20091228Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BARNO. 6864
RECE C
2nU9 GEC 28 PM 4: 09
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
TIME WARNER CABLE INFORMATION )
SERVICES (IDAHO), LLC FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY TO PROVIDE LOCAL )
EXCHANGE AND INTEREXCHANGE )
TELECOMMUNICATIONS SERVICES )
WITHIN THE STATE OF IDAHO )
CASE NO. TIM- T -08-01
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff ofthe Idaho Public Utilties Commission, by and through its
attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 30958 on December 4,2009,
in Case No. TIM-T-08-01, submits the following comments.
THE APPLICATION
On November 14, 2009, Time Warer Cable Information Services (Idaho), LLC (TWCIS)
fied an Application for a Certificate of Public Convenience and Necessity (CPCN) to provide
competitive facilties-based local and interexchange telecommunications services within the State
of Idaho. In the Application, TWCIS states that it is a competitive telecommunications company
that intends to offer intrastate telecommunications services for commercial and wholesale
customers statewide. Application at 2.
STAFF COMMENTS 1 DECEMBER 28, 2009
TWCIS is a registered foreign limited liabilty company in good standing with the Idaho
Secretary of State's Office. TWCIS is wholly owned by TWC Digital Phone, LLC and
incorporated in the State of Delaware with its principal address located in Stamford, Connecticut.
The Company's registered agent for service in Idaho is CT Corporation System. Id.
The Company's source of capital funds wil be provided by Time Warer Cable Inc. as
memorialized in a letter signed by an offcer of the company. Id., Exhibit 4. A 2007 Annual
Report for Time Warer Cable Inc. containing financial information was included in the
Application. Id., Exhibit 5. An ilustrative price list was included. Id., Exhibit 6. TWCIS asserts
the Company has reviewed all of the Commission rules and agrees to comply. Id. at 7.
Following the initial review of the Application, Staff advised TWCIS that as a provider of
commercial and wholesale services, a CPCN was neither applicable nor necessary to conduct
business in Idaho. TWCIS was advised that the services described in the Application did not
meet the definition of basic local exchange service as defined in Idaho Code § 62-603( 1 )(9)(11). i
During a face-to-face meeting, the TWCIS representatives agreed that the Company was a
wholesale and not a retail service provider. Staff informed the Company that the CPCN
Application was a registration process for basic local exchange service providers similar to water
and energy utilties. The absence of a CPCN does not preclude TWCIS from entering the Idaho
market as a wholesale service provider, nor should it prevent the Company from entering into
interconnections agreements. After numerous emails, and conversations, TWCIS elected not to
follow Staffs suggestion to withdraw the Application, but instead, submitted a supplement to the
Application.
i Idaho Code § 62-603(1) "Basic local exchange service" means the provision of access lines to
residential and small business customers with the associated transmission of two-way interactive
switched voice communications within a local exchange callng area.
Idaho Code § 62-603 (9) "Residential customers" shall mean persons to whom
telecommunication services are fuished at a dwellng and which are used for personal or
domestic puroses and not for business, professional or institutional puroses. Idaho Code
Idaho Code § 62-603 (11) "Small business customers" shall mean a business entity, whether an
individual, parnership, corporation or any other business form, to whom telecommunications
services are furnished for occupational, professional or institutional purposed, and which business
entity does not subscribe to more than five (5) access lines which are biled to a single biling
location.
STAFF COMMENTS 2 DECEMBER 28, 2009
The Supplement to the Application
On November 9,2009, TWCIS fied a supplement to the Application to set forth
additional reasons why TWCIS should be granted a CPCN. These are: (1) TWCIS has met the
requirements for a CPCN; (2) TWCIS has proposed to offer a Basic Local Exchange Service; (3)
Nothing in Title 62 remotely prohibits the grant of a CPCN to TWCIS; and (4) Section 253 of the
Communications Act, backed by federal and state policies favoring competition, precludes a
narow reading of Title 61 and 62. Supplement at 3-10.
BACKGROUND
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 Title 62 of the Code that created
a modified form of regulation for telecommunications companies providing other than basic local
exchange services in Idaho. Those telecommunications companies intending to offer only non-
basic local exchange service (e.g. 6 or more business lines, MTS, dedicated service) need not
apply for a certificate, but must comply with the fiing requirements of Idaho Code § 62-604.
