20021101Comments.pdf

DONALD L. HOWELL, il
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
Street Address for Express Mail:
472W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
IN THE MATTER OF THE PETITION OF
POTLATCH TELEPHONE COMPANY,
CENTURYTEL OF IDAH, CENTURYTEL OF
THE GEM STATE, AND THE IDAHO
TELEPHONE ASSOCIATION FOR A
DECLARATORY ORDER PROHIBITING THE
USE OF "VIRTUAL" NXX CALLING.
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CASE NO. GNR-T-02.I6
COMMENTS OF THE
COMMISSION STAFF
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Donald L. Howell, II, Deputy Attorney General, and submits the following
comments in response to the Notice of Petition for Declaratory Order, Notice of Modified
Procedure, Notice of lntervention Deadline and Order No. 29125 issued on October 4,2002.
THE APPLICATION
On August 27,2002, several small incumbent local exchange companies (LECs) filed a
petition seeking a declaratory order. In particular, the Petitioners urged the Commission to declare
that the practice of "virtual" calling by means of a virtual prefixes (NXX) or other virtual-like
services is not in the public interest and should be prohibited in ldaho. Virtual NXX calling
converts what would otherwise be a long distance (toll) or message telecommunications service
(MTS) call to a toll-free local call by the assignment of a local telephone prefix, which makes it
STAFF COMMENTS NOVEMBER 1,2002
appear that the call is a local call. The Petition for Declaratory Order was filed jointly by Potlatch
Telephone, CenturyTel of Idaho, CenturyTel of the Gem State and the Idaho Telephone
Association (ITA).t
DISCUSSION
1. Background. As an initial matter, this Commission regulates intrastate
telecommunications. Traditionally, the jurisdictional distinction (between interstate and intrastate
or interLATA and intraLATA) has been premised on determining the points of origination and
termination of the telephone call. For example, a telephone call that originates in Idaho and
terminates within Idaho has traditionally been construed as an intrastate telephone call. Even if
the call is routed for transport services through facilities that are located out of state, if the call
originates and terminates in Idaho the call has been construed to be an intrastate call. Order
No.21433.
From a historical perspective, each wireline local exchange has been assigned rating
coordinates. When a call is made from one local exchange to another local exchange, the central
office switching equipment determines whether the call was local or toll based upon a comparison
of the rating coordinates. In 1996, the Commission authorized Qwest's predecessor (U S WEST)
to create three large regional local calling areas. Order No.26672 issued November 1,1996. In
subsequent Orders, the Commission expanded these three local calling regions to include adjacent
non-Qwest local exchanges.
With the advent of wireless communication and competitive LECs, these entities serve
"local" areas that do not necessarily conform to the typical exchanges or calling area boundaries of
the incumbent LECs (ILEC). For example, the FCC has authorized commercial mobile radio
service (CMRS) carriers to use the major trading area (MTA) as their "local service area for
CMRS traffic. Local Competition Order at fl 1036.2 For purposes of illustration, the southern
' The ITA has 14 members including Albion Telephone, Cambridge Telephone, Midvale Telephone, Direct
Communications Rockland, Silver Star Telephone, Rural Telephone, and Inland Telephone. These listed companies
receive financial support from the Idaho USF. Petition at 4.
2 Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, First Report and
Order, I I FCC Rcd 15499 (1996), aff'd in part andvacated in port sub nom., Competitive Telecommunications Ass'n
v.FCC,117F.3d1068(8thCn.1'997)andlowaUtilitiesBd.v.FCC,120F.3d753Sth(Cirl997) aff'dinpartand
remanded, AT&T Corp. v. Iowa Utilities Bd, 525 U.S. 366, 119 S.Ct. 721 (1999) (hereinafter the Local Competition
Order).
STAFF COMMENTS NOVEMBER 1,2002
Idaho MTA includes allthe Qwest and non-Qwest exchanges located in the Boise LATA.3
Consequently, the local service areas for wireless carriers and competitive LECs may be larger
than the local calling areas of the ILEC and may include routes that, from an ILEC's perspective,
may be a toll route.
