20120601Centurylink Comments.pdf

Mary S. Hobson
Attorney & Counselor
999 Main, Suite 1103
Boise, ID 83702
208-383-8666
RECEIVED
2i2 MAY 31 PM 4:46
IDANC UBLkI UTILITIES COMMISSION
May 31, 2012
VIA HAND DELIVERY
Jean D Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
RE: Case No. GNR-T-12-03
Dear Ms. Jewell:
Enclosed for filing with this Commission are an original and seven (7) copies of THE
COMMENTS OF THE CENTURYLINK COMPANIES in support of the revisions to
Rule 502, IDAPA 31.41.01.502 as reflected in the Commisison's Order No 32543
If you have any questions, please contact me. Thank you for your cooperation in this
matter.
Very truly yours,
Mary S./Hobson
Enclosures
Mary S. Hobson (ISB. No. 2142)
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
marv.hobson(CenturvLink. corn
Lisa A. Anderl
Associate General Counsel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Tel: [phone]
Lisa.Mderl.(CenturvLink.com
Attorneys for the CenturyLink Companies
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'S )
REVIEW OF TELEPHONE CUSTOMER )
RELATIONS RULE 502, IDAPA 31.41.01.502 )
)
)
)
CASE NO. GNR-T-12-03
COMMENTS OF THE
CENTURYLINK
COMPANIES
Qwest Corporation dba CenturyLink QC, CenturyTel of Idaho, Inc. dba
CenturyLink, and CenturyTel of the Gem State, Inc. dba CenturyLink (collectively "the
CenturyLink companies" or "CenturyLink") by and through their undersigned attorneys,
file these Comments in support of the revised Rule 502 (IDAPA 31.41.01.502) ("revised
Rule") referenced in the Idaho Public Utilities Commission's Notice of Settlement
Stipulation, Notice of Modified Procedure, and Order No. 32548 (hereinafter "the
Commission's Notice"), entered in the above-referenced docket on May 10, 2012.
BACKGROUND
The Commission's Notice correctly observes that the present docket reviewing
Rule 502 arose out a CenturyLink filing made in December, 2011, in which the
COMMENTS OF THE -1-
CENTURYLINK COMPANIES
CenturyLink companies sought a full exemption to relieve the unusual and unreasonable
hardships that result from Rule 502's application to CenturyLink. These hardships stem
from the profound changes that have occurred in the telecommunications industry in
Idaho since the provisions of Rule 502 were adopted eighteen years ago. Today, the
majority of Idaho voice customers enjoy access to alternative forms of voice
communication (e.g., wireless phones, cable telephony, and Voice over Internet Protocol
(VoIP) service) that substitute for the service regulated under Rule 502. These industry
changes create two significant shifts in the context in which the present Rule operates.
First, from a customer standpoint, the availability of these new forms of communication
means the vast majority of customers are not "out of service" should their CenturyLink
service not be restored immediately. Second, while there is now fierce competition for
these customers among the multiple providers of these various forms of communication,
only one competitor—CenturyLink—is regulated under Rule 502 in the markets it serves.
The Rule is neither technologically nor competitively neutral and its application to
CenturyLink places it at a competitive disadvantage.
The impact of the changes in the market is evident from recent studies. Wireless
technology, in particular, has had a large impact on the CenturyLink companies. As of
June 2010, over 30% of Idaho households no longer had wireline service and relied
solely on wireless technology for their voice needs.' The FCC reported that in 2009
wireless penetration in all Idaho economic areas studied was between 80 and 90%.2 Most
1 Centers for Disease Control and Prevention, National Centerfor Health Statistics, Wireless Substitution: State-
level Estimates from the National Health Interview Survey, January 2007—June 2010, released April 20,
2011, Table 3.
2 Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless,
Including Commercial Mobile Services, WT Docket No. 10-133. Fifteenth Report, Released: June 27,
2011, Table C-3.
COMMENTS OF THE -2-
CENTURYLINK COMPANIES
customers that have not eliminated their wireline service have both a wireline and a
wireless phone in the household The FCC identified 1,221,000 wireless connections in
Idaho in 2009, while the 2009 census recorded only 647,502 housing units in the state.3
This represents a ratio of nearly 1.9 wireless connections per housing unit in Idaho. In
comparison, as of December 2010, the FCC reported there were only 455,000 incumbent
local exchange carrier (ILEC) access lines in Idaho.4 Further, in its latest report, the
National Center for Health Statistics (NCHS) reported that only 12.9% oflandline
households in the United States did not have a wireless phone.5 Thus, for the vast
majority of wireline customers who also maintain a wireless connection, an out-of-
service condition for their wireline service does not have nearly the impact for voice
communication capability that it did in 1993.
