NOTICES

Petition for Rural Incumbent Local Exchange Carriers for a 36-Month Suspension of Interconnection Requirements

[33 Pa.B. 707]

Public Meeting held
January 15, 2003

Commissioners Present: Glen R. Thomas, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr., Dissenting Statement follows; Terrance J. Fitzpatrick; Kim Pizzingrilli

Petition of Rural Incumbent Local Exchange Carriers for a 36-month Suspension of Interconnection Requirements Limited to Only Those Requirements Set Forth in § 251(b)(1) and (c) of the Telecommunications Act of 1996; Petition to Join and for Relief Under § 251(f)(2) of the Telecommunications Act of 1996; Doc. No. P-00971177

Order

By the Commission:

   The current matter before this Commission consists of petitions for relief brought by two groups of rural incumbent local exchange carriers (Rural ILECs or Petitioners), pursuant to § 251(f)(2) of the Telecommunications Act of 1996 (TA-96), 47 U.S.C. §§ 101, et seq. All the Petitioners seek a 36-month suspension of interconnection obligations under § 251(b)(1) and (c) of TA-96.

   Because we conclude that the relevant factors outlined in TA-96, under § 251(f)(2), warranting grant of an absolute suspension from interconnection obligations for a 36-month period have not been met by Petitioners, we deny the requested suspension from interconnection obligations. In denying the relief requested we stress that the standing exemption, under § 251(f)(1), for rural ILECs is undisturbed by our order.¹

   By our action today, we merely allow the possibility for non-facilities based competition in rural areas. Rural ILECs, such as Petitioners, still maintain TA-96's protection via the rural exemption, which stands unless modified by this Commission's order. Any exemption will remain in effect unless challenged by a bona fide request for interconnection, and until a Commission determination on the evidence presented in support of continued exemption.

Petitioning Rural ILECs

   Pursuant to TA-96 ''rural'' ILECs are entitled to consideration for special relief from TA-96's pro-competitive measures. 47 U.S.C § 251(f). To be eligible for consideration for relief, an ILEC must satisfy the definition of ''rural carrier'' set forth in § 3 of TA-96, 47 U.S.C. § 153. That section states that a rural LEC is one possessing fewer than 2% of the nation's subscriber lines. All the Petitioners in this proceeding qualify as rural carriers, and therefore, are entitled to consideration of the requested relief.

   The petitioning Rural ILECs are: Armstrong Telephone Company-North; Armstrong Telephone Company-Pennsylvania; Bentlyville Communications Corp. d/b/a/ The Bentlyville Telephone Company; Buffalo Valley Telephone Company; Conestoga Telephone & Telegraph Company; Denver and Ephrata telephone & telegraph Company d/b/a D&E Telephone Company; Hickory Telephone Company; Ironton Telephone Company; Lackawaxen Telephone Company; Laurel Highlands Telephone Company; Marianna & Scenery Hill Telephone Company; The North-Eastern Pennsylvania Telephone Company; North Penn Telephone Company; North Pittsburgh Telephone Company; Palmerton Telephone Company; Pennsylvania Telephone Company; Pymatuning Independent Telephone Company; South Canaan Telephone Company; Venus Telephone Company; Yukon-Waltz Telephone Company; Citizens Telephone Company of Kecksburg; Frontier Communications of Breezewood, Inc.; Frontier Communications of Canton, Inc.; Frontier Communications of Pennsylvania, Inc.; Frontier Communications of Lakewood, Inc.; Frontier Communications of Oswayo River, Inc.; TDS TELECOM/Mahanoy and Mahantango Telephone Company; and TDS TELECOM/Sugar Valley.

   Listed petitioners Armstrong Telephone Company-North through Yukon-Waltz filed the original petition in this matter on June 7, 2002 (Original Petition). Notice of the Original Petition and request for comments was published at 32 Pa.B. 3052 (June 2002).

   Comments in response to the Original Petition were filed by the Office of Consumer Advocate, the Office of Trail Staff, Full Service Network, and A.R. Building Company. Reply comments were filed on behalf of the original petitioners. On July 26, 2002, listed petitioners Citizens Telephone Company of Kecksburg through TDS TELECOM/Sugar Valley, filed a Petition to Join (Joinder Petition) requesting identical relief sought in the Original Petition.²

   Notice and request for comments to the joinder petition and relief was published August 17, 2002, at 32 Pa.B. 4104.

   Comments were filed in response to the Joinder Petition by the Office of Consumer Advocate, the Office of Trial Staff, the Office of Small Business Advocate, and Armstrong Telecommunications, Inc. (as to Citizens Kecksburg only). Reply comments were filed on behalf of the petitioners seeking joinder.

