This year's Step 5 requires a reduction of interstate and intrastate terminating end office switched access rates to $0.0007 per minute for Price Cap Carriers and CLECs that benchmark to them. Rate of Return Carriers, and CLECs that benchmark to them, must reduce their interstate and intrastate terminating end office switched access rates to $0.005 per minute. There are multiple switched access rate elements, and it's important to understand what rate elements are considered end office rates. End office rates include the following, where applicable:
While terminating end office rates will be $0.0007 per minute, a monthly DTP charge may also apply. We saw ILECs take different approaches regarding how this rate was reduced and applied going forward. AT&T and Frontier tariff an “originating” monthly rate, but the rate is billed as originating and terminating based on a Percent Originating Usage (POU) factor of 50%. CenturyLink calculated the DTP assuming a 50/50 split of the originating and terminating traffic. The terminating portion of the rate was reduced and then combined with the originating portion to create a single flat rate for billing purposes. Verizon added a footnote in their tariffs stating that the DTP will only apply to the portion associated with originating usage.
Keep in mind that transport rate elements (tandem switching, tandem switched transport - termination, tandem switched transport - facility, common mutliplexing, and dedicated tandem trunk port) are not affected yet. Next year with Step 6, terminating transport rates will be reduced to $0.0007 and terminating end office switched access rates will be reduced to bill-and-keep for Price Cap ILECs and CLECs that benchmark to them. However, the terminating transport reduction only applies when the terminating (end office) carrier or its affiliate owns the serving tandem switch. Therefore, transit traffic handled by intermediate carriers is not affected by the Reform Order.
CLECs that benchmark to ILEC rates have 15 days from the effective date of the ILEC rates to file their rate reductions. Since July 16th falls on a Saturday this year and FCC filings are not accepted on weekends, CLEC filings must be made no later than Friday, July 15, 2016. CLECs can match each ILEC’s rates individually, or create a composite in states where they compete with multiple ILECs. The terminating end office rates CLECs file at the interstate level will also need to be filed at the intrastate level, unless the intrastate tariffs contain a reference back to the interstate tariff. There are still several states that require access rates to be tariffed in lieu of referencing FCC tariffs.
TMI has compiled a summary of the July 1 ILEC reductions. The summary is combined into a tool that also assists in identifying the lowest price cap ILEC rates that are the required cap for carriers that trip the access stimulation triggers. Please contact Karen Ritter at 407-740-3021 or kritter@tminc.com if you want more information about this tool.