rate in any particular location. BellSouth, SW Bell, and US West argue that the Commission should deregulate local coin rates immediately. Bell Atlantic, NYNEX, and Pacific Telesis contend that the Commission should deregulate local coin rates pursuant to federal standards after a transition period. GTE argues that deregulation of local coin rates would be appropriate after a two-year transition period. BellSouth contends that the Commission has the requisite authority to review local coin rates during any transition period.

     

31. USTA, GTE, WorldCom, and Florida PSC argue that, because PSPs receive commissions on 0+ intraLATA calls, these 0+ intraLATA calls should be treated like interLATA 0+ calls for purposes of compensation. On the other hand, Virginia SCC contends that intraLATA 0+ calls should be treated in the same manner as local coin calls. CompTel argues that because intraLATA calls are frequently routed to the LEC, not the presubscribed carrier, for which there may not be a commission paid to the PSP or location provider, treating intraLATA 0+ calls as interLATA 0+ calls would require IXCs to pay compensation on calls for which they receive no benefit.

     

32. The RBOCs and APCC, among others, contend that the Commission, to ensure compensation for "each and every completed intrastate and interstate call," should mandate that callers make a coin deposit or otherwise provide per-call compensation for "411" directory assistance calls. They argue that such compensation is necessary to recover the costs associated with use of the payphone to make a directory assistance call. SW Bell believes that per-call compensation for directory assistance calls is appropriate, but it specifies that the end user should be required to pay for these calls through a coin deposit. Oklahoma CC argues that if the incumbent LEC charges independent payphone providers for directory assistance calls, then the LEC should be required to impute this cost to its own payphones for each directory assistance call. Ohio PUC argues that the LEC providing the directory assistance service should not be permitted to charge the PSP for it, and, therefore, per-call compensation would not be necessary.

     

33. Because Section 276(b)(1)(A) requires a plan to ensure fair compensation for "each and every completed intrastate and interstate call," some commenters argue that the Commission is obligated to determine what constitutes a "completed" call for purposes of per-call compensation. Several of these commenters further argue that the Commission should define a "completed call" as a call that is answered by the called party. They argue that compensating unanswered calls will lead to uneconomic rates for payphone users and will be contrary to a caller's expectations about when a call is billed. On the other hand, some of the independent payphone providers argue that a "completed call" consists of any call that reaches the carrier's platform, regardless of whether the call ultimately reaches the called party. These independent payphone providers argue that per-call compensation is appropriate for these calls, because the payphone is being used for these calls and is, therefore, unable to earn other revenue.

     

34. Some IXCs provide different definitions of what should be considered a "completed call." Sprint and MCI argue that a call is completed when it earns revenue for the carrier. WorldCom contends that an access code call is completed when it is billed, and a subscriber 800 call is completed when answer supervision is returned. Other parties argue that, because it is often difficult for the parties to know whether a call was answered by the called party, the Commission should use a duration surrogate for completed calls. The debit card providers, in particular, favor a duration surrogate because they estimate that fifty percent of debit card calls are not completed to the called party. Under this approach, they argue, any call placed from a payphone below a certain duration would be excluded because it would be likely that the call was not completed to the called party within that time period. The threshold duration proposed by these commenters varies from 42 seconds to 60 seconds. The RBOCs argue that a 60-second threshold should be used, while APCC believes that the Commission should not rely on any duration threshold. The RBOCs argue that multiple calls made through use of a payphone's "#" button, even though they require billing information to be dialed only once, should be counted as separate calls for compensation purposes.

     

35. Several commenters suggest alternative or supplementary approaches to per-call compensation. The RBOCs collectively contend that the Commission should look to compensating incoming calls in the future, because Section 276 does not differentiate between calls originated and received by a payphone. SW Bell and US West, in their individual capacities, argue that the Commission must ensure fair compensation for incoming calls in this proceeding.

     

36. AT&T, the RBOCs, GTE, USTA, Florida PSC, Indiana URC, and various independent payphone providers agree with the tentative conclusion in the Notice that the Commission should provide compensation for international calls that make use of a payphone. These commenters argue that there is no basis to exclude these calls from a compensation mechanism, and that a payphone performs the same functions for all types of calls. AT&T and APCC argue that the term "interstate," as used in Section 276(b)(1)(A), includes international calls. Sprint, MCI, and other IXCs oppose the Commission's tentative conclusion and argue that compensation for international calls goes beyond the plain language of the Section 276; that Congress would have specified compensation for "international" or "foreign" calls, as it did in other provisions of the 1996 Act, if it intended such compensation; and that the Commission does not otherwise have authority to impose this compensation obligation. MCI argues that such compensation for international calls billed to non-U.S. carrier customers is not practicable, because the Commission does not have the requisite jurisdiction to require the foreign carrier to bill and collect the PSP compensation.

