20020718Qwest's Response.pdf

Mary S.Hobson (ISB#2142)
Curtis D.McKenzie (ISB#5591)2 L I 8 Pii 4:58
Stoel Rives LLP
101 S.Capitol Blvd.,Suite 1900
Boise,ID 83702-5958 UilL ¡Es CON ¿Sli0N
Telephone[phone]
Facsimile [phone]
Attorneys for Qwest Communications Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
APPLICATION FOR CERTIFICATE OF )CASE NO.QCC-T-02-1
PUBLIC CONVENIENCE AND NECESSITY )AND TITLE 62 NOTICE OF QWEST )COMMUNICATIONS CORPORATION )
QWEST COMMUNICATIONS CORPORATION'S
RESPONSE TO STAFF COMMENTS
Qwest Communications Corporation ("QCC")responds to the comments of the
Staff of the Idaho Public Utilities Commission ("Staff"),in connection with Order No.
29049,and QCC's Notice of Application and Notice of Modified procedure in Case No.
QCC-T-02-1 issued on June 10,2002,as follows:
Introduction
QCC has applied for a certificate of public convenience and necessity ("CPCN")
to provide local exchange telephone service,in addition to the long distance services
QCC plans to provide upon FCC approval.The ability to provide both local and long
distance service through QCC is vitallyimportant to QCC's ability to compete with other
long distance providers on equal footing,and will enable QCC to offer better,more
innovative services and packages designed to meet consumers'varied needs.The Staff
recommends approval of QCC's application,but would place an inappropriate condition
QWEST COMMUNICATIONS CORPORATION'S RESPONSE TO STAFF COMMENTS-Page 1 of 7
Boise-144156.1 0029164-00046
on that approval -that QCC not be allowed to jointly market its services with Qwest
Corporation ("QC").QCC certainly appreciates the Staff s favorable recommendation,
and therefore comments only on the conditions the Staff proposes.
In the face of plain statutory language and established precedent,the Staff's
proposed restrictions would effectively prohibit QCC from competing in the market for
local exchange services,would confuse consumers,and would create great inefficiencies.
The overlooked precedents were designed to serve the consuming public as well as the
interests of competition,and the Commission should not depart from them.Oregon's
Public Utilities Commission followed the precedents permitting joint marketing by
regional Bell operating companies ("RBOC")and their §272 affiliates when it recently
approved QCC's application to provide both long distance and local exchange service,
without conditioning its approval on denying QCC and QC the right to jointly market
their services.'Accordingly,QCC's application for a certificate of Public Convenience
and Necessity ("CPCN")should be granted,without the conditions the Staff suggests.
The Staff Comments Conflict with the Telecommunications Act of 1996
and the FCC's Orders.
As the Commission may recall,the FCC has already decided that RBOC affiliates
like QCC may provide both long distance and local exchange services.In its Non-
Accounting Safeguards Order (First Report),11 FCC Rcd 21905,22057 ¶315 (1996),the
FCC "conclude[d]as a matter of policy that regulations prohibiting BOC section 272
affiliates from offering local exchange service do not serve the public interest."After
three years of experience,comment,and consideration,the FCC's third report on the
'A copy of the Oregon ruling is attached as Appendix 1 for the Commission's reference.
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initial order,the Non-Accounting Safeguards Order (Third Report),14 FCC Rcd 16299,
16317 ¶23 (1999),used even stronger language:
[W]e agree with the BOCs that there is no basis for concluding that
allowing section 272 affiliates to provide local services poses competitive
risks and is not sound public policy.
The Staff's comments provide no basis or explanation as to why this Commission should
depart from the FCC's well-considered reports on the issue,but effectivelyprohibit QCC
from competing in the market for local exchange services by prohibiting joint marketing
with QC.
Section 272(g)of the Telecommunications Act of 1996 Expressly Permits JointMarketingbyRBOCsandtheir§272 Affiliates.
The law does not permit the Commission to make the choice the Staff suggests.
As the Commission is no doubt aware,section 272(a)of the Act requires QC to establish
an affiliate to provide long distance services in Idaho (and the other states QC serves as a
RBOC).QC is not permitted to provide a single entity through which to sell its long
distance and local exchange services in Idaho,but rather is required to set up QCC to
provide long distance service.Fortunately,Congress realized that selling local exchange
service through QC and long distance throughQCC could result in inefficiencies and/or
consumer confusion,and drafted section 272(g)of the Telecommunications Act of 1996
(the "Act").Section 272(g)is titled "Joint Marketing,"and allows RBOCs like QC to
market the services they provide jointly with section 272 affiliates like QCC.
The provisions of §272(g)reflect Congressional intent to permit BOCs and their
§272(a)affiliates to offer consumers "one-stop shopping"with regard to local and
interLATA services once they obtain approval under §271(d)to enter the interLATA
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market.As the FCC's Third Report on the Non-Accounting Safeguards Order (Third
Report),14 FCC Red 16299,16317 ¶24 (1999)noted:
We reaffirm that the increased flexibility from being able to offer "one-
stop shopping"for both local and interLATA services further promotes
competition in telecommunications markets,consistent with the 1996 Act,
by allowingsection 272 affiliates to create packages of services they
would not be able to offer if confined to the rates and services of the
BOCs.
