Sec. 54.301  Local switching support.

    Beginning January 1, 1998, eligible rural telephone company study 
areas with 50,000 or fewer access lines shall receive support for local 
switching costs, defined as Category 3 local switching costs under part 
36 of this chapter, using the following formula: the carrier's annual 
unseparated local switching revenue requirement shall be multiplied by 
the local switching support factor. The local switching support factor 
shall be defined as the difference between the 1996 weighted interstate 
DEM factor, calculated pursuant to Sec. 36.125(f) of this chapter, and 
the 1996 unweighted interstate DEM factor. If the number of a study 
area's access lines increases such that, under Sec. 36.125(f) of this 
chapter, the weighted interstate DEM factor for 1997 or any successive 
year would be reduced, that lower weighted interstate DEM factor shall 
be applied to the carrier's 1996 unweighted interstate DEM factor to 
derive a new local switching support factor. Beginning January 1, 1998, 
the sum of the unweighted interstate DEM factor and the local switching 
support factor shall not exceed .85. If the sum of those two factors 
would exceed .85, the local switching support factor must be reduced to 
a level that would reduce the sum of the factors to .85.