20010831Decision Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RANDY LOBB
DON HOWELL
JOHN HAMMOND
LYNN ANDERSON
JOE CUSICK
BIRDELLE BROWN
WAYNE HART
CAROLEE HALL
BEVERLY BARKER
LOU ANN WESTERFIELD
RON LAW
TONYA CLARK
GENE FADNESS
WORKING FILE

FROM: DOUG COOLEY

DATE: AUGUST 31, 2001

RE: QWEST'S FILING OF ADVICE NO. 01-04-N INTRODUCING 711 SERVICE AND ASSOCIATED CHARGES.

On June 14, 2001, Qwest Corporation (Qwest) filed Advice No. 01-04-N that introduced 711 service and the associated charges in its Northern Idaho Exchange and Network Services Tariff. This service allows both hearing and hearing-impaired customers to make telephone calls via the Idaho Telecommunications Relay Service (TRS) by simply dialing "711" from any telephone in Idaho. This service was mandated nationwide by the FCC in its Second Report and Order (FCC 00-257, CC Docket No. 92-105) and must be implemented by service providers no later than October 1, 2001.
On July 5, 2001, the Commission issued Order No. 28772 suspending Qwest's filing for 60 days to allow Staff the opportunity to conduct a review of the supporting cost studies. In its Northern Idaho service area, Qwest initially proposed a $300 non-recurring service establishment charge and a $95 switch activation charge for each of its eight Northern Idaho switches. On
July 10, 2001, Qwest modified Advice No. 01-04-N to reflect a reduced per-switch activation charge of $30.
At this time, Staff has not received 711 cost recovery filings from any other carrier in Idaho and is not aware of any such filings in the nation, other that those submitted by Qwest.
Staff also believes the FCC Order on 711 considers these costs to be a "cost of doing business" and anticipates that these costs be recovered in rate base. The relevant paragraph states:

Implementation costs associated with providing access to TRS through
711 must be borne by all common carriers as an obligation under section 225(b)(1) of the Act. Recovery of the costs associated with implementing
711 may not fall disproportionately on TRS users, as all carriers are
obligated to ensure that TRS users pay rates no greater than the rates paid
for functionally equivalent voice communications services. Wireline carriers
may properly include the costs they incur in implementing 711 access to TRS with their joint and common costs and recover those costs from the rates
charged for intrastate and interstate services, separated pursuant to the Commission's jurisdictional separation rules.

Staff therefore believes that costs associated with providing TRS are common costs of doing business and should be recovered through regular ratemaking procedures, not by charging Idaho's relay provider, Hamilton Telecommunications, for establishing this service. As Qwest has proposed in Advice No. 01-04-N, Hamilton Telecommunications will be charged these fees and would likely seek reimbursement from the Idaho Telecommunications Relay Fund.
Staff also believes Qwest's filing raises the issue of whether access to the TRS via 711 should be treated similarly in Qwest's southern Idaho service area where the Company filed similar charges in Advice No. SID2001-022.
Although the FCC has mandated that access to TRS via 711 be established by October 1, 2001, the question of cost recovery does not need to be decided by that date. Staff believes there are at least three options before the Commission. First, the Commission could approve Qwest's Advice No. 01-04-N and allow Qwest to recover its 711-related costs by charging Hamilton Communications. Second, the Commission could deny Qwest's Advice No. 01-04-N and require the Company to seek cost recovery through appropriate ratemaking procedures. Third, the Commission could extend this filing's suspension and process the matter by Modified Procedure, allowing the parties and interested persons the opportunity to file written comments.
From these options Staff recommends that the Commission extend the suspension of Advice No. 01-04-N and put the question of Qwest's cost recovery method out on Modified Procedure with a 21-day comment period.

COMMISSION DECISION
Should the Commission approve Qwest's Advice No. 01-040N as filed?
Should the Commission deny Qwest's Advice No. 01-04-N as filed and require Qwest to seek 711 cost recovery through regular ratemaking procedures?
Should the Commission further suspend this filing and process this matter by means of Modified Procedure?

________________________
Doug Cooley

DC:I:udmemos/Qwest 711 Dec Memo2

Second Report and Order, CC Docket No. 92-105, FCC 00-257, para. 44, emphasis added.

DECISION MEMORANDUM 1 AUGUST 31, 2001