Sec. 36.2  Fundamental principles underlying procedures.

    (a) The following general principles underlie the procedures 
outlined in this part:
    (1) Separations are intended to apportion costs among categories or 
jurisdictions by actual use or by direct assignment.
    (2) Separations are made on the ``actual use'' basis, which gives 
consideration to relative occupancy and relative time measurements.
    (3) In the development of ``actual use'' measurements, measurements 
of use are (i) determined for telecommunications plant or for work 
performed by operating forces on a unit basis (e.g., conversation-
minute-kilometers per message, weighted standard work seconds per call) 
in studies of traffic handled or work performed during a representative 
period for all traffic and (ii) applied to overall traffic volumes, 
i.e., 24-hour rather than busy-hour volumes.
    (b) Underlying the procedures included in this manual for the 
separation of plant costs is an over-all concept which may be described 
as follows:
    (1) Telecommunications plant, in general, is segregable into two 
broad classifications, namely, (i) interexchange plant, which is plant 
used primarily to furnish toll services, and (ii) exchange plant, which 
is plant used primarily to furnish local services.
    (2) Within the interexchange classification, there are three broad 
types of plant, i.e., operator systems, switching plant, and trunk 
transmission equipment. Within the exchange classification there are 
four board types of plant, i.e., operator systems, switching plant, 
truck equipment and subscriber plant. Subscriber plant comprises lines 
to the subscriber.
    (3) In general, the basis for apportioning telecommunications plant 
used jointly for state and interstate operations are:
    (i) Operator work time expressed in weighted standard work seconds 
is the basis for measuring the use of operator systems.
    (ii) Holding-time-minutes is the basis for measuring the use of toll 
switching plant.
    (iii) Conversation-minute-kilometers or conversation minutes is the 
basis for measuring the use of interexchange circuit plant and holding-
time minutes is the basis for measuring the use of exchange trunk plant. 
While the use of holding-time-minute-kilometers is the basic fundamental 
allocation factor for interexchange circuit plant and exchange trunk 
plant, the use of conversation-minute-kilometers or conversation-minutes 
for the allocation of interexchange circuit plant and holding-time 
minutes for the allocation of exchange trunk plant are considered 
practical approximations for separations between state and interstate 
operations when related to the broad types of plant classifications used 
herein.
    (iv) A subscriber plant factor is the basis of apportioning the cost 
of message telecommunications subscriber plant and local switching plant 
between State and interstate operations. The subscriber plant factor is 
developed and used according to the procedures set forth in 
Secs. 36.154(c) through 36.154(f).
    (c) Property rented to affiliates, if not substantial in amount, is 
included as used property of the owning company with the associated 
revenues and expenses treated consistently: Also such property rented 
from affiliates is not included with the used property of the company 
making the separations; the rent paid is included in its expenses. If 
substantial in amount, the following treatment is applied:
    (1) In the case of property rented to affiliates, the property and 
related expenses and rent revenues are excluded from the telephone 
operations of the owning company, and
    (2) In the case of property rented from affiliates, the property and 
related expenses are included with, and the rent expenses are excluded 
from, the telephone operations of the company making the separation.
    (d) Property rented to or from non-affiliates is usually to be 
included as used property of the owning company with the associated 
revenues and expenses treated consistently. In the event the amount is 
substantial, the property involved and the revenues and expenses 
associated therewith may be

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excluded from or included in the telecommunications operations of the 
company. When required, the cost of property rented to or from non-
affiliates is determined using procedures that are consistent with the 
procedures for the allocation of costs among the operations.
    (e) Costs associated with services or plant billed to another 
company which have once been separated under procedures consistent with 
general principles set forth in this part, and are thus identifiable as 
entirely interstate or State in nature, shall be directly assigned to 
the appropriate operation and jurisdiction.
[ 52 FR 17229 , May 6, 1987, as amended at  58 FR 44905 , Aug. 25, 1993]

                 Subpart B--Telecommunications Property

                                 General