§ 51.909   Transition of rate-of-return carrier access charges.

   (a)  Notwithstanding any other provision of the Commission's rules, on
   December 29, 2011, a Rate-of-Return Carrier shall:

   (1)  Cap the rates for all rate elements for services contained in the
   definitions of End Office Access Service, Tandem Switched Transport Access
   Service,  and Dedicated Transport Access Service, as well as all other
   interstate switched access rate elements, in its interstate switched access
   tariffs at the rate that was in effect on the December 29, 2011; and

   (2) Cap, in accordance with § 51.505(b)(2), the rates for rate all elements
   in its intrastate switched access tariffs associated with the provision of
   terminating  End Office Access Service and terminating Tandem-Switched
   Transport Access Service at the rates that were in effect on the December
   29, 2011,

   (i) Using the terminating rates if specifically identified; or

   (ii) Using the rate for the applicable rate element if the tariff does not
   distinguish between originating and terminating.

   (3) Except as provided in paragraphs (a)(6) and (b)(4) of this section,
   nothing in this section obligates or allows a Rate-of-Return 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.

   (4) Notwithstanding the requirements of paragraph (a)(1) of this section, if
   a Rate-of-Return Carrier enters or exits the National Exchange Carrier
   Association  (Association),  as  defined  in § 69.2(d) of this chapter,
   traffic-sensitive tariff pursuant to the provisions of § 69.3(e)(6) of this
   chapter,  the  Association  shall adjust its switched access rate caps
   referenced in paragraph (a)(1) of this section.

   (i) For each entering Rate-of-Return Carrier, the Association shall:

   (A) Determine each entering Rate-of-Return Carrier's interstate switched
   access revenues for the preceding calendar year;

   (B) Determine the revenues that would have been realized by the entering
   Rate-of-Return Carrier in the preceding calendar year if it had used the
   Association's switched access rates (employing the rates for the appropriate
   bands)  as  of  December  31  of  the  preceding year and the entering
   Rate-of-Return Carrier's switched access demand used to determine switched
   access revenues under paragraph (a)(4)(i)(A) of this section; and

   (C)  Subtract the sum of the revenues determined pursuant to paragraph
   (a)(4)(i)(B)  of  this section from the sum of the revenues determined
   pursuant to paragraph (a)(4)(i)(A) of this section.

   (ii)  The Association shall determine the amount by which each exiting
   Rate-of-Return Carrier is a net contributor or net recipient to or from the
   switched access segment of the Association pool as follows:

   (A) The Association shall calculate the difference between each exiting
   Rate-of-Return Carrier's 2011-2012 tariff year projected interstate switched
   access revenues excluding Local Switching Support and the Rate-of-Return
   Carrier's  projected  switched access pool settlements excluding Local
   Switching Support for the same period with a net contribution amount being
   treated as a positive amount and a net recipient amount being treated as a
   negative amount. The Association shall divide the calculated difference by
   the Rate-of-Return Carrier's 2011-2012 tariff year projected interstate
   switched access revenues excluding Local Switching Support to produce a
   percent net contribution or net receipt factor.

   (B)  The Association shall multiply the factor calculated in paragraph
   (a)(4)(ii)(A) of this section by the Rate-of-Return Carrier's switched
   access revenues for the preceding calendar year to yield the amount of the
   Rate-of-Return Carrier's net contribution or net receipts for the calendar
   year.

   (iii) To determine the Association's adjusted switched access rate caps, the
   Association shall:

   (A) Add the amounts calculated under paragraphs (a)(4)(i) and (a)(4)(ii) of
   this section;

   (B) Divide the amount determined in paragraph (a)(4)(iii)(A) of this section
   by the preceding year's switched access revenues of the Rate-of-Return
   Carriers that will participate in the Association traffic-sensitive tariff
   for the next annual tariff period;

   (C) The Association shall proportionately adjust its June 30 switched access
   rate caps by the percentage amount determined in paragraph (a)(4)(iii)(B) of
   this section.

   (iv)  The  interstate switched access rate caps determined pursuant to
   paragraph (a)(4)(iii)(C) of this section shall be the new capped interstate
   switched access rates for purposes of § 51.909(a). The Association shall
   provide support in its annual access tariff filing to justify the revised
   interstate switched access rate caps, the Access Recovery Charges that will
   be assessed, and the amount of Connect America Fund ICC support each carrier
   will be eligible to receive.

   (5) A Rate-of-Return Carrier exiting the Association traffic-sensitive
   tariff pursuant to § 69.3(e)(6) of this chapter must establish new switched
   access rate caps as follows:

   (i) The Rate-of-Return Carrier shall multiply the factor determined in
   paragraph  (a)(4)(ii)(A)  of  this  section  by  negative one and then
   proportionately adjust the Association's capped switched access rates as of
   the  date  preceding  the effective date of the exiting Rate-of-Return
   Carrier's next annual tariff filing by this percentage. A Rate-of-Return
   Carrier that was a net contributor to the pool will have rate caps that are
   lower  than  the  Association's switched access rate caps, while a net
   recipient will have switched access rate caps that are higher than the
   Association's switched access rate caps;

   (ii)  The  interstate switched access rate caps determined pursuant to
   paragraph (a)(5)(i) of this section shall be the new capped interstate
   switched access rates of the exiting Rate-of-Return Carrier for purposes of
   § 51.909(a). An exiting Rate-of-Return Carrier shall provide support in its
   annual access tariff filing to justify the revised interstate switched
   access rate caps, the Access Recovery Charges that will be assessed, and the
   amount of Connect America Fund ICC support the carrier will be eligible to
   receive.

