981009.docx

DECISION MEMORANDUM
TO:COMMISSIONER HANSEN
COMMISSIONER NELSON
COMMISSIONER SMITH
MYRNA WALTERS
TONYA CLARK
RITA SCOTT
DON HOWELL
STEPHANIE MILLER
DAVID SCOTT
JOE CUSICK
WORKING FILE
FROM:BEVERLY BARKER
CHERI COPSEY
DATE:OCTOBER 9, 1998
RE:PROPOSED AMENDMENTS TO TELEPHONE CUSTOMER RELATIONS RULES (CASE NO.  31-4101-9801)
On June 18, 1998, the Commission issued a Notice of Proposed Rulemaking regarding proposed amendments to the Customer Relations Rules for Telephone Corporations Providing Local Exchange or Intrastate MTS/WATS Service in Idaho (IDAPA 31.41.01.)  Public notice was also given through the Idaho Office of Administrative Rules.  No requests for holding a public hearing were received.  The deadline for filing written comments with the Commission was August 26, 1998.  The deadline for the Commission to submit proposed pending rules to the State Administrative Rules Coordinator is October 21 for publication in the Administrative Bulletin on December 2, 1998.
Timely comments were filed by the Commission Staff, MCI Telecommunications Corp., AT&T Communications of the Mountain States, U S WEST Communications, the Idaho Telephone Association, GST Telecom Idaho, and GTE Northwest Incorporated and GTE Communications Corporation.  The Commission received late-filed comments from Brittan Communications International Corporation on September 1, 1998.  The Legislative Services Office of the Idaho State Legislature reports that the Senate and House Subcommittees for review of administrative rules have no objections to the proposed rules.
Commentors address the proposed amendments and, in several instances, propose changes to rules in addition to those that were the subject of the Notice of Proposed Rulemaking.  Several commentors discuss the impact of the proposed rules on competition in the telecommunications industry.  MCI recommends that carrier-to-carrier performance standards also be established.  The comments are summarized below, beginning at page 2.  Based on the comments, Staff recommends that the Commission amend some of the proposed rules to reflect those comments.  Staff’s recommended amendments begin on page 20.  The Staff recommended amendments also appear in legislative format and are attached for your review.  A copy of the Notice of Proposed Rules is also attached.
SUMMARY OF COMMENTSAND STAFF ANALYSIS
1.  Rule 5 - Definitions
The proposed substantive changes include revising the definitions of “customer” and “local exchange service” as well as moving language regarding unemancipated minors from Rule 300 to Subsection 005.05.01 of this rule, which defines the term “applicant.”
The Legislative Services Office of the Idaho State Legislature advises the Commission  that Idaho does not have an emancipation statute and recommends that the definition of “emancipated minor” be included.  Staff finds that Idaho Code §32-101 defines “minor” as under eighteen (18) years of age and that it further provides that any person who has been married whether  under eighteen (18) or not is competent to contract.  Moreover, while there is no specific statute providing a procedure for emancipation, the Idaho courts have long recognized emancipation and determination emancipation on a case by case basis.  See e.g.Ireland v. Ireland, 123 Idaho 955, 855 P.2d 40 (1993).  Emancipation is a court determined status.  Therefore, it is not appropriate for the Commission to establish standards for emancipation.
AT&T suggests that the definition of “customer” specifically include “business,” as well as, “person” in order to clarify that a business is a customer for purposes of these rules.  Staff does not believe that is necessary.  Person is a legal term of art and includes businesses.  In addition, because competitive local exchange companies (CLECs) do not generally have access to customer payment histories for local exchange customers, AT&T suggests that the definition of “good credit” be revised to include the statement, “‘Good credit’ standing may also be determined through the use of credit bureau sources.”  Staff disagrees.  The term “good credit” appears in Rules 103, 107.02 and 205.  The current proposed rules delete Rule 205.  Both Rule 103 and 107.02 address the “good credit” of current customers and prospective customers.  Therefore, AT&T’s comments are irrelevant.
GTE recommends that the definition of “local exchange company” and “telephone company” be clarified that it applies only to “end user” customers and not to carriers.  It also proposes adding a definition of “eligible telecommunications carrier.”  Staff opposes both.  Eligible telecommunications carrier does not appear in the rules.  It is also clear from reading the entirety of the rules that carriers are not customers.  In addition, GTE also requests clarification of “other services” because it believes that the current definition may include services that do not fall under the Commission’s jurisdiction, such as Internet, cellular, or paging services.  Staff disagrees.  The Commission does have jurisdiction over a carrier’s billing practices.
MCI recommends augmenting the definition of “customer” to include “more than one person in a given household may be authorized to select, cancel, and receive telecommunications services.”  Alternatively, it recommends using a definition of “end-user customer.”  Staff disagrees.While U S WEST agrees that the definition of “local exchange service” is consistent with the statutory definition, it suggests that its inclusion will create confusion.  Therefore, it recommends that the Commission further refine the terminology used to better reflect the Commission’s actual policy.  Staff finds no reason to change this definition.
2.  Rule 101 - Deposit Requirements
GTE recommends that this rule apply only to deposits for basic services that are included as “universal services,” as defined in GNR-T-97-22 and GNR-T-98-7.(footnote: 1)  The Commission did not propose to change this rule.  It sets forth the conditions under which a deposit can be collected by local exchange companies (LECs).  Because the Commission did not propose to change this rule and no other party submitted comments, Staff recommends that no change be made at this time.  The Commission may wish to direct the Staff to convene a workgroup that would address future changes to the Telephone Customer Relations Rules, including GTE’s proposed change to Rule 101.
3.  Rule 102 - Other Deposit Standards Prohibited
The proposed rule states that customers billed directly for MTS service cannot be required to give a deposit for MTS service to the LEC.  It also eliminates the prohibition against using commercial credit records to determine credit-worthiness of applicants for local exchange service.
