NOTICES
IntraLATA Presubscription Implementation; Doc. No. I-00940034; Petition for Regional Implementation of Permanent Local Number Portability; Doc. No. P-00961103
[27 Pa.B. 2602] Public Meeting held
May 8, 1997Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; John Hanger; David W. Rolka; Nora Mead Brownell
Order By the Commission:
On December 14, 1995, this Commission entered an order at Docket No. I-00940034 captioned ''Investigation Into IntraLATA Interconnection Arrangements.'' This December 14, 1995, order (1995 Order) addressed many issues pertaining to intraLATA presubscription (this term, synonymous with intraLATA dialing parity, refers to the ability of telephone service subscribers to select in advance intraLATA toll service providers). The issue of intraLATA presubscription again came before the Commission under a petition filed by MCI Telecommunications Corporation captioned ''Petition for Regional Implementation of Permanent Local Number Portability''. On January 7, 1997, the Commission entered an order which established a Task Force to make initial recommendations on matters relating to local number portability (LNP); however, this Task Force was also directed to make recommendations on intraLATA presubscription issues.
By Secretarial letter dated January 7, 1997, the Commission notified the telecommunications industry of the establishment of the Task Force and invited, inter alia, all interested parties to present their positions on various intraLATA presubscription issues. Task Force meetings were held on January 17, February 5 and March 14 of 1997. These meetings were attended by representatives of telecommunication interexchange carriers (IXCs), incumbent and competitive local exchange carriers (ILECs and CLECs), the OCA, the Pennsylvania Telephone Association (PTA) and Commission staff.
During these meetings, the Task Force members discussed various intraLATA presubscription matters in an attempt to reach a consensus on technical and policy issues. To better analyze industry positions since the industry was unable to reach a consensus, Commission staff requested that industry representatives draft a report (IXC report) on the various dialing parity issues. In addition, the PTA drafted a dissenting paper on these issues. The following is a summary of these position papers and the Commission's decisions on the addressed intraLATA presubscription issues. However, we will continue to monitor all ongoing governmental and industry dialing parity implementation activities which are related to these and other issues.
Cost Recovery
This issue is the main area of contention among Task Force members. In the FCC's Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98, Second Report and Order and Memorandum Opinion and Order, released August 8, 1996 (Second Report and Order), the FCC directed all intraLATA toll service providers, including LECs, to share in the cost of intraLATA presubscription implementation through a competitively neutral assessment mechanism. This mandate directly contravenes the provisions of the Commission's 1995 Order at I-00940034 which excludes LECs from sharing in these implementation costs. (paragraph 5 of the 1995 Order).
The PTA argues that the FCC does not have the authority to adopt standards for intrastate communications service unless Congress expressly provides the FCC with that authority. PTA asserts that Congress did not provide the FCC with the authority to regulate intraLATA presubscription matters. Therefore, PTA avers that the FCC's Second Report and Order is not binding on the Commission and that the Commission should continue to follow all provisions of its December 14, 1995, order on intraLATA presubscription. PTA also notes that the FCC's Second Report and Order is currently on appeal before the U. S. Court of Appeals for the Eighth Circuit. The PTA asserts that should the Commission choose to comply with the Second Report and Order, it should not act until the Eighth Circuit Court rules on the legality of the FCC's action.1 Finally, PTA argues that the cost recovery issues are factual, and can only be reconsidered if the record of the Commission's December 14, 1995, Order at Docket No. I- 00940034 is reopened for additional testimony.
In contrast, the other Task Force members believe that the FCC had legitimate authority to promulgate the Second Report and Order, and that the Commission is preempted from any action which contravenes that FCC pronouncement. These members assert that the appeal of the FCC's order before the Eighth Circuit Court does not diminish that Order's force and effect, since the order has not been stayed. These members urge the Commission to assess implementation costs against all intraLATA toll providers, including LECs, in accordance with the FCC's Second Report and Order. (paragraphs 94 and 95). The IXC report recommends the adoption, as a cost recovery method, of a competitively neutral Equal Access Recovery Charge (EARC). This charge is to be assessed against all toll providers based on relative intraLATA ''1+'' and ''0+'' minutes for each carrier.