   (6) If the Association revises its interstate switched access rate caps
   pursuant to paragraph (a)(4) of this section, each Rate-of-Return Carrier
   participating in the upcoming annual Association traffic-sensitive tariff
   shall:

   (i) Revise any of its intrastate switched access rates that would have
   reached parity with its interstate switched access rates in 2013 to parity
   with the revised interstate switched access rate levels;

   (ii)  The  Association  shall provide Rate-of-Return Carriers that are
   participating in the Association traffic-sensitive pool with notice of any
   revisions the Association proposes under paragraph (a)(4) of this section no
   later than May 1.

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

   (1)  Each  Rate-of-Return  Carrier shall file intrastate access tariff
   provisions, in accordance with § 51.505(b)(2), that set forth the rates
   applicable to Transitional Intrastate Access Service in each state in which
   it provides Transitional Intrastate Access Service.

   (2) Each Rate-of-Return 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  (b)(2)(i) of this section and the amount calculated in
   (b)(2)(ii) of this section.

   (iv) A Rate-of-Return 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 intrastate switched
   access  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 Rate-of-Return 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 § 51.907(b)(1).

   (3) Except as provided in paragraph (b)(4) of this section, nothing in this
   section obligates or allows a Rate-of-Return 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.

   (4) If a Rate-of-Return Carrier must make an intrastate switched access rate
   reduction  pursuant  to  paragraph  (b)(2)  of  this section, and that
   Rate-of-Return Carrier has an intrastate rate for a rate element that is
   below the comparable interstate rate for that element, the Rate-of-Return
   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)(4)(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
   Rate-of-Return Carrier's interstate Terminating End Office Access Service,
   Terminating Tandem-Switched Transport Access Service, and Originating and
   Terminating Dedicated Transport Access Service rates and subject to the same
   rate structure and all subsequent rate and rate structure modifications.
   Except as provided in paragraph (c)(2) of this section, nothing in this
   section obligates or allows a Rate-of-Return 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) If a Rate-of-Return Carrier made an intrastate switched access rate
   reduction in 2012 pursuant to paragraph (b)(2) of this section, and that
   Rate-of-Return Carrier has an intrastate rate for a rate element that is
   below the comparable interstate rate for that element, the Rate-of-Return
   Carrier shall:

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

   (ii) Include any increases made pursuant to paragraph (c)(2)(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) Notwithstanding the rate structure rules set forth in § 69.106 of this
   chapter or anything else in the Commission's rules, a Rate-of-Return Carrier
   shall  establish  separate  originating and terminating interstate and
   intrastate rate elements for all components within interstate End Office
   Access Service. For fixed charges, the Rate-of-Return Carrier shall divide
   the  amount  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) Nothing in this Step shall affect Tandem-Switched Transport Access
   Service or Dedicated Transport Access Service.

   (3) Each Rate-of-Return Carrier shall establish rates for interstate and
   intrastate  terminating  End Office Access Service using the following
   methodology:

   (i) Each Rate-of-Return 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 and the interstate
   End Office Access Service rates at the levels in effect on December 29,
   2011.

   (ii) Each Rate-of-Return Carrier shall calculate its 2014 Target Composite
   Terminating End Office Access Rate. The 2014 Target Composite Terminating
   End  Office Access Rate means $0.005 per minute plus two-thirds of any
   difference between the 2011 Baseline Composite Terminating End Office Access
   Rate and $0.005 per minute.

   (iii)  Beginning  July 1, 2014, no Rate-of-Return Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2014 Target
   Composite Terminating End Office Access Rate. A rate-of-return carrier shall
   determine compliance by calculating interstate Composite Terminating End
   Office Access Rates using the relevant projected interstate demand for the
   tariff period multiplied by the respective interstate rates as of July 1,
   2014, and then dividing by the projected interstate terminating end office
   local switching demand for the tariff period. A rate-of-return carrier's
   intrastate terminating end office access rates may not exceed the comparable
   interstate terminating end office access rates. In the alternative, any
   Rate-of-Return 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.

   (4) Nothing in this section obligates or allows a Rate-of-Return 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.

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

   (1) Each Rate-of-Return Carrier shall establish rates for interstate and
   intrastate  terminating  End Office Access Service using the following
   methodology:

   (i) Each Rate-of-Return Carrier shall calculate its 2015 Target Composite
   Terminating End Office Access Rate. The 2015 Target Composite Terminating
   End  Office  Access Rate means $0.005 per minute plus one-third of any
   difference between the 2011 Baseline Composite Terminating End Office Access
   Rate and $0.005 per minute.