GST supports the proposed change to eliminate LEC deposits in cases where customers are direct-billed for MTS and states that the local exchange provider does not need protection from unpaid interexchange carrier toll calls, nor should it undertake the expense of protecting the interexchange carrier which should make its own guarantee arrangements with the customer.
U S WEST does not object to this change if it is limited to the time when a customer establishes new service and the prohibited deposit is for MTS not billed by the LEC.  U S WEST suggests it should not apply to situations where the customer has run into difficulty with his original carrier and is denied access to MTS by that carrier or is ‘dialing around’ his pre-subscribed carrier and incurring charges for MTS service which are billed by the LEC.  It also suggests that once established, should U S WEST or the MTS provider determine that the account presents a credit risk based upon collections activities which have been required, U S WEST is expected to collect a deposit to secure the account.  
Staff recommends adoption of the rule as proposed.  Given U S WEST’s comments, the Commission may wish to clarify its intent in its order that the rule clearly applies to both applicants for service and existing customers, including those customers who are toll-restricted or are denied access by their primary MTS provider.  Nothing in the rule prevents a LEC from requesting a deposit for MTS service resulting from casual calling or dial-around service if the customer has used those services in the past or indicates he or she will be using those services in the future as a substitute for or in addition to dialing direct via a primary MTS provider.
4.  Rule 103 - Guarantee in Lieu of Deposit
The proposed rule requires LECs to inform residential customers that it will accept written payment guarantees in lieu of a deposit.  The current rule requires LECs to accept guarantees.
AT&T recommends that CLECs not be required to accept guarantees because it will discourage competition.  AT&T maintains that guarantees are very difficult to administer and thus add to the cost of providing service.  The wording proposed by AT&T would require only incumbent local exchange companies (ILECs) to offer customers the option of giving guarantees.
GTE does not support the proposed changes and recommends that the rule be eliminated in its entirety.  GTE notes that its Advance Credit Management system eliminates the necessity for deposits for residential and single line business customers.
U S WEST suggests that this rule be eliminated in its entirety.  Alternatively, it suggests that letters of guarantee should be reserved for extraordinary cases.  U S WEST indicates that guarantees are an “extraordinarily unsatisfactory” means for securing accounts, and are no longer the sole alternative to posting a cash deposit.  U S WEST customers now have the option of obtaining toll-restricted service, for which a deposit is not required, and prepaid phone cards.  U S WEST states that the burden of this rule will fall disproportionally on ILECs and suggests that CLECs will not follow the rule.
The Commission Staff observes that the current rule requires all LECs to accept guarantees but does not require that customers be informed of that option.  Staff, therefore,  maintains that most customers are not aware of the guarantee option and so are effectively precluded from using it.  The current rule does not clearly spell out the LECs’ obligations which has made enforcement difficult.  Therefore, Staff recommends that either the proposed rule be adopted or completely eliminated.
5.  Rule 105 - Amount of Deposit
The current rule specifies how deposit amounts are to be calculated.  No changes to this rule were proposed by the Commission.  
U S WEST proposes the rule be changed make Rule 105.02 and Rule 110 consistent.  U S WEST argues that while MTS companies are allowed to collect “reasonable” deposits, LECs that bill for MTS service (their own or on behalf of others) must charge two months’ actual MTS charges based on the customer’s past 12 months’ usage.  Deposits for customers with no service history may be estimated.  U S WEST states that Idaho is unique in using a year’s worth of data and that its current system does not allow for easy calculation of deposit amounts using this method.  It asserts that the rule is not competitively neutral in that CLECs will not have usage history on which to base deposits and MTS companies can charge “reasonable” deposits.
Staff notes that U S WEST’s comments derive from the fact that it revised its customer record keeping system making it difficult for U S WEST to easily comply with the existing rule.  However, because the Commission did not propose to change this rule and no other party recommended it be changed, Staff recommends that no change be made at this time.  The Commission may wish to direct the Staff to convene a workgroup that would address future changes to the Telephone Customer Relations Rules, including U S WEST’s proposed change to Rule 105. If the Commission accepts U S WEST’s proposal to eliminate Subsection 105.02, Subsection 105.03 should also be eliminated and Rule 110, Deposits-MTS Companies, will need to be revised.
6.  Rule 201 - Issuance of Bills - Contents of Bills
The Commission did not propose to change this rule.  The rule specifies what information must be included on bills.  However, GTE observes that the rule is based on current ILEC billing practices and does not take into consideration bundled service offerings which may include a number of services from a single provider for one price.  Therefore, GTE concludes that requiring bill itemization no longer serves the public interest.  Staff observes that bill itemization does serve the public interest.  Because the Commission did not propose to change this rule and no other party submitted comments, Staff recommends that no change be made at this time.  The Commission may wish to direct the Staff to convene a workgroup that would address future changes to the Telephone Customer Relations Rules, including GTE’s proposed change to Rule 201.
7.  Rule 202 - Due Date of Bills
The proposed change eliminates the hardship exemption giving residential customers the option of extending payment due dates upon written request to a telephone company.  GTE supports the change and no party opposes it.  Therefore, Staff recommends adoption of the rule as proposed.
8.  Rule 205 - Billing Prohibited
The proposed rule eliminates the current rule requiring LECs to provide a statement of good credit to customers with final bills and substitutes a new rule that addresses billing for certain types of calls or services and specifies a time frame for removing disputed charges.  This is  consistent with current Subsection 402.02, Obligations for Billing Disputes.  Whereas, Subsection 402.02 applies to LEC bills only, proposed Rule 205 applies to all telephone companies.
AT&T, GST and GTE propose to delete the requirement that certain charges (unanswered or unaccepted calls, calls to toll-free numbers, services or merchandise not ordered or authorized) be removed within two billing cycles following notice to the telephone company.  GTE believes this rule is unnecessary since it has taken steps to protect its customers from cramming or billing of unauthorized charges. AT&T alleges that the proposal exceeds what is required in the newly-enacted state law that addresses slamming and cramming.  AT&T also notes that in July, 1998, the FCC released voluntary best practices guidelines to combat cramming. AT&T, GST and GTE, therefore, urge the Commission to allow the self-policing efforts of the telecommunications industry to take effect.  Staff disagrees.  It has found that the problem is real and that it exists now.
