gnrt945.usw.ch.ws.doc

WELDON STUTZMAN
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
Idaho Bar No. 3283

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID. 83702-5983

Attorneys for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PETITION OF )
AT&T COMMUNICATIONS OF THE ) CASE NO. GNR-T-94-5
MOUNTAIN STATES, INC. FOR INTRALATA )
EQUAL ACCESS AND CARRIER PRESUB- ) COMMENTS OF THE
SCRIPTION IN THE SERVING TERRITORY ) COMMISSION OF STAFF
U S WEST COMMUNICATIONS, INC. )

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Weldon Stutzman, Deputy Attorney General, and submits the following comments for the Commission’s consideration in Case No. GNR-T-94-5.

BACKGROUND
On April 22, 1999 U S WEST Communications, Inc. (U S WEST) filed its “Idaho 1 + IntraLATA Toll Dialing Parity Implementation Plan” (the Plan). In its plan, U S WEST included exhibits reflecting the form of notification given to carriers, a proposed form of customer notification and tariff and catalog provisions reflecting charges associated with this change. This filing is in compliance with The Telecommunications Act of 1996 (the Act), Section 251 which states:

(b) OBLIGATIONS OF ALL LOCAL EXCHANGE CARRIERS.-Each local exchange carrier has the following duties:

DIALING PARITY.-The duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service, and the duty to permit all such providers to have nondiscriminatory access to telephone numbers, operator services, directory assistance, and directory listing, with no unreasonable dialing delays.

Following the implementation of the Act, many States challenged the jurisdictional authority of the FCC to implement the Act. These challenges resulted in a suit (AT&T v. Iowa Utilities Board) being filed in Federal Court, which found its way to the Eighth Circuit Court of Appeals, and later to the United States Supreme Court. On January 25, 1999, the United States Supreme Court, in AT&T v. Iowa Utilities Board, reversed in part the rulings of the Court of Appeals. The Supreme Court vacated certain rules the FCC had adopted pursuant to the Communications Act of 1934, as amended by the Telecommunications Act of 1996, but held, inter alia, that the FCC has general jurisdiction to implement the Act’s local competition provisions.
With its decision, the Supreme Court allowed the FCC to revise the timing for implementing dialing parity. The Supreme Court remanded to the Court of Appeals, which was later to remand it to the FCC in a final order. Before the FCC received its final order from the Court of Appeals, the FCC issued its Order No. FCC 99-54, establishing new timelines for all local exchange carriers to implement dialing parity. Specifically, the order required all local exchange carriers that had not yet filed dialing parity plans to submit implementation plans to State Commissions no later than April 22, 1999. State Commissions are given until June 22, 1999, to review and approve those plans, and the local carriers are to implement dialing parity within thirty days of the state’s approval.
U S WEST filed its Idaho plan representing that the timing for notices and for implementation are included to comply with the FCC order and do not reflect U S WEST’s agreement that such schedules and deadlines are appropriate or manageable. U S WEST has sought relief from the FCC’s order both at the FCC and the Eighth Circuit Court of Appeals. In its application, U S WEST states that in the event relief is granted, its filing will be of no force and effect and U S WEST will prepare and file a more appropriate plan and implementation schedule pursuant to IPUC Order No. 27965.
The Commission’s Order No. 27965 established a June 1, 1999 date by which U S WEST was to present its dialing parity implementation plan to the Commission. Staff believes the schedule established in U S WEST’s current plan is attainable and will probably be completed before a final determination from the FCC or the Eighth Circuit Court is issued.

SUMMARY OF PROPOSED PLAN
U S WEST proposes to implement full 2-PIC intraLATA presubscription in all of its exchanges in Idaho. Such implementation will allow customers to presubscribe to one carrier for all interLATA calls and the same or another carrier for their intraLATA calls. In its plan,
U S WEST proposed the following implementation schedule contingent upon the FCC’s order not being stayed, rescinded or modified:

April 22 Notification to Carriers
May 10 Carrier Participation Response
June 1 Commission Approval of Customer Notification
June 22 Final Plan Approval by the Commission
June 22 Customer Notification Mailed
July 22 Implementation

Staff believes the implementation schedule submitted by U S WEST is manageable and satisfies the guidelines of the FCC. Staff supports this implementation schedule.