   With respect the issue of joinder, no comments were submitted in opposition to joinder, with the exception Armstrong's opposition to joinder of Citizens of Kecksburg, which we have resolved in favor of allowing joinder. Therefore, for administrative reasons, joinder of all remaining petitioners is granted. Petitioners' request for relief, the comments in response and replies thereto, shall be considered jointly at this time.

Current Request for Relief

   Since Petitioners have already been granted an effective 5-year suspension from TA-96 interconnection obligations, we now consider whether existing circumstances warrant additional extension of relief in the form of suspension.

   Petitioners' assertions in support of a continued suspension are set forth in detail and provide an accurate picture of the incremental, and often arduous, process of both the FCC's and this Commission's introduction of a competitive telecommunications market pursuant to TA-96. See, (Original Petition, pp. 12-44); (Joinder Petition, pp. 10-15).

   In support of the 36-month extension, Petitioners assert essentially three grounds, as summarized by Petitioners:

   First, despite the suspension rights conferred on the Rural ILECs by the Commission in the July 10, 1997 Suspension Order, issues relating to access charge reform, interconnection rules and universal service reform remain incomplete, particularly as they affect the Rural ILECs, on both the state and federal level.

Second, during the prior suspension period, the Rural ILECs undertook the development and filing of their Chapter 30 Alternative and Streamlined Regulation Plans and Network Modernization Plans. After extensive litigation that exceeded a two-year period, Petitioners finally obtained Commission approval of those plans. With final Commission orders approving their Plans entered as late as July 2001, however, the Rural ILECs have had at most only the last 12-18 months in which to implement the rate reformation, authorized under their streamline or alternative regulation plans and to commence their Commission-approved Network Modernization Plans.

Finally, permanent universal service funding to permit the Rural ILECs to establish the rates that are necessary for a competitive marketplace to effectively function without jeopardizing affordable service to all rural customers has not been completed.

   (See, Reply Comments of Original Petitioners, p. 2-3; Petition; Petition to Join and for Relief, p. 2) (citations omitted).

   Petitioners assert that these bases satisfy the elements of § 251(f)(2) for continued suspension of interconnection obligations. Petitioner's maintain that it is absolutely essential that the possibility of non-facilities based local competition in rural telephone company service territory be precluded for at least another 36-month period. (Original Petition at par. 95). Therefore, Petitioners conclude, continued suspension of their interconnection obligations is consistent with the public interest, convenience, and necessity.

   Several comments in opposition to the original and joinder petitions were received. The comments are briefly summarized as follows:

Comments of the Office of Consumer Advocate (OCA)

   OCA urges that the Petitioners have failed to carry the burden of proof to warrant an extension and that the Commission should: 1) deny Petitioners' request for a 36-month extension; 2) if extension is granted, limit relief to December 2003, to coincide with the sunset date of Chapter 30 and the Commission's Global Order; or 3) further examine the Petitioners on an individual basis to determine whether the relative size and strength of the companies warrant a continued suspension. OCA's comments stressed the importance of extending the benefits of competition, now enjoyed in more urban areas, to Commonwealth citizens in rural areas. (Comments of OCA filed July 8, 2002, and August 26, 2002.)

Comments of the Office of Trial Staff (OTS)

   OTS urges that Petitioners have failed to carry the burden of proof to warrant an extension and that the Commission should: 1) deny Petitioners' request for a 36-month extension; 2) if extension is granted, limit relief to a 1-year extension to July 10, 2002, with the opportunity to request two additional 1-year extensions provided Petitioners continue to meet Chapter 30 commitments; or 3) deny the individual petitions of some Petitioners based upon the relative size and financial strength of those companies, and further examine the remaining Petitioners on an individual basis to determine whether their relative size and strength warrant a continued suspension. (Comments of OTS filed July 8, 2002, and August 21, 2002).³

Comments of Full Service Network (FSN)

   FSN, a self-described competitor which ''stands ready to bring local telephone competition to the residential and commercial customers located in North Pittsburgh's service territory,'' offers opposition specifically to continued suspension for North Pittsburgh. FSN urges that North Pittsburgh has been granted ample time to prepare for impending competition and fulfill its Chapter 30 obligations. Further, FSN notes that while North Pittsburgh, via its affiliates, is able to compete in markets shared by FSN, FSN does not enjoy the same opportunity in North Pittsburgh's service territory, due solely to North Pittsburgh's suspension from interconnection obligations. (Comments of FSN filed July 8, 2002.)