     

37. In response to the Commission's request for comment on how it might address possible compensation fraud associated with the improper dialing of subscriber 800 numbers to increase compensation payments, a wide range of commenters argue that the Commission must take strong enforcement action, including imposing severe penalties, on any party engaging in such fraud. These commenters further argue that while the possibility of fraud exists, the Commission cannot refuse to compensate subscriber 800 calls. The RBOCs, GTE, and Cable & Wireless contend that, in addition to enforcement action by the Commission, the carrier-payors should be given some latitude to take action and withhold compensation to parties who engage in fraud. MCI and American Express argue that the Commission should require the LECs to report any suspicious calling patterns with regard to subscriber 800 numbers. Other parties argue that the "carrier pays" compensation mechanism proposed by the Commission encourages fraud. Several parties further argue that requiring the calling party to deposit coins for subscriber 800 calls would eliminate the incentive to engage in fraudulent calling. Sprint argues that keeping the per-call compensation amount at the marginal cost of the use of the payphone would also reduce fraudulent calling. AT&T contends that the Commission should use a surrogate setting forth the average number of subscriber 800 calls from a payphone to calculate the payment of per-call compensation for these calls. To prevent other types of potential fraud, Frontier and Sprint argue that the Commission must adopt a definition of "payphone" for compensation purposes.

     

38. Four states, Maine, New Hampshire, New Mexico, and Vermont, filing joint comments, argue that Section 276 applies only to payphones provided by the RBOCs. They argue further that the Commission is without authority under Section 276 to adopt rules that apply to all payphones, including those provided by non-BOC LECs and independent payphone providers.

     

     

    ii. Compensation Amount

     

39. APCC, AT&T, Sprint, and other commenters argue that the Commission should adopt a national uniform rate that it deems compensable for all calls using a payphone. They contend that uniformity is necessary to avoid imposing undue burdens on carriers that would result from varying rates. In addition, they assert that the payphones perform identical functions for each type of compensable call. The RBOCs argue that the Commission need not prescribe a rate for each type of compensable call, and should, instead, let the market dictate the appropriate per-call rate.

     

40. Some commenters argue that certain types of calls should receive a different per-call compensation amount than others. WorldCom contends that the amount of compensation should vary with the duration of the call to the extent that marginal cost also varies. Invision and the Inmate Coalition, providers of inmate payphones, assert that the Commission should adopt a $.90 per-call compensation rate that would apply only to calls using inmate payphones located in penal institutions. They argue that payphone services for inmates is a distinct, specialized industry, which is required to provide, at a significant capital investment, operator service, fraud control, extensive call controls, and monitoring services throughout the duration of its calls. They argue further that these factors warrant a higher per-call compensation rate. Another inmate payphone provider, Gateway, contends that the Commission should not adopt a separate, higher rate for inmate payphone calls, because such a rate would give inmate providers double recovery of costs already included in their rates and surcharges. Gateway also argues that the Commission should defer consideration of a higher rate until after its OSP Reform proceeding, and that inmate providers should petition the various states for relief from state operator services rate caps. MCI opposes the provision of per-call compensation for calls using either inmate payphones or semi-public payphones. It asserts that semi-public payphones already receive adequate compensation from the premises owners. The RBOCs contend that per-call compensation for semi-public payphones is warranted, because there is no statutory basis to preclude semi-public payphones from receiving compensation, and carriers benefit from dial-around traffic that originated on semi-public payphones.

     

41. The RBOCs also argue that any per-call rate the Commission sets should be regarded as a default rate, which parties would be free to alter by contract. MCI and Sprint contend that the per-call amount should be adjusted downward in the future to account for technological advances that will reduce PSP costs. APCC contends, on the other hand, that the per-call compensation rate should rise automatically at the same rate as inflation.

     

42. A number of IXCs and other commenters support the Commission's tentative conclusion that the amount of per-call compensation should be based on PSP costs and argue that the Commission must adopt a marginal cost standard. They argue that under a marginal cost standard, a PSP would be allowed to recover the costs associated with the wear on the payphone's keypad and handset, along with additional costs over fixed costs. MCI provides a study authored by the Hatfield Associates, which analyzes the costs of providing service for access code calls, and concludes that the appropriate compensation amount would be $.083 for each compensable call. MCI argues that the $.083 per call is fair compensation, because PSPs already receive revenues in excess of costs. Sprint contends that the Commission should adopt a marginal cost-based rate of $.0675 per call, based on its view that the $.25 rate it currently pays for access code calls fairly compensates independent payphone providers for all calls. In its analysis, Sprint found that 27% of all non-revenue generating calls from payphones are operator service calls for which 27% of $.25 is the appropriate per-call compensation amount, i.e., $.0675. MCI and Sprint further argue that the Commission should consider anew the $.12 per-call compensation amount originally proposed in the Commission's 1991 Notice of Proposed Rulemaking in the access code call compensation proceeding, CC Docket No. 91-35, because this rate reflects payphone costs on a per-call basis. AT&T favors an unspecified compensation amount related to marginal cost and based on the total services long-run incremental cost ("TSLRIC") method, which would recover the costs of providing and maintaining the payphone instrument, exclusive of coin collection functions, and the monthly SLC and other tariffed LEC services specific to payphones. AT&T argues that the TSLRIC standard is "more generous" than a marginal-cost standard, because it allows PSPs to recover the portion of payphone costs that benefit the carriers whose customers initiate calls at payphones.

     

43. The RBOCs and the independent payphone providers oppose the use of a marginal cost-based compensation amount. They argue that fair compensation embraces more than cost recovery, and that marginal cost disregards fixed costs, which are significant for a PSP. USTA and GTE argue that AT&T's proposed TSLRIC-based compensation is not relevant to the provision of competitive services where rates should be guided by the market, and it does not permit full recovery of costs.

