NOTICES
Petition by GTE Communications Corporation, f/k/a GTE Card Services
[30 Pa.B. 5104] Public Meeting held
August 17, 2000Commissioners Present: John M. Quain, Chairman; Robert K. Bloom, Vice Chairman; Nora Mead Brownell; Aaron Wilson, Jr.; Terrance J. Fitzpatrick.
Amended Application of GTE Communications Corporation, f/k/a GTE Card Services, for Approval to Offer, Render, Furnish, or Supply Competitive Local Exchange Telecommunications Services; A-310291F0002.
Amended Application of GTE Communications Corporation, f/k/a GTE Card Services, for Approval to Offer, Render, Furnish, or Supply Competitive Access Telecommunications Services; A-310291F0004.
Amended Application of GTE Communications Corporation, f/k/a GTE Card Services, for Approval to Offer, Render, Furnish, or Supply Facilities-Based Interexchange Toll Telecommunications Services; A-310291F0005.
Collaborative to Determine the Adequacy and Interpretation of Existing Accounting Procedures and Financial Reporting Regulations for All Telecommunications Carriers; M-00001374.
Opinion and Order By the Commission:
Before us for consideration is a Petition filed on May 21, 1999, by GTE Communications Corporation, f/k/a GTE Card Services (GTECC or Company), concerning the two (2) following matters arising in association with our March 22, 1999 Opinion and Order (March 22, 1999 Order) in the above-captioned proceeding:
1. Request for a waiver of the March 22, 1999 Order requirement that directs GTECC to file a Lifeline Plan with the Commission; and,
2. Request for Clarification of the March 22, 1999 Order regarding the requirement that GTECC maintain separate accounting systems for its CAP, CLEC, and its IXC operations.
For the reasons delineated in the body of this Opinion and Order, we shall (1) deny GTECC's request for a waiver, (2) deny GTECC's request for clarification, and (3) initiate a collaborative proceeding involving interested parties for the purpose of determining the adequacy and interpretation of our existing accounting procedures and financial reporting regulations for all types of telecommunications companies in an increasingly competitive toll and local environment.
Background By our Opinion and Order entered January 28, 1997, at Docket No. I-00940035, we ordered all local exchange carriers (LECs) to file proposed Lifeline Plans for low-income customers by March 29, 1997. The March 29, 1997 deadline date for those LECs that had not filed Lifeline Plans was subsequently extended to September 30, 1997, by our Order on Reconsideration entered July 31, 1997. Since then, the filing and implementation of Lifeline Plans has become a routine compliance requirement for new competitive local exchange carriers (CLECs) that receive approval to operate in the Commonwealth.
By our March 22, 1999 Order in the above-captioned proceeding, we granted, inter alia, GTECC authority to operate as:
1. a CLEC within the service territories of Bell Atlantic-Pennsylvania, Inc. and GTE North, Inc. (F0002),
2. a Competitive Access Provider (CAP) within the service territories of Bell Atlantic-Pennsylvania, Inc. and GTE North, Inc. (F0004), and,
3. a facilities-based interexchange toll service provider (IXC) within the service territories of Bell Atlantic-Pennsylvania, Inc. and GTE North, Inc. (F0005).
Additionally, our March 22, 1999 Order directed that:
1. GTECC shall file its Lifeline Plan within sixty (60) days of the date of entry of the Order, or by May 21, 1999. (Ordering Paragraph No. 8); and,
2. GTECC shall maintain separate accounting systems for its CAP, CLEC and IXC operations. (Ordering Paragraph No. 9).
Discussion A. Request for Waiver of Commission Order Compliance Requirements
GTECC requests a waiver of the requirement that directs GTECC to file a Lifeline Plan. In support of this request, GTECC avers that its initial provision of services as a CLEC will not include conventional, basic local exchange services that are based on voice telephony. Instead, GTECC states that it will, for all intents and purposes, be a ''data CLEC'' in the original stages of its operations in the Commonwealth and will not, in the near future, be offering basic local exchange services that could be of benefit to potential Lifeline customers. (Petition, p. 3).
