3060-0470 February 2008
Section 64.901, Allocation of Cost; Section 64.903, Cost Allocation Manuals;
and RAO Letters 19 and 26
We are requesting an extension of a currently approved collection.
SUPPORTING STATEMENT
A. Justification:
1. Section 201(b) of the Communications Act of 1934, as amended, requires that common carriers establish just and reasonable charges, practices and regulations for the services they provide. The Commission is responsible for regulating the telecommunications industry and ensuring that common carriers abide by its mandate. Since the carriers are allowed to provide nonregulated services, the Commission must establish mechanisms to prevent carriers from imposing on ratepayers the cost and risks of nonregulated ventures. Over the years several methods have been adopted by the Commission to reach this goal. One method was structural separations. Under this method, carriers were required to establish separate corporate entities for their common carrier and data processing services. Although structural separation provided maximum separation of costs, the method proved to be costly and was not in the public interest.
The Commission is seeking continued OMB approval for the following information collection requirements:
47 C.F.R. Section 64.901 requires carriers to separate their regulated costs from nonregulated costs using the attributable cost method of cost allocation. Carriers must follow the principles described in Section 64.901. Carriers subject to Section 64.901 are also subject to the provisions of 47 C.F.R. Sections 32.23 and 32.27. See 47 C.F.R. Sections 64.901 and 64.902.
47 C.F.R. Section 64.903(a) requires each local exchange carrier with annual operating revenues that equal or exceed the indexed revenue threshold, as defined in 47 C.F.R. § 32.9000 of this chapter, shall file with the Commission within 90 days after publication in the Federal Register, a manual containing information regarding its allocation of costs between regulated and non-regulated activities.
47 C.F.R. Section 64.903(b) requires that carriers update their cost allocation manuals at least annually; except that changes to the cost apportionment table and the description of time reporting procedures must be filed at the time of implementation. Proposed changes in the description of time reporting procedures, the statement concerning affiliate transactions, and the cost apportionment table must be accompanied by a statement quantifying the impact of each change on regulated operations. Changes in the description of time reporting procedures and the statement concerning affiliate transactions must be quantified in $100,000 increments at the account level. Changes in the cost apportionment table must be quantified in $100,000 increments at the cost pool level.
Moreover, filing of CAMs (cost accounting manuals) and occasional updates are subject to the uniform format and standard procedures specified in Responsible Accounting Officer (RAO) Letter 19. RAO Letter 26 provides guidance to carriers in revising their CAMs to reflect changes to the affiliate transactions rules pursuant to the Accounting Safeguards Order (FCC 96-490).
As noted on the OMB Form 83i, this information collection does not affect individuals or households; thus, there are no impacts under the Privacy Act.
Statutory authority is contained in sections 1, 4, 201-205, 215, and 218-220 of the Communications Act of 1934, as amended, 47 U.S.C. sections 151, 154, 201-205, 215, and 218-220, and Parts 32 and 64 of the Commission’s rules, 47 C.F.R. Parts 32 and 64.
2. The CAM is reviewed by the Commission to ensure that all costs are properly classified between regulated and nonregulated activity. Uniformity in the CAMs will help improve the joint cost allocation process. In addition, this uniformity will give the Commission greater reliability in financial data submitted by the carriers through ARMIS.
3. Carriers are not prohibited from using improved information technology to comply with reporting requirements.
4. No similar information is available elsewhere.
5. The Commission specifically exempted small carriers from the reporting requirements. Only LECs with annual operating revenues equal to or above the indexed revenue threshold as defined in 47 C.F.R. Section 32.9000, except mid-sized incumbent local exchange carriers, are subject to the reporting requirement. The Commission may impose the requirement on other communications common carriers as necessary. See 47 C.F.R. Section 64.903(c).
6. Pursuant to Section 64.903 carriers must update their manuals at least annually. If the collection is not conducted or is conducted less frequently, the Commission will not be able to effectively carry out its responsibilities under the Communications Act. It would thwart the Commission’s ability to detect cross-subsidization.