The Staff's comments and proposed conditions on QCC's CPCN run counter to
the FCC's well-established position on this issue.QCC and QC can offer the "one-stop
shopping"envisioned by the Act and the FCC only through joint marketing.The Staff's
comments would force multiple,redundant sales organizations on QCC,and increase'its
costs to the point where QCC cannot compete with other long distance service providers
on an equal footing.As the FCC noted in the Third Report:"[D]enying section 272
affiliates the opportunity to provide local service could limit the BOCs'ability to
compete with other carriers that offer bundled local and interLATA service....[W]e
also seek to ensure that BOC section 272 affiliates have the same opportunityto compete
for customers as other long distance service providers."The Staff's proposed conditions
would deny QCC that opportunity.
Joint MarketingDoes Not Violate QC's Nondiscrimination Obligations.
One concern the Staff raised was that they do not "believe nondiscriminatory
service is possible"if QCC and QC jointly market their services.Staff Comments,at 2.
That concern is already addressed by the Act.Section 272(g)(3)plainlyprovides:"The
joint marketing and sale of services permitted under this subsection shall not be
considered to violate the nondiscrimination provisions"of section 272.The United
States Appeals Court for the D.C.Circuit agrees,and has held that §272(g)"exempt[s]
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joint marketing activities from [the Act's]nondiscrimination requirement."A T&T Corp.
v.FCC,220 F.3d 607,632 (D.C.Cir.2000)(rejecting AT&T's claim that Bell Atlantic's
plan to jointly market its services along with its §272 affiliates was discriminatory).
The Staff's Proposed Conditions Would Lead to Customer Confusion.
A concern raised by the Staff's comments was that "many customers will not be
aware of the distinction between the "regulated"basic local service provided by Qwest
(Corporation)and the "deregulated"basic local service provided by Qwest
(Communications Corporation)."To remedy this claimed problem,the Staff advances
the counterintuitive solution of multiplyingthe channels of communication.In reality,
however,joint marketing should actually reduce customer confusion.Joint marketing
will help eliminate customer confusion because a single call will provide consumers with
information on all the local and long distance services Qwest can offer through QCC
and/or QC (and/or competing providers).Instead of wondering which number or which
sales organization to contact,consumers will know that if they want information about
Qwest services -whether those are local exchange,intraLATA,or interLATA services -
they can get their questions answered by one voice with one call.Dividing that voice,as
the Staff proposes,can only result in more confusion,miscommunication,and
inefficiencies.
The Staff's Proposal Effectively Prohibits QCC from Offering Local Exchange
Service.
If QCC is not allowed to jointly market its services along with QC,as §272(g)of
the Act permits,and instead is forced to set up a duplicate marketing and customer
service organization,it is axiomatic that QCC's costs will skyrocket,and its competitive
position will suffer.In fact,the burden will effectivelyprohibit QCC from offering local
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exchange service.'As noted above,the FCC decries putting §272 affiliates like QCC at
such a competitive disadvantage,and that there is no basis to conclude that allowing §
272 affiliates to provide local service "is not sound public policy."Third Report,14 FCC
Rcd at 16317.The additional expense that would result from the Staff's proposed
conditions amounts to an end run around the Act and the FCC's orders,preventing
indirectly by unreasonable conditions what this Commission cannot do directly.The
Commission should avoid such a conflict with federal pronouncements.
Conclusion
The Staff's suggestions will increase QCC's costs,confuse consumers,and run
afoul of the language of the Act and the FCC's orders.QCC respectfully requests that
the Commission accept the Staff's recommendation that QCC be granted the CPCN
applied for,but without the conditions the Staff suggests.
RESPECTFULLY SUBMITTED this 18th day of July,2002.
STOEL RIVES LLP
Curtis D.Mc zie /
Ãttiériys for
Qwest Communications Corporation
2 Another tangential concern raised by the Staff's comments are the "financial capabilities"of QCC.Staff
Comments,at 3.Althoughthis concern is irrelevant to the matter at hand,QCC and its corporate parent are
viable and vital.Indeed,unnecessary and expensive regulations like those proposed by the Staff only
threaten Qwest's finances.If the Commission is concerned about the vitality of Qwest,QCC's application
should be granted,without conditions,as soon as possible,so that QCC can get on with the business ofprovidingexcellentservicetoitscustomers,rather than complying with counterproductive regulations.
QWEST COMMUNICATIONS CORPORATION'S RESPONSE TO STAFF COMMENTS -Page 6 of 7
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CERTIFICATE OF SERVICE
I hereby certify that on this 18"day of July,2002,I served the foregoing
QWEST COMMUNICATIONS CORPORATION'S RESPONSE TO STAFF
COMMENTS upon all parties of record in this matter as follows:
Ms.Jean Jewell,Secretary X Hand Delivery
Idaho Public Utilities Commission U.S.Mail
472 West Washington Street Overnight Delivery
Boise,Idaho 83720-0074 Facsimile
Weldon B.Stutzman X Hand Delivery
Deputy Attorney General U.S.Mail
Idaho Public Utilities Commission Overnight Delivery
P.O.Box 83720 Facsimile
Boise,ID 83720-0074
Brandi L.Gearhart,PLS
Legal Secretary to Mary S.Hobson
Stoel Rives LLP
QWEST COMMUNICATIONS CORPORATION'S RESPONSE TO STAFF COMMENTS-Page 7 of 7
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APPENDIX 1
ORDER NO.0 2 -3 8 7JUN183R
.,,JUN 1 4 2001
-ENTERED
BEFORE '9tEftiBttttTTETTY COMMISSION
OF OREGON
CP 1041
UM 460,CP 341,UM 397,CP 327,CP 611
In the Matter of )
QWEST COMMUNICATIONSCORPORATION )ORDER
Application for a Certificate of Authorityto )
ProvideTelecommunications Service and )
Classification as a Competitive Provider.)
