Goto Section: 54.303 | 54.307 | Table of Contents
FCC 54.305
Revised as of October 1, 2005
Goto Year:2004 |
2006
Sec. 54.305 Sale or transfer of exchanges.
(a) The provisions of this section are not applicable to the sale or
transfer of exchanges between non-rural carriers after the complete
phase-down of interim hold-harmless support, pursuant to Sec. 54.311, for the
non-rural carriers subject to the transaction.
(b) Except as provided in paragraph (c) of this section, a carrier that
acquires telephone exchanges from an unaffiliated carrier shall receive
universal service support for the acquired exchanges at the same per-line
support levels for which those exchanges were eligible prior to the transfer
of the exchanges. If the acquired exchanges are incorporated into an
existing rural incumbent local exchange carrier study area, the rural
incumbent local exchange carrier shall maintain the costs associated with
the acquired exchanges separate from the costs associated with its
pre-acquisition study area. The transferred exchanges may be eligible for
safety valve support for loop related costs pursuant to paragraph (d) of
this section.
(c) A carrier that has entered into a binding agreement to buy or acquire
exchanges from an unaffiliated carrier prior to May 7, 1997 will receive
universal service support for the newly acquired lines based upon the
average cost of all of its lines, both those newly acquired and those it had
prior to execution of the sales agreement.
(d) Transferred exchanges in study areas operated by rural telephone
companies that are subject to the limitations on loop-related universal
service support in paragraph (b) of this section may be eligible for a
safety valve loop cost expense adjustment based on the difference between
the rural incumbent local exchange carrier's index year expense adjustment
and subsequent year loop cost expense adjustments for the acquired
exchanges. Safety valve loop cost expense adjustments shall only be
available to rural incumbent local exchange carriers that, in the absence of
restrictions on high-cost loop support in Sec. 54.305(b), would qualify for
high-cost loop support for the acquired exchanges under Sec. 36.631 of this
chapter.
(1) For carriers that buy or acquire telephone exchanges on or after January
10, 2005 from an unaffiliated carrier, the index year expense adjustment for
the acquiring carrier's first year of operation shall equal the selling
carrier's loop-related expense adjustment for the transferred exchanges for
the 12-month period prior to the transfer of the exchanges. At the acquiring
carrier's option, the first year of operation for the transferred exchanges,
for purposes of calculating safety valve support, shall commence at the
beginning of either the first calendar year or the next calendar quarter
following the transfer of exchanges. For the first year of operation, a loop
cost expense adjustment, using the costs of the acquired exchanges submitted
in accordance with Sec. Sec. 36.611 and 36.612 of this chapter, shall be calculated
pursuant to Sec. 36.631 of this chapter and then compared to the index year
expense adjustment. Safety valve support for the first period of operation
will then be calculated pursuant to paragraph (d)(3) of this section. The
index year expense adjustment for years after the first year of operation
shall be determined using cost data for the first year of operation of the
transferred exchanges. Such cost data for the first year of operation shall
be calculated in accordance with Sec. Sec. 36.611, 36.612 and 36.631 of this
chapter. For each year, ending on the same calendar quarter as the first
year of operation, a loop cost expense adjustment, using the loop costs of
the acquired exchanges, shall be submitted and calculated pursuant to
Sec. Sec. 36.611, 36.612, and 36.631 of this chapter and will be compared to the
index year expense adjustment. Safety valve support for the second year of
operation and thereafter will then be calculated pursuant to paragraph
(d)(3) of this section.
(2) For carriers that bought or acquired exchanges from an unaffiliated
carrier before January 10, 2005, and are not subject to the exception in
paragraph (c) of this section, the index year expense adjustment for
acquired exchange(s) shall be equal to the rural incumbent local exchange
carrier's high-cost loop expense adjustment for the acquired exchanges
calculated for the carrier's first year of operation of the acquired
exchange(s). At the carrier's option, the first year of operation of the
transferred exchanges shall commence at the beginning of either the first
calendar year or the next calendar quarter following the transfer of
exchanges. The index year expense adjustment shall be determined using cost
data for the acquired exchange(s) submitted in accordance with Sec. Sec. 36.611 and
36.612 of this chapter and shall be calculated in accordance with Sec. 36.631 of
this chapter. The index year expense adjustment for rural telephone
companies that have operated exchanges subject to this section for more than
a full year on the effective date of this paragraph shall be based on loop
cost data submitted in accordance with Sec. 36.612 of this chapter for the year
ending on the nearest calendar quarter following the effective date of this
paragraph. For each subsequent year, ending on the same calendar quarter as
the index year, a loop cost expense adjustment, using the costs of the
acquired exchanges, will be calculated pursuant to Sec. 36.631 of this chapter
and will be compared to the index year expense adjustment. Safety valve
support is calculated pursuant to paragraph (d)(3) of this section.
(3) Up to fifty (50) percent of any positive difference between the
transferred exchanges loop cost expense adjustment and the index year
expense adjustment will be designated as the transferred exchange's safety
valve loop cost expense adjustment and will be available in addition to the
per-line loop-related support transferred from the selling carrier to the
acquiring carrier pursuant to Sec. 54.305(b). In no event shall a study area's
safety valve loop cost expense adjustment exceed the difference between the
carrier's study area loop cost expense adjustment calculated pursuant to
Sec. 36.631 of this chapter and transferred support amounts available to the
acquired exchange(s) under paragraph (b) of this section. Safety valve
support shall not transfer with acquired exchanges.
(e) The sum of the safety valve loop cost expense adjustment for all
eligible study areas operated by rural telephone companies shall not exceed
five (5) percent of the total rural incumbent local exchange carrier portion
of the annual nationwide loop cost expense adjustment calculated pursuant to
Sec. 36.603 of this chapter. The five (5) percent cap on the safety valve
mechanism shall be based on the lesser of the rural incumbent local exchange
carrier portion of the annual nationwide loop cost expense adjustment
calculated pursuant to Sec. 36.603 of this chapter or the sum of rural incumbent
local exchange carrier expense adjustments calculated pursuant to Sec. 36.631 of
this chapter. The percentage multiplier used to derive study area safety
valve loop cost expense adjustments for rural telephone companies shall be
the lesser of fifty (50) percent or a percentage calculated to produce the
maximum total safety valve loop cost expense adjustment for all eligible
study areas pursuant to this paragraph. The safety valve loop cost expense
adjustment of an individual rural incumbent local exchange carrier also may
be further reduced as described in paragraph (d)(3) of this section.
(f) Once an acquisition is complete, the acquiring rural incumbent local
exchange carrier shall provide written notice to the Administrator that it
has acquired access lines that may be eligible for safety valve support.
Rural telephone companies also shall provide written notice to the
Administrator defining their index year for those years after the first year
of operation for purposes of calculating the safety valve loop cost expense
adjustment.
[ 70 FR 10060 , Mar. 2, 2005]
Goto Section: 54.303 | 54.307
Goto Year: 2004 |
2006
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