7. Each carrier must submit six copies of their CAM filings, accompanied by a Transmittal Letter. Four copies must be filed with the Office of the Secretary. One copy must be delivered directly to Chief, Pricing Policy Division of the Wireline Competition Bureau, and the last copy must be delivered to the Commission’s copy contractor.
The five copies are distributed as follows: public file, official file, working file, public notice file, and the Investigations and Hearing Division of the Enforcement Bureau.
These files are located in different areas, and it is necessary to have CAM filings in each location. This is part of our accounting procedures to maintain good accounting safeguards.
8. The Commission placed a notice in the Federal Register as required by 5 C.F.R. Section 1320.8(d). See 72 FR 64223, dated November 15, 2007. No comments were received.
9. The Commission does not anticipate providing any payment or gift to respondents.
10. The information is not of a confidential nature. Respondents who believe certain information to be of a proprietary nature may solicit confidential treatment in accordance with the procedures described in 47 C.F.R. Section 0.459.
11. The information is not of a sensitive nature nor are there any privacy issues.
12. The following represents the estimate of hour burden of the collection of information:
(1) Number of respondents: 6; 12 responses annually (approximately 2 per year per respondent).
(2) Frequency of response: Annually and on occasion reporting requirements.
(3) Annual hour burden: 200 hours each filing (approximately 2 per year).
Total annual burden: 200 hours x 12 filings/annum = 2,400 hours.
(4) Estimate of annualized cost to respondents for the hour burdens for collection of information: $141,037.50.
(5) Explanation of calculation: We estimate that it will take approximately 200 hours any time the respondent is required to provide information to the Commission.
6 respondents x 2 estimated annual submissions x 200 hours/submission = 2,400 hours
2,400 hours x $58.77 per hour = $141,037.50.
The cost incurred by carriers in complying with our CAM rules is difficult to quantify since each carrier is involved in different markets and, to different degrees, in similar markets.
However, assuming that the carriers use a mid-to-senior level in-house employee comparable in pay to that of a mid-to-senior level Federal employee (GS-13/5) $45.20 per hour, plus 30% overhead, which we estimate respondents’ total cost to be $58.77 per hour per collection.
Information Collection Requirements |
Number of Respondents |
Total Annual Responses |
Hours Per Response |
Total Hours |
Total Cost |
S64.903 – annual CAM Filings |
6 |
1 |
200 |
1,200 |
$70,518.75 |
Occasional filing, incling certain revisions |
6 |
1 |
200 |
1,200 |
$70,518.75 |
Total |
6 |
12 |
|
2,400 |
$141,037.50 |
Total Number of Respondents: 6
Total Number of Responses Annually: 12
Total Annual Hourly Burden: 2,400 hours
Total “In House” Costs: $141,037.50
13. The following represents the Commission’s estimate of the annual cost burden to respondents or recordkeepers resulting from the collections of information:
(1) Total capital and start-up cost component (annualized over its useful life): $0
(2) Total operations and maintenance and purchase of services component: $0
(3) Total annualized cost requested: $0
14. The annualized cost to the Federal government is estimated to be $35,259.38, which is based on the following:
Processing Costs:
- 600 hrs to review revised manuals, annual and occasional updates: = 600 hours
- Avg. grade of employee, GS-13/5, including 9.3% benefits = $45.20
Subtotal = $27,122.60
- Overhead cost ($27,122.60 x 30%) = $8,136.78
Total Cost to the Federal Government = $35,259.38
15. Total annual burden estimate for the CAM filing requirement remains 2,400 burden hours.
16. The Commission does not anticipate that it will publish any of the information collected.
17. The Commission does not seek approval not to display the expiration date for OMB approval of the information collection.
18. There are no exceptions to Item 19 in the Certification Statement.
B. Collection of Information Employing Statistical Methods:
The Commission does not anticipate that the collection of information will employ statistical methods.
| File Type | application/msword |
| Author | NCS |
| Last Modified By | Leslie.Smith |
| File Modified | 2008-02-11 |
| File Created | 2008-02-11 |