20020729Decision Memo.doc

DELIBERATION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
DON HOWELL
RANDY LOBB
TERRI CARLOCK
JOE CUSICK
CAROLEE HALL
BEV BARKER
TONYA CLARK
GENE FADNESS
WORKING FILE

FROM: JOHN R. HAMMOND

DATE: JULY 29, 2002

RE: IN THE MATTER OF THE PETITION FOR RECONSIDERATION OF BASICPHONE, INC. OF THE COMMISSION’S BOND REQUIREMENT CONTAINED IN ORDER NO. 29067. CASE NO. GNR-T-02-8.

On May 2, 2002, BasicPhone, Inc. filed an Application for a Certificate of Public Convenience and Necessity (“CPCN”) to provide local residential and business dial tone on a prepaid basis in Idaho. On May 16, 2002, the Commission issued a Notice of Application and Notice of Modified Procedure. Order No. 29028. In response to this Order the Commission Staff submitted written comments and was the only party to do so. On July 3, 2002, the Commission approved BasicPhone’s Application for a CPCN. Order No. 29067. On July 28, 2002, BasicPhone filed a timely Petition for Reconsideration.
BACKGROUND
In compliance with Commission Rules of Procedure, BasicPhone filed an Application for a CPCN to provide local residential and business dial tone on a prepaid basis throughout Idaho. The Company also intends to offer prepaid long distance service. In its Application, BasicPhone requested that the Commission waive the requirement to establish an escrow account because it is a prepaid provider. BasicPhone stated that it would operate as a non-facilities based reseller of services of incumbent telecommunications carriers. BasicPhone represented that it had no plans to build facilities in the future. BasicPhone is incorporated in the State of Texas and represents that it is in good standing under the laws of that State. BasicPhone represents that it is currently authorized to do business as a foreign corporation in the State of Idaho.
Staff reviewed the Application and financials submitted by the Company and recommended that the Commission approve the Company’s Application for a CPCN and tariff, along with a waiver of the escrow account or bond requirement.
Based on the comments, the law and the record, the Commission granted BasicPhone’s Application. However, the Commission, by a majority, decided that because BasicPhone had no history in the State and would require customers to pre-pay for services, it was necessary that it post a bond in order to protect consumers in the event that the Company does not provide the services that its customers have paid for. The Commission found that consistent with past decisions the Company would be required to post and maintain a bond as a condition of the issuance of its CPCN. The bond would be initially established at $5,000 and would be maintained at a level that exceeds $50 per residential and small business basic local exchange service customer for a period of not less than two years of operation within Idaho. After this time period the Commission found that the Company could petition to eliminate the financial security requirement.
PETITION FOR RECONSIDERATION
In general BasicPhone contends that the Commission’s requirement that the Company post a bond as a condition of the issuance of its CPCN is unreasonable, anti-competitive, contrary to Idaho and federal laws, and erroneous.
BasicPhone’s specific arguments are as follows. 1) the Commission’s decision to require a posting of a bond is unreasonable because there is sufficient evidence in the record to demonstrate BasicPhone’s financial stability; 2) the Commission’s decision is anti-competitive because it effectively creates a barrier for BasicPhone to enter into the Idaho market. BasicPhone contends that in creating this barrier, the Commission has acted contrary to the legislative intent of the Idaho Telecommunications Act of 1988 and the provisions of the Telecommunications Act of 1996 that mandate the promotion of affordable telecommunications services for all consumers through effective competition; 3) the Commission’s decision is erroneous in light of the recommendations made by the Commission Staff that BasicPhone should not be required to post a bond; and 4) the Commission’s decision is erroneous given BasicPhone’s statement that it does not require advance deposits from its customers.
Based on the foregoing arguments BasicPhone contends that the Commission should reconsider its decision in Order No. 29067 to issue the Company’s CPCN , subject to the posting of a bond.
COMMISSION DECISION
Does the Commission wish to grant or deny BasicPhone’s Petition for Reconsideration at this time?
If the Commission decides not to grant or deny this Petition at this time does the Commission wish to establish a procedure by which to process this matter?

John Hammond

Staff: Carolee Hall

M:GNRT0208_jh

DELIBERATION MEMORANDUM 1