20100709Post-Hearing Brief.pdf

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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
20m JUL -9 PH~: ~2
)
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
POST -HEARING BRIEF OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and
through its attorney of record, D. Neil Price, Deputy Attorney General, and, pursuant to
the Commission's directive, does hereby submit Staffs Post-Hearing Brief objecting to
Time Warer Cable Information Services (Idaho), LLC's Petition for Reconsideration.
PROCEDURAL HISTORY
On November 14, 2008, Time Warer Cable Information Services (Idaho), LLC
("TWCIS" or "Company") filed an Application for a Certificate of Public Convenience
and Necessity ("CPCN") pursuant to Idaho Code §§ 61-526 through 528, IDAPA
31.01.01.111 and Idaho Public Utilties Commission ("Commission") Order No. 26665 to
provide competitive facilities-based local and interexchange telecommunications services
within the state ofIdaho.
On November 14, 2009, the Company filed a Supplement to its Application
("Supplemental Application").
On December 4, 2009 the Commission issued a Notice of Application and
Modified Procedure. Thereafter, Commission Staff was the only pary to submit written
comments regarding TWCIS' Supplemental Application. Subsequently, Staff and
POST-HEARING BRIEF 1
representatives of the Company entered into another series of discussions during which
the paries agreed that TWCIS would be permitted to issue a written reply to Staffs
comments. On January 29, 2010, TWCIS submitted a written response to Staffs
comments.
On February 23, 2010, the Commission issued an Order denying TWCIS'
Application for a CPCN. See Order No. 31012. On March 16, 2010, TWCIS filed a
Petition for Reconsideration of the Commission's Order.
Thereafter, TWCIS and Staff submitted direct testimony and TWCIS submitted
rebuttal testimony. On June 10, 2010, the Commission held an oral hearing regarding
TWCIS' Petition for Reconsideration and ordered the paries to submit simultaneous
post-hearing briefs on the legal issues presented by TWCIS' Application for a CPCN in
Idaho.
STATEMENT OF JURISDICTION
"The (Commission) is hereby vested with power and jurisdiction to supervise and
regulate every public utilty in the state." Idaho Code § 61-501. The Commission has
the authority to issue a CPCN to either a "street railroad corporation, gas corporation,
electrical corporation, telephone corporation or water corporation. . ." Idaho Code § 61-
526.
Specifically, the Idaho legislature has delegated to the Commission the authority
to administer the Telecommunications Act of 1988, as amended ("the Idaho Act"), and
applicable federal law. Idaho Code § 62-602(5). A provision in the Idaho Act exempts
from Title 61 regulation certain "telephone corporation(s) which did not, on Januar 1,
POST-HEARING BRIEF 2
1988, hold a certificate of public convenience and necessity issued by the commission
and, which does not provide basic local exchange service. . ." ie. § 62-604(l)(a).
The Commission "issues Certificates of Public Convenience and Necessity to
competitive local exchange carriers (CLECs) seeking to provide local exchange services
in Idaho." Commission Rules of Procedure 114, IDAPA 31.01.01.114. "The
Commission uses the certification process to register and review applications to provide
local telecommunications services." Id.; see also Commission Order No. 26665.
SUMMARY OF ARGUMENT
TWCIS is not entitled to a CPCN because the Commission lacks the requisite
statutory authority to issue a Certificate to the Company. TWCIS is not a telephone
corporation, as the term is defined by Idaho and federal law, because its business plan
does not contemplate the offering of its wholesale telecommunications services directly
to the public. The Commission's authority to enforce the provisions of the Idaho Act is
limited to the authority delegated to the agency by the Idaho legislature. The
Commission should avoid the appearance of regulatory authority where none exists. The
Commission's interpretations of the application of the statutes and rules at issue in this
case are reasonable and are entitled to deference.