DISPOSITION:CP 1041,APPLICATIONGRANTED;AND
UM 460,ORDER NO.92-344,CERTIFICATE OF AUTHORITY CANCELED;
CP 341,ORDER NO.97-353,CERTIFICATE OF AUTHORITY CANCELED;
UM 397,ORDER NO.91-886,CERTIFICATE OF AUTHORITY CANCELED;
CP 327,ORDER NO.98-365,CERTIFICATE OF AUTHORITY CANCELED;
CP 611,ORDER NO.99-360,CERTIFICATE OF AUTHORITY CANCELED.
Note:By issuing this certificate,the Commission makes no endorsement or certification
regarding the certificate holder's rates or service.
The Application
On March 5,2002,Qwest Communications Corporation(Applicant or QCC)filed
with the Commission an application for certification to provide telecommunications
service in Oregon as a competitive provider.Applicant seeks to provide intraexchange
(local exchange)telecommunications service in areas coextensive with all exchanges of
the telecommunications utilities and cooperative corporations listed in Appendices A and
B to this order.Applicant also seeks to provide interexchange telecommunications
service statewide in Oregon.
Applicant proposes to provide intraexchange (local exchange)switched service
(i.e.,local dial tone),and non-switched,private line service (dedicated transmission
service)within all exchanges of the telecommunications utilities and cooperative
corporations listed in Appendices A and.B to this order.Applicant will operate as a
reseller and as a facilities based provider of local exchange service.Applicant may
ORDER NO.0 2 -38 7
construct its own lines or transpqrt facilitiës for intraexchange service.Applicant may
purchase unbundlednetwork elänents,as well as finished services for resale,from other
certified carriers for intraexchange service.
Applicant also proposes to provide interexchange switched service (toll)and
private line service (dedicated transmission service)statewide in Oregon.Applicant will
operate as a reseller and as a facilities based provider of interexchange service.Applicant
may construct its own lines or transport facilities for interexchange service.Applicant
may purchase unbundled network elements,as well as finished services for resale,from
other certified carriers for interexchange service.
Operator services are part of switched telecommunications service.Applicant
will directly provide operator services as defined in OAR 860-032-0001.Applicant will
not be an 'operator service provider'as defined in ORS 759.690(1)(d).Commission rule
OAR 860-032-0007and Oregon statute ORS 759.690 establish conditions regarding
provision of operator services.
Docket UM 823
In docket UM 823 the Commission is currentlyinvestigatingthe entry of Qwest
Corporation(Qwest)into in-region,interLATA telecommunications service under
Section 271 of the Telecommunications Act of 1996 (the Act).Qwest is a former Bell
Operating Company,and pursuant to the Act,neither Qwest,QCC,nor any of their
affiliates may provide interLATA service in Qwest's fourteen state region until
authorized to do so by the Federal Communications Commission.This application
proceeding,docket CP 1041,has no bearing on the Commission investigation in docket
UM 823.The fact that we grant QCC's application here shall not be constmed to have
any bearingon,or implications regarding,Commission findings and recommendations in
docket UM 823.
Affiliates and Related Certificates of Authority
Applicant,QCC,currentlyhas authority to provide intraexchange service in the
local exchanges of its affiliate Qwest Corporation (Qwest)and Verizon Northwest Inc.
(Verizon)and to provide interexchange service statewide in Oregon.See Order
No.99-360,docket CP 611,dated June 10,1999.In the application before us,QCC
requests authority to continue to provide interexchange service statewide and to provide
intraexchange service in exchanges of all incumbent local exchange can·iers including
Qwest and Verizon.With the granting of authority requested by QCC,Order No.99-360
becomes superfluous,therefore,the Commission will cancel that certificate of authority
in this order.
Applicant,QCC,is affiliated with several entities that are certified to provide
telecommunications service in Oregon.In the past,QCC advised the Commission of
various intemal mergers,which resulted in some of those entities ceasing to exist or
2
ORDER NO.Q 2 -3 $7
ceasing operations.In the cover letter which accompanied the application in this docket,
QCC requested that the Commission cancel four certifications for three affiliates in order
to reflect the internal mergers.The three affiliates are LCI International Telecom Corp.,
Phoenix Network,Inc.,and US WEST Long Distance,Inc.There were errors in the
cover letter which accompanied QCC's application.However,the errors were resolved
by Staff Request No.1 and QCC's response to it.The Commission will cancel the
authority granted by the certificates of authority,as follows:
Entity Order No.Docket
LCI Intemational Telecom Corp.92-344 UM 460
LCI International Telecom Corp.97-353 CP 341
Phoenix Network,Inc.91-886 UM 397
US WEST Long Distance,Inc.98-365 CP 327
Qwest Communications Corporation 99-360 CP 611
Some of QCC's affiliates will remain in business and their certificates of authority
will not be canceled by this order.Those affiliates and their current certifications are as
follows:
Qwest Corporation,a telecommunicationsutility,is the incumbent local exchange
carrier in 64 exchanges in Oregon.See Order No.86-1237,docket UM 70.Also,
Qwest is the Designated Catrier for intraLATA toll service in all exchanges in
Oregon except those of Verizon and United Telephone Company of the
Northwest,dba Sprint (Sprint).See Order No.93-1133,docket UM 384,
Attachment page 8,and see Order No.86-1237,docket UM 70.
