[Federal Register: September 11, 2003 (Volume 68, Number 176)]
[Rules and Regulations]
[Page 53524-53525]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11se03-16]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51
[CC 95-185 and 96-98; WT 97-207; FCC 03-215]
Cost-Based Terminating Compensation for CMRS Providers
AGENCY: Federal Communications Commission.
ACTION: Final rule; interpretation.
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SUMMARY: In this document, the Commission responds to an application
for review of a May 9, 2001, letter issued jointly by the Wireless
Telecommunications Bureau and the Common Carrier Bureau (now the
Wireline Competition Bureau) (Joint Letter) in response to a request
for clarification of our reciprocal compensation rules. The Commission
concludes that the Joint Letter is consistent with the interpretation
of the Communications Act that the Commission adopted in the August
1996 Local Competition Order and reflected in the Commission's rules
and prior orders and, accordingly, affirms the interpretation of our
rules stated therein.
FOR FURTHER INFORMATION CONTACT: Peter Trachtenberg, Wireless
Telecommunications Bureau, Policy Division, (202) 418-7369, or via the
Internet at Peter.Trachtenberg@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Order in CC Docket
Nos. 95-185 and 96-98, and WT Docket No. 97-207, FCC 03-215, adopted on
August 27, 2003, and released on September 3, 2003. The complete text
of this Order is available on the Commission's website in the
Electronic Comment Filing System and for public inspection during
regular business hours in the FCC Reference Center, Room CY-A257, 445
Twelfth Street, SW., Washington, DC 20554. A copy of the Order may also
be purchased from the Commission's duplicating contractor, Qualex
International, Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-
2898, or via e-mail qualexint@aol.com. 1. On February 2, 2000, Sprint PCS filed a letter and legal
memorandum requesting that the Commission confirm and clarify
Commercial Mobile Radio Service (CMRS) providers' entitlement to
reciprocal compensation for all the additional costs of switching or
delivering to mobile customers ``local traffic originated on other
networks.'' On April 27, 2001, in the context of seeking comment on a
unified intercarrier compensation scheme, the Commission issued the
Unified Intercarrier Compensation Notice of Proposed Rulemaking (NPRM),
66 FR 28410, (May 23, 2001), which, among other things, reviewed and
sought comment on the application of its current orders and rules
regarding asymmetric reciprocal compensation to Local Exchange Carrier
(LEC)-CMRS interconnection.
2. On May 9, 2001, WTB and WCB responded to the Sprint PCS Letter,
relying on clarifications of the reciprocal compensation rules in the
NPRM. The Joint Letter stated that, based on the language of section
252(d)(2)(A) of the Communications Act, CMRS carriers are entitled to
the opportunity to demonstrate that their termination costs exceed
those of ILECs, that the ``equivalent facility'' language of Sec.
51.701(c) and (d) of the Commission's rules does not require that
wireless network components be reviewed on the basis of their
relationship to wireline network components or bar a CMRS carrier from
receiving compensation for the additional costs that it incurs in
terminating traffic on its network if those costs exceed the ILEC's
costs, and that if a CMRS carrier can demonstrate that the costs
associated with spectrum, cell sites, backhaul links, base station
controllers and mobile switching centers vary, to some degree, with the
level of traffic that is carried on the wireless network, a CMRS
carrier can submit a cost study to justify its claim to asymmetric
reciprocal compensation that includes additional traffic sensitive
costs associated with those network elements. The Joint Letter also
stated that a CMRS carrier is entitled to the tandem interconnection
rate under Sec. 51.711(a)(3) of the Commission's rules if it can
satisfy a comparable geographic area test, and need not also satisfy a
functional equivalency test.
3. On June 8, 2001, SBC submitted an application for review of the
Joint Letter contending that the Joint Letter could be read as
establishing a broader definition of additional costs for CMRS networks
than the Commission previously established for LEC networks and that
the Joint Letter improperly read the functional equivalency test out of
the rules for purposes of deciding whether a new entrant should be
compensated at the tandem interconnection rate.
4. We reaffirm that, under the current rules, a CMRS carrier can
seek a compensation rate that includes the traffic-sensitive costs
associated with its network elements. We conclude that the Joint Letter
correctly addressed the questions raised in the Sprint PCS request.
5. The Joint Letter correctly reflected the Commission's
interpretation of section 252(d)(2)(A) of the Act in the Local
Competition Order, 61 FR 47284, (September 6, 1996), in stating that,
based on the language of section 252(d)(2)(A), carriers are entitled to
recover all of their additional forward-looking costs of terminating
traffic to the extent they demonstrate such costs. Further, Sec.
51.711(b) of our rules expressly permits connecting carriers, including
CMRS carriers, an opportunity to prove that their additional costs
justify a higher rate than the rate charged by the incumbent LEC. Such
additional costs must be established through a cost study using a
forward-looking economic cost model.
6. The Joint Letter also correctly explained that the determination
of the additional costs of terminating traffic over a wireless network
element does not involve an inquiry into whether the wireless network
element is ``equivalent'' to a recoverable wireline element. The term
``equivalent facility'' in Sec. Sec. 51.701(c) and 51.701(d) of our
rules was not intended to preclude the recovery by CMRS carriers of the
``additional costs'' of wireless components that might be regarded as
functionally equivalent to wireline elements whose costs are non-
recoverable, such as a wireline LEC's local loop. Rather, the term was
used to ensure that the costs of non-LEC facilities would be included
in transport and termination rates even if such facilities did not
precisely track the network facilities architecture of a LEC. Thus,
while equivalence does, in part, define what facilities are involved in
the function of ``termination,'' it is simply not relevant to
determining which of those terminating facilities imposes costs that
can be recovered through reciprocal compensation charges.
[[Page 53525]]
7. We also conclude that our interpretation here does not apply a
different standard of additional cost to CMRS carriers than the
standard applicable to LECs. The ``additional cost'' standard
applicable to both is whether an element is traffic-sensitive. In
asserting that the Commission applied a different standard of
recoverable costs in the Local Competition Order when it found that
loop costs were not recoverable, SBC misconstrues the Commission's
reasoning. The Commission excluded loop costs because it found that
``[t]he costs of local loops and line ports associated with local
switches do not vary in proportion to the number of calls terminated
over these facilities' and concluded that ``such non-traffic sensitive
costs should not be considered ``additional costs'' when a LEC
terminates a call that originated on the network of a competing
carrier.'' Because loop costs were excluded from ``additional costs''
on the basis of a finding of non-traffic sensitivity, we are not
creating a different standard for CMRS carriers by permitting them to
recover all costs that are traffic-sensitive.
8. We also find that the Joint Letter's interpretation of the
tandem interconnection rate rule is correct. Section 51.711(a)(3) of
our rules governs when the tandem interconnection rate is applicable,
and requires only a comparable geographic area test to be met for a
carrier to receive the tandem interconnection rate. SBC argues that
Sec. 51.711(a)(3) of our rules must be interpreted to require both a
functional equivalence test and a comparable geographic area test based
on discussion in the Local Competition Order addressing this issue. As
the Joint Letter correctly noted, however, the Commission has
previously addressed the import of this language in the NPRM, and
stated that ``although there has been some confusion stemming from
additional language in the text of the Local Competition Order
regarding functional equivalency, Sec. 51.711(a)(3) is clear in
requiring only a geographic area test.'' We reaffirm this
interpretation.
9. Accordingly, it is ordered that, pursuant to 47 U.S.C. 154(i),
and 47 CFR 1.115(c), the Application for Review filed by SBC
Communications Inc. on June 8, 2001, is denied.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-23129 Filed 9-10-03; 8:45 am]
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