TWCIS' Application for a CPCN can be distinguished from other CPCN
Applications fied with the Commission. Nevertheless, TWCIS' Application should be
evaluated on its own merits. While the Commission has granted CPCN's to other
wholesale providers, these Certificates were dispensed to providers proposing to offer
basic local exchange services and are now awarded subject to strict conditions to ensure
the preservation of Idaho's dwindling numbering resources. TWCIS should not be
POST-HEARING BRIEF 3
allowed to effectively step into the shoes of other successful Applicants and adopt their
Applications as their own.
TWCIS' inabilty to secure an interconnection agreement is not relevant to the
Commission's review of whether TWCIS should be granted a CPCN. TWCIS has failed
to take advantage of specific remedies provided for by the Commission's Rules of
Procedure and Idaho law, including the filing of a formal complaint against the offending
incumbent carer or a petition for a declaratory ruling, in order to secure an
interconnection agreement.
ARGUMENT
I. THE COMMISSION LACKS THE STATUTORY AUTHORITY TO ISSUE
A CPCN TO TWCIS.
1. TWCIS Does Not Qualif for a CPCN Because the Company Does not
Propose to Offer its Services Directly to the Public.
As stated above, the Idaho Act contains specific enabling language allowing the
Commission to administer the Idaho Act. See ie. § 62-602(5). However, the provisions
of the Idaho Act, and other Idaho statutes governing the telecommunications industry, are
only applicable to entities meeting the statutory definition of "telephone corporation(sJ."
See ie. § 61-121(1); ie. § 62-604(1)(a).
In Idaho, a telephone corporation is defined as "every corporation or person, their
lessees, trustees, receivers or trustees appointed by any cour whatsoever, providing
telecommunication services for compensation within this state. . ." ie. § 61-121(l); ie.
§ 62-603(14)(emphasis added). "Telecommunication service" includes the following:
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
POST -HEARING BRIEF 4
originate and terminate in this state, and are offered to or
for the public, or some portion thereof, for compensation.
ie. § 61-121(2); ie. § 62-603(13)(emphasis added). Similarly, the federal Act defines
'telecommunications service' as the "offering of telecommunications for a fee directly to
the public or ... effectively available directly to the public, regardless of the facilties
used. . ." 47 U.S.C. § 153(46).
In sworn testimony before the Commission, TWCIS representative Julie Laine
testified that TWCIS' business model in Idaho would include the sale of the Company's
"services to its retail VoIP entity, which wil provide services - VoIP services - to end-
user customers." Commission Hearing Transcript, June 10,2010, TIM-T-08-01, at p. 22,
lines 14-16. Ms. Laine explained that "the retail entity owns the last-mile facilities to the
customer. . . and is the retail unit that sells the service to the end user." Id., lines 17-20.
TWCIS "wil be essentially a carier's carer." Id. at p. 23, lines 1-2.
These admissions are consistent with the Company's November 9, 2009
Supplemental Application for a CPCN wherein TWCIS revealed its intent to operate in
Idaho as a wholesale provider of intrastate telecommunications services to its VoIP
provider customers. See Supplemental Application at p. 5.
Therefore, because TWCIS does not offer, nor does it have any curent plans to
offer, its telecommunications services directly to the public the Company does not meet
the definition of a telephone corporation. Notwithstading TWCIS' apparent desire and
consent to be subject to regulation, the Company falls outside the Commission's
jurisdiction and authority to regulate. "An administrative agency is a creature of statute,
limited to the power and authority granted it by the Legislature." Welch v. Del Monte
Corp., 128 Idaho 513, 514, 915 P.2d 1371, 1372 (1996). The Commission should not
POST-HEARING BRIEF 5
endeavor to read TWCIS into the relevant statutes and rules governing the issuance of a
CPCN and thereby create the appearance of regulatory authority where none exists.
a. The Commission's Interpretations of the Relevant Statutes at Issue in
this Case are Reasonable.
In its prior Order, the Commission interpreted that the plain language of I e. § 62-
604 "removed any discretion" from the Commission and that TWCIS was "specifically
exempted from the regulatory structure found in Title 61 of the Idaho Code." Order No.
