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LISA D. NORDSTROM
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
(208) 334-0314
IDAHO BAR NO. 5733
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Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
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.
CASE NO. EXC-O2-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Lisa D. Nordstrom, Deputy Attorney General, and in response to the Notice
of Application and Notice of Modified Procedure issued in Order No. 29190 on February 4
2003 , submits the following comments.
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 ofIdaho. Excel's Application states that the Company is not
requesting authority to 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 FEBRUARY 25 , 2003
Initially Excel proposes to provide local services statewide to residential customers.
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 including local service, private line, data transmission service and Internet service.
BACKGROUND
In 1997, Excel previously applied 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 interexchange carrier and the number of complaints the Commission received
from Excel's customers. The complaints concerned billing problems, 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'
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
significantly decreased. 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 ofthe 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 subsequently terminated the service representative who
failed to respond~
STAFF COMMENTS 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-held corporation
sold more than $750 million of communications services in 2002 and was purchased by VarTec
in April 2002. Excel has taken the following steps to address and correct the concerns Staff
expressed in 1997:
(1) Excel utilizes a nationwide third party verification (TPV) system to confirm
residential primary interexchange carrier changes;
(2) The Company 'has 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;
(3) Excel's Independent Representatives (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 promptly terminate 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 quality provider of interexchange telecommunications 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 effectively setting an industry standard.
Excel submitted unaudited Income Statements, Balance Sheets and Cash Flow statements
for 1999 2000 and eleven 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 Staffs
concerns, Excel submitted an Affidavit from VarTec dated July 25 , 2002 wherein VarTec
guarantees the financial support of Excel.
STAFF COMMENTS 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 final 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 financial support.
STAFF RECOMMENDATION
Excel has submitted the necessary documents and met the Commission s requirements
for a Certificate of Public Convenience and 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 financial history would normally lead Staff to recommend some form of
surety, but VarTec s Affidavit guaranteeing financial 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 ~ 5 day of February 2003.
Lisa D. Nordstro
Deputy Attorney
Technical Staff: Beverly Barker
Birdelle Brown
LN:i:umisc/comments/exctO2.1Inbabbb
STAFF COMMENTS 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-02-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO
THE FOLLOWING:
WINAFRED R BRANTEL
KELLEY DRYE & WARREN LLP
800 TOWERS CRESENT DR
SUITE 1200
VIENNA VA 22182
JERRY G KIRBY
TARIFF MANAGER, REGULATORY AFFAIRS
EXCEL TELECOMMUNICATIONS INC
8750 N CENTRAL EXPRESSWAY
SUITE 2000
DALLAS TX 75231
Jo SEC ARY
CERTIFICATE OF SERVICE