20120110Petition.pdf

Mar S. Hobson
Attorney & Counselor
999 Main Suite 1108
Boise, il 88702
208-885-8666
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iOll DEC 22 PI:; 4: 21
December 22,2011
VI HA DELIVRY
Jean D. Jewell, Secretar
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
RE: Docket No.€EN-tt-ll-
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Dea Ms. Jewell:
Enclosed for filing with ths Commission are an original and seven (7) copies of the
Petition of the CenturyLink Companies for Exemption from Rule 31.41.01.502.
Qwest Corporation dba CentuLin QC, CentuTel of Idaho, Inc. dba CenturyLink,
and CentuTel of the Gem State, Inc. dba CentuLin (collectively ''te CentuLink
companes" or "CentuLink") respectfully request that the Commission consider ths
Petition on modified procedure and expeditiously grant the relief requested herein to
allow the Petitioners a permanent exemption from Rule 31.41.01.502. CentuLin's
Confidential Attachments A, which is fied under separate cover and with an Attorney's
Cerificate contains confidential information that supports the Petition.
If you have any questions, please contact me. Than you for your cooperation in ths
matter.
Ver trly yours,
Afb~ /-. L-
Mar Sdobson
Enclosure
Mar S. Hobson (ISB. No. 2142)
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
mary.hobsoncmCentuLink.com
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ZUIL JAN I 0 A~l 9: 45
Lisa A. Anderl
Associate General Counsel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Tel: [phone]
Lisa.Anderl.cmCentuLink.com
Attorneys for the CentuLink Companies
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
PETITION OF THE CENTURYLINK
COMPANIES FOR EXEMPTION
FROM RULE 31.41.01.502
Case No. GfL=T ii
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THE CENTURYLINK COMPANIES' PETITION FOR EXEMPTION
Qwest Corporation dba CentuLink QC, CentuTel of Idaho, Inc. dba
CentuLink, and CentuTel of the Gem State, Inc. dba CentuLin (collectively ''te
CentuLink companes" or "CentuLink") by and though their undersigned attorneys,
file ths Petition for Exemption from Rule 31.41.01.502 (petition) on the grounds set out
below.
BACKGROUND
CENTURYLINK PETITION FOR EXEMPTION - 1 -
Ths Petition is filed pursuat to IDAPA 31.41.01.003. CentuLin requests a
peranent exemption from the provisions ofIDAPA 31.41.01.502 (Rule 502), which
perains to standads for restoration of voice serc~s and customer credits. CentuLink
respectfully requests that the Commission review this Petition on an expedited basis.
CentuLink seeks ths exemption to obtain relief from the unusua and
uneasonable hardships that result from the application of Rule 502 to the CentuLin
companes. These hardships arse from the profound changes that have occured in the
telecmmuncations industr in Idaho since the provisions of Rule 502 were adopted
eighteen years ago, in 1993. Today, the majority ofIdaho voice customers enjoy access
to alterative forms of voice communication (e.g., wireless phones, cable telephony,
Voice over Interet Protocol (VoIP) servce) that substitute for the serce regulated
under ths Rule. Signficantly, virtally all of Centu Link's competitors for these local
exchange customer are not regulated under the Rule.
Competitive pressures, paricularly from wireless technology, have a large impact
on all thee of the CentuLink companes. In addition, CentuTel of the Gem State, Inc
("Gem State") suffer from additional hardships related to the physical characterstics of
its serice tertory that make compliance with Rule 502 unquely burdensome.
STANDAR OF REVIEW
The Commission may grant exemptions if ''uusua or uneasonable hardships
result from the application of any of (its) rues". . . IDAPA 31.41.01.003. The
circumstaces descrbed in ths Petition meet this stadad. These include the
anti competitive impact on the thee CentuLink companes and the physical hardships
for Gem State. In addition, as the discussion below will demonstrate, application of Rule
CENTURYLINK PETITION FOR EXEMPTION - 2-
502 in the context of today' s telecommuncation market in Idaho results in regulation that
conflicts with the mandate of the Idaho Legislatue that any Commission regulation of
Title 62 companes providing basic local exchange serice be competitively and
technologically neutral.
DISCUSSSION
A. Application of the provisions of Rule 502 to CenturyLink in today's Idaho
telecommuncations market is anticompetitive and conflcts with Idaho statute.
1. Since the adoption of Rule 502 Idaho's telecommunications market has changed
dramatically.
