FROM: Michael Ward
O’Keefe, Ashenden, Lyons & Ward
RE: Illinois Public Telecommunications Association v. Federal Communications
Commission
U. S. Court of Appeals, D.C. Circuit, #96-1894 (Decided July 1, 1997)
The United States Court of Appeals, District of Columbia Circuit,
reversed in part and affirmed in part the Federal Communications Commission’s
Payphone Order, Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996 (CC Docket No. 96-128). A summary of
the impact of the decision is as follows:
- Affirmed the FCC’s jurisdiction to deregulate the local coin rate.
- Reversed and remanded the interim and permanent compensation rates for 800 and
access code calls. The Appellate Court found that the FCC failed to address the evidence
of record that the cost of coin calls are higher than those of coinless calls and,
therefore, it was arbitrary and capricious to set the default and interim compensation
rates for coinless 800 and access code calls based on the local coin rate. The FCC is
required to have new proceedings to establish the interim and permanent rates.
- Reversed and remanded the FCC’s exclusion of IXCs with less than
$100,000,000 in toll revenues from contributing to the interim flat rate structure.
- Reversed and remanded the FCC’s exclusion of inmate payphones from the
interim flat rate compensation and the exclusion of 0+ calls on RBOC payphones.
- Affirmed the FCC’s requirement that the IXCs, and not the end users, must
make the 800 and access code payments to the payphone providers, and that the IXCs are
required to perform the tracking of the calls.
- Affirmed the FCC’s ruling that BOCs are only prohibited from
discriminating against IPPs regarding the provision of basic services. BOCs may
discriminate in the provision of nontariffed services.
- The Appellate Court found, for the purpose of preventing cross subsidies, that
the valuation of BOC payphone assets shall be valued at net book value, regardless of
whether the LEC transfers its payphone assets to a separate affiliate or to an operating
division that has no joint and common use of assets or resources with the LEC and
maintains a separate set up books.
The main import of the decision is that the level of interim and
permanent compensation for 800 and access code calls is being remanded to the FCC for a
new determination. In the remand proceeding, the FCC will be required to address the
IXCs’ arguments that the cost of coinless calls is substantially less than that of
coin calls. The FCC will be required to address the underlying cost basis for coinless
calls on payphones in determining both an interim and a permanent rate structure for 800
and access code compensation. In addition to the calls previously required to be
compensated, it appears that IXCs will be required to pay for calls on inmate payphones
and to pay for 0+ calls on RBOC payphones unless the FCC can reconcile the apparent
inconsistency of the FCC’s denial of compensation with the statutory requirement for
compensation "for each and every completed intrastate and interstate call using their
payphone."
No further information is available at this time.
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