Comments of A.R. Building Company (AR Building)

   AR Building, a builder-owner of townhouse and apartment rental units, also offers opposition specifically to the continued suspension for North Pittsburgh. AR Building, like FSN, urges that North Pittsburgh has been granted ample time to prepare for impending competition and fulfill its Chapter 30 obligations. Further, AR Building stresses that competitive pricing available to residents of its building developments in other service territory remains unavailable to residents of its buildings in North Pittsburgh's service territory due solely to North Pittsburgh's continued suspension from interconnection obligations. (Comments of AR building filed July 8, 2002.)

Comments of Armstrong Telecommunications, Inc. (Armstrong)

   Armstrong offers opposition specifically to the petition of Citizens. Armstrong asserts that Citizens' petition should be treated separately since Citizens occupies a unique factual and regulatory position from all other Petitioners.

   Armstrong asks that the Commission distinguish Citizens on the basis of the outcome of prior litigation in which Armstrong sought to defeat Citizens' exemption from interconnection obligations. In that proceeding, this Commission determined that Citizens' exemption would continue until the expiration of any suspension granted to the Petitioners at this docket.⁴ Armstrong contends that it is prepared to offer non-facilities-based competition in Citizens' territory and that, without the continued suspension of Citizen's interconnection obligations, Armstrong should be permitted to do so without further presentation of evidence. (Comments of Armstrong filed August 26, 2002.)

Discussion

   TA-96 imposes upon ILECs duties and obligations designed to develop competitive markets in the telecommunications industry. 47 U.S.C. § 251(a)-(c). Pursuant to § 251(f)(2) relief granted by this Commission, the Petitioners' TA-96 interconnection obligations have been effectively suspended from the time of TA-96's inception.⁵ Under the suspension, the Rural ILECs enjoy blanket immunity from interconnection.

   We note that, even without a § 251(f)(2) suspension, rural ILECs are afforded special insulation from TA-96's interconnection obligations in the form of a standing exemption from interconnection obligations, under § 251(f)(1). Section 251(f)(1) provides that the rural carriers shall be entitled to the exemption ''until (i) such company has received a bona fide request for interconnection services, or network elements, and (ii) the State commission determines . . . that such request is not unduly burdensome, is technically feasible, and is, consistent with subsection 254 . . . .''

   Unless a § 251(f)(2) suspension from interconnection obligations is granted by a state commission, the standing § 251(f)(1) rural exemption is subject to challenge by a party requesting interconnection. In the state proceeding challenging the exemption, the exemption may be terminated unless the rural ILEC provides evidence that continued exemption is warranted.

   As we previously determined in our July 10, 1997 Suspension Order, this Commission considers the factors outlined by 47 U.S.C. § 251(f)(2) in determining whether a petitioner is entitled to relief in the form of a suspension of § 251(b) and (c) interconnection requirements. Pursuant thereto, we are to consider whether a petitioner has less than 2% of the nation's subscriber lines installed in the aggregate nationwide, whether a petitioner has video programming operations, the petitioner's relative size, the service territory population and whether there have been any interconnection requests. As a further basis for granting relief, we are to consider whether our action could promote deployment of the advanced telecommunications network and services envisioned by TA-96 and Chapter 30.

   Additionally, § 251(f)(2) provides:

   The State commission shall grant such petition [for suspension from interconnection obligations] to the extent that, and for such duration as, the State commission determines that such suspension or modification--

(A)  is necessary

(i)  to avoid a significant adverse economic impact on users of telecommunications service generally;

(ii)  to avoid imposing a requirement that is unduly economically burdensome; or

(iii)  to avoid imposing a requirement that is technically infeasible; and

(iv)  is consistent with the public interest, convenience, and necessity.

   With specific regard to subsequent requests for extension, our July 10, 1997 Suspension Order provided:

   As an additional caution, we note that any subsequent relief sought by a Petitioner pursuant to this Opinion and Order must present competent evidence that such relief is necessary under Section 251(f)(2). A Petitioner requesting additional relief must demonstrate why it needs any additional time to secure the resources to meet the goals of TA-96 and Chapter 30. A Petitioner must also demonstrate what action it has taken to comply with Chapter 30's mandate regarding alternative regulation and network deployment. A Petitioner must further demonstrate what progress a Petitioner has made in deploying an advanced telecommunications network to the public schools, libraries, and other public facilities serving rural Pennsylvania.

July 10, 1997 Suspension Order at pp. 28-29.

   At the time of the July 10, 1997 Suspension Order, further relief beyond the 5-year period (original 2-year suspension plus three additional 1-year extensions) was not considered. However, TA-96 grants the state commission authority to determine at any time that a suspension is warranted, provided that the commission is satisfied that circumstances meet the given standards for granting a suspension. Thus, our analysis again turns to whether factors exist that weigh in favor of granting further relief to Petitioners beyond the effective 5-year suspensions that either expired on July 10, 2002, or are set to expire in the near future.

