| (iv) the duration of a call.
(G) Cost drivers for operator services. The LRIC for
this BNF must systematically account for variations in costs caused
by variations in the type of operator services calls.
(g) LRIC studies for tariffed services. The DCTU must
perform a LRIC study for each tariffed service, except those services
for which a waiver has been granted under the workplan approved by
the commission. Each LRIC study for a tariffed service must be calculated
as the sum of the costs caused by that service's use of BNFs and any
other service specific costs associated with functions not identified
as separate BNFs, such as expenses of billing, service specific advertising
and marketing, and service specific taxes. Each LRIC study for a tariffed
service must be consistent with the principles described in subsection
(d) of this section. Additionally, the company must use the following
instructions in determining the LRIC for individual tariffed services:
(1) Mapping of BNFs and costs to tariffed services.
The LRIC study must identify the BNFs that are used in the provision
of the tariffed service; the long run incremental costs for the tariffed
service must include the costs associated with this usage. The costs
associated with the service's use of a BNF must be calculated as the
product of the unit cost for the BNF (as determined under subsection
(f)(8) of this section) and the demand of the service for that BNF.
(2) Identification of other costs. The LRIC study for
an individual tariffed service must include all service specific costs
(e.g., expenses of billing, marketing, customer service or service
specific taxes) related to the provision of the service that are not
included in the costs for the BNFs.
(3) Exclusion of common costs. The LRIC study for an
individual tariffed service must exclude any costs that are common
costs (as defined in subsection (c)(5) of this section). Specifically,
the individual LRIC studies for residential and business basic local
exchange service, as these services are tariffed on the effective
date of this section, must exclude any volume insensitive costs associated
with the use of the network access channel basic level (as defined
in subsection (e)(1)(A) of this section) and network access channel
connection basic level (as defined in subsection (e)(2)(A) of this
section).
(4) Relevant increment of output. For the purposes
of this subsection, the relevant increment of output, as that term
is used in the definition of LRIC in §26.5 of this title (relating
to Definitions), must be the level of output necessary to satisfy
current demand levels for the service. Adjustments to total service
output may be made to reflect the presence of new services for which
demand levels can demonstrably be anticipated to increase significantly
over the course of six months.
(5) Relating expenses to services. The company must
avoid the use of embedded cost data and must determine expenses consistent
with the principles of long run incremental costing.
(A) Common expenses. Common expenses that are not directly
attributable, using the cost causation principle, to the service must
be excluded.
(B) Nonrecurring expenses. The expenses of nonrecurring
activities must be separately identified.
(C) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, must be excluded from the LRIC
study for individual services.
(6) Least cost technology. LRIC studies must assume
the use of least cost technology. The choice of least cost technologies,
however, must:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary
to satisfy current demand levels for all services using the BNF in
question; and
(C) be consistent with overall network design and topology
requirements.
(7) Network topology. LRIC studies must use the existing
or planned network topology.
(8) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined either
in a rate proceeding as described in §26.201(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but must justify its
use. The DCTU is not required to update its filing only to reflect
the most recently approved cost of money.
(9) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the company
there will be a presumption of reasonableness. The company must justify
the use of any other rate.
(h) Identification of BNFs and groups of services that
share significant common costs and calculation of such common costs.
The company must identify all instances in which BNFs and groups of
services share significant common costs and calculate such common
costs.
(1) Costs common to BNFs. The company must identify
and calculate for each subcategory of BNFs and category of BNFs significant
costs that are common to BNFs (as defined in subsection (c)(5)(B)
of this section). Costs common to BNFs must only be identified and
calculated at the level of subcategories of BNFs and/or categories
of BNFs.
(2) Costs common to groups of services. The company
must identify and calculate all significant common costs and the groups
of services that share those common costs (as defined in subsection
(c)(5)(C) of this section). The calculation of common costs required
under paragraphs (1) - (2) of this subsection must be consistent with
the principles described in subsection (d) of this section and the
instructions listed below.
(3) Relevant increment of output. When common costs
are computed for BNFs or services, the relevant increment of output,
as that term is used in the definition of LRIC in §26.5 of this
title (relating to Definitions), must be the level of output necessary
to satisfy current demand levels for the BNFs or the services. Adjustments
to total service output may be made to reflect the presence of new
services for which demand levels can demonstrably be anticipated to
increase significantly over the course of six months.
(4) Expenses. The company must avoid the use of embedded
cost data and must determine expenses consistent with the principles
of long run incremental costing.
(A) Nonrecurring expenses. The expenses of nonrecurring
activities must be separately identified.
(B) Taxes. Any tax expenses not directly attributable,
using the cost causation principle, must be excluded from the cost
studies for common costs.
(5) Least cost technology. The studies must assume
the use of least cost technology. The choice of least cost technologies,
however, must:
(A) be restricted to technologies that are currently
available on the market and for which vendor prices can be obtained;
(B) be consistent with the level of output necessary
to satisfy current demand levels for the BNFs or services in question;
and
(C) be consistent with overall network design and topology
requirements.
(6) Network topology. Cost studies must use the existing
or planned network topology.
(7) Cost of money. When the company uses the most recent
commission approved rate of return for the company, determined either
in a rate proceeding as described in §26.201(d)(1) of this title
(relating to Cost of Service) or a commission arbitration proceeding,
there will be a rebuttable presumption of its reasonableness. The
company may use any other forward-looking rate, but must justify its
use. The DCTU is not required to update its filing only to reflect
the most recently approved cost of money.
(8) Rate of depreciation. When the company uses the
most recent commission approved rate of depreciation for the company
there will be a presumption of reasonableness. The company must justify
the use of any other rate.
(i) LRIC studies for groups of tariffed services that
share significant common costs. The DCTU must perform a LRIC study
for each group of services identified under subsection (h)(2) of this
section. Each group LRIC must be calculated as the sum of the LRICs
(as determined under subsection (g) of this section) for the services
in the group and the common costs for those services (as identified
under subsection (h)(2) of this section). Each LRIC study must be
consistent with the principles described in subsection (d) of this
section. Additionally, the company must use the following instructions
in determining the LRIC for groups of services.
Cont'd... |
