§ 51.907   Transition of price cap carrier access charges.

   (a) Notwithstanding any other provision of the Commission's rules, on
   December 29, 2011, a Price Cap Carrier shall cap the rates for all
   interstate and intrastate rate elements for services contained in the
   definitions of Interstate End Office Access Services, Tandem Switched
   Transport Access Services, and Dedicated Transport Access Services. In
   addition, a Price Cap Carrier shall also cap the rates for any
   interstate and intrastate rate elements in the traffic sensitive
   basket” and the “trunking basket” as described in 47 CFR 61.42(d)(2)
   and (3) to the extent that such rate elements are not contained in the
   definitions of Interstate End Office Access Services, Tandem Switched
   Transport Access Services, and Dedicated Transport Access Services.
   Carriers will remove these services from price cap regulation in their
   July 1, 2012 annual tariff filing.

   (b) Step 1. Beginning July 1, 2012, notwithstanding any other provision
   of the Commission's rules:

   (1) Each Price Cap Carrier shall file tariffs, in accordance with
   § 51.905(b)(2), with the appropriate state regulatory authority, that
   set forth the rates applicable to Transitional Intrastate Access
   Service in each state in which it provides Transitional Intrastate
   Access Service.

   (2) Each Price Cap Carrier shall establish the rates for Transitional
   Intrastate Access Service using the following methodology:

   (i) Calculate total revenue from Transitional Intrastate Access Service
   at the carrier's interstate access rates in effect on December 29,
   2011, using Fiscal Year 2011 intrastate switched access demand for each
   rate element.

   (ii) Calculate total revenue from Transitional Intrastate Access
   Service at the carrier's intrastate access rates in effect on December
   29, 2011, using Fiscal Year 2011 intrastate switched access demand for
   each rate element.

   (iii) Calculate the Step 1 Access Revenue Reduction. The Step 1 Access
   Revenue Reduction is equal to one-half of the difference between the
   amount calculated in paragraph (b)(2)(i) of this section and the amount
   calculated in paragraph (b)(2)(ii) of this section.

   (iv) A Price Cap Carrier may elect to establish rates for Transitional
   Intrastate Access Service using its intrastate access rate structure.
   Carriers using this option shall establish rates for Transitional
   Intrastate Access Service such that Transitional Intrastate Access
   Service revenue at the proposed rates is no greater than Transitional
   Intrastate Access Service revenue at the intrastate rates in effect as
   of December 29, 2011 less the Step 1 Access Revenue Reduction, using
   Fiscal Year 2011 demand. Carriers electing to establish rates for
   Transitional Intrastate Access Service in this manner shall notify the
   appropriate state regulatory authority of their election in the filing
   required by § 51.907(b)(1).

   (v) A Price Cap Carrier may elect to apply its interstate access rate
   structure and interstate rates to Transitional Intrastate Access
   Service. In addition to applicable interstate access rates, the carrier
   may, between July 1, 2012 and July 1, 2013, assess a transitional
   per-minute charge on Transitional Intrastate Access Service end office
   switching minutes (previously billed as intrastate access). The
   transitional per-minute charge shall be no greater than the Step 1
   Access Revenue Reduction divided by Fiscal Year 2011 Transitional
   Intrastate Access Service end office switching minutes. Carriers
   electing to establish rates for Transitional Intrastate Access Service
   in this manner shall notify the appropriate state regulatory authority
   of their election in the filing required by paragraph (b)(1) of this
   section.

   (vi) Except as provided in paragraph (b)(3) of this section, nothing in
   this section obligates or allows a Price Cap Carrier that has
   intrastate rates lower than its functionally equivalent interstate
   rates to make any intrastate tariff filing or intrastate tariff
   revisions to increase such rates.

   (3) If a Price Cap Carrier must make an intrastate switched access rate
   reduction pursuant to paragraph (b)(2) of this section, and that Price
   Cap Carrier has an intrastate rate for a rate element that is below the
   comparable interstate rate for that element, the Price Cap Carrier
   shall:

   (i) Increase the rate for any intrastate rate element that is below the
   comparable interstate rate for that element to the interstate rate no
   later than July 1, 2013;

   (ii) Include any increases made pursuant to paragraph (b)(3)(i) of this
   section in the calculation of its eligible recovery for 2012.

