(1) Phase II shall be for determining cost and revenue impacts and for rate design. When the commission determines that a sufficient community of interest exists to warrant further consideration of EAS, the affected regulated local exchange company (or companies) shall be directed, and unregulated local exchange companies shall be requested, to perform an impact analysis. The company (or companies) shall submit the results of the impact analysis along with rate design proposals to the commission within 90 days after the commission order commencing phase II (an extension of time may be granted for good cause) , accompanied by all necessary company prefiled testimony, including an estimated implementation plan and schedule.

(2) The impact analysis shall include a determination of all cost and revenue impacts from implementation of the proposed EAS routes. These impacts include:������������

(a) losses in revenues from toll and other discontinued services such as foreign exchange service;

(b) increases in capital costs resulting from required additions to network capacity;

(c) net changes in operating and other expenses;

(d) cost shifts from the interstate jurisdiction to the intrastate jurisdiction resulting from the new EAS arrangement;

(e) losses in switched and special access revenues;

(f) net changes in billing and collection revenues; and

(g) changes in switched access allocations.

(3) Proposed EAS rates shall be designed so that EAS implementation is revenue-neutral to the affected local exchange company (or companies) . EAS rate design will include a flat rate option and at least one lower cost usage sensitive option. Additional rate design proposals are not precluded (and are encouraged, to provide additional customer choices) . Except when there is a substantial basis for shifting the cost to others, the rates shall be designed to recover the costs of EAS from those customers who directly benefit from EAS. The rate proposals should include a detailed description of the costs considered, how the proposed rates recover the costs of EAS implementation, the extent to which these costs are recovered from the customers who directly benefit, and the extent to which these costs are shifted to other customers.

(4) If the proposed EAS involves two or more companies, the companies shall propose interconnection and compensation arrangements.

(5) Following receipt of the company's (or companies') analyses and prefiled testimony the commission will issue notices as might then be required, providing an opportunity for hearing and a contested case procedural order and schedule.

(6) The commission may, on its own motion or the motion of any party, in its sole discretion, direct that affected customers be surveyed (balloted) by mail to ascertain customer acceptance of the proposed EAS arrangement. The survey form (ballot) must be approved by the commission prior to distribution. The commission may also hold public hearings in the affected areas.

(7) The commission will conclude phase II with an order either approving or denying the proposed EAS arrangement.

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