20020827Order No 29099.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR QWEST COMMUNICATIONS CORPORATION. )
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CASE NO. QCC-T-02-01

ORDER NO. 29099

On April 24, 2002, Qwest Communications Corporation (QCC) filed an Application for a Certificate of Public Convenience and Necessity to provide basic local exchange service within the State of Idaho. QCC is a wholly-owned subsidiary of Qwest Service Corporation, which also owns Qwest Corporation. Qwest Corporation is an incumbent local exchange carrier in Idaho and a Bell Operating Company (BOC) as defined by the 1996 Telecommunications Act. QCC intends to provide intra and interLATA toll service upon approval from the Federal Communications Commission pursuant to 47 U.S.C. § 271 and § 272.
Section 272 requires a BOC, which includes Qwest Corporation, to provide interLATA services through an affiliate separate from the BOC. As initially stated in its application, QCC also intends to provide local exchange service and vertical features to business and residential customers in the service area of Qwest Corporation and Verizon Northwest, Inc., using both its own facilities and resold service or unbundled network elements. QCC’s local telecommunications services would be subject to the Commission’s jurisdiction pursuant to Title 62, Idaho Code.
On June 10, 2002, the Commission issued a Notice of Application and Notice of Modified Procedure to process QCC’s Application. During the comment period, written comments were filed only by the Commission Staff. Staff determined that QCC met the Commission’s filing requirements for approval of a CPCN, but raised concerns regarding the joint marketing of services. Staff expressed concern that customers may not understand the distinction between the regulated basic local service provided by Qwest Corporation and the relatively unregulated basic local service provided by QCC, especially if those services are marketed by the same entity. In reply comments, QCC asserted joint marketing by QCC and Qwest Corporation is expressly permitted by Section 272 of the Telecommunications Act. Nevertheless, QCC on August 12, 2002, filed a motion to amend its application “to exclude the Idaho service territory in which Qwest Corporation operates as the incumbent local exchange carrier.” Accordingly, QCC now seeks authorization to provide local service only in the service area of Verizon.
In a related matter, QCC by letter dated June 14, 2002, asked the Commission to withdraw the CPCN previously issued to LCI International Telecom Corp. (LCI). QCC explained that LCI was a commonly owned affiliate of QCC, now merged into QCC. Because LCI no longer exists, QCC asks the Commission to approve the withdrawal of LCI’s operating certificate.
DISCUSSION
Section 272 creates specific operating requirements for QCC and Qwest, and allows for some joint marketing of services. Section 272(g)(3) states that “the joint marketing and sale of services permitted under this subsection shall not be considered to violate the nondiscrimination provisions of subsection (c).” The joint marketing referred to and thus “permitted under this subsection,” in terms of this case, would be marketing by QCC of Qwest’s local exchange services and Qwest’s marketing of QCC’s long-distance service. See 47 U.S.C. § 272 (g)(1) and (2). The section does not refer to QCC’s marketing of local service, ostensibly in competition with Qwest’s local service. Because QCC has amended its application to limit its basic local service authority to non-Qwest territory, the Commission need not determine whether joint marketing of local service by QCC and Qwest would violate legal or public policy standards.
We also note that Section 272 sets forth specific requirements for the relationship between Qwest and QCC. For example, QCC must “operate independently” from Qwest. 47 U.S.C. § 272(b)(1). The companies must maintain separate records and accounts, and have separate officers, directors and employees. 47 U.S.C.§ 272(b)(2) and (3). Transactions between the two companies must be conducted “on an arm’s length basis,” and must be reduced to writing. 47 U.S.C. § 272(b)(5). Qwest may provide facilities and services to QCC only if “such services or facilities are made available to all carriers at the same rates and on the same terms and conditions, and so long as the costs are appropriately allocated.” 47 U.S.C. § 272 (e)(4). It will be easier for QCC and Qwest to meet these requirements where they are not attempting to provide local service in the same areas of the state.
With the modification to QCC’s Application to limit its local service authority to the area served by Verizon, the Commission finds that QCC has satisfied the Commission’s requirements for receiving a CPCN. The Commission will issue this Order approving the Application of QCC for a Certificate of Public Convenience and Necessity to provide basic local exchange service within the service area of Verizon Northwest, Inc. The Commission also approves QCC’s withdrawal of the certificate issued to LCI International Telecom Corporation. The CPCN issued to LCI no longer is in force and effect.
O R D E R
IT IS HEREBY ORDERED that the Application of Qwest Communications Corporation for a certificate of public convenience and necessity to provide basic local exchange service in that part of the state served by Verizon Northwest, Inc. is approved.
IT IS FURTHER ORDERED that the Certificate of Public Convenience and Necessity issued to LCI International Telecom Corporation is withdrawn and is no longer effective.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. QCCT021 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order or in interlocutory Orders previously issued in this Case No. QCC-T-02-1. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of August 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

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ORDER NO. 29099 1

Office of the Secretary
Service Date
August 27, 2002