§ 36.2   Fundamental principles underlying procedures.

   (a) The following general principles underlie the procedures outlined
   in this part:

   (1) Separations are intended to apportion costs among categories or
   jurisdictions by actual use or by direct assignment.

   (2) Separations are made on the "actual use" basis, which gives
   consideration to relative occupancy and relative time measurements.

   (3) In the development of "actual use" measurements, measurements of
   use are (i) determined for telecommunications plant or for work
   performed by operating forces on a unit basis (e.g.,
   conversation-minute-kilometers per message, weighted standard work
   seconds per call) in studies of traffic handled or work performed
   during a representative period for all traffic and (ii) applied to
   overall traffic volumes, i.e., 24-hour rather than busy-hour volumes.

   (b) Underlying the procedures included in this manual for the
   separation of plant costs is an over-all concept which may be described
   as follows:

   (1) Telecommunications plant, in general, is segregable into two broad
   classifications, namely, (i) interexchange plant, which is plant used
   primarily to furnish toll services, and (ii) exchange plant, which is
   plant used primarily to furnish local services.

   (2) Within the interexchange classification, there are three broad
   types of plant, i.e., operator systems, switching plant, and trunk
   transmission equipment. Within the exchange classification there are
   four board types of plant, i.e., operator systems, switching plant,
   truck equipment and subscriber plant. Subscriber plant comprises lines
   to the subscriber.

   (3) In general, the basis for apportioning telecommunications plant
   used jointly for state and interstate operations are:

   (i) Operator work time expressed in weighted standard work seconds is
   the basis for measuring the use of operator systems.

   (ii) Holding-time-minutes is the basis for measuring the use of local
   and toll switching plant.

   (iii) Conversation-minute-kilometers or conversation minutes is the
   basis for measuring the use of interexchange circuit plant and
   holding-time minutes is the basis for measuring the use of exchange
   trunk plant. While the use of holding-time-minute-kilometers is the
   basic fundamental allocation factor for interexchange circuit plant and
   exchange trunk plant, the use of conversation-minute-kilometers or
   conversation-minutes for the allocation of interexchange circuit plant
   and holding-time minutes for the allocation of exchange trunk plant are
   considered practical approximations for separations between state and
   interstate operations when related to the broad types of plant
   classifications used herein.

   (iv) Message telecommunications subscriber plant shall be apportioned
   on the basis of a Gross Allocator which assigns 25 percent to the
   interstate jurisdiction and 75 percent to the state jurisdiction.

   (c) Property rented to affiliates, if not substantial in amount, is
   included as used property of the owning company with the associated
   revenues and expenses treated consistently: Also such property rented
   from affiliates is not included with the used property of the company
   making the separations; the rent paid is included in its expenses. If
   substantial in amount, the following treatment is applied:

   (1) In the case of property rented to affiliates, the property and
   related expenses and rent revenues are excluded from the telephone
   operations of the owning company, and

   (2) In the case of property rented from affiliates, the property and
   related expenses are included with, and the rent expenses are excluded
   from, the telephone operations of the company making the separation.

   (d) Property rented to or from non-affiliates is usually to be included
   as used property of the owning company with the associated revenues and
   expenses treated consistently. In the event the amount is substantial,
   the property involved and the revenues and expenses associated
   therewith may be excluded from or included in the telecommunications
   operations of the company. When required, the cost of property rented
   to or from non-affiliates is determined using procedures that are
   consistent with the procedures for the allocation of costs among the
   operations.

   (e) Costs associated with services or plant billed to another company
   which have once been separated under procedures consistent with general
   principles set forth in this part, and are thus identifiable as
   entirely interstate or State in nature, shall be directly assigned to
   the appropriate operation and jurisdiction.

   [ 52 FR 17229 , May 6, 1987, as amended at  58 FR 44905 , Aug. 25, 1993;  71 FR 65745 , Nov. 9, 2006]

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