2. Virtual NXX. As described in the Petition for Declaratory Ruling, Virtual NXX
occurs when telephone numbers or an entire prefix (NXX) are assigned to a carrier such as a
competitive local exchange carrier (CLEC) in a certain rate center but calls to those numbers are
delivered by the incumbent carrier (ILEC) to the CLEC in another rate center outside of the
originating local calling arca. Therefore, such calls are rated as local calls, but by the nature of the
end points are routed as toll calls. The questions surrounding inter-carrier compensation in Virtual
NXX situations are currently being considered by the Federal Communications Commission
GCC).4 However, in the Local Competition Order, the FCC stated that state commissions have
the authority to determine what geographic areas should be considered "local areas" for the
purposes of reciprocal compensation obligations under Section 251(bX5) of the Act.s
3. Jurisdiction. In their Application, the Petitioners alleged that they "are aware of
situations in other states where [CLECs] are requesting to enter into relationships under which a
Virtual [NXX] would be established within local exchange areas. . . ." Petition at 5, fl9. The
Petitioners further state that they believe "at least one or more CLECs that provide VNXX or
\rNxx-like services in other states are now certificated in Idaho." Id. at 6. Although not
specifically defined in the Petition, it is StafPs belief that Virtual NXX configuration does exist in
Idaho. Staff is aware that at least one CLEC has an NXX assigned to the eastern Idaho Qwest
calling area, but their point of interconnection with Qwest is in Boise. Consequently, Staff
believes that the Petitioners' requested relief is neither of a hypothetical nor abstract character.
Noh v. Cenaruusa, _Idaho _, 53 P.2d l2l7 (2002). Returning to the request of the
petitioners, they seek an Order prohibiting intrastate telephone calls between locations that are not
within the same local calling area being "rated as local rather than toll" calls. Petition at 6. The
Commission has authority to address intrastate local calling areas and exchange access
' The Boise LATA includes all LEC exchanges south of the Salmon River.
a In the Matter of Developing a Llnified Intercarrier Compensation Regime,Notice of Proposed Rulemaking, CC
Docket No. 0 1-92, FCC 01-032 (rel. April 27, 200l).
s Local Competition Order at n 1035. See also Virginia Arbitration Order,2002WL 1576912 (July 17, 2OO4,n 549.
STAFF COMMENTS NOVEMBER 1,2002
compensation under ldaho Code $$ 62-603(7) and 62-609. At the same time the FCC sets local
calling areas for CMRS carriers. Local Competition Order at u 1036. Both the Applicants'
Petition and the Commission's Notice recognize that the Commission has previously determined
that the transportation of telecommunication in a manner which avoids the assessment of
legitimate toll and access charges was inappropriate and unlawful. Order No. 25885 (the Upper
Valley Case). In this case, the Commission found that the use of EAS bridging or arbitrage to
make what would otherwise be a long-distance call was inappropriate.
Staff continues to support the long established "end-to-end" analysis for determining
the nature of calls. (See Order Nos. 25885 and21433). Specific to this case, Virtual NXX calls
originate in the exchange of one local callingareabut are delivered to terminate in an exchange of
another local callingarea and should, therefore, be considered interexchange traffic and subject to
the appropriate access compensation rates.
At the root of this issue lies the question of whether or not one carrier can use another
carrier's network without a negotiated compensation arrangement. In a Virtual NXX scenario, the
ILEC could incur the cost of the network that transports Virtual NXX traffic between local calling
areas, lose the access revenue that would otherwise be associated with that traffic, and end up
payrng reciprocal compensation to the other carrier on that same traffic because it is
mischaracteized as local calling. While not attempting to dictate the local calling areas or
network architecture of other carriers such as CLECs, wireless providers, or paging services that
may use the ILEC's network, Staff does believe that using an ILEC's plant and facilities without
some negotiated compensation arrangement for that usage is unjust. This position is supported by
the FCC's statement that "traffic originating or terminating outside of the applicable local area
would be subject to interstate and intrastate access charges."6
Carriers that participate in Virtual NXX calling have several legitimate negotiated
compensation alternatives to provide service. For example, those carriers can purchase special
access services from the ILEC, can negotiate to use extended enhanced loops (EEL), foreign
exchange lines (FX), wide area telecommunication service (WATS), or 800 number services.
None of these alternatives or other arrangements such as "bill-and-keep" attempt to trick carrier
switches and billing systems into providing transport between local calling areas without
u n.1rczs.
STAFF COMMENTS NOVEMBER 1, 2OO2
compensation the way Virtual NXX does. For services such as FX that are offered by the ILEC,
compensation is either imputed according to $ 62-609 or collected from the end use subscriber.
