HomeMy WebLinkAbout19971205Comments.docBRAD PURDY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0357
Street Address for Express Mail:
472 W WASHINGTON
BOISE ID 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF ATLAS COMMUNICATIONS, LTD. FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO PROVIDE RESOLD LOCAL EXCHANGE CARRIER SERVICES.
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CASE NO. ACM-T-97 2
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its attorney of record, Brad Purdy, Deputy Attorney General, and in response to the Notice of Application and Notice of Modified Procedure issued on November 14, 1997, submits the following comments.
On September 24, 1997, Atlas Communications, Ltd, through its attorney, Patrick D. Crocker of Early, Lennon, Peters & Crocker, filed an application for a Certificate of Public Convenience and Necessity to provide local exchange resale services in Idaho. Atlas position is that the federal Telecommunications Act prohibits states from imposing burdensome requirements that would bar entries to the market and requires LECs to assist new entrants into the market by refraining from unreasonable limitations, entering reciprocal compensation arrangements and offering its telecommunications services for resale at wholesale rates. The Company believes that its experience in providing telecommunications in the state and its intent to provide only non-facilities-based services should qualify it without formal proceeding.
Atlas Communications, Ltd. is a Pennsylvania corporation, incorporated in 1995 to provide long distance services to small and medium sized commercial and residential customers throughout the United States through contract tariffs with a national carrier over an established network of independent long distance and marketing companies known as agents. The Company proposes to resell U S WEST and GTE exchange services to originate and terminate local calls to customers and will provide customers the ability to access long-distance carriers and switched access services to IXCs. The Company plans initially to resell LEC services (such as basic local lines, DID/DOD lines, Centrex and related services, 9-1-1 emergency service, Directory Assistance and Operator Assisted calls, toll-free calling, various calling and CLASS features, including Caller ID and Caller ID with name, Call Trace, etc., and blocking to information service numbers) to business customers. The Company also plans to install interLATA and intraLATA dedicated inward and outbound exchange services.
Atlass application basically follows the requirements listed in the Appendix to the Commissions Procedural Order No. 26665, which lists the requirements for applying for a CPCN; however, many areas of Atlas application are deficient. The deficiencies detected by Staff are as follows:
1. Atlas Communications, Ltd. advises that Com Partners, Ltd. owns 100% of its issued shares. In a subsequent filing, Atlas advises that Compartners is a Virginia-based corporation and is not the source of financing. No additional information has been provided.
2. The Company does not provide the date on which it anticipates it will begin to provide service as requested on page 4 of the Procedural Order and as required by IDAPA 31.01.01.111 (Rule 111). Atlas anticipates that LECs will make wholesale rates available to it. Staff is concerned that the Company is not aware that it must approach the LECs and enter into agreement(s) wherein such rates are made available.
3. Applicant submitted copies of audited 1995 and 1996 financial statements and an unaudited 6-month statement for the period ending 6/30/97. While Staff does not normally present an evaluation of a Companys financial status based on the data the Company submits in
its application, there are some aspects of the financial viability of this Company that require comment. Atlas Statements of Operations and Accumulated Deficit show the following information:
Interim 6-Month
Period, 6/30/97 1996 1995
Revenues 23,322,756 $43,187,422 $ 866,568
Cost of Revenue 20,900,350 38,244,071 607,172
Gross Profit $2,422,406 $ 4,943,351 $ 259,396
Operating Expenses
except Bad Debt Allow. 2,446,226 3,529,179 756,999
Bad Debt Allowance (257,526)1 4,221,447 19,951
Total Operating Expenses 2,188,700 $ 7,750,626 $ 776,950
Other income 8,534 113,621 31,509
NET GAIN/(LOSS) 242,240 $(2,693,654) $(486,045)
Stockholders Equity/(Deficiency) 242,240 (2,693,654) (486,045)
Accumulated Deficiency $(2,937,459) $(3,179,699) $(486,045)
1 Listed as recovery of bad debt reserve, net of expense of $337,474.
Applicant professes to have access to financing and capital necessary to conduct its telecommunications operations and will rely on existing personnel and technological resources and no additional investment will be necessary. However, Staff notes that the Company is apparently incurring losses and they have not provided this Commission with any indication of their source of financing.
Item 11 in the Appendix to Procedural Order No. 26665 is the requirement that Applicants provide a signed copy of an escrow account with a bonded agent if the Company requires advance deposit by its customers and that the Company submit quarterly report filings from the agent recording deposits or disbursements from the account. In its interim tariff, Atlas indicates its intent to additionally require advanced payments in some instances. Atlas did not address this escrow requirement in its application, but has recently advised that it will revise its tariffs to reflect that it will not require advance deposits for the services contemplated, thereby negating the escrow requirements. Staff recommends, in view of the financial deficiencies of the Company, that this escrow account be expanded to cover all special advanced payments (such as special configurations or construction), including one months revenue in addition to any deposits the Company requires. If the Company identifies its source of financing to show that customers would not be hurt if the Company ceases its operations in Idaho, this requirement could be waived.
4. Order No. 26665 requires a proposed tariff to be submitted in both paper and electronic form. Applicant presented an interim tariff in paper form only. Atlas has subsequently promised to submit its tariff on diskette when it has completed its revision. In Staffs review of this tariff, Staff prepared a list of 34 areas in the tariff that require clarification, correction or modification. Staff transmitted a copy of this list to Mr. Crocker on December 1. Until these items are satisfied, Atlas interim tariff does not comply with the Commissions rules.
5. Atlas has requested an exemption from Idaho Code Section 62-610 and IDAPA rules regarding Universal Service Fund requirements on the grounds that Atlas will only be providing resold equipment. Atlas assumes that the facilities-based carriers for which Atlas resells will pay the USF and TRS requirements. This is not a valid assumption. Staff recommends that Atlas be required pursue exemption from these obligations in a separate proceeding, following the procedure outlined in IDAPA 31.46.01 for toll providers who request exemptions from these fund obligations. Essentially, this procedure allows the USF Administrator and/or Staff to grant exception if the provider supplies letter(s) from underlying carrier(s) verifying that the carrier(s) remit the required funds.
6. Atlas also proposes to offer operator services, including 0- calling capabilities. IDAPA 31.51.01.01102 requires operator service providers to direct emergency calls placed by dialing 0" to the LEC unless the providers are exempted. Staff recommends that Atlas apply for such exemption in a separate proceeding. Applicant has subsequently advised Staff that it will seek this exemption before it provides 0- services. With this information, Staff does not find a problem with Atlas proposal to offer operator services, but recommends that the exemption requirement be included in any order the Commission issues.
RECOMMENDATION
While the Commission typically allows some latitude in reviewing compliance of applicants for Certificates of Public Convenience and Necessity, Staff does not feel that Atlas has presented the necessary information to process this Application. The Company has not provided information about its corporate structure and it has avoided discussions regarding its source of financing, even though it has apparently accrued a significant deficit in the year and a half it has been in business. It has not provided an anticipated date when it will begin operations and has presented an inadequate tariff that does not comply with Commission rules. Staff believes this Application, in its present form should be denied. The Commission might allow Atlas an additional 30 days to provide more information and make necessary modifications to its tariffs or, the Commission might dismiss this Application, leaving Atlas free to file again when it has the necessary information.
Respectfully submitted this day of December 1997.
_______________________________
Brad Purdy
Deputy Attorney General
_______________________________
Birdelle Brown
Telecommunications Analyst
BP:BB/jo/umisc\comments\acmt972.bp
STAFF COMMENTS 1 December 5, 1997