   (ii)  Beginning  July  1, 2015, no Rate-of-Return Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2015 Target
   Composite Terminating End Office Access Rate. A rate-of-return carrier shall
   determine compliance by calculating interstate Composite Terminating End
   Office Access Rates using the relevant projected interstate demand for the
   tariff period multiplied by the respective interstate rates as of July 1,
   2015, and then dividing by the projected interstate terminating end office
   local switching demand for the tariff period. A rate-of-return carrier's
   intrastate terminating end office access rates may not exceed the comparable
   interstate terminating end office access rates. In the alternative, any
   Rate-of-Return 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.
   Nothing in this section obligates or allows a Rate-of-Return 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.

   (2) [Reserved]

   (f) Step 5. Beginning July 1, 2016, notwithstanding any other provision of
   the  Commission's  rules,  each Rate-of-Return Carrier shall establish
   interstate  terminating  End Office Access Service rates such that its
   interstate Composite Terminating End Office Access Service rate does not
   exceed  $0.005  per  minute.  A rate-of-return carrier shall determine
   compliance by calculating interstate Composite Terminating End Office Access
   Rates using the relevant projected interstate demand for the tariff period
   multiplied by the respective interstate rates as of July 1, 2016, and then
   dividing by the projected interstate terminating end office local switching
   demand  for  the  tariff period. A rate-of-return carrier's intrastate
   terminating end office access rates may not exceed the comparable interstate
   terminating end office access rates. In the alternative, any Rate-of-Return
   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 Rate-of-Return 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 Rate-of-Return Carrier shall establish interstate and intrastate
   rates  for  terminating  End Office Access Service using the following
   methodology:

   (i) Each Rate-of-Return Carrier shall calculate its 2017 Target Composite
   Terminating End Office Access Rate. The 2017 Target Composite Terminating
   End Office Access Rate means $0.0007 per minute plus two-thirds of any
   difference between that carrier's 2016 Target Composite Terminating End
   Office Access Rate and $0.0007 per minute.

   (ii)  Beginning  July  1, 2017, no Rate-of-Return Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2017 Target
   Composite Terminating End Office Access Rate. A rate-of-return carrier shall
   determine compliance by calculating interstate Composite Terminating End
   Office Access Rates using the relevant projected interstate demand for the
   tariff period multiplied by the respective interstate rates as of July 1,
   2017, and then dividing by the projected interstate terminating end office
   local switching demand for the tariff period. A rate-of-return carrier's
   intrastate terminating end office access rates may not exceed the comparable
   interstate terminating end office access rates. In the alternative, any
   Rate-of-Return 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 2017 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 Rate-of-Return 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.

   (2) [Reserved]

   (h) Step 7. Beginning July 1, 2018, notwithstanding any other provision of
   the Commission's rules:

   (1) Each Rate-of-Return Carrier shall establish interstate and intrastate
   rates  for  terminating  End Office Access Service using the following
   methodology:

   (i) Each Rate-of-Return Carrier shall calculate its 2018 Target Composite
   Terminating End Office Access Rate. The 2018 Target Composite Terminating
   End  Office Access Rate means $0.0007 per minute plus one-third of any
   difference between that carrier's 2016 Target Composite Terminating End
   Office Access Rate and $0.0007 per minute.

   (ii)  Beginning  July  1, 2018, no Rate-of-Return Carrier's interstate
   Composite Terminating End Office Access Rate shall exceed its 2018 Target
   Composite Terminating End Office Access Rate. A rate-of-return carrier shall
   determine compliance by calculating interstate Composite Terminating End
   Office Access Rates using the relevant projected interstate demand for the
   tariff period multiplied by the respective interstate rates as of July 1,
   2018 and then dividing by the projected interstate terminating end office
   local switching demand for the tariff period. A rate-of-return carrier's
   intrastate terminating end office access rates may not exceed the comparable
   interstate terminating end office access rates. In the alternative, any
   Rate-of-Return 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 2018 interstate 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 Rate-of-Return 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.

   (2) [Reserved]

   (i) Step 8. Beginning July 1, 2019, notwithstanding any other provision of
   the  Commission's  rules,  each Rate-of-Return Carrier shall establish
   interstate and intrastate rates for terminating End Office Access Service
   that do not exceed $0.0007 per minute.

   (j) Step 9. Beginning July 1, 2020, notwithstanding any other provision of
   the Commission's rules, each Rate-of-Return Carrier shall, in accordance
   with a bill-and-keep methodology, revise and refile its federal access
   tariffs  and  any state tariffs to remove any intercarrier charges for
   terminating End Office Access Service.

   (k) As set forth in FCC 11-161, states will facilitate implementation of
   changes to intrastate access rates to ensure compliance with the Order.
   Nothing in this section shall alter the authority of a state to monitor and
   oversee filing of intrastate tariffs.

   [ 76 FR 73856 , Nov. 29, 2011, as amended at  77 FR 48452 , Aug. 14, 2012;  78 FR 26267 , May 6, 2013;  79 FR 28845 , May 20, 2014]

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