20050310_1106.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:WAYNE HART
DATE:MARCH 4, 2005
RE:REVISION TO INTRASTATE PIC CHARGES TO MATCH NEW
INTERSTATE CHARGES.
On February 17 2005 , the Federal Communications Commission released a Report and
Order (FCC 05-32) in its review of the charges imposed by local exchange carriers on end use
customers who change their presubscribed inter-exchange carrier (PIC) for interstate long
distance calls. These charges, which are known as PIC change charges, have remained at the
level established by the FCC in 1984 when such charges were first imposed. At that time, the
FCC established a safe harbor of $5.00 for a PIC change fee. Under the safe harbor, companies
could tariff a charge of up to $5.00 without providing cost studies. If a carrier desired to tariff a
higher charge, they had to provide cost support to justify the higher amount.
In 2002 , the FCC initiated a study to determine whether the $5.00 amount was still
reasonable. In its recent Order, the FCC established a two-tiered safe harbor with the amount of
the safe harbor increasing to $5.50 for manually processed PIC changes, and a separate safe
harbor of $1.25 for electronically processed PIC changes.
The FCC's new safe harbor applies only to PIC changes for interstate long distance.
IntraLATA PIC (LPIC) change charges are tariffed at the state level, and not subject to the
FCC's Order. However, the costs a carrier incurs for changing an LPIC are essentially the same
as for changing a PIC. The FCC's analysis indicated that when both PIC and LPIC are changed
at the same time, there was essentially no increase in cost. The FCC's Order indicates that the
safe harbor rate for a PIC change requested in conjunction with an LPIC change would be 50%
DECISION MEMORANDUM - 1 -MARCH 4, 2005
of the rate for a PIC change requested separately. The FCC expected the LEC to recover the
remaining costs from the state tariffed LPIC charge.
Although the Idaho Commission has not formally established a safe harbor rate for LPIC
change charges, it has established a precedent of approving a rate that is within the FCC's safe
harbor of $5.00 without requiring the company to submit detailed cost support.
STAFF ANALYSIS
When the new rates for interstate PIC change charges become effective, there will be a
lack of consistency between the charges for changing PICs and LPICs. If LPIC change charges
remain unchanged, based upon the FCC's analysis, local exchange carriers would be over-
compensated for electronically processed LPIC changes, and under-compensated for manually
processed LPIC changes.
STAFF RECOMMENDATION
Staff recommends that the Commission open a docket to examine LPIC change charges
specifically investigating whether the IPUC should adopt a safe harbor rate for such charges and
whether the FCC's new rates are appropriate. Staff recommends that this be processed under
modified procedure, and recommends a comment period of four weeks.
COMMISSION DECISION
Does the Commission wish to open a docket to consider LPIC change charges?
If so, is modified procedure with a four-week comment p d appropriate?
i :udmemos/pic change charge dm
DECISION MEMORANDUM - 2-MARCH 4, 2005