Rule 502, which creates stadards for interal for the restoration of voice serce
and the payment of customer credits where stadards are not met, was initially adopted in
1993. At that time Qwest Corporation dba CentuLink QC ("QC") was known as "US
WEST Communcations" and was virtally the sole provider of wire line voice serce to
the residence and small business customer residing in its serice tertory. The Federal
Telecommuncations Act of 1996 (Federal Act), which would irrevocably open local
telecommunications markets to competition, had not yet been enacted. Cell phone use
was then limited primarly to business leader and their pees who cared heavy devices
that resembled bricks with antenae,
1 and the use of peronal computers to access the
Internet was in its infancy. Local telephone companes were strgging to meet customer
demand for new and additional telephone lines to provide ''basic local exchange servce,"
i.e., access lines to residential and small business customer with the associated
transmission of two-way interactive switched voice communcation withn in local
i The FCC's wieless report showed a tota ofl6 millon wieless subscribers in the entie nation in 1993.
As of December, 2010, the same source reportd 285 millon subscribers.
CENTURYLIN PETITION FOR EXEMPTION - 3 -
calling area.2 That basic local exchange servce (which is the focus of Rule 502) was
subject to economic regulation by the Commission under Title 61, Idaho Code.
The coming years brought signficant change to Idaho's telecommunications
market. QC's predecessor company reached the apex of its line penetration in 2001 with
544,640 lines in serce in Idaho. Soon, however, the rapid adoption of wireless phones
by user of all ages and economic levels, and the availabilty of competitive alteratives
for wieline communcations (especially for businesses and cable television customers)
ushered in by the Federal Act, ended QC's role as the predominant provider of telephone
serces for residence and small business customer. As of June 2010, over 30% of Idaho
households no longer had wireline serce and relied solely on wireless technology for
their voice needs.
3
Meawhile, any customer with a broadband connection can subscrbe to Voip4
serces from a carer like Vonage or Google to meet their voice nees. According to
the FCC, as of December 2010, there were 706,000 broadband connections in Idahos-a
number that significantly exceeds the 455,000 incumbent local exchange carer (ILEC)
access lines in the state.6 Each of these broadband customers can use VoIP for voice
callng and avoid buying basic local exchange serice from an ILEC such as one of the
CentuLink companes.
2 Idaho Code § 62-603(a).
3 Centers
for Disease Control and Prevention, National Center for Health Statistics, Wireless Substitution: State-
level Estiates from the National Health Intervew Surey, Janua 2007-June 2010, released Apri
20.2011, Table 3.
4 The term voice over Internet protocol (V oIP) servce refer to telecommuncations services that are
provided without using the public switched network upon which trditional telephone services are based.
High Speed Servcesfor Internet Access: Statu as of December 31,2010, FCC Industr Analysis and Technology
Division, Wireline Competion Bureau, Octobe 201 i, Table 17.6 Local Telephone Competition: Status as of December 31, 2010; Industr Analysis and Technology Division,
Wireline Competition Bureau, Ocober 201 I, table 8.
CENTURYLIN PETITION FOR EXEMPTION - 4-
These competitive technologies have taken their toll on traditional ILEC voice
serices. By December, 2010, 67% of the total voice connections in Idaho were provided
by wireless carers, while another 9% were provided by non-incumbent wireline carer
such as competitive local exchange carers (CLECs) and cable companes, and only 24%
were provided by incumbent wireline providers such as the CentuLink companes.7
QC's total line count in Idaho declined from 544,640 in 2001 to 310,870 in 201û-a loss
of43%.
2. Idaho's regulatory statutes have also changed since the adoption of Rule 502.
When Rule 502 was adopted, incumbent providers such as the CentuLink
companes were the predominant providers of local voice serice. Ver few customers
used wireless serices and most had no alternative for voice communcation in the event
their traditional phone line suffered a serce outage. Customer reliance on voice
technology was also significantly greater at that time since the Internet had not yet
becme a widespread means of peronal and business communcation. In addition, in
1993, virlly a1i8 voice services offered to residence and small business customers
remained subject to full economic regulation under Title 61, Idaho Code.9 In ths context,
Commission regulation of restoration of voice serce interals and customer credits
where stadards were missed made sense. Customers' voice options were few or
nonexistent at that time, and the Commission was in a position to set prices (charged to a
7 Id., tables 8 and 17
8 The exceptions were cooperative telephone companes whose customers also owned the companes
frovidig servce.For most companes ths meant rate of retu reguation, including price settg by the Commssion.