In addition, any customer with a broadband connection can subscribe to VoIP 6
services from a carrier like Vonage or Google to meet their voice needs. According to
the FCC, as of December 2010, there were 706,000 broadband connections in Idaho 7—a
number that also significantly exceeds the 455,000 ILEC access lines in the state 8 Each
of these broadband customers can use VoIP for voice calling and avoid buying basic local
exchange service from an ILEC such as one of the CenturyLink companies.
See http //www census gov/popestldata/housmg/totals/2009/mdex html 2010 Housing unit data is not
yet available.
Local Telephone Competition: Status as ofDecember 31, 2010; Industry Analysis and Technology
Division, Wirelme Competition Bureau, October 2011 table 13
Centers for Disease Control and Prevention, National Center for Health Statistics, Wireless Substitution: Early
Release of Estimates from the National Health Interview Survey, July-Dec 2010, released June 8, 2011, Table 1.
6 The term voice over Internet protocol (VoIP) service refers to telecommunications services that are
rovided without using the public switched network upon which traditional telephone services are based.
High Speed Services for Internet Access: Status as ofDecember 31, 2010, FCC Industry Analysis and Technology
Division, Wireline Competition Bureau, October 2011, Table 17.
8 Local Telephone Competition: Status as ofDecember 31, 2010; Industry Analysis and Technology Division,
Wireline Competition Bureau, October 2011, table 8.
COMMENTS OF THE -3-
CENTURYLINK COMPANIES
CenturyLmk's petition for exemption was predicated, therefore, on dual notions
that the world had changed for customers who now enjoy many alternatives, while
regulation lagged far beyond the competitive realities of today's telecommunications
industry, creating a competitive disadvantage to incumbent providers. The Commission
responded to this petition in its Notice of Petition, Notice of Modified Procedure and
Order No 32446 issued January 25, 2012 At page 2 the Commission sought the
comments of interested parties on "whether a broader rulemalung procedure is
appropriate, and whether an exemption to Rule 502 should be granted to CenturyLink in
the meantime" Frontier Communications Northwest Inc and Citizens
Telecommunications Company of Idaho d/b/a Frontier Communications of Idaho
(collectively, "Frontier") filed comments fully supporting CenturyLmk's position and
requesting the Commission "open a rulemaking to discuss these important
issues and immediately grant a waiver of Rule 502 to CenturyLink and all similarly
situated companies."
The Idaho Public Utilities Commission Staff ("Staff') in response to the
Commission's January 25 Notice filed comments recommending denial of CenturyLmk's
request for an exemption and recommending that the Commission open "a Negotiated
Rulemaking Proceeding regarding Rule 502" However, the Staffs comments did not take
issue with CenturyLink's primary contentions that most customers have competitive choices
including wireless and broadband services, and that virtually every competitor that
incumbents like CenturyLink face in the competitive market is unregulated by Rule 502
Staff's concerns were instead focused on the smallest of minorities in the most remote
locations in CenturyLmk territory that may not be able to receive wireless service in their
homes or who do not as yet have alternative broadband providers.
COMMENTS OF THE -4-
CENTURYLINK COMPANIES
Following these submissions, representatives of Staff and CenturyLink continued
to discuss how the issues could be best addressed by the Commission and the industry.
On March 28, 2012 Staff and company representatives met informally to determine
whether any agreement was possible on interim relief for the CenturyLmk Companies
while the rulemaking process proposed by Staff proceeded The parties to that meeting
were notable to agree on interim relief but did agree on a procedure that would address
Rule 502 in a rulemalung proceeding that could afford interim relief, assuming consensus
on rule revisions could be reached. Staff agreed to seek the Commission's approval for
the initiation of a Negotiated Rulemaking and (assuming the Commission's consent) to
schedule a workshop for all interested parties for the purpose of addressing Rule 502 on
Monday, April 30, 2012. That process was approved, and during the workshop attended
by CenturyLink, Frontier, TDS Telecommunications Corporation, and the Idaho Telecom
Alliance, the revised Rule that is the subject of the Commission's Notice in this docket
was negotiated and agreed upon
The parties to that workshop commemorated their agreement in a Settlement
Stipulation filed with the Commission May 4, 2012. The Stipulation requests that the
Commission process the agreement by modified procedure, approve the revised rule and
submit to the Rules Coordinator for publication and promulgation.
