20020701Comments.doc

WELDON B. 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 QWEST COMMUNICATIONS CORPORATION FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO PROVIDE LOCAL EXCHANGE TELECOMMUNICATIONS SERVICES.
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CASE NO. QCC-T-02-1

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. 29049, the Notice of Application and Notice of Modified Procedure in Case No. QCC-T-02-1 issued on June 10, 2002, and submits the following comments.
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 incorporated in the State of Delaware and is in good standing with the Idaho Secretary of State. QCC is a wholly owned subsidiary of Qwest Service Corporation, which also wholly-owns Qwest Corporation. Qwest Corporation is an incumbent local exchange carrier in Idaho and a Bell Operating Company as defined by the 1996 Telecommunications Act.
QCC intends to provide intra- and interLATA toll service to customers located in Qwest Corporation’s service area upon approval from the Federal Communications Commission for provision of interLATA service under 47 U.S.C. § 272. Section 272 requires a Bell Operating Company (BOC), which includes Qwest Corporation, to provide interLATA services through an affiliate separate from the Bell Operating Company.
QCC also intends to provide local exchange service and vertical features to business and residential customers in the service areas of Qwest Corporation and Verizon Northwest, Inc. using both its own facilities and resold services or unbundled network elements.

STAFF FINDINGS
Staff has reviewed the information provided by QCC in its application and the additional material provided to support that application and believes it satisfies the requirements of the Commissions Rule of Procedure 111, IDAPA 31.01.01.111, and Procedural Order No. 26665 issued November 7, 1996, which sets out the necessary information to be included with an application for a certificate.
Staff had questions as to why QCC would need a CPCN. No certificate is necessary for the long distance services typically provided by the BOC’s 272 affiliate. Staff informally inquired as to which customers were likely to be the target market for the unregulated basic local service to be offered by QCC. QCC representatives indicated the Company intended for QCC to be a single company source for all the telecommunications needs of its customers, and, therefore, any long distance customer of QCC was also a likely target for the basic local service to be offered by QCC.
Staff is concerned 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). Staff understands the Federal Telecommunications Act of 1996 requires QCC to follow the same procedures as any other competitive local exchange company (CLEC), in regards to all of its interactions with Qwest Corporation. This would not only include such issues as priority for installation or repair, but also access to customer service representatives and the removal of local service provider freezes. Staff does not believe nondiscriminatory service is possible if the same customer service representative and toll free number is used for marketing and servicing both QCC and Qwest Corporation customers. This is especially the case if these same customer service representatives receive a commission or other financial reward for the sale of QCC services, but not for the services of other CLECs. Therefore, Staff recommends that if QCC is provided a Certificate, QCC be required to use a totally separate customer service organization, with a different toll free number, from Qwest Corporation, for all marketing and other customer inquiries, including repair and billing inquiries.
Staff also has some concerns about the financial capabilities of QCC. The financial problems of the overall parent company, Qwest Communications International, Inc., are in the news almost daily, and its bond ratings having recently been downgraded to “junk” status by most all of the large rating agencies.
In a related matter on June 14, 2002, Qwest Communications Corporation submitted an application to withdraw the CPCN that the Commission provided to LCI International Telecom Corp (LCI). LCI existed as a wholly-owned subsidiary of LCI International, Inc, which in turn was a commonly owned affiliate of QCC. Due to an internal restructuring, LCI no longer exists.

STAFF RECOMMENDATION
Staff recommends that, subject to the separation of customer service organization requirements identified above, a Certificate of Public Convenience and Necessity to provide competitive local exchange service in the service areas of U S WEST and Verizon be provided to Qwest Communications Corporation.
Staff also recommends the termination of Certificate No. 343, issued to LCI International Telecom Corp.

Respectfully submitted this day of July 2002.

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Weldon B. Stutzman
Deputy Attorney General

Technical Staff: Wayne Hart

WS:WH.uumisc/comments/qcct02.1wswh

STAFF COMMENTS 1 JULY 1, 2002