Qwest is also certified as a competitive local exchange carrier and as a
competitive telecommunications provider for interexchange service in all
exchanges in Oregon,except those of Malheur Home Telephone Company and
the 64 exchanges where Qwest is the incumbent local exchange carrier.
See Order No.00-590,docket CP 808.
Malheur Home Telephone Company dba Malheur Bell is a telecommunications
utilityand is the incumbent local exchange carrier in four exchanges in eastem
Oregon.See Order No.86-1184,docket UM 121.
USLD Communications,Inc.,aka U.S.Long Distance,Inc.(USLD),is a
competitive provider.(USLD is a different entity from US WEST Long
Distance,Inc.,listed above.)USLD is certified to provide interexchange service
statewide in Oregon.See Order No.91-267,docket UM 371.USLD is also
certified to provide competitive,intraexchange telecommunications service in all
exchanges of Qwest,Verizon,and Sprint.See Order No.97-134,docket CP 208.
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ORDER NO.0 2 -3 8 7
Procedure and Protests
The Commission served notice of the applicationon the Commission's
telecommunications mailing list on March 12,2002.Protests were due at the
Commission office by 5 p.m.on April 1,2002.On April 1,2002,the Commission
received a timelyprotest from Tribal One Broadband Technologies,LLC,dba ORCA
Communications (ORCA).'ORCA is made a party to this application proceeding.The
protestant did not request a hearing.On April 2,2002,an Administrative Law Judge
(ALJ)with the Commission issued a ruling that adopted procedures for processing this
docket.The ALJ set a procedural schedule.On April 15,2002,Applicant responded to
the protest.
Applicant,QCC,points out,and the Commission notes,that the protestant
appears to believethat the applicant is Qwest Corporation (Qwest),an incumbent
telecommunications utility.Applicant is Qwest Communications Corporation (QCC),which is a competitive provider,not a utility.However,QCC and Qwest are affiliated.
ORCA listed six reasons for its protest.In addition,it stated possible affects on
its operations if the Commission grants QCC's application.Both ORCA and HREC have
been issued certificates of authority to provide intraexchange and interexchange non-
switched,private line service (dedicated transmission service)throughout Oregon.See
Order No.02-077,docket CP 998,issued February 4,2002 for ORCA.See OrderNo.01-880,docket CP 971,issued October 25,2001 for HREC.
Protest Reason (1):ORCA states that Qwest is defined as a telecommunicationsutilityunderORS759.005(1)(a)and does not meet any of the requirements of
ORS 759.005(1)(b)which would define QCC otherwise.The applicant is QCC,not
Qwest.Qwest is a utility.QCC applied for authorityas a competitive provider and will
act only as a competitive provider.Therefore,QCC meets the definition of
ORS 759.005(1)(b)(C),and pursuant to ORS 759.020(5),the Commission will classify
QCC as a competitive provider.
Protest Reason (2):ORCA states that under Section 272 of the Act Qwest may
provide competitive services onlyby using a separateaffiliate.In docket UM 823,Qwest
states that QCC is the 'Section 272'affiliate which Qwest will use to provide interLATA
telecommunications service.
Protest Reason (3):ORCA states that QCC is subject to regulationunder OAR
Chapter 860,Division 021,by definition in 860-021-0008.Qwest is a utilityand is
subject to OAR Chapter 860,Division 021.Applicant,QCC,is not a utilityand is not
subject to Division 021.
'On April 4,2002,the Commission received a virtually identical protest from Hood River Electric
Cooperative (HREC).The protest from HREC was not timely filed.Since HREC's protest is virtually
identical to that from ORCA,discussion of ORCA's protest efTectively is a discussion of both protests.
4
ORDER NO.0 2 -3 8 7
Protest Reason (4):ORCA states that QCC is subject to regulation under OAR
Chapter 860,Division 022,by definition in 860-022-0001.Qwest is a utilityand is
subject to OAR Chapter 860,Division 022.Applicant,QCC,is not a utilityand is not
subject to Division 022.
Protest Reason (5):ORCA states that QCC is subject to regulation under OAR
Chapter 860,Division 028,by definition in 860-028-0020.Qwest is a utility and is
subject to OAR Chapter 860,Division 028.Applicant,QCC,is not a utilityand is not
subject to Division 028 as an owner of poles,ducts,conduits,or rights-of-way.However,
Applicant is subject to Division 028 as a licensee or occupant attaching its facilities to
poles or conduitr owned by utilities.This condition applies to all competitive providers,
but it does not provide grounds for denying an application.
Protest Reason (6):ORCA states that QCC currentlymaintains a certificate of
authority based on conditions set forth in OAR 860-032-0007,in particular,
paragraphs (2)and (3).As described above QCC,who is the Applicant,and Qwest both
have certificates of authority.Both are subject to OAR 860-032-0007.Subsections (2)
and (3)of that rule apply to Qwest,the telecommiinications utility,however,those two
subsections do not apply to competitive providers such as QCC.Administrative rule
OAR 860-032-0007lists conditions which apply to holders of certificates of authority,
but the rule does not provide grounds for denying an application.