ITA maintains that the proposed rule makes LECs liable for any charges contained on LEC bills, even though the LEC is innocently performing its common carrier duty to bill and collect for third party telecommunications providers.  ITA states that the rule only prohibits cramming by telephone companies and is not directed towards those independent service providers who typically cause the majority of problems.  ITA submits changes to the rule to correct these two perceived defects.  Staff agrees with ITA’s comments and accepts its proposed amendment, in part.
U S WEST does not object to the proposed rule so long as industry standard practices are allowed to continue under its application and suggests that the rule be clarified to indicate when relevant ‘notice’ to the telephone company takes place.  U S WEST believes that the customer’s initial contact with the company does not constitute “notice.”  The first contact is the first opportunity to clarify the charges for the customer or to refer the customer to the vendor if there is a dispute.  U S WEST states that only where U S WEST has received notice from the service provider itself that the charge should be removed or from the customer that he and the service provider cannot come to agreement about the charge, should U S WEST be deemed to have received ‘notice’ requiring it to remove the disputed charge from the bill.  
Although Staff disagrees with U S WEST’s representation of what industry standard practices are, it agrees that clarification of what constitutes “notice” to the telephone company would be helpful.  Therefore, Staff recommends that in its final order adopting rules, the Commission make clear that disputed charges must be removed from the customer’s bill when customers notify the company that they are unwilling or have been unable to either contact or successfully resolve a dispute with the goods or service provider and that the charge remains in dispute.
9.  Rule 207 - Billing for Other Services
The proposed rule requires bills to contain certain information regarding the service provider, the service rendered, and a statement that local exchange service cannot be disconnected for nonpayment of other charges.  
AT&T recommends that this proposed rule be eliminated for the reasons stated above in the discussion of Rule 205.  Staff disagrees.
GTE currently provides the toll-free number of service providers on bills.  However, it objects to having to print the statement about disconnection because it would require a costly change to its billing format.  GTE and U S WEST both object to including this statement in their bills because they contend it would encourage customers to avoid paying their legitimately incurred charges.
ITA maintains the rule does little to police the conduct of the party that is actually responsible for cramming and would leave the LEC in violation of the rule if it does not receive, and include on the bill, certain information that can only come from the service provider that submitted the charge for billing.  ITA suggests adding a sentence that would allow LECs to refuse to bill and collect for service providers who fail to submit the necessary information.  Staff suggests that this is unnecessary because the carrier is free to impose whatever conditions it chooses on other service providers with which it contracts.
The Commission Staff asserts that the rule’s minimal notice requirement will give customers valuable information at the point where it is most helpful—when they receive their bills.  Providing information on bills about billing and collection policies is a common business practice in unregulated industries and it would be neither unusual nor onerous for the Commission to impose a similar requirement to those imposed under federal law for unregulated industries.  Staff recommends amending the rule to eliminate the final sentence because it duplicates the requirement in Rule 208.
10.  Rule 208 - Notice Concerning Application of Payments and Disconnection
The proposed rule specifies how partial payments will be allocated among various service providers and requires a statement that local exchange service cannot be disconnected for nonpayment of non-local exchange charges.  Allocation of payment is also addressed in Rule 312, Payment Arrangements.
AT&T recommends that this rule be eliminated in its entirety because its systems are not equipped to accommodate numerous ‘customer requirements’ as to payment application. and it believes that it could encourage customers to not pay the non-local exchange portion of their bill.
In the belief that local exchange companies would need to keep track of individual customer payment allocation preferences, GST states that the notification requirements will be difficult and costly to implement, and would discourage companies from offering third party billing and collection services.
GTE states that its billing system does not separate payments or adjustments at the product service provider level.  It asserts that this forces it to violate this rule where it bills for billing aggregators that in turn bill on behalf of those entities actually providing the product or service.  GTE does not support the inclusion of a notice regarding disconnection in bills because it believes that the policy prohibiting disconnection of local exchange service for nonpayment of non-local services is no longer necessary.  It argues that customers now have a number of options available, including toll restriction.  In addition, it suggests that prohibiting disconnection encourages irresponsible payment behavior and may increase its uncollectibles, ultimately increasing rates.   Staff suggests that GTE ignores the fact that it cannot disconnect a customer for failure to pay for service other than basic local exchange service.  Moreover, GTE suggests that disconnection prohibitions do not consider the effect of bundled services that it suggests would have to be unbundled in order to comply with the rule.
U S WEST maintains that including information on bills regarding the prohibition against disconnection of local service is neither necessary nor desirable and will have the unintended consequence of encouraging customers to delay or avoid payment.  It suggests that the time to advise customers of this requirement is at the time a dispute or when nonpayment arises, not when a bill is issued.  U S WEST also requests that the Commission consider that its bill is used in 14 states and that creating a special billing format for Idaho would be expensive and burdensome.  It further suggests that the Commission should take action against the companies causing problems rather than attempt to use the monthly bill as a sword against all of the evils of the emerging competitive industry.  U S WEST supports the proposed change to the payment allocation process but does not believe this information should be printed on bills.  It maintains that few customers make partial payments and that those that do and are in danger of disconnection receive separate notices.  It notes that U S WEST’s customers also receive this information annually in their telephone directory.
The Commission Staff recommends that an abbreviated version of the rule be adopted to reflect the further recommended changes to Rules 306 and 312.
11.  Rule 300 - Further Definitions
Subsection 300.01 of this rule was moved to Rule 5 and Subsection 300.02 was eliminated, since the term “intraLATA MTS” is no longer used within the context of the rules.  No comments were received regarding elimination of this rule.  No party objected to elimination of this rule.
