§  51.705   Incumbent LECs' rates for transport and termination.

   (a) An incumbent LEC's rates for transport and termination of
   telecommunications traffic shall be established, at the election of the
   state commission, on the basis of:

   (1) The forward-looking economic costs of such offerings, using a cost
   study pursuant to § § 51.505 and 51.511;

   (2) Default proxies, as provided in § 51.707; or

   (3) A bill-and-keep arrangement, as provided in § 51.713.

   (b) In cases where both carriers in a reciprocal compensation
   arrangement are incumbent LECs, state commissions shall establish the
   rates of the smaller carrier on the basis of the larger carrier's
   forward-looking costs, pursuant to § 51.711.