Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996

On October 9, 1997, the Commission adopted a Second Report and Order in CC Docket 96-128, FCC 97-371, in which it concluded that interexchange carriers must compensate payphone service providers for all coinless payphone calls not otherwise compensated pursuant to contract, including subscriber 800 and access code calls, 0+ and inmate calls, at the rate of $.284 per call. The Commission based this decision on the conclusion that the default rate for per-call compensation for these calls is the deregulated local coin rate adjusted for cost differences. This rate will continue to be the default rate for coinless payphone calls for the first two years of per-call compensation. After the first two years, the market-based local coin rate adjusted for certain costs is the surrogate for the default per-call rate.