12.  Rule 304 - Requirements for Notice Before Termination of Local Exchange Service
The proposed rule eliminates the requirement to provide additional notice prior to disconnection of service if the customer has already received a notice within the past 28 days and subsequently defaults on a payment arrangement or pays with a dishonored check.
AT&T recommends that Subsections 304.02 and 304.03 which address notice requirements only apply to ILECs because it argues it would be burdensome and may discourage CLECs from providing local exchange service in Idaho.  Staff disagrees.
GST and GTE support the suggested changes.  GTE recommends that the requirement for the “extra” 24-hour notice and the additional notice required in Subsection 304.03 should be eliminated completely because it adds to administrative costs with no benefit to the majority of customers.  Staff disagrees and continues to recommend adoption of the rule as proposed.
13.  Rule 306 - Contents of Notice of Intent to Terminate Local Exchange Service
The proposed additions to the current rule impose a requirement that disconnection notices disclose how partial payments will be applied and include a statement that failure to pay any amount in bona fide dispute cannot be used as a basis for disconnection.  
AT&T recommends that Subsections 306.01 and 306.02, which require disclosure of the reason for disconnection and actions that may be taken by the customer to avoid disconnection, be deleted in their entirety and that the proposed additions, 306.06 and 306.07, not be adopted because it argued that there should be national uniformity in its methods and procedures, as well as, flexibility in a competitive market.
GST asks the Commission to clarify the Subsection 306.07 by defining what is meant by “bona fide dispute.”  Staff does not see a need to clarify the term “bona fide dispute” in the rule, as recommended by GST but suggests that the Commission might clarify its intent in its order.
GTE reiterated that it is unable to separate payments or adjustments at the product service provider level.  It states that the allocation of payments is contained in the billing and collection agreements that are not regulated by this Commission.  Staff recommends that the Commission clarify that by Order No.  21096, Case No. U-1500-162, billing and collection agreements were de-tariffed but not deregulated in Idaho.
U S WEST suggests that the Commission should simply adopt a rule stating its policy for the application of the partial payments such as proposed Rule 312.03 and require that all written and verbal communications with the customers on this point be consistent with the Commission’s rule.  Staff disagrees.  Staff recommends the Commission modify Subsection 306.06 to be consistent with the changes it recommends for Rules 208 and 312.
14.  Rule 307 - Termination of Local Exchange Service-maintenance of Records
No change to this rule was proposed by the Commission.  GTE notes that this rule would not be required if the verbal notice were eliminated in Subsections 304.02 and 304.03.  Staff agrees with GTE’s comments but recommends no change to this rule.
15.  Rule 308 - Serious Illness or Medical Emergency
No change was proposed to this rule by the Commission.  GTE suggests that the Commission needs to determine a compensation mechanism for the additional uncollectibles incurred by competitive providers who comply with this rule.  Because the Commission did not propose to change this rule and no other party submitted comments, Staff recommends that no change be made at this time.  The Commission may wish to direct the Staff to convene a workgroup that would address future changes to the Telephone Customer Relations Rules, including GTE’s proposed change to Rule 308.
16.  Rule 310 - Insufficient Grounds for Termination of Local Exchange Service
The proposal revises the current rule to allow telephone companies to disconnect local exchange service if the customer has signed a written guarantee of payment for another customer’s bill.  The proposed rule continues to prohibit disconnection for amounts under $50.00 but eliminates the two-month billing requirement.
AT&T and GTE recommend proposed Subsections 310.01 and 310.03 be eliminated because it suggests they are unnecessarily burdensome and do not make good business sense.  AT&T  further recommends that payments be allocated proportionately towards all billing parties and that nonpayment of the total balance be used as the basis for disconnection of local exchange service except for disputed amounts.  Staff believes that disconnection prohibitions are an important consumer protection measure and so does not support elimination of Subsection 310.03 as proposed by AT&T and GTE.  Staff recommends that Subsection 310.04 be eliminated as originally proposed.
ITA states that it is not opposed to the proposal to eliminate the two month’s charges criteria but maintains that the change will increase the grace period for non-paying customers which may increase bad debt expense and ultimately impact rates.
17.  Rule 312 - Payment Arrangements
The substantive change made to the existing rule requires that, absent instruction by the customer, partial payments are to be applied first to local exchange service with the remainder allocated proportionately to other service providers.
AT&T recommends that customers not be allowed to instruct the company as to how partial payments should be applied and that payments should be proportionately allocated among providers except to disputed amounts.  AT&T believes that accounts should be treated as a whole and that preference not be given to local exchange service.  Staff strongly disagrees with AT&T that customers should not be able to direct how their partial payments are applied.  Staff does concede that since the focus of the proposed Subsection 312.03 has shifted to favor the preservation of local service, further dictates by the Commission about how payments should be allocated may not be necessary.  
GTE again notes that it cannot separate payments or adjustments at the product service provider level with its current system.
U S WEST agrees with the proposed policy change.  It recommends that the meaning of local exchange service be clarified, suggesting that the definition provided in Rule 5 is not sufficient for purposes of this rule.  In addition to recurring charges for basic local exchange service, U S WEST would include: non-recurring charges for installation of basic local exchange service; the federal customer access line charge; 911/E911 charges; USF & TRS charges; taxes or other charges imposed by government associated with basic local exchange service; and charges associated with toll restriction, depending on the outcome of U S WEST-T-96-5.
Based on these comments, Staff recommends that the rule be amended.
18.  Rule 313 - Local Exchange Service Not Denied or Terminated for Bills for MTS or Other Services
Rule 313 currently prohibits the disconnection of local exchange service for nonpayment of MTS or other services.  The proposal eliminates an obsolete reference to situations where MTS or other services cannot be denied or terminated without also discontinuing local exchange service, presumably due to technical constraints.  (Staff notes that the intended elimination of Subsection 313.02 was not proposed in the Commission’s Notice due to a typographical error that resulted in the intended strikeover not showing.)