   No impediments exist to our consideration of Petitioners' request. Petitioners in this matter are all rural local exchange carriers operating in Pennsylvania. The uncontroverted evidence of record states that each of the individual Petitioners have fewer than 2% of the subscriber lines installed in the aggregate nationwide. Finally, there are no outstanding requests for interconnection with the Petitioners to be considered.

   Turning now to Petitioners' asserted basis for requesting a 36-month extension of the suspension, we find that the Petitioners have failed to sustain the burden of proof warranting continued suspension of interconnection obligations.

   Petitioners generally assert the continued uncertainty existing for the ''trilogy'' of interrelated telecommunications issues. It is true that issues relating to access charge reform, interconnection rules and universal service reform continue to evolve. However, in the Commission's judgment, significant progress has been made in the development of these issues in the 5 years since the suspensions were first granted such that a further extension of the suspensions is no longer in the public interest.

   Arguments to support further deferring full competition become less persuasive with the passage of time since this Commission has specifically granted the carriers time in which to prepare for full competition. For example, as of April 1, 2000, the rural telcos have enjoyed the competitive advantages of reductions in their intraLATA toll rates and access charges while at the same time, not losing any revenues for these reductions because they were able to raise local rates up to a $16.00 cap and then dip into the Pennsylvania Universal Service Fund for reimbursement as a result of the Global Order of Sept. 30, 1999.

   The Pennsylvania Universal Service Fund was designed, however, to be interim in nature. It was designed to ready the companies for competition while at the same time ensure that universal basic telephone service was not jeopardized in Pennsylvania. See 52 Pa. Code § 63.161 (relating to statement of purpose and policy) of the PaUSF. Section 63.161(2) provides: ''Given an increasingly competitive marketplace, it is necessary to assure and maintain universal service and promote the development of competition in telecommunications markets throughout this Commonwealth.'' § 63.161(3) provides: ''The purpose of the Fund is to maintain the affordability of local service rates for end-user customers while allowing rural telephone companies to reduce access charges and intraLATA toll rates, on a revenue-neutral basis, thereby encouraging greater competition.'' The Rural ILECs have had since April 2000 to use their revenues to modernize their networks, expand into new markets, and prepare for interconnection obligations. Thus, it is appropriate that the possibility of full competition in rural areas come one-step closer to a reality by lifting the rural carriers' suspension from interconnection obligations.

   Petitioners also assert that the institution of the Chapter 30 plans, alternative and streamlined regulation and network modernization plans requires more time, unhindered by possible interconnection requests, to be effective. Again, Petitioners' asserted basis for suspension is speculative and offers no quantifiable proof or firm evidence, other than supposition, that harm would result if the suspensions are lifted.

   The same may be said for Petitioners' third basis, that permanent universal service funding is necessary prior to lifting the suspension; the Rural ILECs argue that this is essential if they are to effectively function in a competitive marketplace without jeopardizing affordable service to all rural customers. This asserted basis for a continued suspension is speculative, since no evidence has been produced to establish a substantial adverse economic impact to the individual Petitioners. In this regard, we are in accord with the comments of OTS and OCA, that if future requests for relief are predicated upon claim of undue economic burden, then an individual review of the economic impact can be undertaken. We also hasten to add that the loss of some customers and associated revenues to competitors is an expected result of allowing interconnection; it is not a sufficient basis to extend the suspension.

   For example, settlement of universal service issues is of particular concern for rural carriers generally, but lack of settlement of that issue does not itself justify a continued blanket suspension from interconnection. It is not unduly burdensome for rural carriers to bear the unsettled nature of the industry to the limited extent of removing the suspension protection. If the speculative nature of regulatory issue may be shown to have some real impact, it must be shown by evidence of record and an offer of proof on the issue at the time the bona fide request for interconnection is submitted.

Conclusion

   In view of Petitioners' asserted basis for relief, the comments and reply comments thereto, we conclude that the Rural ILECs have not provided sufficient evidence to support a finding that the continued suspension is necessary pursuant to the relevant factors of § 251(f)(2) of TA-96. We conclude so in the knowledge that Petitioners still maintain the standing rural exemption under § 251(f)(1). As such, our order today establishes only the possibility of facilities-based competition in Petitioners' rural territory.

   After the 5-year period of suspension, it is now time to move forward, albeit at a necessarily gradual pace, to the day when rural ILECs are fully open to competition. This should indeed come as no surprise to Petitioners, who have had a total of 5-years' reprieve to prepare for the next step towards allowing non-facilities based competition in their service territories.