31012 at p. 5. Court wil defer to an agency's interpretation of a statute or rule so long
as: "1 ) the agency is responsible for administration of the rule in issue; (2) the agency's
construction is reasonable; (3) the language of the rule does not expressly treat the matter
at issue; and (4) any of the rationales underlying the rule of agency deference are
present." Preston v. Idaho State Tax Comm'n, 131 Idaho 502, 504, 960 P.2d 185, 187
(1998). One of the rules of deference includes whether "a practical interpretation of the
rule exists." Id. at p. 505.
TWCIS argues that the legislative history of Title 62 demonstrates that the Idaho
legislature's purose in enacting ie. § 62-604 was to allow rate-regulated certificated
telephone corporations to elect whether to remain rate-regulated. TWCIS Petition at p. 9.
According to TWCIS, even if the Company is "exempt" from the provisions of Title 62
nothing in the definition of that word, "or Idaho Code § 62-604, requires an exempt pary
to forego, or precludes the Commission from faciltating benefits or advantages otherwise
available for similarly situated entities." Id.
TWCIS interpretations are nonsensicaL. They ignore the circumscribed nature of
the Commission's authority and suggest that an entity specifically exempted by the plain
language of a statute can later elect to be subject to that very same statute if it is in its
POST-HEARING BRIEF 6
interest to do so. In short, TWCIS is asking the Commission to exercise regulatory
authority over the Company so that it may share in the benefits or advantages offered to
other non-exempt entities.
2. TWCIS' Application for a CPCNShould be Strictly Limited to its Content.
In its Petition for Reconsideration, TWCIS alleges that the Commission's decision to
deny the Company a CPCN was unduly discriminatory because the Commission has
previously granted CPCN's to "carriers that proposed to provide services comparable to
those proposed by TWCIS." TWCIS Petition at p. 3-5. In making its argument of
disparate treatment, TWCIS specifically referenced the Applications of ALEC Telecom,
Inc. ("ALEC"), Case No. ALE-T-09-01, and Eltopia Communications, LLC ("Eltopia"),
Case No. ECL-T-07-01. Id. at p. 3-4.
Staff witness Grace Seaman noted in her direct testimony that "some companies,
that obtained certificates in the past, may have been wholesale services providers."
Hearing Transcript at p. 64, lines 3-5. However, Ms. Seaman explained that, upon
learning that some of these companies did not plan to offer local exchange services, the
Commission Staff began to recommend, and the Commission approved, CPCN's to these
companies "on a conditional basis." Id., lines 8-13. Certificates are now granted on a
conditional basis and companies like ALEC and Eltopia must agree to the following
conditions prior to receiving a CPCN:
compliance with the Number Pool Administrator and Order
No. 30425 mandating number resource utilization forecast
(NRUF) reporting; (2) contribution to the Idaho Universal
Service Fund, Idaho Telecommunications Relay System
(TRS) Idaho Telephone Assistace Program (IT SAP) and
any future reporting requirements deemed appropriate for
competitive telecommunications providers; (3) filing a final
and complete price list with the Commission containing all
POST-HEARING BRIEF 7
of its rates, terms and conditions; and (4) an agreement
from the Company to relinquish its certificate and any
telephone numbers if, within one year of the issuance of a
CPCN, the Company is not offering local exchange
telecommunications services in Idaho.
1
Id. at p.64-65, linesI4-25, lines 1-2; See also Case No. ALE-T-09-01 (Order No. 30944 at
3); Case No. BVN-T-09-01 (Order No. 31030), Case No. ENT-T-09-01 (Order No.
30950), Case No. ITN-T-09-01 (Order No. 30995) and Case No. MNT-T-08-02 (Order
No. 30794).