This is a difficult issue. If the Eighth Circuit Court reverses the FCC's Second Report and Order, then all provisions of the Commission's December 14, 1995, Order can stand. However, we cannot wait for the Eighth Circuit Court to act. Absent a stay, the Commission must comply with the Second Report and Order, and we should proceed accordingly.
As noted, PTA argues that should the Commission alter the cost recovery holding of its 1995 Order, then the Commission must reopen the prior record to receive new evidence on the cost recovery issues. We agree. The potential change in responsibility for implementation costs will give rise to factual issues (such as reallocated costs, continued use of the EARC, and cost amortization), which are sufficient to require amendment of the 1995 Order. Pursuant to 66 Pa.C.S. § 703(g), we must provide affected parties notice and the opportunity to be heard.
Since time is of the essence, we will reopen the record of the Commission's December 14, 1995, Order at I-00940034 to receive written comments limited to issues pertaining to the recovery of intraLATA presubscription implementation costs. These comments will enable the Commission to quickly respond to any judicial confirmation of the Second Report and Order, and will satisfy the due process requirements of Section 703(g). Diamond Energy v. Pa. P.U.C., 653 A.2d 1360 (1995) (in the absence of a statutory requirement for ''oral hearing'', the paper hearing provided by the Commission satisfies the due process requirement for hearing). We will attempt to resolve factual cost recovery issues without formal hearings before an Administrative Law Judge. However, we expressly reserve the right to schedule hearings as may be required to address factual averments in the written comments filed pursuant to this Order. Any comments raising factual averments must, of course, be accompanied with an appropriate verification.
We note that the Commission has already permitted GTE North to establish an Equal Access Cost Recovery Charge by our July 19, 1995, Order at Docket No. R-00963672. Therefore, we also request comments on additional action the Commission should undertake regarding GTE North's Cost Recovery Charge. We seek comments on whether GTE North should implement a refund mechanism or adjust its Equal Access Cost Recovery Charge mechanism (on a forward going basis only) in accordance with future Commission directives. However, GTE North's current tariffs based on the Equal Access Cost Recovery Charge mechanism (implemented at R-00963672) shall remain in effect at this time.
Date of Implementation
PTA notes that the Commission's December 14, 1995, order established December 31, 1997, as the conversion date for LECs serving less than 250,000 access lines. (1995 Order, paragraph 2). June 30, 1997, was established as the conversion date for carriers with greater than 250,000 access lines, but this date was changed to July 31, 1997, under a Commission order entered January 24, 1997. ''Application of MFS Intelenet of PA, Inc.'', at Docket No. A-310203F0002. The FCC-mandated implementation date is February 8, 1999. PTA states that if the Commission revises its Prior 1995 Order, then the date for implementation should change to February 8, 1999.
We believe that the Commission's two 1997 implementation dates should stand. Prior to the FCC's actions, all carriers presumably intended to meet the deadlines set forth in the Commission's December 14, 1995, Order. In addition, various carriers (Bell Atlantic-PA, Inc., North Pittsburgh Telephone Company, MFS Intelenet of Pennsylvania, Inc. and Citizens Telecommunications Company of New York, Inc.) have already filed implementation plans in accordance with the FCC's Second Report and Order. There is no reason to extend the conversion date deadline to February 1999 merely because the FCC permits it. The cost recovery issues addressed above should not affect the Commission's implementation dates either, as the cost recovery mechanism is effectively independent of dialing parity implementation. Where allocations are unresolved at the time of implementation, costs can be accounted or allocated at a later date.
Customer Notice
The IXC position is that neutrally worded ''informational'' LEC billing inserts should be used to inform customers about the implementation of intraLATA presubscription. These members believe that the Commission (and other IXCs) should have an opportunity to review these inserts for content and neutrality at least 30 days prior to the customer mailing date, and this mailing date should be at least 30 days prior to the implementation date. The PTA believes that the IXCs have sufficient motivation to make customers aware of intraLATA presubscription, and that the Commission should not require LECs to send informational billing inserts to their customers.