AT&T suggests that telephone companies be allowed to deny or terminate local exchange service in the event of nonpayment of undisputed charges for MTS or other services.  It argues that without the threat of disconnection of local exchange service, customers will be encouraged to run up high unpaid bills for MTS and other services.  Fraud and uncollectibles will be passed on to customers in the form of higher rates.  It also argues that a LEC that offers local exchange service bundled with MTS and other services would be forced to continue providing local exchange service even when the customer’s lack of payment justifies terminating the rest of the bundled services.  AT&T also indicates that this rule would force it to provide local exchange service to customers who would not otherwise qualify for service due to their credit standing.  As an alternative, AT&T suggests that this rule apply only to ILECs, since CLECs would be exposed to proportionately more risk of bad debt since all customers would be new customers and customers who owed MTS bills could not be denied local exchange service.
GTE reiterates its opposition to the prohibition of disconnection.
Staff recommends adoption of the change to Subsection 313.01 as proposed.  For consistency sake, Staff recommends that Subsection 313.02 be eliminated as well.  Staff recognizes that the comments of GTE and AT&T regarding the implications of this and other rules for companies offering bundled services have merit but submits that neither retention of the existing rule nor adoption of the proposed rule would adequately address the issue raised.  Staff proposes that a workgroup be convened to consider the issue and make recommendations to the Commission at a later time.
19.  Rule 314 - Denial, Restriction, Modification or Termination of Mts or Other Services
The proposed amendment requires companies providing MTS to provide reasonable notice to customers before modifying an existing service.
GTE observes that this rule refers to other services, which it says needs to be more clearly defined.  See further discussion under Rule 5.  MCI states that MTS companies should not have to notify customers every time a company decreases its rates or changes its tariff’s text or terms and conditions of service.  Such an obligation would affect its competitiveness and increase its costs of doing business, which would ultimately result in higher rates for Idaho customers.  Staff agrees with MCI’s comments and recommends that the word modification be replaced with cancellation in the title and Subsection 314.01.  This change in terminology more accurately describes Staff’s original intent.
21.  Rule 401 - Complaint to Telephone Company
The changes proposed require local exchange companies that bill and collect for other entities to address complaints and provide customers with information on how to contact the supplier of service or merchandise billed.
GTE states that requiring it to address inquiries may contradict many current billing and collection contracts, which do not fall under the Commission’s jurisdiction.  GTE notes that it currently provides customers with information on suppliers and removes disputed charges.  
U S WEST maintains that the proposed change completely changes the relationship between the local exchange company and the entities with which it has billing relationships.  It argues that billing and collection services are not regulated by the Commission and the rule is discriminatory because it does not apply to credit card companies, collection agencies or billing agents.  According to U S WEST, its contracts for billing services often do not require U S WEST to handle customer inquiries and disputes for service providers; requiring U S WEST to provide a service not desired by or paid for by the service provider is not acceptable.  U S WEST maintains that customers would not be well-served due to the potential for inconsistent responses from the LEC and the service provider.
After reviewing the comments, although Staff continues to believe that local exchange companies have an obligation to be responsive to their customers, Staff is persuaded that part of the proposed revision to this rule is overly broad and, as such, provides no concrete guidance.  Therefore, Staff recommends that the language of the existing rule be retained except for adding the provisions regarding the provision of an address or telephone number.
22.  Rule 404 - Response to Informal Complaints
This new rule requires telephone companies to respond to informal complaints within ten business days.  GTE states that a more reasonable time frame for conducting a full investigation and complete response is 30 days.  Staff agrees.
MCI recommends that the rule be modified to require a response within ten days that at least shows the company is making a good faith effort to resolve the complaint.  According to MCI while ten business days may be sufficient to review and resolve the majority of disputes between customers and telephone companies, some disputes involving the examination of lengthy records, the issuance of large refunds, etc., may take longer to finalize.  Staff agrees.
23.  Rule 503 - Repair Service Standards
The proposed rule modifies the existing rule to clarify it and make it consistent with proposed Rule 504.
AT&T suggests that the rule only apply to ILECs.  It maintains that CLECs will be reluctant to enter a market where the state will hold them accountable for and penalize them for issues that are not often within their control.  In fact, according to AT&T, in a resale or wholesale environment, CLECs will often be the customer, rather than the provider.  AT&T further argues that service quality regulations are not necessary where a choice of competitive providers exist.
GTE advocates the elimination of all traditional service quality rules (e.g., X% of out-of-service trouble reports cleared within Y days) and the retention of a narrow set of regulations that are absolutely needed to protect customers (e.g., complaints, commitments met and reliability).  GTE argues these regulations should apply to all LECs, because CLECs offer bundled services and may rely on a facilities-based provider for repair services.  GTE suggests that the Commission postpone its decision on service standards until it observes how the market will work.
Staff recommends that the proposed revisions to Rule 503 be adopted and suggests that the Commission in its order announce its intent that the rule apply to both CLECs and ILECs.
24.  Rule 504 - Local Exchange Service Installation Standards
This new rule establishes service installation standards and specifies billing credits for failure to meet the standards.
AT&T and GST suggest that this rule only apply to ILECs.  GST argues that it must often depend upon an ILEC for operational and maintenance services.  Alternatively, GST recommends that the Commission explicitly state that ILEC failure to perform its interconnection obligations constitutes an event beyond the control of GST or any other CLEC and that either no penalties should apply or that penalties should be paid by the ILEC rather than the CLEC.  Staff disagrees.  A CLEC is fully capable of protecting itself within the interconnection agreement.  The carriers’ concerns can be better addressed in direct negotiations between the reseller and its underlying service provider.
GTE states that this rule is unnecessary and recommends that the Commission postpone its decision until its observes how the competitive market will work.  GTE notes that it has its own service performance guarantee plan.
ITA suggests that the rule apply only to residential and small business customers and not to commercial or industrial projects where meeting the 5-day time frame would be impossible.   Alternatively, ITA recommends alternative language that would allow installation of service within a reasonable period of time.  ITA opposes allowing customers to specify an installation date if placing an order more than 5 days in advance.  ITA maintains that LECs should be able to schedule installation dates at their discretion.  It further argues that most customers neither expect this level of service nor be willing to pay for it.  ITA suggests that this rule apply on a one-time basis to cover instances where the LEC is unable to perform the installation because the customer fails to keep an appointment.
