20120307Reply Comments.pdf

Mar S. Hobson
Attorney & Counelor
999 Main, Suite 1108
Boise, il 88702
208-885-8666
RECEIVED
2811 MAR -7 PH 4: 39
March 7, 2012
VI HAD DELIVRY
Jean D. Jewell, Secreta
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
RE: Case Nos. QWE-T-12-01, CEN-T-12-01, CGS-T-12-01
Dear Ms. Jewell:
Enclosed for fiing with ths Commssion are an original and seven (7) copies of THE
CENTURYLINK COMPANIES' REPLY COMMNTS IN SUPPORT OF
PETITION FOR EXEMPTION.
CentuLink's Confidential Attachment A, which is fied under separate cover and with
an Attorney's Certificate, contains confidential information that supports the relief
requested in the Companies' Petition.
If you have any questions, please contact me. Than you for your cooperation in ths
matter.
Ver trly yours,
6::;!!t--
Enclosures
Mar S. Hobson (ISB. No. 2142)
999 Mai, Suite 1103
Boise, ID 83702
Tel: [phone]
mar.hobsonW2CentuyLink.com
Lisa A. Anderl
Associate General Counsel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Tel: [phone]
Lisa.Anderl. W2CenturyLink. com
Attorneys for the CentuLink Companes
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN THE MATTER OF QWEST
CORPORATION DBA CENTURYLINK
QC, CENTURYTEL OF IDAHO, INC.
DBA CENTURYLINK AND
CENTURYLINK OF THE GEM STATE,
INC. DBA CENTURYLINK'S
PETITION FOR AN EXEMPTION OF
THE COMMISSION'S
TELECOMMUNICATIONS
CUSTOMER RELATIONS RULE 502
(lDAPA 31.41.01.502)
Case Nos. QWE-T-12-01
CEN-T-12-01
CGS-T-12-01
THE CENTURYLINK COMPANIES' REPLY COMMENTS IN SUPPORT OF
PETITION FOR EXEMPION
Qwest Corporation dba CentuLink QC, CentuTel of Idaho, Inc. dba
CentuLin, and CentuTel of the Gem State, Inc. dba CentuLink (collectively "the
CentuLink companes" or "CentuLink") by and though their underigned attorneys
and pursuant to Commission Order No. 32446, file the following Comments in support of
CentuLin's Petition for Exemption from Rule 502 of the Commssion's Customer
Relations Rules.
CenturyLink Reply Comments - 1 -
In Support of Petition for Exemption
BACKGROUND
The CentuLin Companes filed their Petition seeking an exemption from the
Rule 502 on December 22,2011. The Commission issued its Notice of Petition, Notice
of Modified Procedure and Order No. 32446 notifyng "any person desirng to state a
position on ths Petition" that wrtten comments "in support or in opposition" of the
Petition maybe filed with the Commission withi 28 days from the servce date, Janua
25, 2012. Frontier Communcations Nortwest Inc. and Citizens Telecommuncations
Company of Idao dba Frontier Communcations of Idao, (collectively, "Frontier") fied
comments fully supporting CentuLink's Petition and askig that the Commssion
"imediately grant a waiver of Rule 502 to CentuLin and all simlarly situated
companies." Frontier Comments, p. 2. Frontier also requested that the Commssion open a
ruemakg to discuss what it terms "an imbalance in reguation, which limts the flexibility
with which reguated companes can respond to customers." Id.
The Idaho Public Utiities Commssion Staff ("Staff') fied comments recommendig
that the Commssion deny CentuLin's request for an exemption and recommending that
the Commssion open "a Negotiated Rulemakg Proceeding regardig Rule 502." These
Reply Comments address Staffs reasons for opposing the exemption and the scope of any
Commission rulemakg relating to telecommuncations rules.