However QC's predecessor and perhaps others wer able to persuae the Commssion to adopt an
Alterntive Form of Regulation (AFOR). Neverteless even under an AFOR, prices for basic voice servce
were set by the Commssion and the entie rate strctue could be reviewed under rate of retu priciples
under appropriate circumtaces.
CENTURYLIN PETITION FOR EXEMPTION - 5 -
stable or growing group of customers) that allowed companes to achieve revenue
streams that were suffcient to pay the costs of maintaining the stadards adopted.
In the intervening years, however, the technological changes already noted
provided many new options for customers to meet their voice communcations needs.
Given the availabilty of these options, market forces, as opposed to Commission
regulation, began to drive telecommuncations companes' revenues, and it became clear
market forces should also drive the pricing and other product decisions of these
companes. Recognzing this, in 2005 the Idaho Legislatue enacted an amendment to the
Idaho Telecommuncations Act of 1988 to authorize incumbent local exchange carers to
elect to have all serices (including basic local exchange serice) excluded from
economic regulation under Title 61, Idaho Code.1O In makng ths change the Legislature
specifically spoke to the level of Commission regulation it deemed appropriate for basic
local serice offered by companes no longer subject to Title 61, regulation. Idaho Code
§ 62-605 (5) (b) provides:
The commission shall have the continuing authority to deterine the
noneconomic regulatory requirements relating to basic local exchange serce for
all telephone corporations providing basic local exchange service including but
not limited to, such matters as serce quaity standards, . . . which requirements
shall be technologically and competitively neutral.
It is this notion of ''technological() and competitive() neutral(ity)" that is violated
by the application of Rule 502 to QC in today's environment. As the number of lines lost
in QC's Idaho serice tertory demonstrates, QC is facing intense competition for
10 AlthoughCentuTe1 of the Gem State, Inc. and CentuTe1 ofIdao, Inc. have not yete1ected to retove
their services from Title 61, Idao Code, to reguation under Title 62, the unai burden on these
companes' ability to compete is parlel to tht faced by QC. Regardless of their Title 61 reguatory status,
Gem State and CentuTe1 ofIdao face competition from wieless, and possibly cable and VoIP providers,
who are not subject to reguation under Rule 502 and are therefore free to establish their own service
priorities and customer loyalty intiatives.
CENTURYLINK PETITION FOR EXEMPTION - 6-
customers. However the greatest competitive theat to QC and the other CentuLin
companies, wireless telephony, is not regulated by the Commssion. Wireless, cable and
VoIP competitors are simply not subject to the perormance stadards, or the customer
credit requirements imposed by Rule 502. Indeed, as descrbed above, only 24%11 .of all
of Idaho's voice connections in 2010 were incumbent ILEC lines subject to regulation
under Rule 502.12
In light of this disparty of treatment beteen the CentuLink companes and .
their competitors, application of Rule 502 to CentuLink under the curent market
conditions in Idaho amounts to an ''uusual or uneasonable hardship()" that justifies an
exemption under IDAPA 31.41.01.003.
CentuLink recognizes, however, that an exemption of this scope for the largest
ILEC in Idaho as well as the two other CentuLin companes may itself constitute a
signficant change in the regulatory landscape in Idaho. Therefore, CentuLink is
wiling to parcipate in a rulemakng to address the serice quality rules in a more
comprehensive context, should this Commssion deem such an effort appropriate in the
futue.
However, ths present request for an exemption for the CentuLin companies is
not.simply a philosophical question of fairness; the nee is immediate and pressing as the
furter discusion below wil demonstrate.
11 As noted above, in 2010 70% of all voice connections in Idao were wiless. Ten percent of the tota
connections were served by either cable companes or CLECs. In tht market segment only those
connections provided CLECs would come with the purew of the Commssion's noneconomic
reguation under Title 62, Idao Code.12 In the non-ILEC market segment, only those connections provided by CLECs would come withn the
puriew of the Commssion's noneconomic regulation under Title 62, Idao Code.
CENTURYLINK PETITION FOR EXEMPTION - 7 -
B. For CenturyLink compliance with Rule 502 amounts to an unreasonable
hardship that compromises its abilty to serve customers.
1. Since 1993 customers' dependence upon traditional wielieservce has
diished signcantly.