U S WEST maintains that its held orders are not increasing, citing its monthly reports to the Commission and questions whether this new rule is justified.  U S WEST also observes that the rule does not distinguish between primary and additional lines and, therefore, recommends that the rule only apply to installation of primary service.  The customer who merely wants an additional line and is required to wait for a longer time than he would like should be the concern of the telephone provider and its competitors and not the regulator.  U S WEST states that if this rule applies to all lines and not just primary lines and the Commission limits universal service for high cost areas to primary lines in Case No. GNR-T-98-7, then telephone companies will have to provide service in high cost areas without receiving universal service support and face regulatory penalities if that service is not provided in the prescribed interval.(footnote: 2)  U S WEST also states that the rule does not define what constitutes a held order, which it defines as delays occasioned by a lack of facilities to serve customers.  It recommends that the Commission adopt that definition because installation delays may have a variety of causes, all of which will carry equal weight under the Commission’s proposal.  It contends that delays for reasons other than lack of facilities should be addressed, if at all, under a separate rule which takes into account the specifics of service delays and provides adequate protection to service providers who suffer such delays due to customer problems or other circumstances beyond their control.  U S WEST asserts the proposed rule is not clear whether a company reporting failure to comply with the 90% standard set in the rule is liable for other penalties or whether the reports should include instances where failure to meet the deadline was due to “extenuating circumstances.”  U S WEST maintains that the issue was raised in connection with Rule 503 and the Commission ruled that such instances should be excluded in determining compliance levels.(footnote: 3)  U S WEST notes that the term “unserved area” as used in Subsection 504.04 is not defined and observes that the Commission has provided a definition in a set of temporary and proposed rules (IDAPA 31.42.01 et seq., Rule 401.08) recently adopted in Case No.  31-4201-9801, O.N. 27674.  It says that including a definition would be helpful.  Staff agrees.  Finally, U S WEST asks for clarification of exactly what charges should be credited to customers.  Staff agrees and recommends a flat amount equal to the service installation charge plus a minimum of twenty dollars ($20.00).  
Staff recommends several changes to the rule in light of the comments received.  First, Staff agrees with U S WEST that the rule should apply only to primary line service, rather than to all customer lines.  To address issues raised by both U S WEST and GTE, Staff proposes that reference to credit equivalent to one month’s basic local exchange credit be replaced by a minimum amount of $20.00.  This change allows LECs the flexibility to provide larger credits if they so desire and eliminates the need to specify exactly how a credit is calculated.  In light of ITA’s statement that the rule requires LECs to install service by a customer-specified date, Staff recommends that the rule be revised to clarify that, in the event that a customer requests a due date more than five days in advance, failure to install service by the customer’s requested due date shall result in credit being issued.  With regard to ITA’s statement about credit being available on a one-time basis, Staff believes that instances where an installation cannot be completed because a customer (as opposed to the LEC) has failed to keep an appointment to meet during a mutually-agreeable time period falls within the provisions of Subsection 504.03, Extenuating Circumstances.  In other words, credit would not be provided because the failure to perform was “not within the telephone company’s control.”
25.  Rule 602 - Summary of Rules
No changes were proposed to this rule which requires LECs to provide customers with summaries of the rules at least once each year and when beginning service.  Publication in the telephone directory satisfies the annual notice requirement.  GTE recommends that the rule be modified so that it is clear that the summary of rules needs to be printed only once, not multiple times for multiple providers.  Staff recommends that the Commission in its order clarify its intent that a rules summary needs to be printed only once in any single telephone directory.  Staff does not recommend that the current rule be changed.
26.  Rule 603 - Access to Emergency Services
The proposed new rule requires local exchange companies to provide access to emergency services.  The text of the current rule regarding removing charges for PIC changes has been revised and moved to proposed Rule 610.  GTE supports this rule.  Staff recommends adoption of this rule as proposed.
27.  Rule 606 - Verification of Customer Request for Change in Customer’s Telephone Company
Consistent with the requirements of FCC rules and Idaho Code §48-603D, this new rule establishes procedures for verifying a customer’s request to change a local or long distance telephone company.
AT&T recommends that the proposed rule be amended to apply only to customers who have been solicited through the use of outbound telemarketing.  AT&T maintains that although Idaho law does not distinguish between changes initiated through telemarketing or customer-initiated, inbound contact with the telephone company, FCC rules only apply to changes resulting from outbound telemarketing.  AT&T notes that the FCC is contemplating whether its rules should apply to inbound calls, and that federal legislation is now under consideration.  AT&T argues that its amendment would relieve Idaho consumers from bearing the cost of implementing a rule specific to Idaho.
GST did not direct its comments regarding slamming to any particular rule.  However, it urged the Commission to adopt the FCC rules in order to avoid costly compliance with a differing state requirements.  
GTE recommends that the rule simply refer to the FCC rules rather than list the current verification procedures so that the Commission will not have to update its rules if the FCC requirements change.
Staff recommends adoption of the new rule as proposed.
28.  Rule 607- Confirmation Package Information
No party submitted comments on this new proposed rule.  Staff recommends adoption of this rule as proposed.
29.  Rule 608 - Customer Notice of Change of Telephone Company
Consistent with the requirements of FCC rules and Idaho Code §48-603D, this new rule requires customers to be notified of changes and specifies the content of that notice.
AT&T suggests elimination of this rule in its entirety because it is more onerous than FCC rules and would require AT&T to establish special procedures for Idaho.  AT&T also asks for clarification of the term “telecommunications service agreement” as used in Idaho Code §48-603D.