REPLY TO STAFF REVIW
Staffs opposition to CentuLin's requested relief appears based on two concern:
1) the scope of the requested exemption ("CentuLink's waiver request as a practical matter
would eliminate the rue entirely for all customers thoughout its service terrtory," Staff
Comments, p. 3), and 2) the possibilty that some customers do not have competitive
alternatives to CentuLin wireline voice servce ("when wireline servce fails, few, if any
CentuLink Reply Comments - 2 -
In Support of Petition for Exemption
alternative communcation servces are available in some rual areas" Id.). Neither of these
concern justifies Staffs wholesale opposition to CentuLin's Petition, nor do they respond
to the legal and practical issues raised in the Petition and reinorced by Frontier's Comments.
1. Relief by exemption is not limited to small companies or requests impacting few
customers.
The Commission may grant an exemption where ''uusual or uneasonable
hardships result from the application of any of(its) rules". . . IDAPA 31.41.01.003 ("Rule
3). Nothig in the Commission's rules prevents it from granting of relief in the form of
an exemption where, as here, the unusual and uneasonable hardships resulting from the
application of the Commssion's Rule 502impact a large Idaho company instead of a
small one. Nor, as Staff seems to suggest, do the Commission's rules require that
requests for relief impacting a relatively large number of customers be addressed only in
a ruemakng proceeing. Requiring rulemakng would ignore the importt differences
between the company-specific and the relatively immediate relief contemplated by Rule 3
and the more comprehensive, and considerably more time-consuming process of
rulemakng1, with its general application to all companes.
Whle Staff correctly notes CentuLin has stated its wilingness to paricipate in
rulemakg, CentuLink's intention was to suggest that a broader examination of the
Commission's rules in general as they impact the competitive viabilty of regulated
companes may be appropriate. At the same time, CentuLin asked that the
Commission "expeditiously grant the relief requested" in its Petition. Id at 19. The
1 A rulemakng proceeding, because of the requiement of review by the Legislatue,
canot be completed until the 2013 Legislative session. In the highly competitive
environment in which CenturyLink operates, a delay of relief for another year or more is
itself an unjustified hardship. See Confidential Attchment A, which shows the
significant changes experenced by CentuLink over an 18-month time frame.
CentuLink Reply Comments - 3 -
In Support of Petition for Exemption
Commission should grant CentuLink's exemption, even if it plans to open a rulemakng
proceeding. Staff presents no compellng reasons that should cause the Commission to
delay the request for immediate relief from Rule 502.
2. The undisputed competitive disadvantage to CentuLin resultig from the
application of Rule 502 demonstrates the exemption should be granted.
The hear ofStafts opposition to CentuLink's Petition is concer about remote
rual customers who, Staff perceives, do not have alteratives to traditional wireline
service offered by CentuLink2. However, Staff does not and indee canot, argue with
CenturyLink's primar point that the vast majority of customers have several alteratives
to CentuLink wireline serice. This fact establishes two things: it underscores
CentuLink's competitive disadvantage as the only provider among competitors that is
subject to Rule 502, and it shows that most customer are not trly "out of serce" while
wieline repair is taking place.
In the case of CentuLin QC, which is regulated under Title 62, Idaho Code, the
competitive disadvantage resulting from the application of Rule 502 rus afoul of Idaho
Code § 62-605 (5) (b), which requires the Commission's authority to "determine the
noneconomic regulatory requirements relating to basic local exchange serice" be
exercised in a maner that is "technologically and competitively neutral."
CentuLink's request for exemption allows the Commission to restore the competitive
neutrality mandated by the Legislatue for Title 62 companes.
In addition, for all of the CentuLink companes, the application of the Rule
creates a competitive disadvantage that plainly comes withn the scope of Rule 3 relief
2 Sta maes some inccurte claims regarding serices available to rual customers tht CentuLink will
address below.
CentuLin Reply Comments - 4 -
In Support of Petition for Exemption
from uneasonable or unusua hardship. As one concrete example, the fact that
CentuLink alone among"its competitors must provide a full month's credit to each
customer whose service is not restored withn 24 hour, regardless of whether the
customer was inconvenenced by--or even noticed--thedelay, is evidence of an
unreasonable hardship occasioned by the application of Rule 502.
3. The overwhelmg majority of CenturyLink customers have alternatives offered
by competitors who are unfettered by Rule 502.