When the federal Telecommunications Act of 1996 (the Act) became law, one of the
purposes of the Act was to foster competition in the local telecommunications market. To address
the ensuing Applications to provide basic local exchange services in a consistent manner, the
Commission issued procedural Order No. 26665 outlining the requirements for a company to
provide services within the state ofIdaho pursuant to Idaho Code §§ 61-526 through 61-528 and
IDAPA3L.0L.0L.111 (Rule 111) andIDAPA 3L.0L.0L.114 (Rule 114). Rule 111 applies to
Applicants for the issuance of CPCNs as a new utilty under Section 61-526, Idaho Code.
Applications for new competitive local exchange carrers (CLEC) are addressed in Rule 114
(adopted on May 8, 2009) and applies to the issuance ofCPCNs to CLECs seeking to provide
local exchange services in Idaho.
In 2005, the Idaho Legislature passed House Bil No. 224. This bil "amends and adds to
existing law to authorize a telephone corporation to elect to have all or part of the
telecommunications services excluded from regulation pursuant to Title 61, Idaho Code, and to be
subject to regulation pursuant to Chapter 6, Title 62, Idaho Code; to authorize the Public Utilties
Commission to regulate telephone corporations for the purpose of implementing the Federal
Communications Act of 1996 (the Act); and to provide the Public Utilties Commission with
STAFF COMMENTS 3 DECEMBER 28, 2009
authority to determine noneconomic regulatory requirements for telephone corporations providing
basic local exchange service..."
STAFF ANALYSIS
Before embarking on any detailed discussion ofTWCIS's Application and the arguments
concerning its right to be granted a CPCN, there is a threshold question to be addressed.
In its Application, TWCIS admits to being a wholesale provider. Application at 2 and
supplement at 5. This means that the Company provides its services to retail companies and not
to the public or end users. Looking at the definition of "telecommunication service" in Idaho
Code §§ 6l-121(2) or 62-603(13), the definition states that "telecommunications service means
the transmission of two-way interactive switched signs, signals, writing, images, sounds,
messages, data, or other information of any nature by wire, radio, lightwaves, or other
electromagnetic means (which includes message telecommunication service and access service),
which originate and terminate in this state, and are offered to or for the public, or some portion
thereot for compensation (emphasis added)." Because TWCIS does not offer service directly to
the public, the service cannot then be considered telephone service within the definition of Idaho
Code. Because the Company does not offer telephone service, it then canot be considered a
"telephone corporation" in accordance with that definition in Idaho Code §§ 61-121(1) or
61-603(14). Because it is not a telephone corporation in accordance with Idaho Code, any further
discussion of the Application is moot.
That said, Staffwill stil address some ofTWCIS's points, arguendo, to provide further
clarification. In the supplement to the Application, TWCIS argues that the company meets the
requirements for a CPCN, and in fact, the Commission must grant a CPCN to the Company. Staff
addresses each of the four arguments posed by TWCIS in its supplement.
1. TWCIS has met the requirements for a CPCN. TWCIS asserts that it has met and
satisfies the requirements set in Commission Order No. 26665 to be granted a CPCN in Idaho.
Supplement at 3-4.
Staff agrees all requisite information has been provided by TWCIS.
II. TWCIS has proposed to offer a basic local exchange service. The company states that
"through informal discussion with the Commission Staff, it understands Staff is not inclined to
recommend grant of a CPCN because TWCIS has not included basic local exchange services
STAFF COMMENTS 4 DECEMBER 28, 2009
among its proposed tariff service offerings." TWCIS argues that in fact "TWCIS has proposed to
offer a service that should be considered a form of basic local exchange service." Id. at 4. Citing
Idaho Code § 62-603(1) and IDAPA 31.42.01.005.01, the Company maintains it falls within the
parameters of stated statutory definition in its description that "Local Interconnection Service will
be offered on a wholesale basis to facilties-based providers of interconnected VoIP service and
wil provide, among other things, the transport and termination of voice calls within a local
callng area. These services wil be used to connect TWCIS customers to the PSTN, thus
enabling two-way interactive switched voice communications within the relevant local exchange
callng area using soft switch technology." Id. at 5. The Company concludes, "(t)hus, TWCIS's
services will enable other service providers to offer residential and small business customers a
competitive choice in telephone services, which in turn wil lead to consumer benefits in the form
of reduced rates and increased quality of service." Id.