   Moving forward, if a bona fide request for interconnection is disputed, the individual Petitioners will have the opportunity to offer evidence that the exemption is still necessary pursuant to the factors outlined in TA-96. Further, we note that the existing Chapter 30 Plans do reflect that the Petitioners have already made strides in network modernization, and Petitioners continue to pursue deploying an advanced telecommunications network to the public schools, libraries, and other public facilities serving rural Pennsylvania as set forth in their Chapter 30 plans. Petitioners' demonstrated efforts to implement those plans are relevant to any future request to preserve the TA-96 rural exemption.

   Accordingly, we conclude that an additional 36-month extension of the Petitioners' interconnection suspension is not consistent with the public interest, convenience, and necessity, and the Petitioners' request should be denied; Therefore,

   It Is Ordered That:

   1.  The Petition for Joinder of Citizens Telephone Company of Kecksburg; Frontier Communications of Breezewood, Inc., Frontier Communications of Canton, Inc., Frontier Communications of Pennsylvania, Inc., Frontier Communications of Lakewood, Inc., Frontier Communications of Oswayo River, Inc., TDS TELECOM/Mahanoy and Mahantango Telephone Company, and TDS TELECOM/Sugar Valley is granted.

   2.  The request of joint Petitioners: Armstrong Telephone Company-North; Armstrong Telephone Company-Pennsylvania; Bentlyville Communications Corp. d/b/a/ The Bentlyville Telephone Company; Buffalo Valley Telephone Company; Conestoga Telephone & Telegraph Company; Denver and Ephrata Telephone & Telegraph Company d/b/a D&E Telephone Company; Hickory Telephone Company; Ironton Telephone Company; Lackawaxen Telephone Company; Laurel Highlands Telephone Company; Marianna & Scenery Hill Telephone Company; The North-Eastern Pennsylvania Telephone Company; North Penn Telephone Company; North Pittsburgh Telephone Company; Palmerton Telephone Company; Pennsylvania Telephone Company; Pymatuning Independent Telephone Company; South Canaan Telephone Company; Venus Telephone Company; Yukon-Waltz Telephone Company; Citizens Telephone Company of Kecksburg; Frontier Communications of Breezewood, Inc.; Frontier Communications of Canton, Inc.; Frontier Communications of Pennsylvania, Inc.; Frontier Communications of Lakewood, Inc.; Frontier Communications of Oswayo River, Inc.; TDS TELECOM/Mahanoy and Mahantango Telephone Company; and, TDS TELECOM/Sugar Valley for a 36-month suspension of interconnection obligations set forth in Section 251(b)(1) and (c) of the Telecommunications Act of 1996 is denied.

   3.  The Secretary serve a copy of this Order upon all parties.

   4.  The Secretary publish notice of this order in the Pennsylvania Bulletin.

JAMES J. MCNULTY,   
Secretary

Dissent of Commissioner Aaron Wilson, Jr.

Petition of Twenty Rural Incumbent Local Exchange Carriers for a 36-month Suspension of Interconnection Requirements Limited to Only Those Set Forth in Section 251(b)(1) and (c) of the Telecommunications Act of 1996; and Petition of Eight Rural ILECs to Join and for Relief under Section 251(f)(2) of the Telecommunications Act of 1996

Public Meeting January 15, 2003 JAN-2003-L-0097 Docket No. P-00971177

   Today's majority denies continuation of the Petitioners' Section 251(f)(2) suspension or modification granted in our previous orders in this docket. The majority's decision overlooks the reason we provided Section 251(f)(2) relief in the first place i.e., the unsettled state of affairs at the federal level on non-rural telecommunications issues in favor of a recommendation that rests on a cursory belief that ''significant progress'' has been made on federal interconnection, access reform, and universal service sufficient to deny Section 251(f)(2) suspension or modification. The majority's decision also relies on a dubious discussion of the law and the rural carriers' claims under Section 251(f)(2).

   I dissent.

   As a matter of state and federal law, I believe that the detailed discussion and analysis amply demonstrate why today's decision is not supported by substantial evidence, is based on errors of law, and violates the Petitioners' constitutional rights.⁶ The decision is, in my opinion, arbitrary and capricious under state and federal law.

   I base this conclusion on the reasoning set forth below.

   First, by granting Section 251(f)(2) suspension or modification,⁷ the Commission and rural carriers avoid expending time and resources focusing on issues that have not yet been resolved for non-rural carriers, the major focus of the Telecommunications Act of 1996, and which do not have to be answered yet for the rural carriers in this petition.