Other concerns Staff considered regard the reporting of minutes to Idaho's Universal
Service Fund and Telecommunications Relay Service Fund. Virtual NXX minutes that are
inappropriately classed as local minutes may cause carriers to avoid paylng the appropriate
amount to these funds or at least alter the proportionate funding addressed by the Commission.
(See Order Nos. 24525 and28684). In addition, Staff is concerned that Virtual NXX may unfairly
disadvantage those carriers that provide interexchange service and must incur the appropriate costs
ofaccess charges.
RECOMMENDATION
Staff recommends that the Commission rule Virtual NXX traffic is non-local traffic as
described by the parties and is instead interexchange traffic. Staff further suggests that carriers
resolve this and other intercarrier compensation arrangements as they negotiate interconnection
agreements. In most cases, Staff believes that access charges are the appropriate intercarrier
compensation mechanism regarding VNXX traffic but recognizes that, due to the varying types of
network usage, the carriers may negotiate appropriate arrangements on a case-by-case basis. Staff
also recognizes that policy and arrangements may change when the FCC concludes its pending
rulemaking investigation on Unified Intercarrier Compens ation.
Respecttully submitted this l+day of November 2002.
Ll.{$!{h
Donald
Deputy
Technical Staff: Doug Cooley
i : :umisc/comments/gnrt02. I 6.dhdc
L. Howell, il
Attomey General
STAFF COMMENTS NOVEMBER 1,2002
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 1ST DAY OF NOVEMBER 2002,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. GNR-T-02-16, BY ELECTRONIC FILING A COPY THEREOF, TO THE
FOLLOWING:
MORGAN W RICHARDS
MOFFATT THOMAS ET AL
PO BOX 829
BOISE ID 8370I
TED HANKINS DIRECTOR
STATE GOVERNMENT RELATIONS
CENTURYTEL OF IDAHO
PO BOX 4065
MONROE LATr2tt-4065
CLAY STTIRGIS
SENIOR MANAGER
MOSS ADAMS LLP
601 RTVERSIDE SUITE 18OO
SPOKANE WA 99201-0663
SUSAN TRAVIS
WORLDCOM, INC
707 17TH ST 36TH FLooR
DENVER CO 80202
MARY S HOBSON
STOEL RryES LLP
IO1 S CAPITOL BLVD STE I9OO
BOrSE rD 83702-s958
BRIAN THOMAS
TIME WARNER TELECOM
223 TAYLOR AVE NORTH
SEATTLE WA 98T09
GAIL LONG MANAGER
EXTERNAL RELATIONS
POTLATCH TELEPHONE CO.
PO BOX 1566
OREGON CITY OR 97045-1566
CONLEY WARD
GTVENS PURSLEY LLP
PO BOX2720
BOrSE D 83701-2720
DEAN J MILLER
McDEVITT & MILLER LLP
POBOX2564
BOISE ID 83701
ERIC S HEATH ATTORNEY
SPRINT LEGAL & EXTERNAL AFFAIRS
lOO SPEAR ST, SUITE 930
SAN FRANCISCO CA 94105
PETER BLISARD
LEVEL 3 COMMUNICATIONS LLC
1025 ELDORADO BLVD
BROOMFIELD CO 80021
DEAN RANDALL
SPECIALIST-REGULATORY AFFAIRS
VERZON NORTHWEST INC
PO BOX 1100
BEAVERTON OR 97 07 S-ILOO
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TERRY HAYNES
SEMOR STAFF CONSULTANT.
REGULATORY
VERZON NORTHWEST INC
PO BOX 152092
IRVING TX 75015
GENE DeJORDY, VICE PRESIDENT
REGULATORY AFFAIRS
WESTERN WIRELESS CORP.
3650 131ST AVE SE SUITE 4OO
BELLEVUE WA 98006
CATHY L BRIGHTWELL
AT&T COMMUNICATIONS
2I2O CATON WAY SUITE B
oLYMPIA WA 98502-1106
KENNETH C HOWELL
HAWLEY TROXELL ENNIS & HAWLEY
PO BOX 1617
BOISE ID 83701-1617
MARY B TRIBBY
REBECCA B DeCOOK
AT&T COMMUNICATIONS
1875 LAWRENCE ST SUITE 1401
DENVER CO 80202
SECRETARY
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