The degree to which residence and small business customers in 1993 depended on
incumbent local exchange carer (ILEC) basic local exchange serice may have justified
a Commission regulation that both set a standard for restoration for wireline serce and
provided an economic. incentive for maintaning that standard in the form of large
customer credits at that time. Today, however, a substantial majority of basic local
servce customers are not cut off from communcation-are not "out-of-serce"-in the
event their wireline telephone is not workig. The FCC reported that in 2009 wireless
penetration in all Idao economic areas studied was between 80 and 90%.13 Most
customers that have not eliminated their wireline serce have both a wireline and a
wireless phone in the household. The FCC identified 1,221,000 wieless connections in
Idaho in 2009, while the 2009 census recorded only 647,502 housing unts in the state.14
Ths represents a ratio of nearly 1.9 wireless connections per housing unt in Idaho. In
comparson, as of December 2010, the FCC reported there were only 455,000 ILEC
access lines in Idaho.1S Furer, in its latest report, the National Center for Health
Statistics (NCHS) reported that only 12.9% oflandline households in the United States
13 Anual Report and Analysis of Comptitive Market Conditions With Respect to Mobile Wireless,
Includig Commercial Mobile Services, WT Docket No. 10-133. Fifteenth Reprt, Released: June 27,
2011, Table C-3.
14 See htt://ww.census.gov/popest/dataousing/tota1s/2009/index.htm 2010 Housing unt data is not
yet available.
15 Local Telephone Competition: Status as of December 31,2010; Industr Analysis and Technology
Division, Wire1ine Competition Bureau, October 2011, table 13.
CENTURYLINK PETITION FOR EXEMPTION - 8-
did not have a wireless phone.
16 Thus, for the vast majority of
wire line customer who
also mainta a wireless connection, an out-of-serce condition for their wireline serce
does not have nearly the impact for voice communcation capabilty that it did in 1993.
Even for the minority of customer that do not purchase their own wireless
connection, the ubiquity of wireless phones provides options that were not available in
1993. When wireline serices were the only form of voice communcations, only a
telephone company employee or contractor could brig reliefby restoring serce. Today
a guest, relative, or caregiver can brig voice communcation capabilty to the customer
who is out-of-serice by simply offerng a wireless phone for an important call or even
loanng a phone to the out-of-serce customer.
Simlarly, the explosion of broadband serces has changed the impact of a
CentuLink voice serce outage on Idaho customer. If the customer has a broadband
connection that is not impacted by the outage, the customer may have the abilty to
communcate via access to the Interet and the use ofVoIP serices. As noted above,
over 58% ofIdaho households had a broadband connection as of December 2010, when
there were 706,000 broadband connections as compared to only 455,000 ILEC access
lines. Whle many may useVoIP to place voice calls, other may rely on the Interet in
countless ways to gain information, order goods, schedule meetings or otherwise
communcate though emaiL. Regardless of how they use broadband, such customers are
not out-of-serice in the way that was contemplated in 1993 when Rule 502 was adopted.
The development and widespread adoption of alterative communcations
technologies by customers destroys the basic assumption supportng Rule 502, i.e., that
16 Centers for Disease Control and Prevention, Nationa Center for Health Statistics, Wireless Substitution:
Early Releas of Estites from the National Health Intervew Surey, July-Dec 2010, releaed June 8,
2011, Table 1.
CENTURYLINK PETITION FOR EXEMPTION - 9-
where wireline serice outages occur, customer canot communcate until serice is
restored. The presence of wireless and broadband technologies mean most customers are
not out-of-serce and do not depend solely on restoration of their wireline serice to
communcate. Under these circumstances, application of Rule 502 to the CentuLin
companes who have suffered huge competitive losses to providers of these technologies
who are not themselves subject to regulation, amounts to an unusua or uneasonable
hardship for which the Commssion should grant an exemption.
2. The economics of the changig telecommunications industr in Idaho do not
support Rule 502's exclusive focus on voice restoration. Nor is such focus consistent
with Idaho Code § 62-605 (5)(b).
In the secnd quarer of 201 0 CentuLink was actually servng only 44.27% of
the Idaho customer locations (commercial and residential) to which its facilties are
available.
17 By the second quarer 2011, that percent of customer locations sered had
de~eased to 40.88% of the available customer locations on its network. 18 In other words,
in almost 60% of the locations where CentuLink has facilities available for use, the
facilities are not in use. This reflects a substantially different business reality for
CentuLin today as compared to the environment in 1993, when its predecessor
companies were providing servce to a much higher percentage of the customer locations
they passed.