TWCIS's definition of basic local exchange service is not the same as the statutory
definition found in Idaho Code § 62-603(1). Specifically, basic local exchange service means
"the provision of access lines to residential and small business customers with the associated
transmission of two-way interactive switched voice communications within a local exchange
callng area." That is not the same as providing service to a company that is going to provide
service to residential and small business customers. The Commission does not have Title 61 and
Title 62 jurisdiction in cases where a company's services are offered on a wholesale basis through
interconnection agreements. Staff believes TWCIS's interpretation of "offering" basic local
exchange service is an inaccurate application of the statute. TWCIS is attempting to equate
wholesale interconnection services to directly providing basic local exchange service.
II1. Nothing in Title 62 remotely prohibits the grant of a CPCN to TWCIS. The Company
recounts that in its discussion with Staff, it was stated that TWCIS must provide a basic local
exchange service to obtain a CPCN because Idaho Code § 62-604(1)(a) provides that telephone
corporations that did not have a CPCN as of January 1, 1988 and that do not provide basic local
exchange services shall be subject to Title 62 and further shall be exempt from Title 61. Id. at 6.
The Company argues that an "exemption from the requirements of Title 61 doe not mean that an
entrant is foreclosed from voluntarily seeking certification under that title as there is no provision
of Idaho law that explicitly limits the grant of a CPCN to a carier that provide basic local
exchange service." Id. TWCIS believes a "review of the legislative history of Title 62 shows that
STAFF COMMENTS 5 DECEMBER 28, 2009
its primar purose was to allow certificated rate-regulated telephone corporations to elect
whether to remain rate regulated for telecommunications service other than basic local exchange
services and did not contemplate and was not designed to address the wholesale
telecommunications services that TWCIS intends to provide." Id. at 6-7. TWCIS states, "
nothing in the legislative history of the 1988 legislation or the 2005 amendment ( s) thereto
remotely suggest that a competitive carier providing a service other than basic local exchange
service should be precluded (emphasis TWCIS) from obtaining a CPCN." Id. at 7.
The Commission issues certificates to CLECs seeking to provide basic local exchange
services in Idaho. The Commission uses the certification process to register and review
applications from companies that provide basic local telecommunications services. All other
service providers are exempt from this process.
IV. Section 253 of the Communications Act Precludes a Narrow Reading of Titles 61 and
62. TWCIS asserts that "while a straightforward application of the relevant provisions support
granting a CPCN, the Company's entitlement to a certificate is all the more clear in light of (a)
Section 253 of the Communications Act of 1934, as amended (the Act), which prohibits bariers
to entry, and (b) the strong federal and state policies favoring entry by facilties-based competitors
such as TWCIS." Id. The Company contends that "finding TWCIS ineligible for a CPCN based
on a cramped reading of Titles 61 and 62 would run afoul of federal law and undercut importnt
policy objectives." ¡d.
Idaho statutes allow easier entry into the market than the Act. Therefore, the Commission
canot be considered guilty of "running afoul" of federal law and "undercutting important policy
objectives" if a certificate is not granted, as suggested by TM1. Id. at 8. While TWCIS's
argument concerning Section 253 is imaginative, it simply makes no sense. Staff does not see
how the state's lack of regulatory requirements, that is, no need for a CPCN or price list, can be
viewed as a barier to entry. It should be noted that the Commission hàs issued over 100
certificates.
SUMMARY
Staff is somewhat perplexed by this Application in that most telecommunications
companies seek reduced oversight, yet TWCIS, in its Application, is seeking the opposite--more
regulatory oversight then the Staff believes is waranted.
STAFF COMMENTS 6 DECEMBER 28, 2009
As a threshold question, Staff believes TWCIS does not meet the definition of a telephone
corporation as defined in Idaho statutes and, therefore, is not subject to regulation under Title 61
or Title 62.
STAFF RECOMMENDATION
Staff does not believe the Commission has authority over TWCIS under Title 61 or Title
62, and therefore, recommends that the Commission dismiss Time Warer Cable Information
Systems (Idaho), LLC's Application for a Certificate of Public Convenience and Necessity.
Respectfully submitted ths ~ of December 2009.
f~
Neil Price
Deputy At!orney General
Technical Staff: Grace Seaman
i:umisc:commentsitimt08.1 npgs comments
STAFF COMMENTS 7 DECEMBER 28, 2009
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF DECEMBER 2009,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. TIM-T-08-01, BY MAILING A COpy THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
GARY WENGROFSKY
MANAGER REGULATORY
TIME WARNER CABLE INC
290 HARBOR DR
STAMFORD CT 06902
i ia~rmXSECRETARY '"
CERTIFICATE OF SERVICE