     

44. The RBOCs and the independent payphone providers argue that the Commission should adopt a per-call compensation standard that looks both to overall PSP costs and revenues and to market-based pricing. The RBOCs and GTE, in particular, advocate a per-call compensation amount that relies on market-based proxies. The RBOCs provide a study that analyzes commission rates paid to PSPs by IXCs generally and commission rates paid by AT&T and concludes that the appropriate per-call compensation amount should be in the range of $.81 to $.90 per call.

     

45. APCC contends that the Commission must consider market-based surrogates in setting a per-call compensation amount. It proposes that the Commission adopt a compensation amount of $.40 per call, if the Commission extends this rate to local coin calls, or $.80 per call for all non-local coin calls that use a payphone. APCC argues that these proposed amounts would fairly compensate PSPs for use of their payphones. Peoples, the largest independent payphone provider, argues that the Commission should adopt a per-call compensation amount of $.45, which would apply to all calls, including local coin calls. Peoples includes in its comments summaries of data that, it maintains, show that Peoples' average pre-tax cost per call using its payphones is $.40. Other independent payphone providers argue that the Commission should adopt per-call compensation amounts that range from $.40 to $.55 per call. AT&T and Sprint disagree with the approach proposed by APCC and the RBOCs and argue that it relies too much on the factors set forth in the Second Report and Order, which they claim are flawed, and on 0+ commissions, which reflect PSP opportunity costs, a basis for compensation rejected by the Commission in the Second Report and Order. In addition, they argue that APCC and the RBOCs do not disclose actual costs, but instead include substantial overhead, advertising, and marketing and sales expenses in their model.

46. One Call contends that the local coin rate should be used as a surrogate for a fair per-call compensation amount. Conquest argues that the Commission should cap the per-call compensation amount at the rate for a local coin call. AT&T, MCI, and the RBOCs all oppose use of a local coin rate surrogate to achieve fair compensation for PSPs. They argue that local coin rates are kept artificially low by regulators and have no relationship to either cost or the market.

     

47. Some commenters contend that the Commission should adopt a per-call compensation amount that is within the range established by the 1992 Second Report and Order in the access code call compensation proceeding. NTCA argues that continued use of the $.40 per call rate adopted in the Second Report and Order would not be disruptive and would ensure fair compensation for PSPs. APCC argues that the Second Report and Order sets forth the type of market-based surrogates that are appropriate for the Commission to consider in the instant proceeding. PageNet argues that the Commission should examine the $6 per month LEC access charge compensation for payphones, as set forth in the Second Report and Order, and use this amount plus an intrastate recovery element to reach an amount that could be divided by the average number of compensable calls to equal the appropriate per-call rate. The RBOCs contend, on the other hand, that the $.40 per call amount in the Second Report and Order is out of date and should be higher. AT&T and Sprint argue that the factors used in the Second Report and Order are irrelevant for determining fair compensation, because the factors do not relate to marginal cost and concern costs that are recovered through other revenue streams.

     

    c. Discussion

    48.Defining "Fair Compensation". Section 276(b)(1)(A) directs the Commission to establish a plan "to ensure that all payphone service providers are fairly compensated for each and every completed intrastate and interstate call using their payphone." The 1996 Act does not prescribe a particular course to achieve these goals, other than to specify that such action shall "promote competition among payphone service providers and promote the widespread deployment of payphone services to the benefit of the general public[.]" To comply with this mandate, we tentatively concluded in the Notice that we must provide for compensation only when PSPs are not already "fairly compensated" for a particular type of a call using a payphone. A number of commenters contend that we must look to all of a payphone's possible revenue streams and ensure that the payphone, as a whole, is fairly compensated. We disagree. We conclude that, by ensuring that all calls are fairly compensated, including those for which the PSP currently receives no revenue, we will "promote competition" among PSPs and "promote the widespread deployment of payphone services to the benefit of the general public[.]" The marketplace will necessarily determine whether or not a particular payphone is economically viable.

     

    49.We conclude that, once competitive market conditions exist, the most appropriate way to ensure that PSPs receive fair compensation for each call is to let the market set the price for individual calls originated on payphones. It is only in cases where the market does not or cannot function properly that the Commission needs to take affirmative steps to ensure fair compensation, such as in the following situations. First, because TOCSIA requires all payphones to unblock access to alternative OSPs through the use of access codes (including 800 access numbers), PSPs cannot block access to toll free numbers generally. However, TOCSIA does not prohibit an IXC from blocking subscriber 800 numbers from payphones, particularly if the IXC wants to avoid paying the per-call compensation charge on these calls. This uneven bargaining between parties necessitates the Commission's involvement. Second, as discussed more fully below, we conclude that each state should, in light of the instant proceeding, examine and modify its regulations applicable to payphones and PSPs, particularly those rules that impose market entry or exit requirements, and others that are not competitively neutral and consistent with the requirements of Section 276 of the Act. We conclude that, for purposes of ensuring fair compensation through a competitive marketplace, states need only remove those regulations that restrict competition, and they need not address those regulations that, on a competitively neutral basis, provide consumers with information and price disclosure. Third, we conclude that callers should have information in every instance about the price of the calls they make from payphones. To this end, we require that each payphone clearly indicate the local coin rate within the informational placard on each payphone.