Rule 502 forces CentuLin to dedicate resources to the specific actvities that
are required to quickly restore serce outages for voice customer, but ths rue ignores
the realities of competitive industr in which these companies now operate. In 1993
when the Rule was adopted, installation and maintenance of the facilities used to provide
17 See Confdential Attchment A filed seartely and under an Attrney's Certficate puruat to IDAP A
31.01.01.067.03.18 Id.
CENTURYLINK PETITION FOR EXEMPTION - 10-
voice serces was the primar focus of the telecommuncations industr. Today, the
CentuLink companes must make signficant capital expenditues to expand the reach,
speed and capabilties of their broadband network so they can attact and retain
broadband customers and remain competitive in the marketplace. CentuLink must also
balance the allocation of network resources between its voice and broadband network at
the same time its overall customer base is declining.
Qnthe employee side of the equation CentuLink is engaged in a similar
balancing act. As the number of customers continues to decline, CentuLin must
adjust its work force downward even though the overall size and sophistication of its
overall network is increasing. Ths means that a smaller work force must be deployed to
meet the needs of both the traditional voice customer and those customers demanding
the latest broadband capabìlties. CentuLink must be ready to maintai the entire
network, and be ready to provide voice and broadband serice on demand.
Application of Rule 502 to the CentuLin companes seres to skew the delicate
balance the companies must stre in deploying their employee resources. In early 2011
QC reported that it had missed the Rule 502 stadards three consecutive months
(November 2010, December 2010 and Janua 2011). In August 2011, QC met the
standards, but only by a narow margi after missing them in June and July. QC thereby
avoided the need to again report thee consecutive months of perormance below the Rule
502 stadards. In short, QC is having diffculty consistently meetng the requirements of
Rule 502 for restoration of serice.
19
19 Gem State's diffculties in meeting the standard are descrbed in section B.3 below.
CENTURYLINK PETITION FOR EXEMPTION - 11-
QC's efforts to meet the stadard in Augut.are ilustrative of the imbalance
created by the Rule. . In August QC had to focus its network resources primarly upon
meeting the Rule 502 standard at the expense of offerg competitive instalation
intervals for its broadband serce. In some areas the interals for installng High Speed
Interet (HSI) were moved out to over 3 weeks, as techncians were focused on
perormng the duties necessar to meet the restoration stadard. Meanwhile, Cable One,
a fierce competitor for broadband customers, was adversing same-day installations.
Without question, some customers wil choose not to wait for QC to install based on
these installation interals and wil purchase serce from the competitor who can more
rapidly fill their serce request. QC's abilty to respond to such competition is adversely
impacted by the regulatory requirement of Rule 502.
Ths impact on the CentuLink companes' ability to compete is exacerbated by
the fact that cable, wireless and VoIP competitors are not subject to the regulatory
requirements of Rule 502. Unfettered by the constraints of the Rule, these competitors
are free to focus on what customer tell them is importt and exercise independent
business judgment in how best to sere them. They are free to allocate scarce resources
to whatever priorities they believe wil result in a competitive advantage. Cable One's
same-day installation offer is an example of how that competitor chooses to differentiate
itself and meet customer expectations. CentuLink needs the abilty to balance its repair
and installation resources to meet customer priorities as its competitors are doing. If QC
must continue to comply with Rule 502, it is unikely to be able to move toward the
customer- frendly options its competitors are offerng.
CENTURYLINK PETITION FOR EXEMPTION - 12 -
More importtly, for QC the application of Rule 502 to wireline voice providers,
but not to wireless, cable and VoIP provider, rus afoul of Idaho Code § 62-605 (5)(b)' s
requirement that Commission regulation be technologicaly and competitively neutral.
The evolution of the telecommuncations industr has brought a once competitively
neutral regulation to the point where its impact is simultaneously competitively harful
to CentuLink and irrelevant to the large number of cutomer whose serce is not
provided by a traditional wireline carer. Ths development renders the application of
Rule 502 to the CentuLin companes, an ''uusual or uneasonable hardship()" that
justifies an exemption under IDAPA 31.41.01.003.
3. For Gem State the physical characteristics of its servce territory impose unique
hardships in complyig with Rule 502.
