20001103_jh.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
TONYA CLARK
DON HOWELL
LYNN ANDERSON
RANDY LOBB
JOE CUSICK
BIRDELLE BROWN
BEVERLY BARKER
WORKING FILE

FROM: JOHN R. HAMMOND
DATE: November 3, 2000
RE: CASE NO. TWT-T-00-1, APPLICATION OF TIME WARNER TELECOM OF IDAHO, LLC FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY

On October 2, 2000, Time Warner Telecom of Idaho LLC (“Time Warner”) filed an Application for a Certificate of Public Convenience and Necessity to operate as a provider of facilities-based basic local exchange telecommunications services within the state of Idaho. Time Warner also intends to provide resold intrastate interexchange services. Time Warner is a limited liability company organized in the State of Delaware on September 6, 2000. The sole member of Time Warner is Time Warner Telecom Holdings Inc., a Delaware corporation with its principal business office located in Littleton, Colorado. Time Warner Telecom Holdings, Inc. is a wholly-owned affiliate of Time Warner Telecom, Inc. which is a nationwide provider of facilities-based local exchange telecommunications services and a reseller of interexchange services.
In order to provide these services to its customers in Idaho, Time Warner proposes to utilize the assets of GST Telecom of Idaho which it has arranged to purchase through a bankruptcy auction. The parent company, Time Warner Telecom, Inc. and GST plan to close this transaction, nationwide, on or about December 1, 2000. Time Warner also explains in its Application that because of GST’s precarious financial condition, it is of critical importance that the asset sale be complete at the earliest possible time to avoid cessation of service to GST’s current customers. Accordingly, Time Warner requests that this Commission consider this Application on an expedited basis. On October 18, 2000, the Commission issued a Notice of Application, Notice of Modified Procedure which required all written comments to be filed by the parties on or before November 1, 2000. Order No. 28546. The Commission Staff was the only party to file written comments.
BACKGROUND
Time Warner has applied for authority to provide facilities-based local exchange service, including, but not limited to broadband data and voice services, to business customers throughout Idaho. Time Warner proposes to provide access to intraLATA and interLATA message toll calling, operator service, directory assistance, directory listings and emergency services such as 911 and E-911 through its own operations or by purchasing those service. Time Warner asserts that it is amply qualified legally, financially and technically to continue provision of telecommunications service in Idaho using the assets acquired from GST. Time Warner is prepared to commence service to GST’s customers as soon as it has obtained all federal and state regulatory approvals, including this Commission’s grant of a certificate of public convenience and necessity. Time Warner will not need to construct any facilities prior to commencing service in Idaho.
As part of the Asset Purchase Agreement, the parent company, Time Warner Telecom Inc. will acquire the right to assume any interconnection agreements entered into between GST Telecom Idaho, Inc. and local exchange carriers. The Company will have interconnection agreements in place at the time it acquires GST Telecom Idaho’s assets and commences operations in Idaho, either by using agreements assumed from GST Telecom Idaho, opting into other approved agreements, or negotiating its own agreements. Following the acquisition, Time Warner plans to commence negotiations with incumbent local exchange carriers looking toward execution of its own agreements based upon its perception of what arrangements best comport with its business plan and its strategic objectives.
As a newly formed organization, Time Warner does not have financial statements for the previous year. Time Warner relies on the financial resources of Time Warner Telecom, Inc., the Applicant’s parent company, to fund its operations in Idaho. Through its relationship with its parent company, Time Warner Telecom, Inc. (a publicly-traded corporation whose largest shareholder is Time Warner, Inc.), Time Warner Telecom of Idaho, LLC has access to the financing and capital necessary to conduct its telecommunications operations as specified in this Application. Time Warner’s most recently filed SEC statements show Time Warner Telecom, Inc. to be a corporation with more than $1 billion in assets and a favorable debt-equity ratio.
Time Warner has acknowledged the Commission’s requirement in Order No. 26665 that companies that require advance deposits from their customers must establish an escrow account. Time Warner will require advance deposits from some of its customers and is in the process of establishing an escrow account.
Time Warner advises that the public interest would be served by the issuance of this Certificate, first by maintaining and enhancing competition in the local exchange marketplace in Idaho, second, by providing subscribers with higher quality service and enhanced user features and third, by increasing customer choice.
1. Exemption Requested
Time Warner has reviewed and agrees to comply with Commission Rules, except that it has asked the Commission to grant it an exemption from Commission Rule 31.41.01.601 (Rule 601) which requires each local exchange company to provide all customers with one local exchange directory per access line. The Company proposes to include its customers in the incumbent local exchange company directories and will ensure that these directories will be distributed to its customers. This benefits customers since they will need to refer to only one directory for a universal listing of customer information. Time Warner asserts that it would be an unreasonable hardship on Time Warner to require that it publish and distribute its own directory to all customers located within each exchange area.
Rule 601 requires “each local exchange company [to] annually provide to all customers without charge at least one (1) local exchange directory per access line” that includes the name, address and telephone number of each customer subscribing to local exchange service for that directory’s exchanges. The directory must also include the name, address and toll-free number of the serving local exchange company and the name, address and telephone number of the Commission, along with information regarding dispute information. It is Staff’s opinion that the Rule does not require each serving LEC to publish its own directory. Staff believes Time Warner's proposed method of providing directories and listings falls within the provisions of Rule 601 and does not require an exemption.

STAFF RECOMMENDATION
Staff recommends that Time Warner of Idaho, LLC be granted a Certificate of Public Convenience and Necessity to provide local service throughout the State of Idaho. Additionally, Time Warner indicated that it is in the process of securing an escrow account to cover its advance deposits in accordance with Order No. 26665. Staff recommends that this Certificate be made contingent upon receipt of evidence of this escrow account.
Staff further recommends that Time Warner’s request for an exemption from the Commission’s Rule 31.41.01.601 (Rule 601) be denied because an exemption is not necessary, as the intent of the Rule is simply to ensure that CLEC customers be included in and receive local directories, not that the CLEC must publish its own.
Commission Decision
Does the Commission wish to grant Time Warner Telecom of Idaho’s Application for a Certificate of Public Convenience and Necessity, subject to evidence of the establishment of an escrow account
Does the Commission wish to deny Time Warner’s request for an exemption from Commission Rule 31.41.01.601?

John R. Hammond

M:twtt001_jh
On May 17, 2000, GST filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1330, in the United States Bankruptcy Court for the District of Delaware. In this reorganization GST, under supervision of the Court, conducted an auction to accomplish the sale of substantially all of its assets. Through this process Time Warner Telecom, Inc. and GST entered into an Asset Purchase Agreement whereby the former will purchase substantially all of GST’s assets in the United States. This agreement was approved by the United States Bankruptcy Court for the District of Delaware on September 21, 2000. Case No. 00-1982, Docket No. 658 (Bankr. D. De. 2000).

DECISION MEMORANDUM 4