     

48. While the most appropriate way to ensure fair compensation is to let the market set the price for individual payphone calls, we conclude that this transition to market-based rates should occur in two phases. Because LECs will terminate, pursuant to Section 276(b)(1)(b), subsidies for their payphones within one year of the effective date of the rules adopted in this proceeding, LECs will not be eligible to receive compensation under Section 276(b)(1)(a) until that termination date. This one-year period before per-call compensation is effective, as discussed below, will be the first phase of implementing the rules adopted in this proceeding. During this first phase, states may continue to set the local coin rate in the same manner as they currently do. States may, however, move to market-based local coin rates anytime during this one-year period. In addition, the states must conduct its examination of payphone regulations during this one-year period to review and remove, if necessary, those regulations that affect competition, such as entry and exit restrictions. IXCs will pay compensation for access code calls and subscriber 800 calls on a flat-rate basis. In addition, all payphones must provide free access to dialtone, emergency calls, and telecommunications relay service calls for the hearing disabled.

     

49. In the second phase, which will begin one year after the effective date of rules adopted in this proceeding, LECs will be eligible to receive compensation, and per-call tracking capabilities will be in place. The carriers to whom payphone calls are routed will be responsible for tracking each compensable call and remitting per-call compensation to the PSP. During this second year, which is the first year of per-call compensation (as opposed to flat-rate compensation), the market will be allowed to set the rate for local coin calls, unless the state can show that there are market failures within the state that would not allow market-based rates. In addition, during the second phase, which will be the first year of per-call compensation (after the initial year of flat-rate compensation), to allow us to ascertain the status of competition in the payphone marketplace, we conclude, as discussed below, that IXCs must pay PSPs a default rate of $.35 for each compensable call, which may be changed by mutual agreement. PSPs will be required to post the local coin rate they choose to charge at each payphone. During the second phase, we may review, at our option, the deregulation of local coin rates nationwide and determine whether marketplace disfunctions exist, such as locational monopolies caused by the size of the location with an exclusive PSP contract or the caller's lack of time to identify potential substitute payphones, and should be addressed by the Commission. If we find that the deregulation of local coin rates warrants a modification of our approach due to market failures, we may choose to set a cap on the number of calls subject to compensation from particular payphones to limit the exercise of locational market power. Absent such a finding, at the conclusion of the second phase, the market-based local coin rate at these payphones will be the default compensation rate for all compensable calls in absence of an agreement between the PSP and the carrier-payor.

     

50. Ensuring Fair Compensation. Most commenters who address the issue agree with our tentative conclusion that we must provide for compensation for all access code calls, subscriber 800 and other toll-free number calls, including debit card calls. In keeping with our long-term goal to have the market set the compensation amount, we define "fair compensation" above as where there is a willing seller and a willing buyer at a price agreeable to both. For each of these types of calls, the PSP either receives no revenue for originating these calls (i.e., for subscriber 800 and other toll-free number calls), or it is unable to block callers from making such calls (access code calls). The record in this proceeding includes substantial evidence that the number of these types of calls using payphones has proliferated in the past several years. We conclude, therefore, that we must provide for compensation for access code calls and subscriber 800 and other toll-free number calls, whether they are intrastate or interstate in destination.

     

51. We tentatively concluded in the Notice that we need not provide for compensation for 0+ calls, because independent payphone providers and non-BOC LECs receive compensation through individual contracts with the payphone's presubscribed IXC. We also tentatively concluded that "competition in this area ensures 'fair' compensation for PSPs." The RBOCs contend, however, that because Section 276(b)(3) expressly grandfathers contracts existing before the date of the statute's enactment between the location provider and the presubscribed carrier on many BOC payphones, the BOCs would not otherwise receive any compensation for 0+ calls. They argue that the Commission must ensure fair compensation for 0+ calls that use BOC payphones. We agree and modify our tentative conclusion so that, once the BOCs reclassify their payphones and terminate all subsidies, pursuant to Section 276(b)(1)(B), they may receive the per-call compensation established by this Order, so long as they do not otherwise receive compensation for use of their payphones in originating 0+ calls. We conclude further that, in the absence of a contract providing compensation to the PSP for intraLATA 0+ calls, the PSP shall be eligible to collect per-call compensation from the carrier to whom the call is routed. We also conclude that when a caller dials "0" and the payphone subsequently translates this digit, unbeknownst to the caller, into an 800 access number (i.e., as a way of presubscribing the payphone to a particular IXC), such a call is not compensable as an access code call, because it does not put the caller into contact with an alternative carrier.

     

52. We conclude that PSPs should receive compensation for international calls. We conclude that we have authority under Sections 4(i) and 201(b) of the Communications Act of 1934, as amended, to ensure that PSPs are fairly compensated for international as well as interstate and intrastate calls using their payphones in the United States. In addition, as we stated in the Notice, we find no evidence of congressional intent to leave these calls uncompensated under Section 276. We agree with AT&T and other commenters that a payphone performs similar functions, regardless of the destination of the call.

