20030305Order No 29202.pdf

Office of the Secretary
Service Date
March 5, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
EXCEL TELECOMMUNICATIONS, INC. FOR A
CERTIFICATE OF PUBLIC CONVENIENCE AND
NECESSITY TO PROVIDE LOCAL EXCHANGE
TELECOMMUNICATIONS SERVICES.
ORDER NO. 29202
CASE NO. EXC-02-
On January 28, 2002, Excel Telecommunications, Inc. (Excel, Company) filed an
Application for a Certificate of Public Convenience and Necessity to provide competitive local
exchange service within the State of Idaho. Excel proposed to initially provide residential
customers a full range of telecommunications and data services including local service, private
line, data transmission service and Internet service via UNE-Ps and resold services. If future
economic conditions permit, it may offer services to business customers as well. Excel'
Application stated that the Company was not requesting authority to provide service in areas that
fall within the scope of rural exemptions. The Company also requested the Commission waive
the requirement for an escrow account to cover customer deposits.
In the Notice of Application and Modified Procedure issued February 4, 2003 , the
Commission solicited comments regarding Excel's Application. Order No. 29190.
comments were received other than those submitted by Commission Staff.
comments, the law and the record, the Commission grants Excel's Application.
Based on the
STAFF COMMENTS
To provide a historical context for Excel's Application, Staff noted that Excel
previously applied for a Certificate of Public Convenience and Necessity in Case No. EXC-97-
1. Staff opposed that 1997 Application based on the Company s record of operations as an
interexchange carrier and numerous complaints from Excel's customers regarding billing
problems, rates and policies, carrier selection and slamming, and other miscellaneous issues.
Excel had also been sanctioned by the Federal Communications Commission (FCC) for
slamming and forging letters of agency. Despite 21 comments expressing support for Excel'
Application, Excel requested permission to withdraw its Application without prejudice until its
business plans permitted it to concentrate on obtaining certification and providing high quality
cost-efficient services in Idaho. The Commission granted this request on October 17, 1997 and
ORDER NO. 29202
dismissed the case without prejudice. Order No. 27159. Excel, which sold more than $750
million of communications services in 2002, was purchased by VarTec in April 2002.
Staff indicated that the number of complaints against Excel from Idaho customers has
significantly decreased since Excel's 1997 Application. However , Staff was concerned when the
Commission received five complaints in a five-month period in 2002. Of these complaints, four
customers complained of slamming but only two provided Staff with enough information to
pursue investigations. In both cases, Excel was found to have slammed its customers. In one
instance, Excel reported that the customer s service was changed by a relative who was not a
resident of the household but presented herself as an authorized decision maker.Excel
reimbursed the customer for all charges incurred in this process. In the second instance, Excel
failed to respond to the Commission s correspondence.According to the Commission
Customer Relations Rules, failure to respond to a slamming allegation within 21 days will result
in a determination by Staff that the customer was slammed. IDAPA 31.41.01.703.02. Excel
apologized and reimbursed the customer for the charges incurred and subsequently fired the
representative who failed to respond.
In response to Staff's concerns , Excel explained to Staff in February 2003 that it has
taken several steps to address and correct the concerns Staff identified in 1997. First, Excel now
utilizes a nationwide third party verification (TPV) system to confirm residential primary
interexchange carrier changes. The Company has also developed a specialized group within the
Customer Service Department whose sole function is to investigate and resolve slamming
allegations and other related issues. This group ensures that consumers' concerns are fully
addressed and any appropriate credits and adjustments are made. Third, Excel's independent
representatives (IRs) are encouraged to build ongoing relationships with their customers to
ensure continued satisfaction with Excel's products and services. Excel has additionally adopted
a strict "zero tolerance policy" and business code of ethics. Excel states that it will promptly
terminate the employment of any IR who is found to have engaged in illegal or improper
conduct, specifically with regards to slamming. Staff also stated that in recent years, several
state Commissions and the FCC have noted the extraordinary steps that Excel has implemented
to advance the accuracy of the customer order provisioning process and to devise complaint
resolution safeguards effectively setting an industry standard.
ORDER NO. 29202
Excel submitted unaudited income statements, balance sheets and cash flow
statements for 1999 2000 and 11 months of2001 with its Application. These documents reflect
financial events prior to VarTec s purchase of Excel and showed declining revenue accompanied
by reduced expenses. The Company s total profit margin was up slightly in 2001 from 2000, and
its net operating income was slightly less negative in 2001 than in 2000. In response to Staff's
concerns, Excel submitted an affidavit from VarTec dated July 25, 2002 wherein VarTec
guarantees the financial support of Excel. According to Staff, Excel agreed to correct a few
points in its final tariff to address Staff's other concerns and to comply with all applicable
Commission rules.
In conclusion, Staff recommended that the Commission grant Excel's Application for
a Certificate of Public Convenience and Necessary to provide statewide service in Idaho
(excluding service in areas that fall within the scope of rural exemptions).Staff also
recommended the Commission accept VarTec s guarantee of financial support in lieu ofa surety
bond for Excel.
COMMISSION FINDINGS
Based on the comments, the law and the record, the Commission grants the
Application. When considering an application for a Certificate, the Commission must determine
if the applicant has the necessary qualifications to provide service while still fostering
competition in the local telecommunications market. Based upon our review of the filing and the
record in this case, the Commission finds that Excel's filing satisfies the requirements of the
Commission s Rules and Procedural Order No. 26665.Id.Thus, we approve Excel'
Application for a Certificate of Public Convenience and Necessity to allow the Company to
provide telecommunications services statewide. This is consistent with our previous Orders
granting statewide authority to provide telecommunications services to carriers meeting the
established requirements. Although Excel's previous customer relations and slamming issues
cause us concern, the Commission is encouraged that Excel has taken steps to remedy these
problems on a prospective basis. Because VarTec has submitted a written guarantee of financial
support for Excel, the Commission further finds it reasonable to waive the requirement for Excel
to maintain an escrow account to cover customer deposits.
ORDER NO. 29202
ORDER
IT IS HEREBY ORDERED that Excel Telecommunications, Inc. is granted a
Certificate of Public Convenience and Necessity to provide basic local exchange services.
THIS IS A FINAL ORDER. Any person interested in this Order or in interlocutory
Orders previously issued in this case may petition for reconsideration within twenty-one (21)
days of the service date of this Order with regard to any matter decided in this Order or in
interlocutory Orders previously issued in this case. Within seven (7) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See
Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this 'Iii-
day of March 2003.
J~~
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Commission Secretary
O:EXCT020Un2
ORDER NO. 29202