In August of this year, CentuTel of the Gem State, Inc., (Gem State) gave notice
to the Commission that its records indicated that the of out-of-serce trouble reports
cleared withi the interal requirements of Rule 502 had not been met for the months of
April, May and June, 2011. In a confidential filing that accompanied Gem State's notice,
the actual percent of restorations meeting the interal requirements each month was
shown to be substatially below 90%. Similar results were also provided under
confidential cover for July and Augut 2011, and a notice peraig to September,
October and November is in its final stages of preparation.
For Gem State, the physical characterstics of its serce terrtory make
compliance with the requirements of Rule 502 unquely burdensome. Gem State seres a
total of 1026 access lines in a geographically large serce tertory that includes the
Duck Valley Indian reseration on the southwest border of state, the communties of
Grand View and Brueau, Idaho, and a non-contiguous serce area surounding the
CENTURYLINK PETITION FOR EXEMPTION '" 13-
communty of Richfield in south-central Idaho. Richfield is located 110 miles from
Grand View where the Gem State serice techncians are located. It takes a techncian an
average four hour simply for drive time between Grand View and Richfield to attend to
a serce request.
Given the small number of access lines and the fact that a relatively small number
of trouble reports can impact the percent of serce restorations achieved with the
required interal, Gem State has found it impossible to meet the requirements of Rule
502, even on a sporadic basis. Ths problem has been exacerbated by the fact that
CentuLink servce techncians in nearby QC exchanges are unonized whereas those in
the Gem State tertory are not. To date, management has bee unable to negotiate an
agreement with the union that would allow techncians from QC to help restore serice in
the Gem State serce area.
Gem State customers, however, have not advised either the company or the
Commission that the level of serce in the tertory is unatisfactory. Few to none of the
customer in any of the CentuLin companes have chosen to complain about the
interal for servce restoration. Ths is parcularly noteworthy, however, for those
customers in Gem State who have experience restoration interals that are longer on a
more consistent basis than any other CentuLin customer group.
For these reasons, CenturyLink respectfully requests that the unque
characterstics of the Gem State serice tertory, be considered in grting an exemption
from Rule 502 under IDAP A 31.41.01.003.
c. Rule 502 is no longer meetig customer needs or actig as an appropriate
incentive.
CENTURYLINK PETITION FOR EXEMPTION - 14-
1. Rule 502 no longer reflects customer needs or priorities.
Rule 502 requies that CentuLink dedicate its resources to rapid restoration of
voice serce whether that is important to the customer or not. Looking back to 1993
when the Rule was adopted, the assumption that voice serce restoration was the
customer's highest priority may have been largely justified. However, today customers
have other options to traditional basic local exchange voice service and ths has changed
customers' priorities. Today, many customers view mobility via a wireless phone as a
priority and may not be as concered with fast wireline voice serice restoration. Other
customers view HSI as a priority, and may see voice serce as a by-product or featue of
the customer's broadband communications link. These customers may view quick
broadband installation as more important than quick wireline voice serce restoration.
Today's customer priorities are being expressed in the marketplace where demand for
broadband serices is growing while wireline voice connections continue to decline.
Furer evidence of customers' priorities (and their relative tolerance of wire line
voice serce outages) may be found in the fact that CentuLink's interal complaint
offce and the Commission's Staff have see ver few complaints conceng slow
restoration of voice serice. Nor is there any evidence that customer complaints
increased as performance fell below the Rule 502 standard as in the November 2010-
Janua 2011 interal reported to the Commssion by QC or at anytime durng 2011 for
Gem State.
CentuLink submits that customers are not complainig to the Commission for a
number of reasons. First, many customer do not consider themselves out-of-serce
because they have other options for voice communcation such as their wireless phones,
CENTURYLIN PETITION FOR EXEMPTION - 15 -
and their broadband serices. These customer may be more interested in seeing that
their other serces such as their HSI are fuctionig. In addition, customer who are
dissatisfied with their wieline voice serce have competitive options. They need not
bother to complain to the Commission since they ca simply disconnect their serce and
move to a wireless or cable option. Whle ths widespread adoption of other technologies
poses a serous theat to CentuLin, it also demonstrates that Commssion regulation of
serce restoration is no longer neeed to protect customers.
CentuLink needs the abilty to balance its repai and installation work to meet
customer needs as it perceives them. Rule 502's focus on a single assumed customer
need, which in many cases no longer reflecs customer priorities and preferences, places
CentuLin at a competitive disadvantage.
