§  64.901   Allocation of costs.

   (a) Carriers required to separate their regulated costs from
   nonregulated costs shall use the attributable cost method of cost
   allocation for such purpose.

   (b) In assigning or allocating costs to regulated and nonregulated
   activities, carriers shall follow the principles described herein.

   (1) Tariffed services provided to a nonregulated activity will be
   charged to the nonregulated activity at the tariffed rates and credited
   to the regulated revenue account for that service. Nontariffed
   services, offered pursuant to a section 252(e) agreement, provided to a
   nonregulated activity will be charged to the nonregulated activity at
   the amount set forth in the applicable interconnection agreement
   approved by a state commission pursuant to section 252(e) and credited
   to the regulated revenue account for that service.

   (2) Costs shall be directly assigned to either regulated or
   nonregulated activities whenever possible.

   (3) Costs which cannot be directly assigned to either regulated or
   nonregulated activities will be described as common costs. Common costs
   shall be grouped into homogeneous cost categories designed to
   facilitate the proper allocation of costs between a carrier's regulated
   and nonregulated activities. Each cost category shall be allocated
   between regulated and nonregulated activities in accordance with the
   following hierarchy:

   (i) Whenever possible, common cost categories are to be allocated based
   upon direct analysis of the origin of the cost themselves.

   (ii) When direct analysis is not possible, common cost categories shall
   be allocated based upon an indirect, cost-causative linkage to another
   cost category (or group of cost categories) for which a direct
   assignment or allocation is available.

   (iii) When neither direct nor indirect measures of cost allocation can
   be found, the cost category shall be allocated based upon a general
   allocator computed by using the ratio of all expenses directly assigned
   or attributed to regulated and nonregulated activities.

   (4) The allocation of central office equipment and outside plant
   investment costs between regulated and nonregulated activities shall be
   based upon the relative regulated and nonregulated usage of the
   investment during the calendar year when nonregulated usage is greatest
   in comparison to regulated usage during the three calendar years
   beginning with the calendar year during which the investment usage
   forecast is filed.

   (c) A telecommunications carrier may not use services that are not
   competitive to subsidize services subject to competition. Services
   included in the definition of universal service shall bear no more than
   a reasonable share of the joint and common costs of facilities used to
   provide those services.

   [ 52 FR 6560 , Mar. 4, 1987, as amended at  52 FR 39534 , Oct. 22, 1987;  54 FR 49762 , Dec. 1, 1989;  62 FR 45588 , Aug. 28, 1997;  67 FR 5702 , Feb. 6,
   2002]

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