2000825_jh.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
LOU ANN WESTERFIELD
TONYA CLARK
LYNN ANDERSON
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
JOE CUSICK
WAYNE HART
BEV BARKER
WORKING FILE

FROM: JOHN R. HAMMOND

DATE: AUGUST 25, 2000

RE: IN THE MATTER OF THE APPLICATION OF LDM SYSTEMS, INC. FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO PROVIDE LOCAL EXCHANGE SERVICE AS A COMPETITIVE LOCAL CARRIER. CASE NO. LDM-T-97-1.

On March 6, 1997, the Commission received an Application from LDM Systems, Inc. for a Certificate of Public Convenience and Necessity to provide resold local exchange service as a competitive local carrier throughout the state of Idaho.
In Order No. 27295 issued December 31, 1997, the Commission found that this matter could be processed under Modified Procedure and requested interested persons file written comments regarding the Application by January 28, 1998. Staff, U S WEST Communications, Inc. and the Idaho Telephone Association filed comments on January 28, 1998. LDM filed its response to those comments on February 20, 1998. No other person filed comments.
On March 2, 1998, the Commission suspended consideration of LDM’s Application based upon a review which revealed significant numbers of consumer complaints regarding LDM’s “slamming” practices both in Idaho and nationwide. See Order No. 27356. The Commission ordered suspension to continue until LDM presented credible evidence to the Commission that its corrective action had rectified its admitted “slamming” problems. Id. LDM Systems, Inc. has not presented any evidence to the Commission since the Order was issued. Therefore, the Application should be dismissed without prejudice for lack of activity. LDM can re-apply for a certificate if it so chooses.
BACKGROUND
LDM Systems, Inc. is a New York corporation qualified to do business in Idaho and is a non-facilities-based reseller of telecommunications services. LDM filed a price list for long distance services with the Commission in September 1994.
On March 6, 1997, LDM filed an Application with the Commission for a Certificate of Public Convenience and Necessity to provide resold local exchange telecommunications services as a competitive local carrier within Idaho and also requested an exemption from the requirements of Idaho Code § 62-610 and “IDAPA 31.N Rule 3 [sic].” On September 15, 1997, LDM filed supplemental information in further support of its Application and revised its Application to restrict its services to only those areas currently served by U S WEST Communications, Inc. (North and South) and GTE Northwest Incorporated, as reflected in U S WEST’s and GTE’s current Certificates. On September 15, 1997, LDM also filed its proposed initial tariff with the Commission for information purposes pursuant to Idaho Code § 62-606.
According to information in its Application, LDM currently provides resold long distance telecommunications services throughout the continental United States and in Idaho.
While Staff found that LDM’s Application and supporting materials met the minimum Commission Requirements for a Certificate its additional review of the Commission’s Consumer Assistance Staff complaint records revealed LDM’s significant consumer slamming problem both in Idaho and across the nation. See Order No. 27356 at 2-3. LDM agreed with the Staff that it had experienced problems with slamming but asserted that it had taken steps to correct those problems. Despite LDM’s assertion that the problem was being addressed it failed to provide supporting, credible evidence to the Commission that this issue had been abated. Accordingly, on March 2, 1998, the Commission suspended issuance of a Certificate of Public Convenience and Necessity until LDM had submitted this required evidence. LDM has not submitted additional evidence. See Order at 4.
STAFF RECOMMENDATION
In Order No. 27356, the Commission found a disturbing pattern to consumers’ complaints against LDM. Nearly all of its consumer complaints (22 out 24) stemmed from improper switching of customer service or “slamming.” In this Order, the Commission also noted that it would be dilatory in its duty if it did not take strong action where slamming is alleged and supported by the record. While LDM represented that it had taken some steps to rectify its slamming problems, it has not submitted evidence supporting its representations as required by the Commission’s Order. Additional review of this matter also reveals that one slamming complaint against LDM has been registered in the last two years. However, this taken in the context of LDM’s small number of MTS in this state, according to the Idaho Universal Service Fund Annual Report for the year ended June 30, 2000, a sufficient record that the problem has been solved still is not present.
No action has occurred for more than two (2) years. Therefore, Staff recommends the Commission dismiss this Application without prejudice. LDM can reapply if it chooses.
Commission Decision:
Should LDM Systems, Inc.’s Application for a Certificate of Public Convenience and Necessity be dismissed without prejudice?

John R. Hammond

Staff: Wayne Hart
Beverly Barker
Slamming is the changing of a telephone subscriber’s primary interchange carrier without obtaining the subscriber’s authorization.
See Rule of Procedure 111, IDAPA 31.01.01.111, and Procedural Order No. 26665, issued November 7, 1996.

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