20030926Final Order No 29337.pdf

Office of the Secretary
Service Date
September 26, 2003
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT APPLICATION)
OF QWEST CORPORATION AND THE
COMMISSION STAFF FOR APPROVAL OF THE)
PARTIES' AGREEMENT REGARDING TOLL
RESTRICTION SERVICE IN QWEST'
SOUTHERN AND NORTHERN IDAHO SERVICE)AREAS.
CASE NO. QWE-O3-
ORDER NO. 29337
On July 30, 2003 , Qwest Corporation and the Commission Staff (the parties) filed a
Joint Application to approve their agreement concerning toll restriction service. "Toll restriction
service prohibits a Qwest customer from accessing a long-distance carrier on any line on which
the service is installed.As set out in greater detail below, the parties proposed that toll
restriction in Qwest's southern Idaho operating territory be removed as a Title 62 service and
placed under the Commission s Title 61 jurisdiction. In addition, the parties proposed that the
monthly rates for toll restriction be increased but these rate increases would be mitigated by
elimination of the non-recurring (installation) charge for residential customers in both northern
and southern Idaho. The parties requested an effective date of October 1 2003.
In Order No. 29314 issued August 7, 2003, the Commission issued a Notice
Application and Notice of Modified Procedure requesting public comment on the Joint
Application. The Commission requested written comment be filed no later than September 4
2003. The Commission received seven public comments, most objecting to the proposed rate
Increase.After reviewing the Application, the declaration of the parties and the public
comments, we approve the Joint Application.
THE JOINT APPLICATION
A. Procedural History
In their Joint Application, the parties observed that the regulatory status of toll
restriction has been in conflict since 1997. App. at 2. In a 1997 rate case, Qwest's predecessor
(D S WEST) argued that toll restriction should be a price-deregulated service offered under the
Commission s Title 62 authority, Idaho Code 9962-601 et seq. Conversely, the Staff argued
that the service should be price regulated under the Commission s traditional regulatory authority
ORDER NO. 29337
found in Title 61 of the Idaho Code.l In Order No. 27100, the Commission concluded that toll
restriction should be regulated under Title 61. Qwest subsequently appealed this determination
to the Idaho Supreme Court. Id.
While the appeal was pending, Qwest and the Staff entered into a settlement
Stipulation regarding the appropriate regulatory status for toll restriction. The parties agreed toll
restriction should remain a Title 62 service but it should be offered under fixed rates and terms
for a period of three years. The monthly residential rate was proposed to be $0.25 and the
monthly single-line business rate was proposed to be $1.00. Customers in the Idaho
Telecommunications Service Assistance Program (ITSAP)2 would receive toll restriction at no
charge. Residential and single-line business customers ordering the service in southern Idaho
would be assessed a non-recurring installation charge of $13.50 except that this charge would be
waived on the first line for residential customers requesting toll restriction service at the time
they initiated local service.
In October 1998, a majority of the Commission approved the terms of the Stipulation
in Order No. 27785. !d. at 4. That Order provided that the terms of the Stipulation should run
for a period of three years. In addition, Qwest voluntarily dismissed its appeal.
Near the end of the three-year period, Staff discovered that Qwest had inadvertently
assessed the non-recurring charge on new residential customers ordering toll restriction and had
misbilled some of its ITSAP customers. Consequently, the parties executed another Stipulation
in September 2001. The second Stipulation required Qwest to refund money to affected
customers and extended the terms of the original Stipulation through the end of calendar year
2002.This latter Stipulation was approved by the Commission in Order No. 28862 in
October 2001.
1 The Commission s traditional regulatory authority is found in Title 61 of the Idaho Code. The Idaho
Telecommunications Act of 1988 added a new chapter to Title 62 and created a modified form of regulation for
telephone companies providing other than basic local exchange services in Idaho. Idaho Code ~ 61-604(2) allows
Qwest to remove its non-basic local services from the Commission s Title 61 authority. In March 1989, Qwest'
predecessor elected to remove its non-basic local services from the Commission s Title 61 authority. Consequently,
non-basic services provided in southern Idaho (e., local services to business with more than five access lines or
custom calling features) are now subject to the Commission s Title 62 jurisdiction.
2 Eligible low-income households receive discounted local exchange service pursuant to federal and state assistance
programs. Idaho Code ~ 56-902.
ORDER NO. 29337
B. The Present Settlement
In an attempt to settle the ongoing controversy regarding the appropriate regulatory
treatment of toll restriction service, the parties entered into settlement negotiations. These
negotiations culminated in a new agreement, the terms of which are presented in the Joint
Application. As set out on pages 5-6 of the Application, the new agreement contains the
following provisions:
1. In southern Idaho Qwest will file appropriate tariff revisions to move toll
restriction service for residential and business customers with five or fewer
lines from a Title 62 service to a Title 61 service. Toll restriction service
in Qwest's northern Idaho service territory will remain under Title 61.