ORCA also states that the certification of "Qwest"would allow Qwest to use its
considerable resources to create predatory pricing,thereby degrading the business plans
of competitive providers to a point where they are infeasible.Applicant responds that this
is speculation.The protestant did not offer any evidence that QCC,or Qwest for that
matter,have engaged in predatory pricing or other illegal conduct.If ORCA finds that
QCC does engage in illegal conduct or does violate conditionsof its certificate of
authority,then ORCA may bring a complaint to the Commission or take other appropriate
legal action.
ORCA did not provide grounds for the Commission to deny QCC's applicationor
for the Commission to place extraordinary restrictions on QCC's certification.Therefore,
we will grant the application subject to conditions referenced to or listed in this order.
On April 25,2002,the Commission Staff (Staff)distributed a proposed order for
review by the parties.
The Commission has reviewed the proposed order,the exceptions,and the record
in this matter.Based on a preponderance of the evidence,the Commission makes the
following:
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ORDER NO.0 2 -3 8 7
FINDINGS AND CONCLUSIONS
Applicable Law
Applications to provide telecommunications service and for classification as acompetitivetelecommunicationsserviceproviderarefiledpursuanttoORS759.020.
ORS 759.020 provides that:
(1)No person [or]corporation ***shall provide intrastate telecommunications
service on a for-hire basis without a certificate of authorityissued by the PublicUtilityCommissionunderthissection.
*****
(5)The commission may classify a successful applicant for a certificate as a
telecommunications utilityor as a competitive telecommunications servicesprovider.If the commission finds that a successful applicant for a certificate has
demonstrated that services it offers are subject to competition or that its customers
or those proposed to become customers have reasonably available altematives,the
commission shall classify the applicant as a competitive telecommunications
services provider.***For purposes of this section,in determiningwhether
telecommunications services are subject to competition or whether there are
reasonably available altematives,the commission shall consider
(a)The extent to which services are available from alternative providers in the
relevant market.
(b)The extent to which services of altemative providers are functionallyequivalentorsubstitutableatcomparablerates,terms and conditions.
(c)Existing economic or regulatory barriers to entry.
(d)Any other factors deemed relevant by the commission.
Applications to provide local exchange (intraexchange)telecommunications service
are reviewed pursuant to ORS 759.050,the "competitive zone law."Under
ORS 759.050(2)(a),the Commission may:
Certify one or more persons,including another telecommunications utility,to provide
local exchange telecommunications service within the local exchange telecom-
munications service area of a certified telecommunications utility,if the commission
determines that such authorization would be in the public interest.For the purpose of
determiningwhether such authorization would be in the public interest,the
commission shall consider:
6
ORDER NO.Og -
(A)The effect on rates for local exchange telecommunications service
customers both within and outside the competitive zone.
(B)The effect on competition in the local exchange telecommunications
service area.
(C)The effect on access by customers to high qualityinnovative telecom-
munications service in the local exchange telecommunications service area.
(D)Any other facts the commission considers relevant.
Under ORS 759.050(2)(b),the Commission shall:
Upon certification of a telecommunications provider under paragraph (a)of this
subsection,establish a competitive zone definedby the services to be providedby
the telecommunications provider and the geographic area to be served by the
telecommunicationsprovider.
Under ORS 759.050(2)(c),the Commission may·
Impose reasonable conditions upon the authority of [the applicant]to provide
competitive zone service within the competitive tone ***at the time of
certification of a telecommunicationsprovider,or thereafter.
Subsection (5)(a)of ORS 759.050 provides that:
Unless the commission determines that it is not in the public interest at the time a
competitive zone is created,upon designation of a competitive zone,price
changes,service variations,and modifications of competitive zone services
offered by a telecommunicationsutilityin the zone shall not be subject to
ORS 759.180 to ORS 759.190 [notice,hearing and tariff suspension procedures],
and at the telecommunicationsutility'sdiscretion,such changes may be made
effective upon filingwith the commission.
OAR 860-032-0015(1)authorizes the Commission to suspend or cancel the
certificate if the Commission finds that (a)the holder made misrepresentations when it
filed the application,or (b)the certificate holder fails to comply with the terms and
conditions of the certificate.
Designation as a CompetitiveProvider
Applicant has met the requirements for classification as a competitive
telecommunications service provider.Applicant's customers or those proposed to become
customers have reasonably available alternatives.The incumbent telecommunications
utilities and cooperative corporations,listed in Appendices A and 8,provide the same or
7
ORDER NO 0 2 -3 8 7 .
similar local exchange services in the local service area requested by Applicant.AT&T,
WorldCom,Sprint Communications,Qwest,Verizon,and others provide interexchange
telecommunications service in the service area requested by Applicant.Subscribers to
Applicant's services can buy comparable services at comparable rates from other vendors.
Economic and regulatory barriers to entry are relatively low.
Conditions of the Certificate
There are several conditions listed in the application.Oregon Administrative
Rules relating to certificates of authority are generallyincluded in OAR Chapter 860,
Division 032.Conditions applicable to certificate holders include,but are not limited
to the following:OAR 860-032-0007,860-032-0008,860-032-0011,860-032-0012,
860-032-0013,860-032-0015,860-032-0045,860-032-0060,860-032-0090,and
860-032-0095.The conditions listed in the applicationand those contained in Oregon
Administrative Rules are adopted and made conditions of this certificate of authority.A
condition of this certificate of authority is that Applicant shall comply with applicable
laws,Commission rules,and Commission orders related to provision of
telecommunications service in Oregon.
