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

    (a) Telephone companies may establish a reasonable number of density 
pricing zones within each study area that is used for the purposes of 
jurisdictional separations, in which at least one interconnector has 
taken the subelement of connection charges for expanded interconnection 
described in Sec. 69.121(a)(1) of this chapter. Only one set of density 
pricing zones shall be established 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) 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.
    (c) Notwithstanding Sec. 69.3(e)(7) of this chapter, in study areas 
in which at least one interconnector has taken a cross-connect, as 
described in Sec. 69.121(a)(1) of this chapter, for the transmission of 
interstate special access traffic, telephone companies may

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charge rates for special access subelements 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 Sec. 69.3(e)(7) of this chapter, in study areas 
in which at least one interconnector has taken a cross-connect, as 
described in Sec. 69.121(a)(1) of this chapter, 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 subelements of 
direct-trunked transport, tandem-switched transport, entrance 
facilities, and dedicated signalling 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. Telephone 
companies may not, however, charge rates for the interconnection charge 
that differ depending on the zone in which the service is offered.
    (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) Telephone companies subject to price cap regulation may charge 
different rates for services in different zones pursuant to 
Sec. 61.47(h) of this chapter.
    (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 Sec. 69.124 to 
facilities-based transport rates, reflecting the higher costs of serving 
lower-density areas. Each incumbent local exchange carrier must 
reallocate costs from the interconnection charge each time it increases 
the differential between prices in density zones two and one or between 
three and one.
    (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 Sec. 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 by  58 FR 48764 , Sept. 17, 1993; 
 62 FR 31935 , June 11, 1997]

    Effective Date Note: At  62 FR 31935 , June 11, 1997, Sec. 69.123 was 
amended by adding paragraph (f), effective Jan. 1, 1998.

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