Anecdotally, Staff recalls that it held numerous discussions with representatives
for ALEC prior to submitting its recommendation that ALEC receive a CPCN to provide
local exchange telecommunications services in Idaho. During those discussions, ALEC
indicated that it intended to provide local exchange services to small business customers
and to eventually expand its offerings to include residential customers. This statement
was supported by the Company's ilustrative tariff and price list pages 50 through 52, and
on pages 47 through 49 in the Company's final tarff curently on fie with the Idaho
Public Utilties Commission. Among the various service offerings, the ALEC's tariff
lists monthly rates for: Business Exchange Access Line Service, optional custom callng
features, directory listings (including non-published and non-listed numbers), directory
assistance, busy line verification and interrpt service. These services are typically
associated with end-users. See Application of ALEC, Inc., Idaho PUC Tariff No. 1.
Thus, TWCIS' Application can be easily distinguished from ALEC. The
Company's representatives have explicitly stated that its intent was to be a provider of
wholesale services in Idaho, and the Company did not intend to offer end-user services.
i "These conditions were adopted after Eltopia was granted a certificate, and included in the order for
ALEC's certification." Hearing Transcript at p. 65, lines 3-5.
POST-HEARING BRIEF 8
The proposed price list submitted in TWCIS' Application and Ms. Laine's testimony at
hearing confirm this business strategy. Nothing in the TWCIS' proposed price list
suggests that the Company plans to offer end-user services. The only reference to end-
user services in the price list is a reference to employee rates where it states that the
"Company may offer special rates or rate packages to its employees or employees of its
affiliates." See Supplemental Application, Proposed Price List, page 41.
TWCIS also referenced the Application of Eltopia, Case No. ECL-T-07-01, as
support for its argument that the Commission's denial of its Application for a CPCN
constituted "blatant discrimination against TWCIS . .." TWCIS Petition at p. 5. In
response, Staff reiterates the assessment it made in its Comments regarding Eltopia's
2007 Application for a CPCN: "Eltopia's service has the capabilty to provide both voice
and data services over the same trunk, and in some cases, the customer may desire fewer
than five voice lines, which would qualify as basic local exchange service." See Staff
Comments, Case No. ECL-T-07-01 (emphasis added).
In contrast, TWCIS' Application and testimony before the Commission does not
reveal any promissory intent by the Company to offer services which would qualify as
basic local exchange service. Instead of offering "access lines (directly J to residential
and small business customers," ie. § 62-603(1), TWCIS "wil be essentially a carier's
carrer." Hearing Transcript at p. 23, lines 1-2. TWCIS' Local Interconnection Service
"wil be offered on a wholesale basis to facilities-based providers of interconnected VoIP
services. . ." and not to end use customers. TWCIS' Petition at p. 6 (emphasis added).
Serving as the wholesale provider of services that may ultimately qualify as basic
local exchange service once they are delivered by a third pary to residential and small
POST -HEARIG BRIEF 9
business customers does not constitute the provision of 'basic local exchange service,' as
outlined in Idaho Code § 62-603(l). See Staff Comments, Case No. TIM-T-08-01, at p.
5.
The Commission should evaluate TWCIS' Application based solely upon its
content and in accordance with the existing statutory criteria and legal authority.
Allowing TWCIS to bootstrap its Application to that of a successful Applicant would
create a dangerous and legally untenable precedent for the Commission. Fundamental
norms of due process embodied in the Idaho Administrative Procedures Act demand that
each Applicant be evaluated according to the merits of their own Application and not that
of another party. See ie. §§ 67-5201 et seq. Moreover, inasmuch as other "similarly
situated entities" have been granted a CPCN in contravention of Idaho Code, the
Commission is not bound by its prior rulings. See Commission Rule 326; IDAPA
31.01.01.326.
3. A CPCN is not a Prerequisite for Entry into the Idaho Telecommunications
Market.
TWCIS is not prejudiced by the Commission's decision to deny its Application
for a CPCN. The denial of the Application does not discourage "effective competition"
because it does not prevent TWCIS from obtaining interconnection with Incumbent Local
Exchange Carriers. See Idaho Code § 62-602 (emphasis added).