GTECC asserts that it will originally provide Frame Relay Service which is ''a high-performance, cost effective data offering for connectivity of multiple local area networks (LANs) or System Networks Architecture (SNA) locations'' and that the ''data CLEC'' services it will initially offer are not included within the group of basic local exchange services that are normally part of CLEC and Incumbent Local Exchange Carrier (ILEC) Lifeline Programs as defined by the Federal Communications Commission (FCC) and this Commission.1 (Petition, p. 3).
In lieu of an outright waiver, however, GTECC requests that the Commission at least permit it to delay the filing of its Lifeline Plan until such time that GTECC is operationally ready to offer voice telephony basic local exchange services in the areas where it has been authorized to operate by the Commission. (Petition, p. 4).
We note that the Company is requesting this waiver based on its sole assertion that it does not wish to offer certain services under the auspices of a CAP and the fact that it will, for all intents and purposes, be a ''data CLEC'' in the original stages of its operations in the Commonwealth. GTECC states that it will not, in the near future, be offering basic local exchange services that could be of benefit to potential Lifeline customers. Specifically the services that GTECC proposes to offer include Frame Relay Service and other types of high-speed data services.
We agree with GTECC that Frame Relay service is not one of the conventional basic local exchange services included under Lifeline Service. In fact, both the FCC and this Commission directed that Lifeline Service should include the following services, all of which GTECC is not proposing to offer initially:
1. Single-Party Service
2. Voice grade access to the public switched telephone network
3. DTMF or its functional digital equivalent (Touchtone)
4. Access to emergency services (911)
5. Access to Operator Services
6. Access to Interexchange Service
7. Access to Directory Assistance
8. Toll limitation (Toll Blocking or Toll Control Services)
In its Petition, GTECC states that its proposed tariff, which it filed with the Commission, defines Frame Relay Service as ''a high-performance, cost effective data offering for connectivity of multiple local area networks (LANs) or System Networks Architecture (SNA) locations.'' Other information submitted by GTECC in this matter is vague with regard to the specific manner in which it desires to utilize Frame Relay Service.
However, Newton's Telecom Dictionary2 describes Frame Relay Service as ''an access standard'' that employs a type of packet switching in which packets are sent in the form of ''frames'' which are variable in length. Access to Frame Relay is over a dedicated [emphasis added], digital circuit which typically is 56/64 Kbps, NX56/64 Kbps, T-1 or T-3. Newton's Telecom Dictionary further states that Frame Relay is intended for data communications application, most especially LAN-to-LAN internetworking, which is bursty in nature. Frame Relay, while intended for data communications, also supports compressed and packetized voice and video.
As such, it is our view that the type of services (i.e., Frame Relay Services) which GTECC is proposing to include in its CLEC tariff should actually be included in its CAP tariff. As a result, and keeping in mind that, based on the manner in which GTECC initially proposes to offer Frame Relay Services to its customers, it is not appropriate for GTECC to file rates, rules and regulations for Frame Relay Service in its CLEC tariff. In our opinion, the services which GTECC proposes to offer clearly fall under the guise of CAP services, which are described in detail in our April 2, 1999 Opinion and Order in Vanguard at Docket No. A-310621 and A-310621, F0002.3 It is important to note at this point that, subsequent to filing the instant Petition and after discussion with our staff, GTECC has agreed to voluntarily file its Frame Relay Service offering in its initial CAP tariff. This tariff was filed on April 26, 2000, with an effective date of June 27, 2000. We commend GTECC for its cooperation with staff.
We shall deny GTECC's outright request for a waiver to file a Lifeline Plan and its alternative request, which would allow it to delay filing a Lifeline Plan and associated tariffs with the Commission until such time as GTECC is operationally ready to offer voice telephony basic local exchange services in its authorized service territory. In support of this determination, we note that the Company's request for a waiver is based on the premise that ''for all intents and purposes, it will be a data CLEC.'' However, that is not the authority requested or granted by this Commission. We have granted GTECC a CLEC certificate to provide data and voice services. Therefore, regardless of when it begins offering the services, it must file the requisite voice related tariffs.