Staff Comments make no effort to refute the conclusion that Rule 502 creates a
unque regulatory hardship for CentuLink as compared with its unegulated
competitors. Instead, Staff chooses to focus on the extreme margins, suggesting that the
circumstaces impacting a relative handful of customers somehow justify the continued
application of Rule 502 to all of Centu Link. Staff contends that "it may not be tre"
that customers "in the ver rural pars of CentuLink's serce tertory" have access to
wireless and broadband serices. Staff Comments, p. 3
CentuLink concedes that somethng less than 100% of its customers have
access to wireless and broadband. Indeed, when wireline serce was the only alterative
and unversal servce policies supported telephone companes' expansion, 100%
penetration for wireline was never achieved. However, in attempting to identify a ver
narow segment of CentuLin's customer base that lacks access, Staff overstates its
case and ignores the fact the vast majority of customers have access to competitive
alteratives that augment and even substitute for their wireline serce. The Commssion
has always taen a reaonable position with regard to the serce levels required in the
CentuLink Reply Comments - 5 -
In Support of Petition for Exemption
most remote and isolated pars of a company's servce tertory. Staffs Comments ask
that the Commission reverse ths policy.
a. Wireless servce is available to almost everyone in CenturyLin territory.
Looking at the question of availability of wireless serce, Staff apparently does
not dispute that nearly all customer in the legacy Qwest tertory have wireless access.
Staff also concedes that wireless alteratives are available in the CentuTel of Idaho
exchanges of Salmon and Leadore. Id. at 4. That leaves only the North Fork exchange in
norteast Idaho-with roughly of250 access lines (residence andbusiness)-without
wireless access by Stafls estimation. Ths exchange represents only about 8 % ofthe
lines in the legacy CentuTel ofIdaho serice tertory. Furerore, CentuLink's
information differs from Staffs in that the company's serice techncian reports wireless
serce in Nort Fork is "interittent due to the mountain terain" but "that doesn't stop
everone here from having one (wireless phone)." Ths latter comment raises an
important point about rual customer and wireless serce. Whle some rual customers
may not be able to access wireless serice at their homes, because of their isolation these
customers spend a lot of time in their automobiles accessing all kinds of other necessities
such as groceres, schools, medical facilties and so on. This mobilty enables people to
make use of wireless service while on the road and explais its popularty even in areas
where it may not work well in some residences.
In the CentuTel of the Gem State tertory, the situation is ver similar. Staff
concedes wireless access is available in Grandview and Richfield, but states "there are no
cellular serces in Brueau or Grasmere-Riddle." Id. at 3. CentuLink contends
wireless serice is accessible in pars, but not all, of the Brueau exchange, and agrees it
CentuLink Reply Comments - 6 -
In Support of Petition for Exemption
is not accessible in the vast majority of the Grasmere-Riddle exchange. CentuLink's
records again show these areas, although geographically ver large, contan ver few
customers. Despite its large geographic area, CenturyLink has only about 100 access
lines in the Grasmere-Riddle exchange. Most of these are clustered on the Nevada/Idaho
border on the Duck Valley Reseration. These customer are sered out of a central
office in Owyhee, Nevada. Neither Grasmere nor Riddle constitutes anything resembling
a communty. See Attachment B showing aeral photographs of these areas (Source:
Google Maps). Similarly the approximately 200 access lines in the Brueau exchange
are widely distrbuted within a ver large geographic area, although Brueau itself does
contain a school, post offce and a cluster of homes. If one were to assume, contrar to
fact, that none of the customers in these two exchanges has access to wireless, the total
lines in these exchanges represents less than 30 % of the access lines in the legacy Gem
State tertory.
Comparng the number of the lines in the areas claimed by Staff to be without
wieless access in both CentuTel ofIdaho and CentuTel of the Gem State, the total
comes to approximately 550. That is less than two tenths of one percent (.2%) of the
roughy 300,000 CentuLink lines in Idaho. CentuLink does not suggest that the
customer who subscrbe to these lines do not matter, or that rual customers should not
have reliable serce. The fact is, however, these customers constitute a tiny minority.
