Sec.  69.123   Density pricing zones for special access and switched transport.

   Link to an amendment published at  69 FR 25336 , May 6, 2004.

   (a)(1) Incumbent local exchange carriers not subject to price cap regulation
   may establish any number of density zones within a study area that is used
   for purposes of jurisdictional separations, provided that each zone, except
   the highest-cost zone, accounts for at least 15 percent of that carrier's
   special access and transport revenues within that study area, calculated
   pursuant to the methodology set forth in  Sec. 69.725.

   (2) Such a system of pricing zones shall be designed to reasonably reflect
   cost-related  characteristics, such as the density of total interstate
   traffic in central offices located in the respective zones.

   (3) Non-price cap incumbent local exchange carriers may establish only one
   set of density pricing zones within each study area, to be used for the
   pricing of both special and switched access pursuant to paragraphs (c) and
   (d) of this section.

   (b)(1) Incumbent local exchange carriers subject to price cap regulation may
   establish any number of density zones within a study area that is used for
   purposes of jurisdictional separations, provided that each zone, except the
   highest-cost  zone, accounts for at least 15 percent of that carrier's
   trunking basket revenues within that study area, calculated pursuant to the
   methodology set forth in  Sec. 69.725.

   (2) Price cap incumbent local exchange carriers may establish only one set
   of density pricing zones within each study area, to be used for the pricing
   of all services within the trunking basket for which zone density pricing is
   permitted.

   (3) An access service subelement for which zone density pricing is permitted
   shall  be deemed to be offered in the zone that contains the telephone
   company location from which the service is provided.

   (4) An access service subelement for which zone density pricing is permitted
   which is provided to a customer between telephone company locations shall be
   deemed to be offered in the highest priced zone that contains one of the
   locations between which the service is offered.

   (c) Notwithstanding  Sec. 69.3(e)(7), in study areas in which a telephone company
   offers a cross-connect, as described in  Sec. 69.121(a)(1), for the transmission
   of interstate special access traffic, telephone companies may charge rates
   for special access sub-elements of DS1, DS3, and such other special access
   services as the Commission may designate, that differ depending on the zone
   in which the service is offered, provided that the charges for any such
   service shall not be deaveraged within any such zone.

   (1) A special access service subelement shall be deemed to be offered in the
   zone that contains the telephone company location from which the service is
   provided.

   (2) A special access service subelement provided to a customer between
   telephone company locations shall be deemed to be offered in the highest
   priced zone that contains one of the locations between which the service is
   offered.

   (d) Notwithstanding  Sec. 69.3(e)(7), in study areas in which a telephone company
   offers a cross-connect, as described in  Sec. 69.121(a)(1), for the transmission
   of  interstate  switched traffic, or is using collocated facilities to
   interconnect with telephone company interstate switched transport services,
   telephone companies may charge rates for sub-elements of direct-trunked
   transport, tandem-switched transport, entrance facilities, and dedicated
   signaling transport that differ depending on the zone in which the service
   is offered, provided that the charge for any such service shall not be
   deaveraged within any such zone.

   (1) A switched transport service subelement shall be deemed to be offered in
   the zone that contains the telephone company location from which the service
   is provided.

   (2) A switched transport service subelement provided to a customer between
   telephone company locations shall be deemed to be offered in the highest
   priced zone that contains either of the locations between which the service
   is offered.

   (e)(1) Telephone companies not subject to price cap regulation may charge a
   rate for each service in the highest priced zone that exceeds the rate for
   the same service in the lowest priced zone by no more than fifteen percent
   of the rate for the service in the lowest priced zone during the period from
   the date that the zones are initially established through the following June
   30. The difference between the rates for any such service in the highest
   priced  zone and the lowest priced zone in a study area, measured as a
   percentage  of the rate for the service in the lowest priced zone, may
   increase by no more than an additional fifteen percentage points in each
   succeeding year, measured from the rate differential in effect on the last
   day of the preceding tariff year.

   (2) Notwithstanding  Sec. 69.3(e)(7), incumbent local exchange carriers subject
   to price cap regulation may charge different rates for services in different
   zones pursuant to  Sec. 61.47(f) of this chapter, provided that the charges for
   any such service are not deaveraged within any such zone.

   (f)(1) An incumbent local exchange carrier that establishes density pricing
   zones under this section must reallocate additional amounts recovered under
   the  interconnection  charge  prescribed in  Sec. 69.124 of this subpart to
   facilities-based transport rates, to reflect the higher costs of serving
   lower density areas. Each incumbent local exchange carrier must reallocate
   costs from the interexchange charge each time it increases the ratio between
   the prices in its lowest-cost zone and any other zone in that study area.

   (2) Any incumbent local exchange carrier that has already deaveraged its
   rates  on January 1, 1998 must reallocate an amount equivalent to that
   described in paragraph (f)(1) of this section from the interconnection
   charge prescribed in  Sec. 69.124 to its transport services.

   (3) Price cap local exchange carriers shall reassign to direct-trunked
   transport  and  tandem-switched  transport categories or subcategories
   interconnection charge amounts reallocated under paragraph (f)(1) or (f)(2)
   of this section in a manner that reflects the way density pricing zones are
   being implemented by the incumbent local exchange carrier.

   [ 57 FR 54333 , Nov. 18, 1992, as amended by  58 FR 48764 , Sept. 17, 1993;  62 FR 31935 , June 11, 1997;  64 FR 51267 , Sept. 22, 1999;  69 FR 25336 , May 6,
   2004]

   Effective Date Note:   At  69 FR 25336 , May 6, 2004,  Sec. 69.123 was amended by
   revising paragraphs (a)(1), (c), and (d) introductory text and by removing
   and  reserving  paragraph (a)(2). These paragraphs contain information
   collection and recordkeeping requirements and will not become effective
   until approval has been given by the Office of Management and Budget.