As the Commission noted in its Order, "a CPCN is not required for telephone
corporations offering non-basic local exchange services or to obtain interconnection with
the network of an Idaho ILEC." Order No. 31012. "Telephone corporations 'providing
other non-basic local exchange telecommunications services as defined in Idaho Code §
POST -HEARIG BRIEF 10
62-603' need only comply with the notice and price list or tariff requirements found in
Idaho Code §§ 62-604 and 62-606." Id.(citing Order No. 30991 at p. 3.)
TWCIS has acknowledged that Staff and the Commission support the Company's
quest to secure an interconnection with an Idaho ILEC. See Hearing Transcript at p. 27,
lines 22-25, p. 28, linesl-2. Indeed, TWCIS is not averse to petitioning a regulatory body
for a declaratory order establishing the Company's right to gain interconnection with
local exchange carriers and has done so at the federal leveL. See Time Warner Request
for Declaratory Ruling that Competitive Local Exchange Carriers May Obtain
Interconnection Under Section 25 J of the Communications Act of J 934, as amended, to
Provide Wholesale Telecommunications Services to VoIP Providers, Memorandum
Opinion and Order, 22 FCC Rcd (WCB 2007).
However, when queried as to whether TWCIS contemplated fiing a formal
complaint against Verizon for their alleged denial of interconnection in Idaho Ms. Laine
offered the following: "No, because they - it was related to the CPCN, so, no. . . (IJt was
our understanding ofVerizon's position that it's legitimate. . ." Hearing Transcript at p.
32, lines 18-23. Notwithstanding her previous acknowledgement that the Commission
has historically held that a CPCN is not required for interconnection, Ms. Laine seemed
to opine that only certificated CLECs are entitled to interconnection. See id., lines 23-25.
Ms. Laine's opinion is at odds with federal law and federal and state cour
decisions interpreting the federal Act. These cours have all confirmed that the federal
Act established an affirmative duty, owed by local exchange carriers, to provide
interconnection unless the incumbent carier can prove that the interconnection is not
"technically feasible." In re Ryder, 141 Idaho 918, 925, 120 P.3d 736, 743 (ldaho)(citing
POST-HEARING BRIEF 11
US West Communications, Inc. v. Jennings, 304 F.3d 950, 960-61 (9th Cir.2002); 47
C.F.R. § 51.305(e).
Thus, it is clear that there are existing avenues for relief which would allow
TWCIS to redress its apparent inabilty to secure an interconnection agreement in Idaho.
TWCIS has neglected to avail itself of the formal complaint process provided for by
Idaho law and in the Commission's Rules of Procedure. See ie. § 61-612; IDAPA
31.01.01.054. Additionally, TWCIS is permitted to petition the Commission for a
declaratory ruling pursuant to the Idaho Administrative Procedures Act. See ie. § 67-
5232. Both the complaint process and the petition for a declaratory ruling would most
likely lead to a favorable ruling from this Commission, not unlike the favorable decision
the Company received from the FCC, see supra p. 10-11, declaring that the Company
was entitled to interconnection with an incumbent carier.
CONCLUSION
Therefore, pursuant to the foregoing reasons and rationale described more fully
above Staff respectfully requests that the Commission affirm its prior ruling set forth in
Order No. 31012 and deny TWCIS' Petition for Reconsideration.
Respectfully submitted this 9th day of July 2010.
,
4:il Price
Deputy Attorney General
POST-HEARING BRIEF 12
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 9TH DAY OF JULY 2010,
SERVED THE FOREGOING POST-HEARING BRIEF, IN CASE NO. TIM-T-08-01,
BY EMAILING AND MAILING A COPY THEREOF, TO THE FOLLOWING:
GARY WENGROFSKY
MANAGER REGULATORY
TIME WARNER CABLE INC
60 COLUMBUS CIR FL 17
NEW YORK, NY 10023-5860
E-mail: twc.phone.complaints(ftwcable.com
JOHN R HAMMOND JR
FISHER PUSCH & ALDERMAN LLP
PO BOX 1308
BOISE ID 83701
E-mail: jrh(ffpa-Iaw.com
&JJ1. V~
SECRETARY
CERTIFICATE OF SERVICE