B. Request for Clarification
GTECC's second request in this Petition seeks clarification of the requirement in our March 22, 1999 Order that GTECC maintain separate accounting systems for its CAP operations, the IXC portion of its CLEC operations,4 and its IXC operations. Specifically, GTECC is requesting a clarification that:
1. the March 22, 1999 Order does not necessitate the outright replacement of GTECC's existing and operational accounting systems (Petition, p. 6);
2. the compliance requirement applies to gross intrastate operating revenues of GTECC's CLEC and combined CAP/IXC operations to the extent that is necessary for meeting GTECC's annual reporting requirements to the Commission for GTECC's CLEC operations under 52 Pa. Code §§ 63.36 (Filing of Annual Financial Reports) and 71.1 (Statement of Purpose--Financial Reports), and for its combined CAP/IXC operations under 52 Pa. Code § 63.107 (Annual Reporting Requirements [for Interexchange Carriers]) (Petition, p. 6); and
3. this compliance does not apply to GTECC's expenses and assets associated with its intrastate CLEC, CAP, and IXC operations in the Commonwealth. (Petition, p. 7).
In support of this request for clarification, GTECC states that it is a reseller of local service at this time and does not provide owned and operated access facilities. GTECC argues that, therefore, it does not currently require CAP facilities in order to provide local or interexchange frame relay or private line services and, thus, does not believe that it needs to keep separate accounts. (Petition, p. 5). Furthermore, GTECC states that, even if, and when, GTECC begins offering facilities-based services, it would not deploy its assets in separate accounting systems based on the services it offers. (Petition, p. 5).
GTECC notes that it and other CLECs do not utilize the FCC's Uniform System of Accounts (USOA) in their respective intrastate operations and that considerable difficulties would be encountered by maintaining separate accounting systems for GTECC's CAP, CLEC, and IXC operations. GTECC contends that these difficulties would be exacerbated if the requirement for separate accounting systems is interpreted to apply to the underlying GTECC assets that will be utilized for the provision of CAP, CLEC, and IXC services in Pennsylvania on a resale or facilities-based basis. GTECC suggests that its existing accounting systems, with some requisite modifications, will be able to track, with a reasonable degree of accuracy, the gross intrastate operating revenue associated with GTECC's CAP, CLEC, and IXC operations within Pennsylvania. However, the same systems are not designed to produce accounting separations between expenses and assets associated with GTECC's intrastate CAP, CLEC, and IXC operations. (Petition, p. 5).
GTECC alleges that it would be an adequate, and a less burdensome degree of compliance with the Commission's Order, if the Commission would instead permit it to modify its existing accounting systems so that it can adequately track its gross intrastate revenues for its CLEC and its combined CAP/IXC operations. As such, GTECC believes that this approach, when combined with specialized accounting studies where necessary, would be sufficient in order to comply with the Commission's annual reporting requirements for its CLEC operations under 52 Pa. Code §§ 63.36 and 71.1, and for its combined CAP/IXC operations under 52 Pa. Code § 63.107. (Petition, pp. 5-6).
GTECC also believes that the separate accounting systems required by our March 22, 1999 Order should not be interpreted to require the separation of GTECC's operational expenses and assets associated with GTECC's intrastate CLEC, CAP, and IXC applications. (Petition, p. 6). Furthermore, GTECC is of the opinion that the directive in our March 22, 1999 Order that requires separate accounting systems should not be interpreted to require the outright replacement of GTECC's existing and operational accounting systems. Rather, GTECC believes that the directive should be interpreted to require modifications to its existing and operational accounting systems to the extent that is necessary for the submission of the annual reporting information to the Commission. (Petition, p. 6). GTECC prefers this interpretation because any outright replacement of GTECC's automated accounting systems would be prohibitively expensive and disruptive to GTECC's ongoing operations and would impose an unduly heavy administrative burden on a CLEC that is in the process of entering Pennsylvania's telecommunications services markets. (Petition, p. 6).
We shall first address GTECC's request in which it seeks clarification concerning whether or not the directive in Ordering Paragraph No. 9 (i.e., that GTECC maintain separate accounting systems for its CAP, CLEC, and IXC operations) would necessitate the outright replacement of GTECC's existing and operational accounting systems.
We note that our current regulations in Section 63.32, 52 Pa. Code § 63.32, require Class A and B telephone public utilities5 to keep their accounts in conformity with the Uniform System of Accounts requirements prescribed by the FCC (i.e., 47 CFR Part 32). Class C and D telephone public utilities6 are required to keep their accounts in a manner that will be adequately informative for reasonable and foreseeable regulatory purposes. Furthermore, our regulations permit a telephone utility to adopt a system of accounts for a higher class of telephone public utilities, as long as we are first notified by the utility of its intention to do so. (52 Pa. Code § 63.32(d)).