     

53. Local Coin Calls. As outlined above, we believe that full and unfettered competition is the best way of achieving Congress' dual objectives to promote "competition among payphone service providers and promote the widespread deployment of payphone services to the benefit of the general public." Competition over time will lead to the more efficient placement of payphones, improved payphone service, and lower prices for consumers. To encourage competition in the payphone marketplace, we ensure in this Report and Order that PSPs are fairly compensated for "each and every completed intrastate and interstate call[;]" terminate certain LEC subsidies for payphones; and permit all PSPs, including BOCs, to negotiate with the location provider regarding the selection of the presubscribed interLATA and intraLATA carriers.

     

54. Once competitive conditions exist, we believe that the market should set the compensation amount for all payphone calls, including local coin calls. Because we have an obligation under Section 276 to ensure that the compensation for all local coin calls is fair, we conclude that the market should be allowed to set the price for all compensable calls, including a local coin call. We believe this approach is appropriate because, once PSPs are free to enter the market, and once callers are free to choose payphones for their calls, the market will ultimately determine whether a particular payphone is economically viable. According to the record in this proceeding, five states have already deregulated local coin rates. In four of those states, Iowa, Nebraska, North Dakota, and Wyoming, the market-based rate is $.35 per call. In the other deregulated state, South Dakota, the market-based rate is $.25 per call.

     

55. Historically, however, the rate for the most common type of call -- the local coin call -- has not been set by the market, but has instead been determined by state commissions. In the Notice, we stated that Section 276 of the Act requires the Commission to ensure that the PSP receives fair compensation for each interstate and intrastate call, including local coin sent-paid calls. Section 276 also states that "to the extent that any State requirements are inconsistent with the Commission's regulations, the Commission's regulations on such matters shall preempt such State requirements." We sought comment in the Notice on how we should exercise our jurisdiction under Section 276, and noted that we have a range of options for ensuring fair compensation for local coin calls, including setting a nationwide local coin rate for all calls originated by payphones, establishing specific national guidelines that states would use to establish a local rate that would ensure that all PSPs are fairly compensated and permitting the states to continue setting the coin rates for local payphone calls according to factors within their discretion.

     

    58.As we stated in the Notice, the Commission recognizes that the states have long had a traditional and primary role in regulating payphones, including setting local call rates paid by end users. This role, however, has been in the context of LECs providing local payphone service as part of their regulated service. Section 276, however, significantly alters the regulatory landscape by requiring that LEC provision of payphone service be on par with independent PSP provision of service. In addition, by mandating that LEC payphones can no longer receive subsidies from basic exchange services, Section 276 greatly changes the way in which states set local coin rates. Further, Section 276(b)(1)(A) gives the Commission both the jurisdiction to ensure fair compensation for local coin calls and the mandate to establish a plan to compensate PSPs on a per-call basis. We also stated our concern in the Notice that "current local rates may not always 'fairly' compensate the PSP for use of its payphone[,]" because the caller may use the payphone at "a subsidized local coin rate[.]" Based on the record in this proceeding, we conclude that a deregulatory, market-based approach to setting local coin rates is appropriate, because existing local coin rates are not necessarily fairly compensatory.

     

56. We recognize, however, that the competitive conditions, which are a prerequisite to a deregulatory, market-based approach, do not currently exist and cannot be achieved immediately. Many states impose regulations on PSPs, including certain requirements that must be fulfilled before a PSP can enter or exit the payphone marketplace. We conclude that these state regulations are barriers to a fully competitive payphone market, and, therefore, "to the extent that any State requirements are inconsistent with the Commission's regulations, the Commission's regulations on such matters shall preempt such State requirements." In addition, in some locations, because of the size of the location with an exclusive PSP contract or the caller's lack of time to identify potential substitute payphones, the PSP may be able to charge an inflated rate for local calls based on its monopoly, pursuant to an exclusive contract with the location provider, on all payphones at the location. We conclude that such monopoly arrangements, in the absence of regulatory oversight, could impair competition.

     

57. Based on these concerns, we conclude that the overall transition to market-based local coin rates should not occur immediately. As discussed below, LECs will not be required to terminate, pursuant to Section 276(b)(1)(b), certain subsidies associated with their payphones until April 15, 1997. LECs will not be eligible to receive per-call compensation under Section 276(b)(1)(a) for one year, when all such subsidies are terminated. For this one-year period, the states will be responsible for both ensuring that PSPs are fairly compensated for local coin calls and protecting consumers from excessive rates. Eventually, when fully competitive conditions exist, the marketplace will address both concerns. We conclude that, during this one-year period before per-call, as opposed to flat-rate, compensation becomes effective, states may continue to set the local coin rate in the same manner as they currently do. States may, however, move to market-based local coin rates anytime during this one-year period, and are encouraged to do so. In addition, we conclude that during the same period, the states should take additional action to ensure that payphone competition is promoted. As discussed above, we believe that ease of entry and exit in this market will foster competition and allow the market, rather than regulation, to dictate the behavior of the various parties in the payphone industry. To this end, each state should examine and modify its regulations applicable to payphones and PSPs, removing, in particular, those rules that impose market entry or exit requirements. We conclude that, for purposes of ensuring fair compensation through a competitive marketplace, the states should remove only those regulations that affect payphone competition; the states remain free at all times to impose regulations, on a competitively neutral basis, to provide consumers with information and price disclosure. In addition, the states at all times must ensure that access to dialtone, emergency calls, and telecommunications relay service calls for the hearing disabled is available from all payphones at no charge to the caller.