The Commission first applied the competitive zone law,ORS 759.050,in dockets
CP 1,CP 14,and CP 15.After full evidentiaryhearings and consideration of the public
interest criteria set forth in ORS 759.050(2)(a),the Commission designated three
competitive providers of switched local exchange services as altemate exchange carriers
or competitive local exchange carriers (CLECs)in the Portland metropolitanarea.See
Order No.96-021.The Commission subsequently appliedthose findings and conclusions
to dockets CP 132,CP 139,and CP 149,and certified two CLECs to provide switched
local exchange services in areas located throughoutthe state.
The Commission takes official notice of the record in dockets CP 1,CP 14,and
CP 15.2 In Order No.96-021,the Commission established conditions applicable to
CLEC certificates.Since Applicant proposes to offer local exchange service,it seeks
certification as a CLEC.Pursuant to ORS 759.050(2)(c)and Order No.96-021,
Applicant as a CLEC shall comply with the followingconditions:
1.Applicant shall terminate all intrastate traffic originating on the networks
of other telecommunications utilities,competitive providers,and
cooperative corporations that have been issued a certificate of authority by
the Commission.
2.Whenever Applicant terninates intrastate long distance traffic directly or
indirectly from interexchange carriers or from its own toll network to its
end user customers,Applicant shall contribute to the Oregon Customer
2 Under OAR 860-014-0050(2),a party may object to facts noticed within 15 days of notification that
official notice has been taken.The objecting party may explain or rebut the noticed facts.
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ORDER NO.0 2 -3 8 7
Access Fund (OCAF),or its equivalent,in accordance with provisions of
the Oregon Customer Access Plan (OCAP)or any successor plan
approved by the Commission.Applicant shall contribute using rates
approved by the Commission on intrastate terminating carrier common
line access minutes,or on any other basis determined by the Commission.
Applicant may not participate in (i.e.,receive money from)pooling
arrangements established under the OCAP or any successor plan unless
authorized by the Commission.
3.Applicant shall comply with the Oregon Exchange Carrier Association's
(OECA)informational and operational needs as specified by the OCAP or
any successor plan approved by the Commission.
4.Applicant shall offer E-911 service.Applicant has primary responsibility
to work with the E-911 agencies to make certain that all users of their
services have access to the emergency system.Applicant will deliver or ,anange to have delivered to the correct 911 Controlling Office its
customers'voice and dialable Automatic Number Identification (ANI)
telephone numbers so the lead 911 telecommunications service provider
can deliver the 911 calls to the correct Public Safety AnsweringPoint
(PSAP).Applicant shall work with each 911 district and lead 911
telecommunications service provider to develop database comparison
procedures to match Applicant's customer addressesto the 911 district's
Master Street Address Guide in order to obtain the correct Emergency
Service Number (ESN)for each address.Applicant shall providethe lead
911 telecommunications service provider with daily updates of new
customers,moves,and changes with the correct ESN for each.
5.Applicant shall not take any action that impairs the ability of other
certified telecommunications utilities,competitive providers,or
cooperative corporations to meet service standards specified by the
Commission.
6.At the request of the Commission,Applicant shall conduct and submit to
the Commission traffic studies regarding traffic exchanged with
telecommunications service providers and other entities designated by the
Commission.
7.For purposes of distinguishing between local and toll calling,applicant
shall adhere to local exchange boundaries and Extended Area Service
(EAS)routes established by the Commission.Applicant shall not
establish an EAS route from a given local exchange beyond the EAS area
for that exchange.
9
ORDEK NO.0 2 -3 8 7
8.When Applicant is assigned one or more NXX codes,Applicant shall limit
each ofits NXX codes to a single local exchange or rate center,whichever
is larger,and shall establish a toll rate center in each exchange or rate
center proximate to that established by the telecommunications utilityor
cooperative corporation serving the exchange or rate center.
9.Applicant shall comply with universal service requirements as determined
by the Commission.
10.Any obligation regarding interconnectionbetween Applicant and the
telecommunications utilities and cooperative corporations listed in
Appendices A and B to this order shall be governed by provisions of the
Telecommunications Act of 1996 (the Act),including but not limited to
sections 251 and 252 of the Act (47 USC §§251 and 252),as well as the
applicable rules and regulations of the Federal Communications
Commission and this Commission implementing the Act.Order No.96-
021 will govern the interconnectionobligations between such parties for ,the provision of switched local services,unless otherwise addressedby an
interconnectionagreement or the Commission modifies the principles
established in Order No.96-021.
I1.If Applicant provides services to a subscriber who,in turn,resells the
services,including operator services,then Applicant and the subscriber
must comply with ORS 759.690 and OAR 860-032-0007.
12.Applicant shall pay an annual fee to the Commission pursuant to
ORS 756.310,756.320,and 756.350 and OAR 860-032-0008,
860-032-0080,860-032-0090,and 860-032-0095.By November 1,of
each year,the Commission will set the fee level that is to be based on
gross retail intrastate revenues for the followingcalendar year.The
minimum annual fee is $100.Applicant is required to pay the fee for the
preceding calendar year by April 1.
13.Pursuant to Oregon Laws 1987,chapter 290,sections 2-8,and to
OAR chapter 860,division 033,Applicant shall be responsible to ensure
that the Residential Service Protection Fund surcharge is remitted to the
Commission.This surcharge is assessed against each paying retail
subscriber at a rate that is set annuallyby the Commission.