   Moreover, the federal courts have ruled that the TA-96 intends to promote competition and protect rural companies because rural companies have less of a capacity than larger and more urban ILECs to meet the burdens imposed on carriers under the TA-96.⁸

   The majority decision, however, focuses exclusively on duties and obligations designed to promote competitive markets.⁹ The majority decision fails to recognize the real differences between rural carrier and non-rural carriers, a difference recognized by the FCC¹⁰ and the federal courts, and fails to discuss the fact that the scarce resources spent by rural carriers on avoidable Section 251(b) or (c) obligations are resources not available to meet the unavoidable network modernization deployment goals of the TA-96.¹¹

   The majority decision also concludes that evolution and significant progress on federal issues relating to non-rural carriers, the availability of IntraLATA toll revenues and the existence of a state universal service fund are more important considerations than the Section 251(f)(2)(A)(i)-(iii) factors given the paucity of their discussion in the majority's decision.¹²

   I think the Commission's time and resources are better spent focusing on the major issues facing major carriers and their competitors.

   The interconnection, universal service and access reform issues for major carriers, not small rural carriers that serve a few people over a large territorial area, are the major focus of the TA-96. The unavoidable issues of major carriers, not the avoidable issues of rural carriers in rural areas, were the focus of the TA-96. That should be the Commission's focus.

   Second, there is no final federal policy for the major carriers on interconnection, access reform, and universal service let alone for rural carriers such as these Petitioners. If we have been unable to resolve those issues for major carriers after six years of major litigation, I am mystified by the majority's belief that the Commission has the expertise, sophistication, and wisdom to take on the additional, diverse, expensive, and complex concerns of rural telecommunications.¹³

   The majority's decision to subject rural carriers to Section 251(b) and (c) competitive obligations, notwithstanding the federal presumption against it as set forth in Section 251(f)(2) and the Iowa Utilities Board decision, is contrary to the law, evidence, and public interest.

   Third, there is no final settled policy on interconnection. In fact, the Federal Communications Commission (FCC) is re-examining and will re-issue yet another list of federal unbundling requirements (UNEs) for non-rural carriers after more than six years of debate, costly litigation in state and federal courts, and one Supreme Court decision.¹⁴

   There is no settled policy on universal service support, costing, or contributions. The FCC just recently established an interim universal service contribution methodology, after more than six years of controversial debate, while it issued a Notice of Proposed Rulemaking (NOPR) that hopes to develop final regulations and policy.¹⁵ This Interim USF Order noted the increased bundling of interstate and intrastate services, observed expansion of Voice Over the Internet (VOIP) as a substitute for long-distance calling and the access revenues such calls generate, and recognized the increased use of wireless communications as factors that have contributed to a decline in interstate revenue support for local services.¹⁶

   There is no settled policy on access reform for non-rural carriers. In that regard, the FCC has adopted two industry proposals to reform carriers' reliance on access revenues. Those two decisions recognize the unique characteristics and challenges facing rural local exchange carriers compared to non-rural carriers.¹⁷ In fact, the FCC admits that the access reform regime now in effectfor rural carriers is a five-year transition plan that the FCC hopes will maintain existing facilities until a final plan can be established.¹⁸ Finally, federal policy on what, if any, technological platforms should be subject to the access charges that support universal service is unsettled at the present time.¹⁹

   This extremely uncertain and ambiguous state of affairs concerning the ''federal trilogy'' on federal law at the federal level for major carriers should caution against a precipitous rush to overturn the Section 251(f)(2) suspension or modification already provided to these carriers. This uncertain state of affairs, however, is of no moment to the majority. They reject uncertainty and caution in favor of a hasty decision on Section 251(f)(2) suspension or modification relief that facilitates a transient claim to promote competition in rural areas even though neither the federal courts nor the TA-96 envisioned that competition as the statutory norm.

   Another additional reason for rejecting the recommendation is the current state of affairs at the federal level on a dispute between wireless and rural carriers over the compensation wireless carriers should pay rural carriers for terminating the wireless calls of major carriers. Recent pleadings here and at the federal level could require the rural carriers to expend more scarce resources addressing attempts by wireless carriers to change the compensation that wireless carriers currently pay for terminating those calls. The wireless carriers have petitioned the FCC for a federal declaration that calls between a wireless carrier and an incumbent carrier, and rural carriers in particular, are subject to bill and keep as opposed to reciprocal compensation.²⁰

   Also, if we remove the Section 251(f)(2) suspension or modification now provided to our rural carriers, we will effectively require those carriers to expend time and money addressing interconnection, compensation, and technology protocol issues when those scarce resources are better devoted to providing the advanced telecommunications network envisioned by the TA-96 and independent state law.²¹ That was a critical part of our reasoning in 1997. Little, if anything, has changed at the federal level since then to justify a different result.²²

   In addition, rural carriers, and there is no record evidence that Pennsylvania's rural carriers are any different, have significantly higher investments and operating expenses per subscriber compared to non-rural carriers. Rural carriers, and Pennsylvania carriers are no excep-tion, recover a far greater portion of their revenue from inter and intrastate access revenues.²³ A jump to competition when the federal law is so uncertain and when we have not addressed the different challenges facing rural carriers is not advisable, is not supported by the record in this case, will have a significant adverse impact on rural users, will impose requirements that are unduly economically burdensome, and is inconsistent with the public interest, convenience, and necessity.