Since the Company has failed to submit sufficient information related to the manner in which it presently maintains its accounting system, we shall deny the Company's request for clarification on this matter.
We shall also deny the Company's second request for clarification as to whether Ordering Paragraph No. 9 applies to the gross intrastate operational revenues of GTECC's CLEC and combined CAP/IXC operations, to the extent necessary for meeting GTECC's annual reporting requirements to the Commission for GTECC's CLEC operations under 52 Pa. Code §§ 63.36 and 71.1, and for its combined CAP/IXC operations under 52 Pa. Code § 63.107. Again, based on the limited information in the Company's Petition, it is difficult to determine GTECC's utility classification for its CLEC operations in accordance with 52 Pa. Code § 63.31. As such, it is not possible for us to make a clarification on this matter at this time. Also, without knowing GTECC's utility classification, we cannot conclude what GTECC's obligations would be under 52 Pa. Code §§ 63.36 and 71.1. Likewise, without knowing all of the types of services that will be included in GTECC's CAP and IXC tariffs, we are not able to offer further clarification on this matter at this time. Therefore, we shall also deny the Company's second request for clarification.
With regard to GTECC's third request for clarification that Ordering Paragraph No. 9 does not apply to GTECC's expenses and assets associated with its intrastate CLEC, CAP, and IXC operations in the Commonwealth, we again shall deny the Company's request for clarification because of lack of sufficient information in its Petition.
C. Need for Collaborative Review
The Commission has reviewed the Petition for clarification and has determined that it is appropriate to establish a collaborative to assure that our current regulations do not impose unreasonable and unduly burdensome accounting and reporting requirements.
The Executive Director's Office shall be responsible for convening the collaborative with the Law Bureau as the lead bureau and the Bureau of Fixed Utility Services providing technical support. The Executive Director's Office shall convene the collaborative so that a report will be issued for Commission review no later than six (6) months from the entry date of this Opinion and Order. Subsequent to the receipt of the required report, we may then initiate a proposed rulemaking based upon the outcome of the collaborative proceeding.
We have compiled the following questions which we believe should be considered in the collaborative proceeding. These questions are not meant to limit the investigation by any means, and parties are encouraged to raise additional questions as may be necessary.
1. Should the Quarterly Financial Reports (52 Pa. Code §§ 71.1--71.9) and/or Annual Reports (52 Pa. Code § 63.36) be permitted to be treated as confidential and proprietary under 52 Pa. Code § 5.423?
2. Will disclosure of the information in the Quarterly Financial Reports (52 Pa. Code §§ 71.1--71.9) and/or Annual Reports (52 Pa. Code § 63.36) cause any type of unfair economic or competitive damage to ILECs or CLECs? If yes, what are the potential types of unfair economic or competitive damage that might occur?
3. Should CLECs be held to the same quarterly (52 Pa. Code §§ 71.1--71.9) and annual financial reporting requirements (52 Pa. Code § 63.36) as the ILECs?
4. Should the existing Commission quarterly and annual reporting requirements (52 Pa. Code §§ 71.1--71.9) be modified or streamlined as a result of the transition to a competitive environment? If so, how?
5. Do the current Commission requirements that CLECs maintain separate accounting systems for their competitive access provider operations, competitive local exchange operations, and interexchange operations impose unreasonable and unduly burdensome accounting separation and reporting requirements on the CLECs' operations?
6. Should CLECs' accounts continue to be subject to our regulations concerning classification of public utilities (52 Pa. Code § 63.31) and systems of accounts (52 Pa. Code § 63.32)?
7. Should the Federal Communications Commission financial reporting requirements for LECs and CLECs, if any, be adopted by this Commission in order to reduce the regulatory burden on new entrants?
8. In the case of a telephone utility that has CLEC, CAP, and IXC operations, or any combination of these, what combination of revenues should be used for classification purposes under 52 Pa. Code § 63.31?
