§  69.123   Density pricing zones for special access and switched transport.

   (a)(1) Incumbent local exchange carriers not subject to price cap
   regulation may establish any number of density zones within a study
   area that is used for purposes of jurisdictional separations, provided
   that each zone, except the highest-cost zone, accounts for at least 15
   percent of that carrier's special access and transport revenues within
   that study area, calculated pursuant to the methodology set forth in
   § 69.725.

   (2) Such a system of pricing zones shall be designed to reasonably
   reflect cost-related characteristics, such as the density of total
   interstate traffic in central offices located in the respective zones.

   (3) Non-price cap incumbent local exchange carriers may establish only
   one set of density pricing zones within each study area, to be used for
   the pricing of both special and switched access pursuant to paragraphs
   (c) and (d) of this section.

   (b)(1) Incumbent local exchange carriers subject to price cap
   regulation may establish any number of density zones within a study
   area that is used for purposes of jurisdictional separations, provided
   that each zone, except the highest-cost zone, accounts for at least 15
   percent of that carrier's trunking basket revenues within that study
   area, calculated pursuant to the methodology set forth in § 69.725.

   (2) Price cap incumbent local exchange carriers may establish only one
   set of density pricing zones within each study area, to be used for the
   pricing of all services within the trunking basket for which zone
   density pricing is permitted.

   (3) An access service subelement for which zone density pricing is
   permitted shall be deemed to be offered in the zone that contains the
   telephone company location from which the service is provided.

   (4) An access service subelement for which zone density pricing is
   permitted which is provided to a customer between telephone company
   locations shall be deemed to be offered in the highest priced zone that
   contains one of the locations between which the service is offered.

   (c) Notwithstanding § 69.3(e)(7), in study areas in which a telephone
   company offers a cross-connect, as described in § 69.121(a)(1), for the
   transmission of interstate special access traffic, telephone companies
   may charge rates for special access sub-elements of DS1, DS3, and such
   other special access services as the Commission may designate, that
   differ depending on the zone in which the service is offered, provided
   that the charges for any such service shall not be deaveraged within
   any such zone.

   (1) A special access service subelement shall be deemed to be offered
   in the zone that contains the telephone company location from which the
   service is provided.

   (2) A special access service subelement provided to a customer between
   telephone company locations shall be deemed to be offered in the
   highest priced zone that contains one of the locations between which
   the service is offered.

   (d) Notwithstanding § 69.3(e)(7), in study areas in which a telephone
   company offers a cross-connect, as described in § 69.121(a)(1), for the
   transmission of interstate switched traffic, or is using collocated
   facilities to interconnect with telephone company interstate switched
   transport services, telephone companies may charge rates for
   sub-elements of direct-trunked transport, tandem-switched transport,
   entrance facilities, and dedicated signaling transport that differ
   depending on the zone in which the service is offered, provided that
   the charge for any such service shall not be deaveraged within any such
   zone.

   (1) A switched transport service subelement shall be deemed to be
   offered in the zone that contains the telephone company location from
   which the service is provided.

   (2) A switched transport service subelement provided to a customer
   between telephone company locations shall be deemed to be offered in
   the highest priced zone that contains either of the locations between
   which the service is offered.

   (e)(1) Telephone companies not subject to price cap regulation may
   charge a rate for each service in the highest priced zone that exceeds
   the rate for the same service in the lowest priced zone by no more than
   fifteen percent of the rate for the service in the lowest priced zone
   during the period from the date that the zones are initially
   established through the following June 30. The difference between the
   rates for any such service in the highest priced zone and the lowest
   priced zone in a study area, measured as a percentage of the rate for
   the service in the lowest priced zone, may increase by no more than an
   additional fifteen percentage points in each succeeding year, measured
   from the rate differential in effect on the last day of the preceding
   tariff year.

   (2) Notwithstanding § 69.3(e)(7), incumbent local exchange carriers
   subject to price cap regulation may charge different rates for services
   in different zones pursuant to § 61.47(f) of this chapter, provided that
   the charges for any such service are not deaveraged within any such
   zone.

   (f)(1) An incumbent local exchange carrier that establishes density
   pricing zones under this section must reallocate additional amounts
   recovered under the interconnection charge prescribed in § 69.124 of
   this subpart to facilities-based transport rates, to reflect the higher
   costs of serving lower density areas. Each incumbent local exchange
   carrier must reallocate costs from the interexchange charge each time
   it increases the ratio between the prices in its lowest-cost zone and
   any other zone in that study area.

   (2) Any incumbent local exchange carrier that has already deaveraged
   its rates on January 1, 1998 must reallocate an amount equivalent to
   that described in paragraph (f)(1) of this section from the
   interconnection charge prescribed in § 69.124 to its transport services.

   (3) Price cap local exchange carriers shall reassign to direct-trunked
   transport and tandem-switched transport categories or subcategories
   interconnection charge amounts reallocated under paragraph (f)(1) or
   (f)(2) of this section in a manner that reflects the way density
   pricing zones are being implemented by the incumbent local exchange
   carrier.

   [ 57 FR 54333 , Nov. 18, 1992, as amended at  58 FR 48764 , Sept. 17, 1993;
    62 FR 31935 , June 11, 1997;  64 FR 51267 , Sept. 22, 1999;  69 FR 25336 ,
   May 6, 2004]