Customer Notification
U S WEST proposes that all intraLATA presubscripton will be available for all 1+ NPA and 0+NPA. The Company goes on to state that customers will be notified of the pending change and be given a list of all carriers which have indicated an interest in operating as
pre-subscribed carriers in Idaho. The lists of carriers will be randomly sorted so that all carriers’ names will appear on top of the lists distributed to customers. The Company will notify customers in a separate mailing aside from the monthly billing.
Staff believes this methodology is fair and reasonable and supports U S WEST’s efforts for impartiality.

IntraLATA Carrier for Current Customers
In the event an existing customer does not actively choose an intraLATA toll carrier,
U S WEST proposes that, as the Incumbent Local Exchange Carrier (ILEC), it remain the carrier for those calls initiated within U S WEST’s territory.
This is perhaps a difficult issue. Staff has considered a “no PIC” option wherein an existing customer who does not affirmatively choose an intraLATA carrier would have to dial around using 101-XXXX until he actively chooses a carrier. Staff has also contemplated the interLATA carrier automatically becoming the intraLATA carrier. This reasoning is based on the fact that all customers have made deliberate decisions when selecting their interstate carrier within the realm of competition. And finally, Staff has reviewed the incumbent local exchange carrier (ILEC) being the default carrier. This methodology appears to be simpler for customers in the long run. Because U S WEST is an ILEC, it is only logical that it remain the default intraLATA carrier if a customer does not affirmatively choose one.
Because U S WEST is the ILEC, Staff recommends accepting the Company’s proposal of being the default carrier for existing U S WEST customers who do not affirmatively choose a carrier.

IntraLATA Carrier for New Customers
U S WEST proposes that new customers who do not choose an intraLATA carrier will not have 1+ intraLATA capability until they select a carrier. Customers who do not presubscribe to an intraLATA carrier will be required to dial a 101-XXXX code to reach the carrier of their choice until they affirmatively choose an intraLATA carrier.
Staff believes this proposal is reasonable, and should not be too cumbersome for new customers. New customers can simultaneously choose their interLATA and intraLATA carriers. This assumes that the script that U S WEST will be reading from will be competitively neutral at all times and that each carrier will have equal opportunity to be first on the list of carriers for intraLATA toll services.

PIC Charge and “Free PIC Period”
Under its plan, U S WEST proposes to impose a five dollar ($5.00) non-recurring charge for intraLATA PIC changes. The Company proposes a one-time intraLATA PIC change free of charge for the first forty-five (45) days following implementation.
Staff agrees with the five dollar ($5.00) non-recurring charge for intraLATA PIC changes. Staff disagrees with the Company’s proposal for a one-time free PIC change period of forty-five (45) days.
Because toll services are billed on a usage basis every thirty days and U S WEST plans to implement on July 22,1999, customers may only receive a partial monthly bill. Staff does not believe that 45 days is an adequate amount of time for customers to evaluate the performance and rates of their current intraLATA carrier compared to services offered by other carriers. Consumers may need more time to research various intraLATA carriers and make informed choices, just as they have done in the past with their current interLATA carrier.
On January 29, 1999, the Washington Utilities and Transportation Commission (WUTC) approved that portion of U S WEST’s dialing parity plan that pertains to the free PIC time period. In its order, WUTC ordered U S WEST to waive its PIC change charge of $5.00 per line or trunk for the first 120 days following implementation. Staff believes that 120 days following the implementation date is ample time for customers to educate themselves about intraLATA toll dialing parity and make well informed choices.

Recovery of Waived Charges
U S WEST proposes to recover the waived PIC change charge during the free PIC period via the issuance of a one time bulk bill to each participating carrier. This bill will assess the $5.00 PIC change charge for the total number of lines changed to those carriers PIC.
This practice seems reasonable. The competing interexchange carriers (IXCs) will experience a growth in their respective customer base thereby allowing those one-time charges to be recovered over time. Staff would recommend that the IXCs do not pass those fees on to the end user.

