Goto Section: 54.304 | 54.306 | Table of Contents
FCC 54.305
Revised as of October 5, 2017
Goto Year:2016 |
2018
§ 54.305 Sale or transfer of exchanges.
(a) The provisions of this section shall not be used to determine
support for any price cap incumbent local exchange carrier or a
rate-of-return carrier, as that term is defined in § 54.5, that is
affiliated with a price cap incumbent local exchange carrier.
(b) Beginning January 1, 2012, any carrier subject to the provisions of
this paragraph shall receive support pursuant to this paragraph or
support based on the actual costs of the acquired exchanges, whichever
is less. 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 paragraph (b)
of this section, would qualify for high-cost loop support for the
acquired exchanges under § 54.1310.
(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 § § 54.1305 and 54.1306, shall be calculated pursuant to
§ 54.1310 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 § § 54.1305, 54.1306, and 54.1310.
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
§ § 54.1305, 54.1306, and 54.1310 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 § § 54.1305 and 54.1306 and shall be
calculated in accordance with § 54.1310. The index year expense
adjustment for rural telephone companies that have operated exchanges
subject to this section for more than a full year on August 8, 2014
shall be based on loop cost data submitted in accordance with § 54.1306
for the year ending on the nearest calendar quarter following August 8,
2014. 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 § 54.1310 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 paragraph (b) of
this section. 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 § 54.1310 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 § 54.1302. 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 § 54.1302 or the sum of rural
incumbent local exchange carrier expense adjustments calculated
pursuant to § 54.1310. 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, as amended at 76 FR 73871 , Nov. 29, 2011;
79 FR 39188 , July 9, 2014; 81 FR 24339 , Apr. 25, 2016]
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Goto Section: 54.304 | 54.306
Goto Year: 2016 |
2018
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