We agree with PTA that telecommunication carriers should be motivated to inform customers about intraLATA presubscription. Therefore, we will allow LECs to use neutral, informational billing inserts on a voluntary basis. If a LEC chooses to use billing inserts, then the carrier must submit the inserts to the Commission for review of content at least 30 days prior to the customer mailing date, with this mailing date at least 30 days prior to the implementation date. However, we do not believe that the cost of the inserts is a general implementation cost to be shared by all carriers. Therefore, if a LEC volunteers to send billing inserts, the cost of these billing inserts should be borne by the IXCs (and other telecommunication carriers) who wish to be included on the billing insert as a provider of intraLATA phone service within the LEC's service area.
Presubscription Implementation Plans
The FCC's Second Report and Order requires LECs to file with a State commission a plan which addresses the means by which that LEC will obtain dialing parity. This plan has a filing deadline of 180 days prior to the LEC's implementation of presubscription. The PTA feels that this filing requirement is unnecessary, because the Commission's 1995 Order constitutes a complete presubscription plan. In addition, PTA avers that a LEC's tariff filings (required to recover implementation costs) are subject to Commission review and could substitute for the plan filing. The other Task Force members state that they will abide by the FCC requirement to file an implementation plan. However, some members request that the Commission take steps to ensure that these plans are sufficiently detailed, and address specific implementation issues.
We agree that implementation plans should be filed notwithstanding the 1995 Order, and that these plans must contain sufficient detail to apprise the Commission of the plan's implementation methodology. We note that on November 6, 1996, Bell Atlantic-Pennsylvania (Bell) filed with this Commission (also at Docket No. I-00940034) its Motion for Approval of an IntraLATA Presubscription Implementation Plan. Three other carriers (listed supra) have also filed implementation plans. We will address the implementation plans already filed in separate orders.
Competitive Neutrality Issues
All Task Force members agreed on the following marketing ''safeguards'' to maintain competitive neutrality:
1. Customer service representatives (CSR) shall be prohibited from commenting on a customer's choice of intraLATA PIC (Primary Interexchange Carrier) when the customer contacts the CSR to change the PIC.
2. IntraLATA PIC selections should be implemented in the same manner and under the same time parameters as interLATA PIC changes.
3. CSRs should respond to customer inquiries about intraLATA carriers in a competitively neutral way, with the list of carriers (including the CSR's own LEC) subject to ''rotation'' so that each carrier's list position regularly changes.
The IXCs also request additional marketing safeguards, which PTA asserts are cumbersome, expensive and unnecessary. The additional safeguards are as follows:
4. A LEC's CSR must not answer questions about the LEC's intraLATA toll services, but can do the following: (a) transfer the call to a LEC CSR for intraLATA toll services, but only if the LEC is willing to provide the same transfer service to other carriers, or (b) provide a separate telephone number that the customer can call for information about the LEC intraLATA toll service, but only if the LEC is also willing to provide telephone numbers for other carriers.
5. The LEC must provide a carrier with reasonable, accurate, timely mechanized access to a listing of all (a) new service connections, (b) transfers of service, (c) disconnects and (d) out-PICs (from that carrier only). For the out-PICs, the LEC should provide the billing telephone number, name and address, reason for change and the identity of the new carrier.
6. The LEC should provide a ''no PIC'' or ''PIC of none'' designation for those customers who do not wish to choose a carrier.
7. CSRs should not receive additional compensation or awards for increasing or maintaining the LEC's level of presubscribed customers.
We agree with the parties that safeguards 1 through 3 are useful, and we will require carriers to implement these safeguards. It is clear that safeguards 4 through 7 can provide additional protection against anticompetitive behavior. Although we will not direct the adoption and implementation of safeguards 4 through 7, we strongly encourage the incorporation of these safeguards into all LEC presubscription plans filed in response to the Second Report and Order. If gross anticompetitive marketing tactics are encountered, these tactics can be addressed by the Commission or other governmental bodies at that time. The Commission will also observe LEC marketing to check for anticompetitive practices.