The competitive realities facing the CentuLin companes as they sere the
overhelming majority of their customer base requires that an exemption from Rule 502
be granted.
CentuLink Reply Comments - 7 -
In Support of Petition for Exemption
Finally, it is ironic that Staffs Comments have singled out remote exchanges in
the serice tertory of CentuTel of the Gem State to make its case in opposition to the
exemption. In its Petition, CentuLink specifically noted that the Gem State terrtory
should qualify for an exemption due to the unque physical characterstics of the service
tertory that make compliance with Rule 502 impossible from a practical standpoint.
Petition,pp. 13-14. Staff did not respond to the fact that CentuTel of the Gem State
qualifies for an exemption from Rule 502 on independent grounds.
b. Staff underestiates the availabilty and capabilty of broadband servces
in rural Idaho.
Staffs Comments state that "CentuLink curently does not offer broadband
serce to its customers located in the legacy area formerly sered hy CentuTel of the
Gem State." Id. at 3. Staff is misinformed.. CentuLink offers broadband serice,
including standalone broadband serice, in all of its exchanges. Ths means that
customers can choose to subscrbe to stadalone high speed interet from CentuLink
and choose a VoIP provider for voice serce. In the CentuTel of Idaho tertory, 98%
of the available lines are broadband capable. Even in a low density, remote area such as
the Grasmere-Riddle exchange, almost 70% of the available lines in the area are
broadband capable.
CenturyLin customers in rual Idaho also have competitive broadband
alteratives. In the former CentuTel ofIdaho serice terrtory, customers in Leadore
and Nort Fork have access to satellte broadband serice3. Interestingly the third
exchange, Salmon, has both a satellte option and a facility-based broadband competitor,
3 Broad band satellte serce does not accommodate Voice over Internet Protocol (V oIP) servce due to
tie delays in the signal reachig the satellte. However, broad band access allows customers to
communicate though emal, to exchange documents, conduct Interet commerce etc.
CentuLink Reply Comments - 8 -
In Support of Petition for Exemption
Custer Telephone, which is expected to provide local voice serce in competition with
CentuLink later this year. Customers in the CentuTel of the Gem State's Richfield
exchange also have a satellte broadband alternative. Customers in Grand View,
Brueau,.and Grasmere-Riddle have thee competing satellite broadband providers. In
addition, those in Grand View also have the option of mobile wieless broadband serce.
Staff Comments also seem to underestimate the signficance of having broadband.
Staff contends that small business customer ''may have a greater reliance on wireline
serice (than residence customers)" citing its use for facsimile transmission, and
adverising puroses.4 Id. at 4. Staffs Comments overlook the role of broadband in
providing a competitive alterative to and ancilar benefits above traditional wireline
serce. In general, businesses today rely much more heavily on emailing documents
over a broadband connection than sending facsimiles over a phone line. Furterore, as
the use of paper directories steadily declines, businesses rely on web sites and other forms
of advertising to attact customers. If CentuLink does not perorm to customer'
satisfaction or if other technologies better sere them, small business customers (just like
residence customers) can and do choose competitors to CentuLink, even for sending
documents. The suggestion Rule 502 must continue to apply to CentuLink to protect
the interests of small business customer in sending faxes and maintaining the value of
their directory adverising investment is not only outside the scopeofthe Commission's
4 The Comments' focus on advertsing and facsimile trmission misses an importt point. The
Commssion's servce quality reguatory authority is lited to services with the defition of ''basic local
exchage servce" as found in § 62-603 (I), Idao Code, i.e., "the provision of access lines. . . with the
associated trmission of two-way interactive voice communication." (emphasis added). Since neither
facsimile tranmission nor advertsing are voice servces, they lie outside the scope of the Commssion's
authority.
CentuLink Reply Comments - 9 -
In Support of Petition for Exemption
regulatory authority over basic local exchange serice, it seems paricularly out of touch
with today's environment.