Brittan maintains that the proposed rule is too burdensome, might create more customer confusion, and it fails to consider less burdensome means of reducing the likelihood of consumer confusion and specifically objects to Subsection 608.d, which requires a separate customer notice regarding a change in telephone company.  It proposes as an alternative that the notice be included with the customer’s first bill, which Brittan states is more likely to command the customer’s attention and will be less costly to implement.
GTE supports this rule and states it is consistent with Idaho law.
MCI objects to Subsection 608.a because it claims it is anti-competitive.  MCI suggests that this a notice would add nothing to a customer’s ability to act, but could suggest to the customer that the new telephone company lacks confidence in its ability to provide excellent service.  MCI points out what it believes is a typographical error in Subsection 608.c., and recommends changing the word later to earlier.  However, Staff notes that this language comes directly from the Idaho statute.  Idaho Code §48-603D(3)(c). MCI also objects to Subsection 608.d because it argues it  is unduly burdensome, unnecessary and expensive to send a separate mailing for the sole purpose of advising the customer of the change of telephone company, in addition to its welcome package.  However, Staff notes that Idaho Code §48-603D(3)(d) requires any notice be a separate document sent for the sole purpose of advising the consumer of his or her entering into a telecommunications service agreement.
In view of AT&T’s, Brittan’s and MCI’s comments, Staff recommends the Commission amend the proposed Rule.
30.  Rule 609 - Customer Right to Select Different Telephone Company
No party submitted comments on this new proposed rule.  Staff recommends adoption of this rule as proposed.
31.  Rule 610 - Removing Charges for Improperly Changing a Customer’s Telephone Company
The text of the proposed rule is a slightly revised version of current Rule 603.
AT&T supports this rule.  Brittan notes that an interexchange carrier cannot move a customer to another interexchange carrier’s network; such a change can only be made by the customer’s LEC.  Therefore, in order to clarify whose responsibility it is to execute PIC changes, Brittan recommends a modification to the rule to clearly place that responsibility on the LEC.  Staff does not believe this is necessary.  
GTE maintains that LECs should not be required to waive PIC change charges if it means that the LEC must absorb the cost of executing the pre- or post-slamming PIC changes.  GTE suggests that the company that slams should be held liable for the charge.  Likewise, ITA suggests amending the rule to reverse the charges as to the customer but impose them on the slamming company.  Staff believes this is a function of the relationship between the LEC and the interexchange carrier.  These are customer relations rules designed to protect consumers.  MCI agrees that customers who are slammed should not be charged a fee for switching back to their previous carrier.  However, it recommends changes to clarify that the customer remains responsible for paying network usage charges and that customers who are slammed can have charges re-rated.  Staff does not believe this is necessary.  U S WEST suggests that customers be required to give notice to the telephone company within 90 days of incurring the charge to permit efficient administration of the credit requirement and that the company be required only to restore the customer’s prior carrier without charge and not to permit him to select a new carrier.  
STAFF RECOMMENDED CHANGES TO THE PROPOSED RULES
Staff’s recommended additions to the proposed rules are shown in bold and underlined. Its recommended deletions are shown bold brackets with strikeout.  
205.BILLING PROHIBITED (Rule 205).
Telephone companies are prohibited from billing for unanswered or unaccepted telephone calls, telephone calls placed to a toll-free number, or telephone service or other service(s) or merchandise not ordered or otherwise authorized by the customer of record. Any charges for these services that appear on a customer’s bill shall be removed from the customer’s bill no later than two (2) billing cycles following notice to the telephone company. A telephone company that unknowingly submits a bill containing charges for unanswered or unaccepted telephone calls, telephone calls placed to a toll-free number, or telephone service or other service(s) or merchandise not ordered or otherwise authorized by the customer of record shall not be considered in violation of this rule if the disputed amounts are removed from the customer’s bill.
(BREAK IN CONTINUITY OF SECTIONS)
207.BILLING FOR OTHER SERVICES (Rule 207).
Telephone company bills for other services shall contain the mailing address(es) or toll-free telephone number(s) available to customers for answering inquiries and resolving complaints about the services billed, sufficient information to readily identify the service provider, the services rendered, and the associated specific charges for which the bill is tendered [and a statement that local exchange service may not be disconnected due to nonpayment of charges related to these services].
208.NOTICE CONCERNING APPLICATION OF PAYMENTS AND DISCONNECTION (Rule 208).
All bills shall contain a notice that partial payments will be applied toward local exchange service charges first, unless the customer requests otherwise [,and that additional payments will be allocated among the remaining providers based upon the ratio of the undisputed amount due each service provider to the undisputed total amount billed.  Such payments shall be applied first to the oldest undisputed balance.] All bills shall also contain notice that local exchange service may not be disconnected due to nonpayment of charges related to other non-local exchange services, including MTS services.
(BREAK IN CONTINUITY OF SECTIONS)
306.CONTENTS OF NOTICE OF INTENT TO TERMINATE LOCAL EXCHANGE SERVICE (Rule 306).
The written or oral notice of intent to terminate local exchange service required by Rule 304 must
state: (1-5-95)
06.Partial Payments.  That for purposes of disconnection, partial payments will be applied toward local exchange service charges first, unless the customer requests otherwise, and [that additional payments will be allocated among the remaining providers based upon a ratio of the undisputed amount due each service provider to the undisputed total amount billed, and] that charges for services other than local exchange services cannot be used as a basis for disconnection; and
(BREAK IN CONTINUITY OF SECTIONS)
312.03PAYMENT ARRANGEMENTS (Rule 312).
03.Application of Payment. Payments are to be applied first to the undisputed balance owed by the customer for local exchange service [first] and associated installation charges, taxes and surcharges, unless the customer designates otherwise.  A customer may designate how a payment insufficient to pay the total balance due shall be applied.  In the absence of customer instruction, in those instances where a payment is sufficient to pay the totalbalance owed by the customer for local exchange service, the remaining partial payment shall be allocated among the other services based upon the ratio of the undisputed amount due each service provider to the undisputed total amount billed. Such payments shall be applied first to the oldest undisputed balances.  