2. Rule 502 is no longer required to incent appropriate customer servce, is not
tailored to compensate those actually out-of-servce, and is ineffective in promotig
customer loyalty.
If an exemption is granted from the requirements of Rule 502, the CentuLink
companes wil remain motivated though market pressures to restore serce within a
reasonable time, due to an overding need to satisfy and retain customers. While
CentuLink can no longer afford to look at customer needs though the single lens of a
regulatory stadard set nearly 20 years ago, ths is not to say that CentuLink wil not
have incentive to provide good serice to voice customer.
CentuLin is well aware that dissatisfied customers can, and will, move to a
competitive cable, wireless or VoIP serce to meet their voice callng needs if their
needs are not met. Once those customers are lost, they are unikely to retu or to order
other serces from CentuLink. From an economic and business perpective, losing a
CENTURYLIN PETITION FOR EXEMPTION - 16-
customer to a competitor is a considerably more serious consequence to CentuLin
than reporting a stadard violation or even paying a Rule 502 customer credit. Thus,
Rule 502 no longer provides a meangful incentive to the CentuLin companes.
Instead, today the competitive marketlace provides the incetive for the companies to
provide each serice at the level of quaity demanded by customers.
Furerore, Rule 502's requirement that all customers receive a full month's
serce credit when restoration of their serice is delayed is not tailored to assure that the
credit is being applied to customers who are actually out-of-serce. The vast majority of
customers who can use their wireless or broadband technologies while their wireline
serice is being restored have not lost voice communcation capabilty and are therefore
not out-of-serice inthe maner contemplated when Rule 502 was adopted. Requiring a
ful month's serice credit for customer who have not experenced a loss of abilty to
communcate imposes an uneasonable hardship on the CentuLink companes where
other, more signficant marketplace incentives are also present.
Finally the Rule 502 customer credit is an ineffective means of retainig customer
loyalty. If a customer is unappy about the interal for restoration of his broadband
serice, the fact that he may coincidentally receive a credit for another, lower priority,
serce is unikely to bring satisfaction. . And, if the customer is dissatisfied with
restoration of the voice serce itself, she is free to keep her credit while moving to an
uneguated voice alterative such as wireless. In that instace, the competitive loss to
CentuLink is compounded by a regulatory penalty of a credit payable to a customer
who will not continue to do business with CentuLink.
CENTURYLINK PETITION FOR EXEMPTION - 17 -
CONCLUSION
Grantig CentuLink a peranent exemption from Rule 502 wil perit it to
better sere customer by providing the flexibilty to respond to customer nees for all of
the serices it provides. Nearly two decades that have passed since the Rule was
adopted, and as descrbed above, the marketlace has changed signficantly with the
growt of wireless and broadband-based compettion. These changes have rendered the
application of Rule 502 to the CentuLin companes an ''uusual or uneasonable
hardship" under IDAPA 31.41.01.003.
. Customers now have alteratives to basic local exchange voice serice, which
they have adopted to the point that the vast majority of wire line. customers are not
"out-of-service" if the basic exchange wireline serce is not working.
. Rule 502 forces CentuLin to allocate scarce resources to activities that maybe
out of step with customer priorities. The rule declares restoration of voice serce
within cerin interals to be the number one priority, but customer may believe
faster broadband installation is a greater priority.
. CentuLink directly competes with wieless and cable provider. Yet these
competitors are not subject to Rule 502, which places CentuLin at a distinct
disadvantage to its most successful competitors.
. Rule 502' s customer credit requirements pale in comparson to the economic
incentives at work in the marketplace that wil assure the CentuLin companes
meet customer needs or risk losing these customers entirely. Meanwhile, the
application of the credit requirement in the present competitive envionment is not
CENTURYLINK PETITION FOR EXEMPTION - 18 -
tailored to compensate those actully out-of-serce, and is ineffective in
promoting customer loyalty.
REQUEST FOR RELIEF
CentuLink respectfully requests that the Commssion consider ths Petition on
modified procedure and expeditiously grant the relief requested herein to allow
CentuLink a peranent exemption from Rule 502.
Submitted thi~4daY of Deceber, 2011.
Respectfully submitted,...'-
Mar S. bson (ISB. No. 2142)
999 Mai . Suite 1103
Boise, ID 83702
Lisa A. Anderl
Associate General Counel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Attorneys for the CentuLink Companes
CENTURYLINK PETITION FOR EXEMPTION - 19-