4. Staffs claim of Rule 502's "relevance" is misguided.
Staffs Comments state that it "does not agree that the existence of competition in
a large geographic area renders Rule 502 obsolete~" Id. p. 4. The Comments contan
little in the way of an explanation of ths statement. Apar from pointing out that not
ever customer has access to ever competitive alterative, the only other arguent
advanced is that "Rule 502 provides a modest incentive for companes to restore serice
in a timely maner." Id. Both of these statements appear to suffer from a
misunderstanding of the role of competition in regulating markets and demonstrate a
belief that only goverent regulation can incent good customer servce.
In its Petition CentuLink pointed out that wireless penetration in 2009 was
between 80 and 90 percent and that there were nearly two wireless connections for ever
housing unt in Idaho. Petition, p. 8. Cenh.Link noted that in 2010, 67 % of all voice~
connections in Idaho were wireless (Id. at 5), and that as of June 2010, over 30 % of
Idaho households no longer had wireline serice and relied solely on wireless. Id. at 4.
CentuLink has lost 43 percent of its lines since 2001. Id. at 5. Similar information was
provided to demonstrate the profound impact of broadband competition. Id. at 9. Staffs
Comments make no mention of any of these facts. The Comments do not attempt to
explain why a "modest incentive" in the form of a Commission Rule is needed when
CentuLink stads to lose the.customer and all futue revenue from that customer to a
competitor. Nor do they address the legal prohibition against regulation that is not
''technologically and competitively neutral." §62-605 (5) (b), Idaho Code. The
CentuLink Reply Comments - 10 -
In Support of Petition for Exemption
Comments do not address why a regulation that applies to only one competitor among
several does not impose an ''uusual or uneasonable hardship" on that competitor. In
short Staff Comments do not make their case that Rule 502 seres some relevant purose
that justifies its continued application to CentuLink in the face of the demonstrated
facts.
CONCLUSION
Staffhas not provided any reason that the Commission should not immediately
grant the exemption request. Regardless of whether the Commission also decides to open
a ruemakg proceeding to consider the competitive impacts of the Commission's rues
on all reguated companes, the exemption meets the requirements of Rule 3 and should
be granted to avoid fuer competitive har to CenturyLink. The Staffs focus on a few
of the most isolated and widely dispersed rural customers is a deflection from the
compelling competitive story laid out by CentuLink, reinforced by Frontier, and
effectively undisputed by Staff.
It is not CentuLink's objective to abandon rual Idaho or to provide poor
customer serice to any of its customers. For CentuLink in parcular, providing high
quality serice in rual service tertory has been key to its history and its success. What
CentuLink hopes the Commission wil understad is that good customer serce means
different and more complex company responses than were imagined when Rule 502 was
adopted. CentuLink is in the best position to detere how to meet evolving customer
needs and it has ever incentive to meet the real needs of its customers since customer
have choices and wil exercise them if it CentuLink missteps. Rule 502' s alleged
incentive in unecessar and burdensome to CentuLink.
CentuLink Reply Comments - 11 -
In Support of Petition for Exemption
Submitted ths 7th day of March, 20 I 2.
Mar S. son (ISB. No. 2142)
999 Main. Suite 1103
Boise, ID 83702
Lisa A. Anderl
Associate General Counsel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Attorneys for the CentuLink Companies
CentuLink Reply Comments - 12 -
In Support of Petition for Exemption
CERTIFICATE OF SERVICE
I do hereby certify that a tre and correct copy ofthe foregoing CENTURYLINK
COMPANIES' REPLY COMMENTS IN SUPPORT OF PETITION FOR
EXEMPTION was served on the 7th day of March, 2012 on the following individuals:
Jean D. Jewell
Weldon B. Stutzm
Idaho Public Utilities Commssion
472 West Washigton Street
P.O. Box 83720
Boise, il 83702
.. Hand Deliver
U. S. Mail
Overght Delivery
Facsimle
Email
ijewellCfuc. state.id. us
Weldon. StutzmCfuc.idao. gov
Renee M. Wiler
Frontier Communcations
Hand Deliver
U. S.Mail
Overnght Delivery
Facsimle
i Email
Renee.Wiler(ift.com
j;:fllz
Attorney for The CentuLink Companes
CentuLink Reply Comments - 13-
In Support of Petition for Exemption