     

58. At the conclusion of this first one-year period, the market will be allowed to set the price for a local coin call, as discussed more fully above. However, we conclude that we should make an exception to the market-based approach for states that are able to demonstrate to the Commission that there are market failures within the state that would not allow market-based rates. Such a detailed showing could consist of, for example, a detailed summary of the record of a state proceeding that examines the costs of providing payphone service within that state and the reasons why the public interest is served by having the state set rates within that market. In addition, under our deregulatory, market-based approach, when states have concerns about possible market failures, such as that of payphone locations that charge monopoly rates, they are empowered to act by, for example, mandating that additional PSPs be allowed to provide payphones, or requiring that the PSP secure its contract through a competitive bidding process that ensures the lowest possible rate for callers. If a market failure persists after such action, the state should recommend the matter to the Commission for possible investigation. In addition, during the second phase, after the initial year of flat-rate compensation, we may review, at our option, the deregulation of local coin rates nationwide and determine whether marketplace disfunctions, such as locational monopolies where the size of the location or the caller's lack of time to identify potential substitute payphones, exist and should be addressed by the Commission. At this point, if we find that the deregulation of local coin rates warrants a modification of our approach due to market failures, we may choose, for example, to set a cap on the number of calls subject to compensation from particular payphones to limit the exercise of locational market power. Absent such a finding, at the conclusion of the second phase, the market-based local coin rate at these payphones will be the default compensation rate for all compensable calls in absence of an agreement between the PSP and the carrier-payor.

     

59. With regard to "411" directory-assistance calls, we noted that, while incumbent LECs in many jurisdictions currently do not charge the payphone caller for "411" calls made from their own phones, the LECs charge independent payphone providers for directory-assistance calls made from their payphones, and are not always allowed by the state to pass those charges on to callers. We conclude that we must ensure fair compensation for "411" and other directory assistance calls from payphones by permitting the PSP to charge a market-based rate for this service, although a PSP may decline to charge for this service if it chooses. In addition, to help ensure that a LEC does not discriminate in favor of its own payphones, we conclude that if the incumbent LEC imposes a fee on independent payphone providers for "411" calls, then the LEC must impute the same fee to its own payphones for this service.

     

60. Completed Calls. We agree with the commenters that, because Section 276(b)(1)(A) mandates compensation for "each and every completed intrastate and interstate call," we must determine what constitutes a "completed" call for purposes of per-call compensation. We conclude that a "completed call" is a call that is answered by the called party. We have previously found that, where an 800 calling card call is routed through an IXC's platform, it should not be viewed as two distinct calls -- one to the platform and one to the called party. In addition, in Florida Public Telecommunications Ass'n v. FCC, the United States Court of Appeals for the District of Columbia Circuit emphasized the one-call nature of a subscriber 800 call from the caller's point of view. A number of commenters contend that the Commission should use a duration surrogate for completed calls. We conclude that exempting calls from per-call compensation because they are not of a requisite duration, whether 25 seconds or 60 seconds, would not be in accordance with Section 276's mandate that "each and every completed intrastate and interstate call" be compensated. In addition, to comply with this mandate, we conclude that, as argued by the RBOCs, multiple sequential calls made through the use of a payphone's "#" button should be counted as separate calls for compensation purposes.

     

61. The RBOCs argue that the phrase "call using their payphone" in Section 276(b)(1)(A) covers completed calls received by payphones as well as those originated by payphones. Bell Atlantic, BellSouth, PacTel, and NYNEX, maintain that the Commission should look to compensating incoming calls at some unspecified point in the future. We do not agree, however, that Section 276(b)(1)(A) was intended to apply to both incoming and outgoing calls. Because PSPs may block incoming calls, they are able to restrict use of their payphones if they are concerned about a lack of compensation. For this reason, we conclude that incoming calls are not within the purview of Section 276, and we are not required, as a result, to address them in the instant proceeding.

     

62. Payphone Fraud. The Commission has recognized, since it first addressed the issue of compensation for subscriber 800 calls in 1991, that a PSP "could attach an autodialer to a payphone and have it place repeated 800 calls ... to increase the amount of compensation [it] receives." Section 227(b)(1) of the Act states that it is unlawful for any person to use an autodialer to call "any service for which the called party is charged for the call[.]" We conclude that this provision bars the use of autodialers to generate payphone compensation by calling toll-free 800 numbers, which are billed to the called party. A number of commenters argue that the Commission must take strong enforcement action against those who engage in autodialer fraud. We agree. We will aggressively take action against those involved in such fraud. We have authority under the 1996 Act and our rules to take civil enforcement action against a payphone provider who deliberately violates the Commission's compensation rules by placing toll free calls simply to obtain compensation from the carriers. More importantly, such activity may be fraud by wire and subject to criminal penalties. Should we receive information that a PSP is using, or is allowing use of, its facilities in this manner, we will refer the matter to the appropriate law enforcement agencies for criminal prosecution. Contrary to suggestions by some commenters, it is not necessary, nor would it be in the public interest, for the Commission to select a particular method of per-call compensation, such as a marginal cost-based approach, or a particular compensation amount, i.e. low enough to discourage fraud, simply to avoid the possibility of fraud.

