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The Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996

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Federal Communications Commission.




In this document, the Federal Communications Commission (Commission) addresses the rules regarding per-call compensation for payphone calls to ensure that payphone service providers (PSPs) are fairly compensated for all completed, coinless calls made from payphones. The Commission addresses the key issues raised in the petitions for declaratory ruling, reconsideration and/or clarification, and clarifies, on its own motion, certain aspects of the per-call compensation rules.


Effective February 25, 2002.

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Tania Cho, (202) 418-2320; fax (202) Start Printed Page 3622418-2345; TTY (202) 418-0484; email at

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This is a summary of the Commission's Third Order on Reconsideration and Order on Clarification in CC Docket No. 96-128, FCC 01-344, adopted and released on November 21, 2001. The full text of the item is available for inspection and copying during the hours of 9 a.m. to 4:30 p.m. in the Commission's Reference Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554, or copies may be purchased from the Commission's duplicating contractor, Qualex International, 445 12th Street, SW., Suite CY-B402, Washington, DC 20554, phone (202) 863-2893. This Order contains no new or modified information collection subject to the Paperwork Reduction Act of 1995, Public Law 104-13.

Synopsis of the Third Order on Reconsideration and Order on Clarification

To implement Section 276 of the Telecommunications Act of 1996, the Commission has adopted several rules that define the relationship between PSPs and carriers in the call path in order to ensure that PSPs are adequately compensated for calls placed from payphones. In the First Payphone Order, 61 FR 52309, October 7, 1996, the Commission concluded that the interexchange carrier (IXC), as the primary beneficiary of payphone calls, should compensate the PSP. The Commission also recognized that a reseller lacking its own facilities does not have the ability to track calls, and that the facilities-based carrier should therefore pay compensation to the PSP. A requirement to track, or arrange for tracking of, compensable calls was also established for the underlying IXC, and the IXC was permitted to recover the cost of such tracking from the reseller. In the Payphone Order on Reconsideration, 61 FR 65341, December 12, 1996, the Commission modified its rules to provide that switch-based resellers (SBRs) are responsible for paying compensation directly to PSPs. In the Coding Digit Waiver Order, 63 FR 26497, May 13, 1998, the Common Carrier Bureau responded to PSP complaints that IXCs refused to identify SBRs by clarifying that when SBRs identified themselves to the first facilities-based IXC as responsible for paying compensation, the IXC was obligated to provide this information to the PSP.

On April 5, 2001, the Commission released the Second Order on Reconsideration, 66 FR 21105, April 27, 2001, which modified the payphone compensation rules. The modified rules provided that the first facilities-based IXC to which a LEC routes a coinless payphone call must (1) Compensate the PSP for the completed call; (2) track or arrange for tracking of all compensable calls; and (3) send to the PSP call completion information to enable the PSP to verify the accuracy of compensation it receives for coinless, compensable calls and/or to bill the underlying facilities-based carrier. The first IXC may then seek reimbursement from the switchless or switch-based reseller ultimately responsible for the compensation.

In this Third Order on Reconsideration and Order on Clarification, we decline to modify the rules as established in the Second Order on Reconsideration. We also reaffirm that, for purposes of payphone compensation, only calls that are answered by the called party are “completed” and thus compensable. Further, we clarify that the Commission supports the preservation and establishment of direct relationships and agreements between PSPs and SBRs for tracking and payment of payphone compensation, and that the liability of the first facilities-based IXC is limited to the extent that SBRs enter into such direct relationships. We also reiterate that the Commission did not, by revising the payphone compensation rules, intend to nullify any current or future contractual arrangements. Finally, we clarify that carriers are only required to report to PSPs calls that are completed, and thus compensable.

Ordering Clause

Pursuant to the authority contained in Sections 1, 4(i), 4(j), and 276 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), and 276, the Bulletins Petition for Clarification is denied to the extent described herein; WorldCom, Inc. Petition for Declaratory Ruling and Petition for Reconsideration is granted in part and denied in part to the extent described herein; AT&T Petition for Clarification and/or Reconsideration is denied to the extent described herein; and Global Crossing Telecommunications, Inc. Petition for Reconsideration and Clarification is denied, to the extent described herein.

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Federal Communications Commission.

Magalie Roman Salas,


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[FR Doc. 02-1810 Filed 1-24-02; 8:45 am]