   This will occur because new carriers will focus on the one or few multiple line/high-volume customers in a rural carrier's service territory and from whom the rural carriers derive a significant portion of their access revenues. This reliance and the disappearance of those revenues is not an issue that either the FCC or this Commission has resolved at this time.²⁴ Although we have supported increases in customer rates as a partial solution when we implicitly supported the subscriber line charges required by the federal MAG Plan, the fact remains that the loss of one or a few of a rural carriers scarce multi-line/high-volume customers through a hasty and precipitous introduction of alternative carriers will have a devastating impact on local rates, subscribership, and universal service.²⁵

   Moreover, federal and state law envisions deployment of an advanced telecommunications network. The TA-96 recognized differences between rural and non-rural carriers by providing rural carriers Section 251(f)(2) suspension or modification as a means of encouraging deployment of that network. We encouraged our rural carriers to deploy this advanced telecommunications network and, in support of that federal goal, approved carrier plans to update their networks at considerable capital expense. Those plans are now in the midst of implementation. If we do not continue the Section 251(f)(2) suspension or modification provided to our carriers under federal law, we jeopardize those commitments.²⁶ We also run the risk of creating stranded investment in those rural areas of Pennsylvania that already have more in common with our inner urban areas than might otherwise appear to be the case at first blush.²⁷

   Finally, the comments from potential competitors who oppose granting the requested Section 251(f)(2) suspension or modification are focused solely on one petitioner. I do not think that the concerns of two potential competitors, none of whom have made the bona-fide request for interconnection required by TA-96 and only one of whom is actually a competitive local exchange carrier (CLEC), justify such a broad denial of any Section 251(f)(2) suspension or modification based on the erroneous conclusion that the rural carrier failed to meet the ''burden of proof'' imposed on them under TA-96. Those comments and the underlying recommendation lack any in-depth factual statements or analysis, such as that set forth in this dissent, and they rely on vague and undocumentedclaims about competitive interest. Vague and undocumented claims about potential interest should not be the basis for rejecting a party's request for relief when that relief relies on specific concerns, factual statements, and the current state of affairs at the federal level.

   I think the Petitions, with the exception of North Pittsburgh, should have been granted relief for one year with an option to request additional extensions. I also think that the Petition of North Pittsburgh should have been remanded to the Office of Administrative Law Judge for further examination and issuance of a recommended decision within 180 days on whether North Pittsburgh's Section 251(f)(2) suspension or modification should be granted or denied. Such a proceeding will give all the parties and this Commission an opportunity to make a reasoned Section 251(f)(2) determination based on the law, the facts, the parties concerns, and credible business plans.

   I also think that the rural carriers asked too much for too long. The pending federal trilogies may be resolved within the next 36 months or even the next 12 months. The state legislature may take a different approach to rural carriers with the expiration of Chapter 30 in December 2003. The FCC and the federal legislature may significantly alter their current approach to rural carriers.

   For that reason, I think we could have, but did not, adopt a version of the reasoned options proposed by the OCA and OTS. They and the rural carriers, but not today's majority, recognized that Section 251(f)(2) suspension or modification may be warranted for the reasons set forth above.

   I also think that we could have, but did not, expressly state that any Section 251(f)(2) suspension or modification would expire on July 11, 2004 unless the Commission grants any additional one year extensions. Such extensions could have been granted, but never will after today, if (a) the rural carriers affirmatively demonstrate a state of uncertainty at the federal level on matters involving interconnection, universal service, and access reform; and (b) the carriers continue to demonstrate, with specificity of factual result, progress on and compliance with the network modernization and deployment commitments now underway in rural Pennsylvania in furtherance of federal and state law.

   We are not taking this cautious path. Instead, we are making a hasty decision based on cursory beliefs and statements about burden of proof that are contrary to the law.

   As a result, Pennsylvania's rural consumers and carriers will now pay the price for an arbitrary and capricious determination that is contrary to the law, the evidence, and the public interest under state and federal law.

   I cannot, and do not, support such a result.