PIC Freeze
U S WEST proposes to automatically extend a customer’s interLATA PIC freeze to his intraLATA PIC. U S WEST explains that this will protect customers from being slammed while still offering them the opportunity to exercise their choice of carrier(s) during the period of time that the customers are choosing their intraLATA carrier.
Staff believes U S WEST’s intentions are good, however experience in other states has proven that an automatic two PIC freeze creates problems for customers who want to choose a company other than the incumbent local exchange carrier for their intraLATA carrier. Recently, there have been complaints of “jamming.” Jamming is the word coined to cover instances where customers’ are unable to switch their intraLATA carrier due to PIC freezes placed on customers’ lines by the incumbent local exchange carrier. Staff does not agree with the automatic PIC freeze proposed by U S WEST. Automatically freezing the intraLATA PIC may create a barrier to competition and does not comport with the competitive neutrality ordered by the FCC.
Because U S WEST is the incumbent local exchange carrier, Staff supports the Company being the default carrier for those customers who do not choose a carrier. However, Staff believes that automatically placing a PIC freeze on those lines already defaulted to the incumbent creates an anti-competitive environment for other carriers and an inconvenient situation for customers who wish to change carriers. If U S WEST wishes to extend an automatic freeze to the second PIC, it would certainly be logical to make the customers’ second PIC their interLATA carrier and then place a freeze on that intraLATA PIC. Those customers who have chosen an interLATA carrier, and then made the choice to have a PIC freeze, did so in a competitive environment. Currently, customers do not have an intraLATA carrier choice or the option of freezing their intraLATA PIC.
The Commission Staff receives many complaints regarding the response time for U S WEST customer service employees to answer consumer complaints or requests for change in service. Customers often find themselves in a maze of touch-tone menu options for an extended amount of valuable consumer time. Because of this, the Iowa Commission implemented a prohibition of intraLATA PIC freezes for one year. The dialing parity provisions of section 251(b)(3) entitle customers to choose different carriers for their local exchange, intraLATA toll, and interLATA toll services without the burden of dialing access codes. Each LEC is required to provide dialing parity to providers of telephone exchange and telephone toll service with respect to all telecommunications services that require dialing to route a call. This obligation encompasses international, interstate, intrastate, local and toll services. A customer may not be able to accomplish this if their second PIC is automatically frozen.
U S WEST argues that slamming is a continuing problem for the toll industry; however other states have not experienced a significant amount of slamming of intraLATA services. Staff also questions whether U S WEST may legally extend an automatic PIC freeze, which is a discretionary service offering, without the customer’s authorization. If U S WEST wishes to extend a customer’s interLATA PIC to the intraLATA PIC, it should do so after the free PIC period has expired and the customer affirmatively chooses the PIC freeze for their respective interLATA or intraLATA services.

Cost Recovery
U S WEST proposes to recover its costs of implementing intraLATA 1+ presubscription for central office upgrades, software translations, systems programming and testing, training and customer notification by means of an Equal Access Network Reconfiguration Charge (EANRC) of $.001861. U S WEST wants to apply the EANRC to total originating intrastate minutes of use for each carrier over a three year period.
In other states where intraLATA dialing parity plans have been implemented, the costs were recovered on intraLATA access minutes for originating, terminating or both. Toll carriers have argued that the cost recovery should be usage based, which means intraLATA toll minutes. With the U S WEST intrastate proposal, the toll carriers will incur more of those costs associated with intraLATA dialing parity. Because U S WEST cannot carry traffic across LATA boundaries, the toll carriers must absorb those costs.
Idaho’s LATA boundaries are unique because they cross over state boundaries and include small portions of contiguous states surrounding Idaho. U S WEST may argue that implementing dialing parity within LATA boundaries will create higher costs to the toll carriers and intraLATA toll customers and may not be within this Commissions authority. According to the FCC Order No. 96-333, Section 51.209:

(a) A LEC shall implement throughout each state in which it offers telephone exchange service intraLATA and interLATA toll dialing parity based on LATA boundaries. When a single LATA covers more than one state, the LEC shall use the implementation procedures that each state has approved for the LEC within that state’s borders. (emphasis added)