THE REVISED RULE
CenturyLink supports the revised Rule and urges the Commission to approve and
promulgate it The revisions successfully address CenturyLmk's primary concerns with
the existing Rule 502 and promote a more competitive telecommunications market in
COMMENTS OF THE -5-
CENTURYL1NK COMPANIES
which customer's desires and concerns, not outmoded regulatory constructs, drive
competitive companies' responses.
The existing Rule 502 contained three regulatory concepts: 1) standard intervals
for the restoration of traditional wireline telephone service which, in most cases, required
service to be restored in 24 hours, 2) a requirement to provide a month's service charge
credit to every customer whose service was not restored with the standard intervals, and
3) a requirement to report to the Commission when a company was not able to meet the
restoration interval requirements 90 per cent of the time for three consecutive months
The first of these concepts, the standard intervals for restoration of voice service,
when adopted, were based on the assumption that a customer had no alternative to his
basic wireline phone service But, as noted above, the times have changed dramatically
since Rule 502 was adopted The FCC reported wireless penetration in all Idaho was
between 80 and 90% in 2009 9 and the National Center for Health Statistics (NCHS)
reported that only 12.9% of landlme households in the United States did not have a
wireless phone Today it is fair to say most Idaho customers also maintain a wireless
connection that enables voice communication even when their wireline is out-of-service.
Restoration of wireline service, therefore, is no longer as important to customers as it
once was. The revised Rule lengthens and clarifies those intervals while still maintaining
standards for restoration that protect customers CenturyLink believes this change strikes
an appropriate balance and supports its adoption.
The requirement of the existing rule that any customer whose service is not
restored with in the standard interval receive a month's free service is the most blatant
See Id. at fn. 2.
'° See Id. atfii5.
COMMENTS OF THE -6-
CENTURYLINK COMPANIES
example of how Rule 502 creates a competitive disadvantage for incumbent companies
No other competitor is required to pay such credits, which can total a substantial
economic cost. Nor does any evidence support the assumption that such credits are
beneficial in addressing customer concerns or even in maintaining customers who are
dissatisfied In fact, since Rule 502 focuses only on wirelme voice service, it ignores
what today's customers routinely report to CentuiyLink, i.e., that their broadband and
Internet services are more important to them than wireline voice service. All this is not to
suggest that customers who do not receive prompt repairs to their wireline service will be
ignored. But, eliminating the Rule requirement that a month's free service be given all
customers regardless of their circumstances, frees the CenturyLmk companies to design
customer responses that better meet their customers' concerns. If some customers value
wireline voice, while others prioritize their broadband service, the companies should have
the flexibility to respond accordingly. How customers are treated when there is a problem
with service should be a means for companies to differentiate themselves in a competitive
marketplace The elimination of the credit requirement in the revised Rule promotes
competition and is in the customers' ultimate best interests
The existing Rule's requirement that regulated companies report to the
Commission when they do not meet the restoration interval at least 90 per cent of the
time for three consecutive months creates a regulatory burden that forces CenturyLmk to
allocate its resources to try to comply with the Rule, rather than to address customer
needs As discussed above, restoration of wirelme voice service within 24 hours no
longer reflects the priorities of many customers Instead, increasing numbers of
customers are interested in their broadband connections and access to the Internet. A
COMMENTS OF THE -7-
CENTURYLINK COMPANIES
Rule that forces CenturyLink to focus on something most customers care less about and
that drains resources from the products and services they do care about is not good for
customers and harms CenturyLuik competitively. The revisions to Rule 502 address
these issues and allow customers and the markets to drive CenturyLink's resource
allocations
CONCLUSION
The revised Rule 502 recognizes and responds to the issues that the CenturyLrnk
Companies raised in their Petition for Exemption The revisions do not entirely eliminate
regulation of service restoration requirement but they allow for those incumbents that are
regulated to compete more effectively with their unregulated competitors and to better
address the needs of customers CenturyLink urges the Commission to approve the
revised Rule and submit it to the Rules Coordinator for publication and promulgation
CenturyLmk further requests the Commission adopt the revised Rule on an interim basis
until the revisions can be approved as a permanent rule
1'>- Submitted this day of May, 2012.
Respectfully submitted,
Mary S. Hbson (ISB. No. 2142)
999 Main Suite 1103
Boise, ID 83702
Lisa A. Anderl
Associate General Counsel
1600 7th Avenue, Room 1506
Seattle, WA 98191
Attorneys for the CenturyLrnk Companies
COMMENTS OF THE -8-
CENTURYL1NK COMPANIES