     

63. Both Frontier and Sprint argue that the Commission should adopt a definition of "payphone" for compensation purposes. We have previously adopted a definition of "payphone" in the access code call compensation proceeding, although the definition is used only for purposes of the billing and collection of the compensation in that proceeding. We concluded that payphones appearing on the LEC-provided customer-owned, coin-operated telephone ("COCOT") lists were payphones that are eligible for compensation. If a payphone provider does not subscribe to an identifiable payphone service, or if its payphone is omitted from the COCOT list in error, the provider is required to provide alternative verification information to the IXC paying compensation. We conclude that this definition of "payphone," regardless if the payphone in question is independently- or LEC-provided, will be sufficient for the payment of compensation as mandated by Section 276 and the instant proceeding. In addition, as discussed below, all payphones will be required to transmit specific payphone coding digits as a part of their automatic number identification ("ANI"), which will assist in identifying them to compensation payors. Beyond the immediate purposes of paying compensation, we conclude that a payphone is any telephone made available to the public on a fee-per-call basis, independent of any other commercial transaction, for the purpose of making telephone calls, whether the telephone is coin-operated or is activated either by calling collect or using a calling card.

     

64. Compensation Amount. In the Notice, we noted that "while we are still confronted in the instant proceeding by the lack of reliable [independent payphone provider] cost data," we tentatively concluded that "PSPs should be compensated for their costs in originating ... calls" using their payphones. We tentatively concluded further that these costs should be measured by appropriate cost-based surrogates. We sought comment, in particular, on whether some measure of generic or industry-wide costs is available, or whether incumbent LEC costs would be a reasonable surrogate for the costs of independent payphone providers. Upon review of the comments submitted in response to the Notice, we find that while few parties provided cost surrogate data, the RBOCs, Peoples, IPTA, and MCI, among others, present studies on payphone costs. These studies vary in both their approaches to calculating compensation and their conclusions on the appropriate per-call compensation amount that the Commission should adopt.

     

65. A number of commenters, notably the IXCs, argue that the Commission should use the marginal cost of originating a payphone call as the basis for compensating PSPs. We conclude that use of a purely incremental cost standard for all calls could leave PSPs without fair compensation for certain types of payphone calls, because such a standard would not permit the PSP to recover a reasonable share of the joint and common costs associated with those calls. We also reject, for similar reasons, suggestions by commenters that we use local coin rates currently in place as a surrogate for a per-call compensation. As we stated in the Notice, "local coin rates in some jurisdictions may not cover the marginal [incremental] cost of the service." Therefore, basing the per-call compensation amount on current local coin rates, which are frequently subsidized by state regulators, would not fairly compensate the PSPs. We also reject use of the $.12 per-call compensation amount the Commission first discussed in its 1991 Notice of Proposed Rulemaking in the access code call compensation proceeding. We never adopted the $.12 per-call amount, and that rate was effectively rejected when the Commission adopted a $6 flat rate per payphone per month based on a per-call rate of $.40.

     

66. On the other hand, the RBOCs and the independent payphone providers propose that the Commission use market-based surrogates to support a per-call compensation amount. In particular, these commenters provide data on both the average commissions paid to independent payphone providers by AT&T on 0+ calls and the average commission received by independent payphone providers on 0+ calls from all IXCs. Previously, in the access code call compensation proceeding, we relied upon AT&T 0+ commissions as a measure of the fair value of the service provided by independent payphone providers when they originate an interstate call. We conclude that use of 0+ commission data would tend to overcompensate PSPs, because these commissions may include compensation for factors other than the use of the payphone, such as a PSP's promotion of the OSP through placards on the payphone. We, therefore, reject use of this commission data, as provided by the RBOCs and independent payphone providers, to calculate the per-call compensation amount.

     

67. Because we have established elsewhere in this Report and Order that the payphone marketplace has low entry and exit barriers and will likely become increasingly competitive, we conclude that the market (or the states, where there are special circumstances) is best able to set the appropriate price for payphone calls in the long term. We conclude further that the appropriate per-call compensation amount ultimately is the amount the particular payphone charges for a local coin call, because the market will determine the fair compensation rate for those calls. For example, if the rate at a particular payphone is $.35, absent an agreement between the PSP and the carrier-payor for a different amount, then the PSP should receive $.35 for each compensable call (access code, subscriber 800, and directory assistance). If a rate is compensatory for local coin calls, then it is an appropriate compensation amount for other calls as well, because the cost of originating the various types of payphone calls are similar. Although the Commission tentatively concluded in the Notice that PSPs should be compensated for their costs in originating calls, as these costs are measured by appropriate cost-based surrogates, we conclude that deregulated local coin rates are the best available surrogates for payphone costs and are superior to the cost surrogate data provided by the commenters.

     

68. We conclude that the per-call compensation amount equal to the local coin rate, is a default rate that will apply only in the absence of a negotiated agreement between the parties. PSPs, IXCs, subscriber 800 carriers, and intraLATA carriers may agree on an amount for some or all compensable calls that is either higher or lower than the local coin rate at a given payphone. In absence of an agreement, the PSP shall be entitled to receive compensation for compensable calls at a per-call rate equal to its local coin rate, which represents the market-based rate for a call at the payphone in question.