In recognition of Applicant's affiliation with Qwest Corporation,and the
potential for Qwest to favor Applicant over other competitive providers,and the
fact that Applicant may only offer interLATA telecommunications service subject
to Sections 271 and 272 of the Act (47 USC §§271,272),Applicant (QCC)shall
comply with the followingconditions.
10
ORDER NO.0 2 -3 8 7
14.Applicant shall not enter into arrangements with its affiliate,Qwest,that
discriminate between,or provide preferentialtreatment for,Applicant over
other competitive interexchange carriers in regards to rates,terms,or
conditions for·
a.The provision of access to Qwest local exchange network;
b.The provision of customer billing,collection,verification and credit
card information,and related services;or
c.The provision of other products and services such as shared or joint
use of facilities and equipment,customer dialing codes,maintenance,
testing and repair services,market promotions and advertised
services,network information,and customer and market information.
QCC's and Qwest's joint marketingand sale of service permitted by
Section 272(g)of the Act (47 USC §272(g))shall not be construed -
to violate the provisions of this Condition 14.
15.Applicant shall comply with all applicable laws,including Sections 251,
271,and 272 of the Act (47 USC §§252,272,272),and Applicant shall
comply with all applicableregulations,rules,and orders of the Federal
Communications Commission (FCC).
16.Applicant shall not offer or provide intrastate,interLATA
telecommunications service in Oregon until the FCC has granted final
approval of Qwest's petition to authorize Applicant's provision of
in-region,interLATA service under Section 271 of the Act
(47 USC §271).
Public Interest
In Order No.93-1850,docket UM 381,the Commission considered the public
interest aspects of local exchange competition for dedicated transmission service.In
dockets CP 1,CP 14,and CP 15,Order No.96-021,the Commission made several public
interest findings regarding local exchange competition in general.
With regard to the general factual conclusions relevant to this proceeding,the
Commission adopts the Commission's Findings of Fact and Opinion in docket UM 381,
Order No.93-1850,at pages 4-6,and the Commission's Findings and Decisions in
dockets CP 1,CP 14,and CP 15,Order No.96-021 at pages 6-21,entered pursuant to
ORS 759.050(2)(a)(A)-(C).The Commission takes official notice of the record in
dockets UM 381,CP 1,CP 14,and CP 15.
Based on a review of those findings,as well as information contained in the
application,the Commission concludes that it is in the public interest to grant the
11
ORDER NO.Û 3 g
application of Qwest Communications Corporation to provide local exchange
telecommunications service as a competitive telecommunications provider in exchanges
of the telecommunications utilities and cooperative corporations listed in Appendices A
and B,as described in the application.Further,it is in the public interest to grant
statewide interexchange authority as described in the application.
This finding will have no bearing on any determinationthe Commission may be
called upon to make under sections 251 or 252 of the Act (47 USC §251,252)with
regard to the telecommunications utilities and cooperative corporations in this docket.
Competitive Zones
All the exchanges of the telecommunications utilities and cooperative
corporations listed in the appendices to this order are designated competitive zones
pursuant to ORS 759.050(2)(b).
Pricing Flexibility
Cooperative telephone companies are generally not regulated by the Commission
for local exchange services,and therefore already have pricing flexibilityfor local
exchange service.Telecommunications utilities which are exempt under ORS 759.040
from the provisions of ORS 759.180 to 759.190 alreadfhave pricing flexibilityfor local
exchange service.This order has no effect on any ORS 759.040 exemption.However,if
one of those telecommunications utilities loses its ORS 759.040 exemption from
provisions of ORS 759.180 to 759.190,for any reason,it will automatically become
eligible for an exemption under ORS 759.050(5)(a)to (d),as described below.
In Order No.93-1850,docket UM 381,the Commission granted pricing flexibility
for dedicated transmission service at the same time the Commission granted the
certificate of authority.Therefore,the telecommunications utilities listed in Appendix A
are granted pricing flexibilityfor dedicated transmission service in their respective
exchanges by this order.
With regard to the general factual conclusions relevant to this proceeding
and intraexchange,switched telecommunications service,the Commission adopts
the Commission's Findings and Decisions in dockets CP 1,CP 14,and CP 15,
Order No.96-021 at pages 82 and 83,entered pursuant to ORS 759.050(5)(a)to (d).
The telecommunications utilities listed in Appendix A,will gain pricing flexibilityfor
intraexchange,switched service on an exchange-by-exchange basis under
ORS 759.050(5)if:
1.Applicant,or an authorized CLEC,has received a certificate of authority
to provide local exchange service;
12
.ORDER NO.0 2 -3 8 7
2.The telecommunications utilityfiles a tariff that satisfies the Commission's
requirements regarding the provision of interim number portability,as set
forth in Order No.96-021,and the Commission approves the tariff;and
3.Staff notifies the Commission that a mutual exchange of traffic exists
between the telecommunications utilityand an authorized CLEC,
includingbut not limited to,Applicant.If Staff previouslyprovided the
required notice regarding an exchange,no additional notice is required for
that exchange.
(a)As used in paragraph 3 above,"mutual exchange of traffic"means a
mutual exchange of traffic between the telecommunications utility and
the CLEC within the telecommunications utility'sexchange.