2. The Parties propose that the monthly rates for toll restriction for residential
customers be increased from $.25 per line to $.75; and from $1.00 to $2.
per business line. Residential and business customers in both northern and
southern Idaho will be charged the same monthly rates.
3. Qwest will individually notify each customer who subscribes to toll
restriction service of the proposed rate changes.
4. As part of its rate adjustments, Qwest will file changes to its northern and
southern Idaho schedules to eliminate the respective $24.00 and $13.
non-recurring (installation) charges for residential customers ordering the
service. In addition, the non-recurring charge for northern Idaho business
customers will be reduced from $24.00 to $13.50. Business customers in
both northern and southern Idaho will be assessed the same $13.50 non-
recurring charge.
5. ITSAP customers will not be charged for toll restriction.
6. The Staff will not seek a rate reduction in Title 61 toll restriction rates
outside a general rate case in either northern or southern Idaho.
The parties agreed that adoption of the Joint Application will settle the regulatory
controversy. They also maintained that the proposed rates are reasonable and approval of the
Joint Application is in the public interest. Each party supported the Application by including
witness declarations.
As part of the Joint Application, Qwest submitted proposed price lists/tariff schedules
incorporating the proposed terms and conditions set out in the Joint Application. Pursuant to
Telephone Customer Relations Rule 102, Qwest individually notified approximately 38 000
ORDER NO. 29337
customers who subscribe to toll restriction in northern and southern Idaho.IDAPA
31.41.02.102.
C. The Declarations
1. Qwest.In support of the Application, Qwest offered the declaration of John F.
Souba, Idaho Regulatory Affairs Manager. Mr. Souba explained that Qwest supports the
adoption of the Application for several reasons. First, he observed that proposing toll restriction
be subject to the Commission s Title 61 jurisdiction "is a big concession on Qwest's part. . . .
Declaration at ~ 7. He notes that Qwest has long advocated that toll restriction is not properly
characterized as a Title 61 "basic local exchange service." In addition, the Company argued toll
restriction was not subject to the "claw-back" provisions under Idaho Code 962-605(5) because
it was not offered prior to the effective date of the 1988 Telecommunications Act. He stated that
approval of the Joint Application would lay this controversy to rest and avoid further litigation
before the Commission or the Courts. !d.
Second, he asserted approval of the Joint Application will allow Qwest to offer toll
restriction under the same terms and conditions for all Idaho customers whether they are located
in northern or southern Idaho. This offers efficiencies to both the Company and the Staff, as
well as minimizing customer confusion. Third, he declared that Qwest has installed new central
office switching equipment in Lewiston at an investment of $7 million. Id. ~ 8. Qwest has not
sought to recover this investment but the proposed rate increase will help offset this investment.
Finally, he stated that despite the recommended monthly increase, the proposed rates
are reasonable. He noted toll restriction rates in effect prior to the 1997 rate case were $1.00 per
month for residential customers. Id. at ~ 6. Thus, rates would still be lower than they were in
1997. Although the Application proposes increases for both residential and business customers
the suggested rates "are very low compared with other states. . . .Id. at 6. The proposed
residential rate of $.75 is the lowest in the other 12 Qwest states where a fee is charged. Qwest
operates in 14 states. In addition, he maintained the increases are mitigated by elimination of the
non-recurring installation charge of $13.50 for residential customers in northern and southern
Idaho, respectively. The non-recurring charge for business customers in northern Idaho will be
3 Qwest reports that there are 35 233 residential customers and 676 business customers that subscribe to toll
restriction in southern Idaho. In its eight northern Idaho exchanges, 1 728 residential and 362 business customers
subscribe to toll restriction.
ORDER NO. 29337
reduced from $24.00 to the level of the southern Idaho business non-recurring charge of$13.50.
Moreover, ITSAP customers will continue to receive toll restriction service without charge. !d.
at~ 8.
He concluded that the Joint Application presents a reasonable and appropriate
resolution of these toll restriction issues. "Granting the relief requested by the Joint Application
will allow the Company and Staff to focus on other issues and avoid the further expenditure of
time and expenses on this issue.Id. at ~ 11.
2. Staff.Also attached to the Application was the declaration of Staff member
Beverly Barker, supervisor of the Consumer Assistance Section. Without repeating the toll
restriction history, she noted Staffs primary goal is to promote universal service by preserving
the Commission s jurisdiction over toll restriction once and for all. She explained toll restriction
service promotes universal service by allowing customers to obtain local exchange service
without paying a deposit. "It also allows customers to obtain or retain local exchange service
while making payments on past due or prior bills.Declaration at ~ 1. She also insisted toll
restriction limits or prevents toll calls, thereby providing customers a greater degree of control
over the ultimate amount of their telephone bills.