This is an intraLATA toll dialing parity case and Staff believes that costs should be recovered on an intraLATA usage basis. Staff also believes that the FCC was very clear with its implementation procedures where LATA boundaries cross over state boundaries. Therefore, Staff recommends that the costs be recovered on originating intraLATA minutes of use.
U S WEST’s itemization of facility upgrades may need closer evaluation. The actual amount that U S WEST is entitled to recover cannot be determined until the Company provides Staff with the carrier specific costs directly related to providing 1 + intraLATA toll dialing parity. U S WEST is selling its northern Idaho exchanges, thus the costs should be separated to ensure that the Company does not over recover in the southern Idaho region.
In its Order No. 96-333, the FCC included very explicit language surrounding cost recovery requirements and mechanisms. The FCC allows the recovery of the incremental costs of implementing local and toll dialing parity such as the costs of dialing parity-specific switch software, hardware, signalling system upgrades and necessary consumer education. The FCC allows for these costs to be recovered from all providers of telephone exchange service and telephone toll service in the area served by the LEC, including the LEC, through the use of a competitively-neutral allocator established by each state. Staff feels that the costs associated with implementing dialing parity in the northern Idaho exchanges should not be passed on to the southern Idaho intraLATA toll ratepayers. The FCC emphasizes that network upgrades necessary to achieve dialing parity should be recovered on a competitively neutral basis. A competitively neutral cost recovery mechanism prevents incumbent LECs from imposing excessive fees upon competing entrants.
Furthermore, if the Commission accepts Staff’s recommendation that U S WEST should recover costs on originating intraLATA minutes, the Company must then provide separate costs associated with the northern and southern exchanges.
Staff also recommends after one year, a review of the EANRC be performed to ensure its accuracy and the EARNC adjusted if necessary.

Calls Not Eligible for IntraLATA Presubscription
U S WEST wishes to continue to carry the following call categories regardless of the customer’s intraLATA carrier:

Local calls, those defined as local calls in the tariff
Directory Assistance calls placed without the use of an access code
U S WEST Call Completion Service
Calls to N11 codes (e.g.,411, 911) and 555 prefixed numbers
Calls to Information Delivery Services (IDS) e.g., 960/976
Calls completed by a U S WEST operator (0-)
Wireless and paging calls

Staff supports the Company’s proposal.

Business Practices: New Customers
Under its business practices for new customers the company will inform new local exchange end users of their right to select the intraLATA carrier of their choice and agree to take their order. The company proposes to read from a random list of carriers and advise customers that
U S WEST is a choice.
U S WEST practice must be competitively neutral during this process. Staff recommends accepting U S WEST’s new customer business practices with the understanding that customers will not be steered to any company when ordering services and will only be informed that U S WEST is a choice among many others.

Business Practices: Existing Customers
U S WEST will take orders of end user customers who contact U S WEST to request a change in their intraLATA carrier in a competitively neutral manner. Should the customer request information relative to U S WEST toll products and services, U S WEST will respond to the customer’s request. Customers who do not actively choose a carrier will remain with
U S WEST.
Staff believes this practice is acceptable, however U S WEST should market only to those customers in a completely competitive neutral manner and make sure customers are aware of their choices, U S WEST being one of the many.

Order Processing
U S WEST will begin accepting carrier initiated changes for an intraLATA selection on July 22, 1999. U S WEST proposes that the authorization date from customers to make a carrier change on their behalf should not be any earlier than June 22, 1999. U S WEST claims that it will be ready to accept changes from existing end user customers on July 22, 1999.
Staff believes this is reasonable and supports U S WEST’s order processing methodology. However, Staff recommends a turn around processing period of five (5) business days.

Staff Recommendation
Staff recommends that the Commission approve U S WEST’s 1 + intraLATA toll dialing plan with the following adjustments:

The script read to new and existing customers should include language to inform customers that U S WEST is a choice among many carriers to ensure that impartiality and competitive neutrality is adhered to.

2. Waiving the one-time PIC change charge for 120 days following implementation.

Not automatically extending a customer’s interLATA PIC freeze to the intraLATA PIC.

Cost recovery will be based on originating intraLATA minutes. A cost recovery docket should be opened to expeditiously review those specific costs associated with the northern and southern exchanges separately. Also, a review to ensure proper recovery after the first year.

Monitoring the quality of service and the timely switching of the intraLATA carriers occurring during the free PIC change period is important for competition. Staff recommends a processing period of five business days to process PIC changes.

Respectfully submitted this day of May, 1999.

____________________________________
Weldon Stutzman

Technical Staff: Carolee Hall

CH:jo\word\comments\USW-T-94-05 Dialing Parity.doc
STAFF COMMENTS 10 May 18, 1999