Sec. 36.601  General.

    (a) The term Universal Service Fund in this subpart refers only to 
the support for loop-related costs included in Sec. 36.621. The term 
Universal Service in part 54 of this chapter refers to the comprehensive 
discussion of the Commission's rules implementing section 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 254, which addresses 
universal service support for rural, insular, and high cost areas, low-
income consumers, schools and libraries, and heath care providers. The 
expense adjustment calculated pursuant to this subpart F shall be added 
to interstate expenses and deducted from state expenses after expenses 
and taxes have been apportioned pursuant to subpart D of this part. 
Beginning January 1, 1998, the expense adjustment calculated pursuant to 
this subpart will be administered and funded through the new universal 
service system discussed in part 54 of this chapter.
    (b) The expense adjustment will be computed on the basis of data for 
a preceding calendar year which may be updated at the option of the 
carrier pursuant to Sec. 36.612(a).
    (c) The annual amount of the total nationwide loop cost expense 
adjustment calculated pursuant to this subpart F shall not exceed the 
amount of the total loop cost expense adjustment for the immediately 
preceding calendar year, increased by a rate equal to the rate of 
increase in the total number of working loops during the calendar year 
preceding the July 31st filing. The total loop cost expense adjustments 
shall consist of the loop cost expense adjustments, including amounts 
calculated pursuant to Secs. 36.612(a) and 36.631. The rate of increase 
in total working loops shall be based upon the difference between the 
number of total working loops on December 31 of the calendar year 
preceding the July 31st filing and the number of total working loops on 
December 31 of the second calendar year preceding that filing, both 
calculated pursuant to Sec. 36.611(a)(8). Beginning January 1, 1999, 
non-rural carriers shall no longer receive support pursuant to this 
subpart F. Beginning January 1, 1999, the total loop cost expense 
adjustment shall not exceed the total amount of the loop cost expense 
adjustment provided to rural carriers for the immediately preceding 
calendar year, adjusted to reflect the rate of change in the total 
number of working loops or rural carriers during the calendar year 
preceding the July filing. In addition, effective on January 1 of each 
year, beginning January 1, 1999, the maximum annual amount of the total 
loop cost expense adjustment for rural

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carriers must be further increased or decreased to reflect:
    (1) The addition of lines served by carriers that were classified as 
non-rural in the prior year but which, in the current year, meet the 
definition of ``rural telephone company;'' and
    (2) The deletion of lines served by carriers that were defined as 
rural in the prior year but which, in the current year, no longer meet 
the definition of ``rural telephone company.'' A rural carrier is 
defined as a carrier that meets the definition of a ``rural telephone 
company'' in Sec. 7thnsp;51.5 of this chapter. Limitations imposed by 
this subsection ahall apply only to the amounts calculated pursuant to 
this subpart F.
[ 52 FR 17229 , May 6, 1987, as amended at  56 FR 27422 , June 14, 1991;  58 FR 69242 , Dec. 30, 1993;  61 FR 34376 , July 2, 1996;  62 FR 32947 , June 
17, 1997;  62 FR 40748 , July 30, 1997]

                             Data Collection