     

69. Before we move to a local coin call default rate, however, we find it necessary to observe over time how the payphone marketplace will function in the absence of regulation. In particular, consumers facing time constraints may not be able to find, in certain locations, a reasonable substitute for a payphone located on the premises. In these cases where the location provider has an exclusive contract with a PSP, the PSP may be able to charge supra-competitive prices. The location provider would share in the resulting "locational rents" through commissions paid by PSPs. To the extent that market forces cannot ensure competitive prices at such locations, we may want to continue regulating, along with the states, the provision of payphone services generally or in particular types of locations where the size of the location or the caller's lack of time to identify potential substitute payphones could lead to locational monopolies. To allow us to ascertain the status of competition in the payphone marketplace, we conclude that we should establish the default per-call rate for two years before leaving it to the market to set rate, absent any changes in our rules. More specifically, as discussed below, for the first year after the effective date of the rules adopted in this proceeding, IXCs will pay flat-rate compensation to PSPs. After the initial year, when per-call tracking capabilities will be in place, we conclude that IXCs will be required to pay a default rate of $.35 per call, which is the local coin rate in four of the five states that have deregulated their local calling rates. We conclude that the market-based rate in these states is the best evidence of a per-call compensation amount that will fairly compensate PSPs. Therefore, for the limited purpose of calculating compensation for PSPs for the first two years of compensation (one year of flat-rate and one year of per-call compensation), we will use a default rate of $.35 per call, which is the rate in the majority of states that have allowed the market to determine the appropriate local coin rate. As discussed above, the carrier-payor and the PSP may agree to a compensation rate that is different, and, therefore, the default rate would not apply. For coinless payphones, which by definition do not have a local coin rate, the default rate will remain $.35 per call for as long as this rate is fairly compensable under Section 276(b)(1)(A).

     

70. Various parties ask us to provide for either upward adjustments in the per-call amount to account for inflation, or downward adjustments to take advantage of technological advances. We conclude that by making the per-call amount subject to negotiations, the marketplace will make the appropriate adjustments, whether upward or downward. We set this compensation rate as a default rate to be applied only if the PSP and the IXC are unable to negotiate some other form of compensation for compensable calls. Negotiations may lead to rates other than the default rate for several reasons. First, because virtually all of the costs are fixed costs and are not incurred on a per call basis, an IXC and a PSP might agree to a fixed compensation rate rather than compensation for the monthly number of calls. Second, there may be locations in which a payphone would not be financially viable if compensated at only $.35 per compensable call, but would be viable at a higher compensation rate. If an IXC still found it profitable to carry calls at this higher rate, then it would be in the mutual interest of the two parties to negotiate a higher rate. Third, the IXCs may choose to pass on the per-call compensation rate to their customers. In the case of 800 subscriber calls, the IXC could pass on the cost to the called party. If the called party refused to accept calls for which it was charged $.35, but was willing to accept calls with a lower charge, the IXC and the PSP may find it in their mutual interest to negotiate a per-call rate lower than $.35. Fourth, in locations where a competing payphone could be placed without the permission of the location provider, a PSP may be willing to negotiate a lower rate than $.35, rather than give an IXC the incentive to place a competing payphone.

     

71. Some PSPs argue that they should be entitled to a per-call compensation amount greater than that set for local coin calls. In particular, inmate payphone providers argue that their costs of originating calls are greater than that of other payphone providers, which should entitle them to a special compensation rate of $.90 per call. We conclude at this juncture, however, that mandating a per-call amount for inmate payphones, which do not allow local coin calls, could possibly lead to a double recovery of costs already included in higher-than-average operator service rates and special surcharges on end-user phone bills for calls made on these payphones, as argued by Gateway, an inmate payphone provider that opposes a greater per-call amount.

     

72. MCI argues that semi-public payphones should not receive any per-call compensation. Section 276(d) states, however, that "in this section, the term 'payphone service' means the provision of public or semi-public pay telephones...." Pursuant to this definition, all subsidies for semi-public payphones are terminated under Section 276(b)(1)(B), just as they are for public payphones, "in favor of a compensation plan as specified in subparagraph (A)[.]" Therefore, we conclude that, contrary to MCI's arguments, semi-public payphones are entitled to receive per-call compensation in the same manner as public payphones.

     

73. We reject the argument by four states that Section 276 applies only to payphones provided by the BOCs. While Section 276(a), which the states cite as support for their argument, applies only to the BOCs, as do Sections 276(b)(1)(C) and Section 276(b)(1)(D), the remainder of Section 276 applies to all payphones, regardless of their provider. When Congress intended to limit the scope of a particular provision in Section 276 to the BOCs, it used the term "Bell operating company." Otherwise, it used the term "all payphone service providers[,]" or simply "payphone service providers." For example, Section 276(b)(1)(A) states that the per-call compensation plan must "ensure that all payphone service providers are fairly compensated[.]" In addition, Section 276(b)(1) states that the Commission shall take action to "promote competition among payphone service providers and promote the widespread deployment of payphone services to the benefit of the general public[.]" Therefore, based on the plain language of the statute, we conclude that Section 276 grants us the requisite authority to adopt rules that apply to all payphones, regardless of their provider, except where the language clearly applies only to the BOCs. Further, the legislative history of Section 276 refers to both the BOCs and independent payphone service providers.