   (c) Step 2. Beginning July 1, 2013, notwithstanding any other provision
   of the Commission's rules:

   (1) Transitional Intrastate Access Service rates shall be no higher
   than the Price Cap Carrier's interstate access rates. Once the Price
   Cap Carrier's Transitional Intrastate Access Service rates are equal to
   its functionally equivalent interstate access rates, they shall be
   subject to the same rate structure and all subsequent rate and rate
   structure modifications. Except as provided in paragraph (c)(4) of this
   section, nothing in this section obligates or allows a Price Cap
   Carrier that has intrastate rates lower than its functionally
   equivalent interstate rates to make any intrastate tariff filing or
   intrastate tariff revisions to increase such rates.

   (2) In cases where a Price Cap Carrier does not have intrastate rates
   that permit it to determine composite intrastate End Office Access
   Service rates, the carrier shall establish End Office Access Service
   rates such that the ratio between its composite intrastate End Office
   Access Service revenues and its total intrastate switched access
   revenues may not exceed the ratio between its composite interstate End
   Office Access Service revenues and its total interstate switched access
   revenues.

   (3) [Reserved]

   (4) If a Price Cap Carrier made an intrastate switched access rate
   reduction in 2012 pursuant to paragraph (b)(2) of this section, and
   that Price Cap Carrier has an intrastate rate for a rate element that
   is below the comparable interstate rate for that element, the Price Cap
   Carrier shall:

   (i) Increase the rate for any intrastate rate element that is below the
   comparable interstate rate for that element to the interstate rate on
   July 1, 2013; and

   (ii) Include any increases made pursuant to paragraph (b)(4)(i) of this
   section in the calculation of its eligible recovery for 2013.

   (d) Step 3. Beginning July 1, 2014, notwithstanding any other provision
   of the Commission's rules:

   (1) A Price Cap Carrier shall establish separate originating and
   terminating rate elements for all per-minute components within
   interstate and intrastate End Office Access Service. For fixed charges,
   the Price Cap Carrier shall divide the rate between originating and
   terminating rate elements based on relative originating and terminating
   end office switching minutes. If sufficient originating and terminating
   end office switching minute data is not available, the carrier shall
   divide such charges equally between originating and terminating
   elements.

   (2) Each Price Cap Carrier shall establish rates for interstate or
   intrastate terminating End Office Access Service using the following
   methodology:

   (i) Each Price Cap Carrier shall calculate the 2011 Baseline Composite
   Terminating End Office Access Rate. The 2011 Baseline Composite
   Terminating End Office Access Rate means the Composite Terminating End
   Office Access Rate calculated using Fiscal Year 2011 interstate demand
   multiplied by the interstate End Office Access Service rates at the
   levels in effect on December 29, 2011, and then dividing the result by
   2011 Fiscal Year interstate local switching demand.

   (ii) Each Price Cap Carrier shall calculate its 2014 Target Composite
   Terminating End Office Access Rate. The 2014 Target Composite
   Terminating End Office Access Rate means $0.0007 per minute plus
   two-thirds of any difference between the 2011 Baseline Composite
   Terminating End Office Access Rate and $0.0007 per minute.

   (iii) Beginning July 1, 2014, no Price Cap Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2014
   Target Composite Terminating End Office Access Rate. A price cap
   carrier shall determine compliance by calculating interstate Composite
   Terminating End Office Access Rates using the relevant Fiscal Year 2011
   interstate demand multiplied by the respective interstate rates as of
   July 1, 2014, and then dividing the result by the relevant 2011 Fiscal
   Year interstate terminating local switching demand. A price cap
   carrier's intrastate terminating end office access rates may not exceed
   the comparable interstate terminating end office access rates. In the
   alternative, any Price Cap Carrier may elect to implement a single per
   minute rate element for both interstate and intrastate terminating End
   Office Access Service no greater than the 2014 Target Composite
   Terminating End Office Access Rate if its intrastate terminating end
   office access rates would be at rate parity with its interstate
   terminating end office access rates.