(b)As used in paragraph 3 above,for a CLEC who is a reseller (i.e.,a
CLEC does not use its own lines or switches to provide the particular '
service at issue),a "mutual exchange of traffic"exists when the CLEC
orders and receives one service,at a wholesale rate,from the
telecommunications utilityfor resale pursuant to a certificate granted
under ORS 759.050.
Qwest Corporation has satisfied requirement No:2,above.See Order No.96-277,
docket UT 130.Verizon has satisfied requirement No.2,above.See Order
No.96-278,docket UT 129.
ORDER
IT IS ORDERED that:
1.The application of Qwest Communications Corporation to provide
intraexchange switched service and non-switched dedicated transmission
service,and to provide the interexchange switched service (toll)and
dedicated transmission service,as described in the application,is in the
public interest and is granted with conditions described in this order.
2.Applicant is designated as a competitive telecommunications provider for
intraexchange service in the local exchanges of the telecommunications
utilities and cooperative corporations listed in Appendices A and B.In
addition,Applicant is designated as a competitive telecommunications
provider for interexchange service statewide in Oregon.Applicant,QCC,
may not provide interLATA service until authorized to do so by the FCC.
3.The local exchanges of the telecommunications utilities and cooperative
corporations listed in Appendices A and B are designated as competitive
zones.
13
ORDER NO.0 2 -.3 8 7
4.Any obligation regarding interconnectionbetween Applicant and the
telecommunications utilities and cooperative corporations listed in
Appendices A and B shall be governed by the provisions of the
Telecommunications Act of 1996 (the Act),including but not limited to
sections 251 and 252 of the Act (47 USC §§251 and 252),as well as the
applicablerules and regulationsof the Federal Communications
Commission and this Commission implementingthe Act.
Order No.96-021 will govern the interconnection obligations between
such parties for the provision of switched local services,unless otherwise
addressed by an interconnectionagreement or the Commission modifies
the principles established in Order No.96-021.
5.No finding contained in this order shall have any bearing on any
determinationthe Commission may be called upon to make under
sections 251or 252 of the Act (47 USC §251or 252)with regard to the -
telecommunications utilities and cooperative corporations listed in
appendices to this order.
6.The telecommunications utilities listed in Appendix A shall receive
pricing flexibilityon an exchange-by-exchange basis as set forth in this
order.
7..Pursuant to ORS 759.050(2)(c),Applicant shall comply with Commission
imposed universal service requirements as a condition of authorityto
provide local exchange service.
14
ORDER NO.0 2 -3 8 7
8.The authoritygranted to each certificate holder listed below,by the orders
shown for each entity,is hereby canceled:
Entity Order No.Docket
LCI International Telecom Corp.92-344 UM 460
LCI International Telecom Corp.97-353 CP 341
Phoenix Network,Inc.91-886 UM 397
US WEST Long Distance,Inc.98-365 CP 327
Qwest Communications Corporation 99-360 CP 611
JUN 1 4 2002Made,entered,and effective .
Roy Hemming ye
an o i er
Joan Smith
Commissioner
A party may request rehearing or reconsiderationof this order pursuant to ORS 756.561.
A request for rehearing or reconsiderationmust be filed with the commission within 60
days of the date of service of this order.The request must comply with the requirements
in OAR 860-014-0095.A copy of any such request must also be served on each party to
the proceeding as provided by OAR 860-013-0070(2).A party may appeal this order to a
court pursuant to applicable law.
15
ORDER NO.g -
APPENDIX A
CP 1041
EXCHANGES ENCOMPASSED BY THE APPLICATION:
ALL EXCHANGES OF THE TELECOMMUNICATIONS
UTILITIES LISTED BELOW
TelecommunicationsUtilities Not ExemptPursuant to ORS 759.040
CenturyTel of Eastern Oregon,Inc.
CenturyTel of Oregon,Inc.
Qwest Corporation
United Telephone Company of the Northwest,dba Sprint
Verizon Northwest Inc.
Telecommunications Utilities ExemptPursuant to ORS 759.040
Asotin TelephoneCompany
Cascade Utilities,Inc.
Citizens Telecommunications Company of Oregon
Eagle Telephone System,Inc.
Helix TelephoneCompany
HomeTelephone Company
Malheur Home TelephoneCompany
Midvale Telephone Exchange
Monroe TelephoneCompany
Mt.Angel TelephoneCompany
Nehalem Telephone&Telegraph Co.
North-State TelephoneCompany
Oregon TelephoneCorporation
Oregon-IdahoUtilities,Inc.
People's Telephone Company
Pine TelephoneSystem,Inc.
Roome Telecommunications,Inc.
Trans-Cascade Telephone Company
APPENDIX A
PAGE 1 OF 1
ORDER NO.0 2 -3 8 7
APPENDIX B
CP 1041
EXCHANGES ENCOMPASSED BY THE APPLICATION:
ALL EXCHANGES OF THE COOPERATIVE
CORPORATIONS LISTED BELOW
Beaver Creek Cooperative Telephone Company
Canby Telephone Association
Clear Creek Mutual Telephone
Colton Telephone Company
Gervais Telephone Company :
Molalla Telephone Company
Monitor Cooperative Telephone Co.
Pioneer Telephone Cooperative
Scio Mutual Telephone Association
St.Paul Cooperative Telephone Association
Stayton Cooperative Telephone Co.
APPENDIX B
PAGE 1 OF l