20030205Comments.pdf

LISA D.NORDSTROM
DEPUTY ATTORNEY GENERAL y,e
IDAHO PUBLIC UTILITIES COMMISSION r I:!O
PO BOX 83720
BOISE,IDAHO 83720-0074 U iiLi i iba L SSil
[phone]
IDAHO BAR NO.5733
Street Address for Express Mail:
472 W.WASHINGTON
BOISE,IDAHO 83702-5983
Attorneyfor the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )EXCEL TELECOMMUNICATIONS,INC.FOR A)CASE NO.EXC-T-02-1
CERTIFICATE OF PUBLIC CONVENIENCE )AND NECESSITY TO PROVIDE LOCAL )EXCHANGE TELECOMMUNICATIONS )COMMENTS OF THESERVICES.)COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission,by and through its
Attorneyof record,Lisa D.Nordstrom,Deputy AttorneyGeneral,and in response to the Notice
of Application and Notice of Modified Procedure issued in Order No.29190 on February 4,
2003,submits the followingcomments.
APPLICATION
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's Application states that the Company is not
requesting authorityto provide service in areas that fall within the scope of rural exemptions.
The Application also requests that the Commission approve the Company's proposed local
exchange services tariff..
STAFF COMMENTS 1 FEBRUARY 25,2003
Initially Excel proposes to provide local services statewide to residential customers.If
future economic conditions permit,it may offer services to business customers as well.Via
UNE-Ps and resold services,Excel plans to provide a full range of telecommunications and data
services includinglocal service,private line,data transmission service and Internet service.
BACKGROUND
In 1997,Excel previouslyapplied for a Certificate of Public Convenience and Necessity
in Case No.EXC-T-97-1.Staff opposed that Application based on the Company's record of
operations as an interexchangecarrier and the number of complaints the Commission received
from Excel's customers.The complaints concerned billingproblems,rates and policies,carrier
selection and slamming,and other miscellaneous issues.Staff noted that Excel had been
sanctioned by the Federal Communications Commission for slamming and forging letters of
agency.The Commission also received 21 comments expressing support for Excel's
Application.Excel subsequently 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 dismissed the case without prejudice.Order No.27159.
Since that time,the number of complaints against Excel from Idaho customers has
significantlydecreased.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's 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.I.D.A.P.A.31.41.01.703.02.Excel apologized and reimbursed
the customer for the charges incurred and subsequentlyterminated the service representative who
failed to respond.
STAFF COMMENTS 2 FEBRUARY 25,2003
In response to Staff's concerns,Excel explained to Staff in February 2003 that its
business profile has undergone significant changes since 1997.This privately-heldcorporation
sold more than $750 million of communications services in 2002 and was purchased by VarTec
in April 2002.Excel has taken the followingsteps to address and correct the concerns Staff
expressed in 1997:
(1)Excel utilizes a nationwide third party verification (TPV)system to confirm
residential primary interexchangecarrier changes;
(2)The Company has developeda 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 appropriatecredits and adjustments are made;
(3)Excel's IndependentRepresentatives (IRs)are encouraged to build ongoing
relationships with their customers to ensure continued satisfaction with Excel's
products and services;and
(4)Excel has adopted a strict "zero tolerance policy"and business code of ethics.
Excel will promptlyterminate its relationship with any IR who is found to have
engaged in illegal or improper conduct,specifically with regards to slamming.
The Company stated in its February 21,2002 letter to Staff,"Excel has the utmost
commitment to ensuring that the potential for slams is avoided....The Company believes that it
has proven itself as a qualityprovider of interexchangetelecommunications services and eager to
expand its service offerings to the competitive residential local telephone market."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 --effectivelysetting an industry standard.
Excel submitted unaudited Income Statements,Balance Sheets and Cash Flow statements
for 1999,2000 and eleven months of 2001 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.
STAFF COMMENTS 3 FEBRUARY 25,2003
The Company's illustrative tariff includes a deposit requirement that reflects the
Commission rules.Excel has agreed to correct a few points in its fmal tariff to address Staff's
other concerns.The Company further agrees to comply with all applicable Commission rules
but requests the Commission waive the requirement for an escrow account to cover customer
deposits due to VarTec's written guarantee of fmancial support.
STAFF RECOMMENDATION
Excel has submitted the necessary documents and met the Commission's requirements
for a Certificate of Public Convenienceand Necessity.While its customer relations history has
not been stellar,Excel made considerable improvements in recent years and promises to continue
to improve.Excel's fmancial history would normallylead Staff to recommend some form of
surety,but VarTec's Affidavit guaranteeingfinancial support of Excel would appear to relieve
this concern.
Staff recommends 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 recommends the Commission
accept VarTec's guarantee of financial support in lieu of a surety bond for Excel in its endeavor
to obtain certification and provide telecommunications services.
Respectively submitted this day of February 2003.
Lisa D.Nordstro
Deputy AttorneyGeneral
Technical Staff:BeverlyBarker
Birdelle Brown
LN:i:umisc/comrnents/exct02.11nbabbb
STAFF COMMENTS 4 FEBRUARY 25,2003
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 25TH DAY OF FEBRUARY 2003,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF,IN
CASE NO.EXC-T-02-1,BY MAILING A COPY THEREOF,POSTAGE PREPAID,TO
THE FOLLOWING:
WINAFRED R BRANTEL JERRY G KIRBY
KELLEY DRYE &WARREN LLP TARIFF MANAGER,REGULATORY AFFAIRS
800 TOWERS CRESENT DR EXCEL TELECOMMUNICATIONS INC
SUITE 1200 8750 N CENTRAL EXPRESSWAY
VIENNA VA 22182 SUITE 2000
DALLAS TX 75231
SECRE ARY
CERTIFICATE OF SERVICE