   (e) Step 4. Beginning July 1, 2015, notwithstanding any other provision
   of the Commission's rules:

   (1) Each Price Cap Carrier shall establish interstate or intrastate
   rates for terminating End Office Access Service using the following
   methodology:

   (i) Each Price Cap Carrier shall calculate its 2015 Target Composite
   Terminating End Office Access Rate. The 2015 Target Composite
   Terminating End Office Access Rate means $0.0007 per minute plus
   one-third of any difference between the 2011 Composite Terminating End
   Office Access Rate and $0.0007 per minute.

   (ii) Beginning July 1, 2015, no Price Cap Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2015
   Target Composite Terminating End Office Access Rate. A price cap
   carrier shall determine compliance by calculating interstate Composite
   Terminating End Office Access Rates using the relevant Fiscal Year 2011
   interstate demand multiplied by the respective interstate rates as of
   July 1, 2015, and then dividing the result by the relevant 2011 Fiscal
   Year interstate terminating local switching demand. A price cap
   carrier's intrastate terminating end office access rates may not exceed
   the comparable interstate terminating end office access rates. In the
   alternative, any Price Cap Carrier may elect to implement a single per
   minute rate element for both interstate and intrastate terminating End
   Office Access Service no greater than the 2015 Target Composite
   Terminating End Office Access Rate if its intrastate terminating end
   office access rates would be at rate parity with its interstate
   terminating end office access rates.

   (2) Nothing in this section obligates or allows a Price Cap Carrier
   that has intrastate rates lower than its functionally equivalent
   interstate rates to make any intrastate tariff filing or intrastate
   tariff revisions raising such rates.

   (f) Step 5. Beginning July 1, 2016, notwithstanding any other provision
   of the Commission's rules, each Price Cap Carrier shall establish
   interstate terminating End Office Access Service rates such that its
   Composite Terminating End Office Access Service rate does not exceed
   $0.0007 per minute. A price cap carrier shall determine compliance by
   calculating interstate Composite Terminating End Office Access Rates
   using the relevant Fiscal Year 2011 interstate demand multiplied by the
   respective interstate rates as of July 1, 2016, and then dividing the
   result by the relevant 2011 Fiscal Year interstate terminating local
   switching demand. A price cap carrier's intrastate terminating end
   office access rates may not exceed the comparable interstate
   terminating end office access rates. In the alternative, any Price Cap
   Carrier may elect to implement a single per-minute rate element for
   both interstate and intrastate Terminating End Office Access Service no
   greater than the 2016 Target Composite Terminating End Office Access
   Rate if its intrastate terminating end office access rates would be at
   rate parity with its interstate terminating end office access rates.
   Nothing in this section obligates or allows a Price Cap Carrier that
   has intrastate rates lower than its functionally equivalent interstate
   rates to make any intrastate tariff filing or intrastate tariff
   revisions raising such rates.

   (g) Step 6. Beginning July 1, 2017, notwithstanding any other provision
   of the Commission's rules:

   (1) Each Price Cap Carrier shall, in accordance with a bill-and-keep
   methodology, refile its interstate access tariffs and any state
   tariffs, in accordance with § 51.905(b)(2), removing any intercarrier
   charges for terminating End Office Access Service.

   (2) Each Price Cap Carrier shall establish, for interstate and
   intrastate terminating traffic traversing a tandem switch that the
   terminating carrier or its affiliates owns, Tandem-Switched Transport
   Access Service rates no greater than $0.0007 per minute.

   (3) Nothing in this section obligates or allows a Price Cap Carrier
   that has intrastate rates lower than its functionally equivalent
   interstate rates to make any intrastate tariff filing or intrastate
   tariff revisions raising such rates.

   (h) Step 7. Beginning July 1, 2018, notwithstanding any other provision
   of the Commission's rules, each Price Cap carrier shall, in accordance
   with bill-and-keep, as defined in § 51.713, revise and refile its
   interstate switched access tariffs and any state tariffs to remove any
   intercarrier charges applicable to terminating tandem-switched access
   service traversing a tandem switch that the terminating carrier or its
   affiliate owns.

   [ 76 FR 73856 , Nov. 29, 2011, as amended at  77 FR 48452 , Aug. 14, 2012;
    79 FR 28844 , May 20, 2014]

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