9. Should a CLEC be required to separately account for its resale operations and its facilities-based operations?
Conclusion In light of the above discussion, we shall deny GTECC's request for a waiver of Commission Order Compliance Requirements as well as its request for clarification, consistent with the body of this Opinion and Order. Finally, we shall initiate a collaborative proceeding involving all interested parties for the purpose of addressing the questions outlined in the body of this Order; Therefore,
It Is Ordered:
1. That the Petition filed on May 21, 1999, by GTE Communications Corporation, f/k/a GTE Card Services, is denied, consistent with the discussion in the body of this Opinion and Order.
2. That GTE Communications Corporation's request for a waiver of the requirement in our March 22, 1999 Order that directs GTE Communication Corporation to file a Lifeline Plan is denied.
3. That GTE Communications Corporation's alternative request that it be permitted to delay the filing of its Lifeline Plan until such time that GTE Communications Corporation is operationally ready to offer voice telephony basic local exchange services in the areas where it has been authorized to operate by the Commission is denied.
4. That GTE Communications Corporation's request for clarification of the March 22, 1999 Order regarding the requirement that GTE Communication Corporation maintain separate accounting systems for its CAP, CLEC, and IXC operations is denied, consistent with the discussion contained in the body of this Opinion and Order.
5. That, consistent with the discussion in the body of this Opinion and Order, a collaborative proceeding is hereby instituted for the purpose of providing all telecommunications carriers serving in the Commonwealth of Pennsylvania, and other interested parties, with an opportunity to participate in addressing the issues and questions outlined in the body of this Opinion and Order concerning the adequacy and interpretation of our existing accounting procedures and financial reporting regulations for all types of telecommunications companies in a competitive local and toll environment.
6. That the Executive Director's Office shall be responsible for convening the collaborative proceeding. The Law Bureau shall be assigned as the lead bureau and the Bureau of Fixed Utility Services shall be assigned to provide the necessary technical support.
7. That within six (6) months from the date of entry of this Opinion and Order, the Law Bureau shall submit, for Commission review, a report containing a summary and recommendation of the issues and questions addressed in the collaborative proceeding.
8. That a copy of this Opinion and Order be served upon all telecommunications utilities certificated to provide service in the Commonwealth of Pennsylvania, the Office of Consumer Advocate, the Office Small Business Advocate and the Office of Trial Staff.
9. That the Secretary shall duly certify this Order and deposit it with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
JAMES T. MCNULTY,
Secretary(SEAL)
ORDER ADOPTED: August 17, 2000
ORDER ENTERED: September 12, 2000
[Pa.B. Doc. No. 00-1703. Filed for public inspection September 29, 2000, 9:00 a.m.] _______
1 See generally, Federal-State Joint Board on Universal Service (FCC May 8, 1997) CC Docket No. 96-45, Report and Order, FCC 97-157, Paragraph 384, slip op. p. 204 (FCC Universal Service Order); In Re Formal Investigation to Examine and Establish Updated Universal Service Principles and Policies for Telecommunications Services in the Commonwealth, Docket No, I-00940035, Petition of WinStar Wireless of Pennsylvania, Inc. For Approval of Lifeline Service Plan, Docket No. P-00971275 Order entered December 4, 1987, p. 2.
2 See, Harry Newton, Newton's Telecom Dictionary, 14th Expanded Ed., Miller Freeman, New York, NY, 1998, pp. 324--325.
3 See Amended Application of Vanguard d/b/a Cellular One for approval to offer . . . Local Exchange Telecommunications Services, Docket No. A-310621, F0002; and Amended Application of Vanguard d/b/a Cellular One for approval to offer . . . Competitive Access Provider Services, Docket No. A-310621, F0003 (Order entered April 2, 1999).
4 The March 22, 1999 Order did not authorize GTECC to combine any IXC operations with its CLEC operations. Rather, we granted GTECC authority to operate as a CLEC, a CAP, and a facilities-based IXC. As such, these operations would require separate accounting and separate tariffs for each operation.
5 Class A companies have 50,000 or more access lines and Class B companies have less than 50,000 access lines. (52 Pa. Code § 63.31).
6 Class C companies have average annual operating revenues exceeding $10,000 but not more than $50,000 and Class D companies have average annual operating revenues not exceeding $10,000. (52 Pa. Code § 63.31).
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