Ms. Barker listed several other reasons supporting the adoption of the Joint
Application. First, placing toll restriction under the Commission s Title 61 regulatory authority
assures customers that the Commission will have full regulatory oversight with respect to the
rates, terms and conditions of this service. Second, adoption of the parties' agreement will
provide for regulatory certainty and will allow both the Staff and Qwest to focus their resources
on other matters. Third, moving toll restriction to Title 61 for both residential customers and
business customers with five or fewer lines in southern Idaho is consistent with Commission
Order No. 27715. In that Order, the Commission designated the nine core universal services as
Title 61 basic local exchange services including "toll limitation.Id. at ~ 2. Fourth, adoption of
the Application makes the terms and conditions for toll restriction in both northern and southern
Idaho consistent. This regulatory symmetry will avoid customer confusion and be more efficient
for both the Staff and the Company. !d. at 3.
Finally, Ms. Barker acknowledged the Application proposes to increase the monthly
charge for residential and business toll restriction service. She noted that the elimination of the
non-recurring residential charge and the reduction in the northern Idaho non-recurring charge for
ORDER NO. 29337
business customers is a substantial benefit to new customers. !d. at 4. She concluded that the
reduction or elimination of non-recurring charges mitigates to some degree the impact of the
increase in monthly rates for this service. In summary, the Staff argued that the rate proposal is
only one component of a comprehensive resolution of the toll restriction controversy. !d. at ~ 5.
PUBLIC COMMENTS
As previously indicated, the Commission received seven public comments. None
the comments address the regulatory realignment of toll restriction but six comments oppose the
proposed monthly rate increases. One customer asked why he should be charged for a service
(access to the toll network) that he does not want. He characterized the proposed increase as
nothing more than another 'money grab.'" Another customer with income "well below the
poverty level " questioned whether the proposed increase was cost justified.
customer with rental properties stated he had numerous "problems with this
servIce. Perhaps Qwest should be required to make the service work properly before they
increase the price by (200% J." Another customer from Caldwell indicated that Qwest does not
deserve an increase in this price "considering the way they do business. They give the customers
the run-around when the customer calls for help on a particular concern. . . .
DISCUSSION
As discussed above, the regulatory status of toll restriction has periodically been in
dispute since 1997. The Staff has advocated that toll restriction should be subject to our
traditional Title 61 regulatory authority. At the same time, Qwest has asserted that toll
restriction service should be regulated under our Title 62 authority, Idaho Code 9 62-601 et seq.
Over time this dispute has resulted in toll restriction having different regulatory treatments and
rates in Qwest's northern and southern service territories. Weare pleased to see that the Staff
and the Company have reached a resolution of this issue, particularly as it relates to the
appropriate regulatory status of toll restriction.
Based upon the settlement and the lack of opposition to the regulatory proposal, we
find that it is appropriate that toll restriction services offered in southern Idaho be placed under
the Commission s Title 61 jurisdiction.4 By finally determining that toll restriction for
4 As noted above, toll restriction service in Qwest's northern Idaho service territory will continue to be subject to our
Title 61 jurisdiction.
ORDER NO. 29337
residential customers and business customers with five or fewer lines shall be regulated under
Title 6l , rates for this service will be subject to the Commission s rate setting authority. Under
Title 61 , Qwest cannot raise rates for this service without the Commission s approval.
further find that providing Title 61 toll restriction to residential and business customers with five
or fewer lines is in the public interest.
We next turn to the other terms and conditions of the parties' settlement. The parties
propose that the monthly rate for toll restriction for residential customers be increased from $.25
per line to $.75; and from $1.00 to $2.00 per business line. Although these increases are
significant, we note that the proposed monthly rate of $.75 would be the lowest residential rate
for this service in the 12 states that have established rates for toll restriction service.s The same
can generally be said for the proposed business rate. Six out of the seven public commenters
oppose the proposed rate increases. Although we are mindful of these comments, we are
surprised at the low number of opposing comments. Out of 38 000 customers who subscribe to
this service and were notified of the proposed rate increase, only six customers submitted public
comments opposing the proposed rates. While we are concerned with the magnitude of the
proposed increases, the resulting rates appear affordable.
Although these rate increases are significant, the increases are offset by changes to
the non-recurring (installation) charges. The parties proposed that the $13.50 non-recurring
charge for residential customers be eliminated.In addition, the non-recurring charge for
northern Idaho business customers was proposed to be reduced from $24.00 to $13.50.