(BREAK IN CONTINUITY OF SECTIONS)
313.02LOCAL EXCHANGE SERVICE NOT DENIED OR TERMINATED FOR BILLS FOR MTS OR OTHER SERVICES (Rule 313).
[02.Any LEC unable to provide local exchange services while denying or terminating MTS or other services may request an exemption from the Commission on an exchange by exchange basis by fully documenting the technical reasons for its inability to comply].
314.DENIAL, RESTRICTION,ANDCANCELLATION[MODIFICATION] OR TERMINATION OF MTS OR OTHER SERVICES (Rule 314).
01.Telephone companies providing MTS or other services must comply with Rules 301, 303, 311.03 and .04, and 312 in connection with denial, restriction, cancellation [modification] or termination of those services. Telephone companies providing MTS or other services must provide reasonable notice before terminating or restricting access to such services, except as provided by Rule 303.  Telephone companies providing MTS must provide reasonable notice before [modifying] canceling a customer’s existing service.  Nothing in this rule abrogates customers' rights under those telephone companies' tariffs or filings, written agreements with customer, or obligations otherwise imposed by statutory or common law.
(BREAK IN CONTINUITY OF SECTIONS)
401.02COMPLAINT TO TELEPHONE COMPANY (Rule 401).
02.Obligations for Billing Disputes. A local exchange company that bills and collects for other entities is responsible for either addressing complaints for all services and merchandise billed or[and] for providing the customer with the mailing address(es) or  toll-free telephone numbers so the customer may contact the supplier of services or merchandise billed. If the customer informs the LEC that another company's charge is disputed, the LEC must stop any payment allocations to the disputed charge. The disputed charge must be permanently removed from the LEC's bill no later than two billing cycles following the billing cycle during which the complaint is registered unless the customer agrees to pay the disputed bill prior to that time.
(BREAK IN CONTINUITY OF SECTIONS)
404.RESPONSES TO INFORMAL COMPLAINTS (Rule 404).
Within ten (10) business days of receiving notification from the Commission that an informal complaint involving the company has been filed with the Commission, telephone companies must either respond orally or in writing to the Commission.  A telephone company will be granted an extension of time to prepare its response if it demonstrates that it is making a good faith effort to resolve the matter in dispute.   A full and complete response should be submitted to the Commission no later than thirty (30) days after receipt of notification from the Commission.
(BREAK IN CONTINUITY OF SECTIONS)
504.LOCAL EXCHANGE SERVICE INSTALLATION STANDARDS (Rule 504).
01. Response to Customer or Applicant Service Orders.  Unless the applicant or customer requests a later installation time, each telephone company providing local exchange service shall complete the installation of a primary line to provide local exchange service within five business days after receipt of an application or customer request when all pertinent tariff requirements have been met by the applicant or customer.  In those instances where an applicant or customer orders service more than five (5) business days prior to customer’s requested due date, that date shall be the due date for the purposes of this rule.  If the telephone company does not provide service within the times required by this subsection, the local exchange company must credit the customer’s account for an amount equal to the service installation charge plus [the rate for one (1) month of basic local exchange service]a minimum of twenty dollars ($20.00).  Dating from the customer’s assigned or requested due date, for each subsequent thirty (30) day period that the telephone company does not provide service, the customer shall receive an additional credit [equal to the monthly rate for one (1) month of basic local exchange service] of a minimum of twenty dollars ($20.00).
03.Extenuating Circumstances.  If the delay in providing local exchange service is caused by natural disaster or causes not within the telephone company’s control or by conditions where the personal safety of the company employees would be jeopardized, the telephone company is not required to provide credit referred to in Subsection 504.01.  A “cause not within the telephone company’s control” includes delays directly related to the need to construct [providing serviceto a previously unserved area that require construction of] additional plant or lines to accommodate that service because the area does not have sufficient facilities to provide basic local exchange service to customers.  This does not include situations where the telephone company is already providing basic local exchange service to an area but existing facilities have been exhausted.
(BREAK IN CONTINUITY OF SECTIONS)
608.CUSTOMER NOTICE OF CHANGE OF TELEPHONE COMPANY  (Rule 608).
The telephone company initiating the change of telephone company shall give notice to the customer that the customer’s telephone company has been changed.  The notice may not be sent in conjunction with a contest, solicitation or inducement to change telephone companies.  The notice shall:
COMMISSION DECISION
Does the Commission want to issue the proposed rules as originally proposed or to modify those original proposals?
______________________________
Beverly Barker
______________________________
Cheri Copsey
u:\wpfiles\dmemo\41-01.dec
FOOTNOTES
1:
 Order No.  27715 in Case No. GNR-T-98-7 designated the following services as “universal services” that must be offered and provided by telecommunications carriers eligible to receive 1998 Universal Service Fund support: voice grade access to the public switched network; local usage; dual tone multi-frequency signaling or its functional equivalent; single-party service or its functional equivalent; access to emergency services where available; access to operator services, interexchange service, and directory assistance; and toll limitation.
2:
 In Order No.  27715 in Case No.  GNR-T-98-7, the Commission did not make a decision regarding how many lines will be supported by USF.  It stated that “when the Commission determines how to calculate forward-looking economic costs, the Commission will necessarily examine the forward-looking costs of supporting additional residential connections or multiple connection businesses.”  Order No.  27715 at  9.
3:
Order No.  26303, Case Nos.  U S WEST-N-95-2 and U S WEST-S-95-8, contained a footnote mentioning the disagreement between Staff and U S WEST regarding the proper method of calculating the percentage used in
U S WEST’s service outage compliance reports.  The footnote states, “in calculating the compliance standard, the Staff uses the total number of out-of-service trouble reports.  In its calculation, U S WEST adjusts the number of out-of-service trouble reports by removing those reports of service trouble beyond its control....The difference between the two methodologies has produced calculations that vary by as much as 20 percentage points.  For purposes of this inquiry and without deciding this issue, the Commission has utilized the Company’s calculations.”  Order at 2.