gnrt996.wsw.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, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF DSLNET COMMUNICATIONS, LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY. )
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CASE NO. GNR-T-99-6

COMMENTS OF THE
COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Weldon B. Stutzman, Deputy Attorney General, in response to Order No. 28093, the Notice of Joint Application and Notice of Modified Procedure in Case No. GNR-T-99-6 issued on July 9, 1999, submits the following comments.

BACKGROUND
On April 26, 1999, the Commission received an application from DSLnet Communications, L.L.C. (DSLnet) for a Certificate of Public Convenience and Necessity (CPCN) to provide local exchange telecommunications services within Idaho. DSLnets Application states that it desires to provide resold and facilities based, switched and dedicated local exchange telecommunications services throughout the State. DSLnet indicated it would initially provide data transmission services only through a combination of leased and purchased assets. However, the Company seeks the authority to provide the full range of local exchange services.
DSLnet indicated it intends to operate in the service areas of both U S WEST and GTE, and that it “does not plan to provide local exchange service in the service areas of Idaho incumbent LEC’s that qualify for the rural exemption”. The Company requested “statewide local exchange authority, so that it may expand its service areas as market conditions warrant and as additional service areas become open to competition.” The Company claimed it had not yet initiated negotiations for an interconnection agreement with either U S WEST or GTE.

STAFF FINDINGS
DSLnet, headquartered in New Haven, Connecticut, is a limited liability company, organized under the laws of the State of Delaware. DSLnet’s sole member and managing entity is dsl.net, inc, a corporation formed under the laws of Delaware. Both DSLnet and dsl.net, inc. are new companies with limited operations. The Application includes confidential financial statements which DSLnet claims “demonstrate that Applicant, through dsl.net, inc., has access to the financing necessary to operate as a telecommunications service provider in the State of Idaho.”
The Application also includes a summary of the technical expertise of the key members of DSLnet’s management team. Many members of the management team have more than 10 years experience in the telecommunications field.
DSLnet specifically indicated in its Application, that it will comply with all Commission rules. It has provided an illustrative tariff with its Application that demonstrates an understanding of tariffing requirements and processes. The Company indicated it would require deposits of its customers, and that it would provide an escrow agreement upon request.

STAFF RECOMMENDATION
As might be expected for a new company, the evidence of financial ability provided by the Company does not satisfy the conditions established by the Commission in Order No. 26665. This is particularly concerning, as DSLnet intends to use some of its own facilities to provide some of its services, which typically require considerable levels of capital. Although the Company provided evidence that DSLnet will have access to significant levels of capital, this capital is not dedicated to Idaho, and a national rollout of the services identified by the applicant could quickly deplete these resources.
However, the Company initially intends to primarily provide data services to businesses – services that are regulated under Title 62, Idaho Code. It could provide these services without obtaining a CPCN, and thereby disregard the scope of the Commission’s financial security review. It is Staff’s understanding that the Company is requesting a CPCN simply to allow it to provide basic local exchange services as an optional addition to its data services. Most of the customers will undoubtedly be businesses with more than five lines, and are therefore also outside of the Commission’s Title 61 obligations.
Staff believes that the Company will have ample opportunity to prove its financial capabilities in the marketplace before it begins to provide a significant level of services to the Title 61 customers for which the Commission’s financial security obligations apply. Staff believes the information provided by the Company identifies sufficient financial resources to provide the Title 61 services the Company has indicated it will provide.
For these reasons, Staff recommends the Application of DSLnet Communications LLC for a Certificate of Public Convenience and Necessity to provide local exchange telecommunications services be approved, subject to the filing of a copy of the escrow agreement required of Companies that intend to require customer deposits.

DATED at Boise, Idaho, this day of July 1999.

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Weldon Stutzman
Deputy Attorney General
Technical Staff: Wayne Hart

WH:va:word:u:umisc/comments/gnrt996.wsw
STAFF COMMENTS 1 JULY 30, 1999