IntraLATA PIC Freeze
The IXCs assert that the Commission should prohibit LECs from offering a PIC freeze option (a PIC freeze, designed to prevent slamming, requires a customer to take some affirmative action to switch intraLATA carriers). These Task Force members aver that if this freeze option is offered in the early stages of presubscription, LECs could use this option in an anticompetitive manner to delay requests from customers for a PIC change or to try and dissuade that customer from changing PICs. However, these members state that the PIC freeze option should be available once consumers have selected their initial intraLATA toll service provider or if slamming problems develop in the local exchange market.
The OCA requests that the Commission allow a PIC freeze option without delay. The OCA asserts that a PIC freeze option can effectively prevent slamming and that a PIC freeze option should not inhibit intraLATA competition. However, the OCA also urges the Commission to monitor for anticompetitive PIC freeze misuse. The PTA has no position on this PIC freeze issue.
We agree with the OCA that precautions are needed to avoid the problem of slamming. This problem has been significant in the realm of interLATA toll service, and intraLATA service is equally susceptible to slamming. Although a PIC freeze would make it somewhat more difficult for competitors to switch intraLATA toll customers away from the ILEC, we believe that the potential for slamming is too great not to include this protective device. Therefore, we will allow carriers to offer a PIC freeze option without the moratorium requested by the IXCs. An aggrieved party has the ability to come before the Commission should issues of competitive abuse arise; therefore,
It Is Ordered That:
1. The record of the Commission's Order Entered December 14, 1995 at Docket No. I-00940034, ''Investigation Into IntraLATA Interconnection Arrangements'', is hereby reopened to receive comments limited to the issue of recovery for intraLATA presubscription implementation costs.
2. Comments pursuant to paragraph 1, above, shall be filed 15 days from the entry of this Order.
3. Consistant with the Commission's December 14, 1995, order at I-00940034 and January 24, 1997 order at A-310203F0002, all local exchange carriers shall implement intraLATA presubscription pursuant to the following schedule:
a. Local exchange carriers serving in excess of 250,000 access lines shall implement intraLATA presubscription by July 31, 1997.
b. Local exchange carriers serving 250,000 access lines or less shall implement intraLATA presubscription by December 31, 1997.
4. Local exchange carriers shall use neutrally worded billing inserts to inform customers about intraLATA presubscription under the following conditions:
a. The use of such billing inserts by a local exchange carrier shall be voluntary.
b. A local exchange carrier which uses billing inserts shall submit the inserts to the Commission for review of content at least 30 days prior to the customer mailing date.
c. A local exchange carrier which uses billing inserts shall send these inserts to customers at least 30 days prior to the implementation date of intraLATA presubscription.
d. The cost of billing inserts shall be borne by interexchange carriers and/or other telecommunication carriers who request to be listed on the billing insert as a provider of service within the service area of the local exchange carrier that sends the billing inserts.
5. Local exchange carriers shall file a Presubscription Implementation Plan with this Commission pursuant to the following conditions:
a. This plan shall be filed at least 180 days prior to the local exchange carrier's implementation of intraLATA presubscription.
b. This plan shall contain information sufficient to apprise this Commission of the plan's implementation methodology.
c. That local exchange carriers shall file a revised tariff to reflect rate changes which result from the implementation of intraLATA presubscription notice.
6. Marketing safeguards to prevent anticompetitive behavior by telecommunication carriers shall be implemented consistent with the language in the body of this Order under the heading of Competitive Neutrality Issues.
7. Local exchange carriers shall offer, without delay, a PIC freeze option to customers.
8. This Order shall be served upon all Task Force members.
9. A copy of this Order shall be forwarded to the Pennsylvania Bulletin for publication.
JOHN G. ALFORD,
Secretary
[Pa.B. Doc. No. 97-858. Filed for public inspection May 23, 1997, 9:00 a.m.] _______
1 Commission staff believes that during the course of Task Force deliberations, a PTA representative agreed that this Commission and the telecommunication carriers under our jurisdiction would be required to abide by the decision of the Eighth Circuit Court should that Court affirm the FCC's Second Report and Order.
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