Moreover, the parties propose that ITSAP customers continue to receive toll restriction without
charge. Although these non-recurring charges are assessed on a one-time basis, their reduction
or elimination represents benefits to customers. Overall these non-recurring rate adjustments
mitigate the monthly rate increases.
After reviewing the public comments, there appeared to be some confusion regarding
what "toll restriction" actually is or does. Toll restriction service blocks access to a wide variety
of long-distance (e., toll) calling including: direct-dialed toll (1+); operator-assisted toll (0+);
dial-around" toll (10-10-, 101XXXX+1 , or O+XXX-XXXX); pay per call services (1 or
0+900 1 or 0+976); calls to the operator (0 00+01+, O+XXX, 011+); and toll calls to directory
5 Qwest provides local telephone service in 14 states.
ORDER NO. 29337
assistance (1 or 0+555-1212 0+411 , 1 or 0+NPA+555-1212, 1+NPA+555-1212).6 Customers
with toll restriction may access toll-free telephone numbers (1-800, 800, 888, 877, etc.), Qwest
local directory assistance (555-1212, 411 , 1-411) and use toll-free calling cards.
Customers desiring to block access to some long-distance calling have another
alternative although it is not as encompassing as toll restriction. Customers who do not want
access to long-distance calling may request that Qwest not assign a: (1) "primary interexchange
carrier (PIC) for interLATA7 and out-of-state calls; and (2) an "intraLATA primary
interexchange carrier (LPIC) for intraLATA toll calls. In telephone terms this is referred to as
No-PIC" and "No local-PIC." Selecting both No-PIC and No local-PIC will block access in the
same manner as toll restriction except for pay per calls, dial-around toll, calls to the operator, and
dial-around directory assistance calls. Unlike toll restricted customers, customers with No-PIC
or LPIC would have access to Qwest directory assistance statewide. Customers selecting No-
PIC and No local-PIC may also avoid charges assessed by long-distance carriers because the
customer has no pre-selected toll carrier. For some customers the "No-PIClNo local-PIC" option
may provide a cheaper alternative than toll restriction service in reducing or controlling long-
distance charges. For more information contact Qwest's customer service.
ORDER
IT IS HEREBY ORDERED that the Joint Application filed by Qwest Corporation
and the Commission Staff is approved. The proposed rates will be effective October 1, 2003.
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. QWE-03-15 may petition for reconsideration within twenty-one (21) days of the service
6 These dialing patterns do not present all the possible dialing patterns but are listed as examples of the types of toll
calling prohibited by toll restriction service.
7 A "LATA" (local access and transport area) is a geographic area designed to facilitate the divestiture of AT&T and
the Bell Operating Companies (BOCs) in the 1980s. The LATAs were created to facilitate the division of assets
between AT&T and the BOCs (like Qwest), and to mark the boundaries within which Qwest could transport long-
distance calls. All of the Qwest exchanges south of the Salmon River are included in a single LATA, called the
Idaho LATA. The eight Qwest exchanges in northern Idaho (between Grangeville and Lewiston) are included in the
Spokane LATA. Also located in northern Idaho is the Coeur d'Alene "market area" served by Verizon and is not
associated with either the Spokane or Idaho LA T As.
8 Qwest customers changing their "PIC" and "local-PIC" designation simultaneously will be assessed a one-time
charge of$5.00.
ORDER NO. 29337
date of this Order with regard to any matter decided in this Order or in interlocutory Orders
previously issued in this Case No. QWE-03-15. Within seven (7) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See
Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
~,...
day of September 2003.
~IDEm
See Separate Opinion of Commissioner Smith
Concurring in Part and Dissenting in Part
MARSHA H. SMITH, COMMISSIONER
ATTEST:
10 . Je D. Jewell
Commission Secretary
vld/O:QWET03153h2
ORDER NO. 29337
OPINION OF
COMMISSIONER MARSHA H. SMITH
CONCURRING IN PART AND DISSENTING IN PART
CASE NO. QWE-O3-
ORDER NO. 29337
I concur in that part of Order No. 29337 finding that it is reasonable and in the public
interest for toll restriction service to be classified as a Title 61 service. As noted in my 1998
dissent to Order No. 27785 (Case No. USW-96-5), there is ample evidence to support a
conclusion that toll restriction service is properly classified as a Title 61 service. I am pleased
that this matter finally has been resolved.
However, I do respectfully dissent to that portion of to day s Order regarding the rate
Increases for toll restriction. Although I recognize that the approved rates are low when
compared to the rates in other states, I believe that customers should not have to pay to block
their access to long-distance carriers. As customers said in their comments, they should not have
to pay to avoid something they do not want.
MARSHA H. SMITH, COMMISSIONER