Aaron Wilson, Jr.,   
Commissioner

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¹ A question was raised regarding the continued exemption of Citizens Telephone Company of Kecksburg, given this Commission's decision in Applications of Armstrong Communications, Inc.; Petitions of Citizens Telephone Company of Kecksburg for Suspension and Streamlined form of Regulation, Docket Nos. A-310583F0002, A-310583F0004, P-00971229, Order entered April 28, 1999 (Armstrong/Citizens). (Comments of Armstrong, p. 3). Armstrong comments that Citizens' request for joinder should be denied because Citizen's standing rural exemption was terminated by our order in Armstrong/Citizens. However, we conclude, as asserted by Citizens, that TA-96 intends that the exemption stand unless a bona fide request for interconnection is received and a contemporaneous offer of proof supports the termination of the exemption. In fact, TA-96 grants this Commission authority to modify or suspend the interconnection obligations of the rural ILECs at any time. In exercise of this authority, we conclude, Citizens, like the other petitioners, shall continue to be entitled to the exemption, unless and until challenged by bona fide request for interconnection. If a bona fide request for interconnection is made to Citizens, then our decision in Armstrong/Citizens will be relevant to termination of the exemption. However, Citizens will be afforded the opportunity to show a change in circumstances.

² Subsequently, Commonwealth Telephone Company, which had also sought joinder, withdrew its request, per letter dated September 11, 2002. Therefor, Commonwealth Telephone is not considered in this matter.

³ We note that the Office of Small Business Advocate (OSBA) filed comments in response to the Joinder Petition which adopted the same Position as OTS in the matter. (Comments of OSBA filed August 23, 2002).

⁴ As we have noted, supra. at fn. 1, while ultimately we agree that Citizens is not entitled to the requested suspension relief, we conclude, as is within our discretion, that Citizens does have the continued right to exemption. However, our prior determination in Armstrong/Citizens on the issue of technical feasibility of interconnection with Citizens will be relevant if Armstrong submits a bona fide request and Citizens refuses to interconnect claiming the exemption.

⁵ All petitioners have been granted an original 2-year suspension and the three subsequent 1-year extensions, for a total of 5-years' suspension from interconnection obligations. By Secretarial Letter dated July 9th, 2002, Petitioners' suspensions, which were set to expire on July 10, 2002, were extended until disposition of this matter. Further, the continued suspension extends to the Rural ILECs, which sought and have been granted joinder in this matter.

⁶ Kundrat v. Commonwealth of Pennsylvania, State Dental Council and Examining Board, 67 Pa. Commonwealth Ct. 341, 447 A.2d 355 (1982); Iowa Utilities Board v. FCC, 219 F.3d 744, 749 (8th Circuit 2000) (''federal courts defer to an agency's interpretation only if the interpretation is consistent with the plain meaning of the statute and will overturn an interpretation only if that interpretation is unreasonable construction or is arbitrary and capricious. In review, the test is not whether the agency made the best interpretation but whether the agency made a reasonable selection among the alternatives.'').

⁷ The TA-96 plainly intended to relieve rural carriers of the burdens imposed on other carriers, promote competition, and to protect rural telephone companies as evidenced by the congressional debates. Iowa Utilities Board, 219 F.3d at 759 and 761, emphasis added. There are only two ways a state commission can remove the protection afforded rural telephone companies. These are an exemption under Section 251(f)(1) or a modification or suspension of Section 251(b) or (c) obligations under Section 251(f)(2). In both cases, there are discrete components that must be established as a matter of evidence.
   A state commission can remove an exemption from the Section 251(c) requirements of the TA-96 only if there has been a bona fide request for interconnection and we have determined that removing the exemption is not unduly economically burdensome, is technically feasible, and is consistent with Section 254. The FCC's attempt to constrict these considerations and to impose the burden of proof on the rural carriers under the FCC's rules was struck down and vacated by the federal courts. Iowa Utilities, 219 F.3d at 759-765. Staff's recommendation contains no evidence on any of the Section 251(f)(2) exemption factors other than undocumented conclusions, dismissals of the evidence submitted by the rural carriers, and express reliance on the putative interest of one building contractor and one possible competitor (who never did submit any bona fide request for interconnection) about a possible interest in serving in the service territory of ONE of the 26 Petitioners. The majority's opinion, to the extent it might rest on an exemption under Section 251(f)(1), relies on a staff recommendation that contains no evidence on the Section 251(f)(1) criteria, no discussion of the Section 254 considerations, and is contrary to the plain meaning of Section 251(f)(1).
   In the alternative, a state commission can grant a modification or suspension of Section 251(b) or (c) requirements under Section 251(f)(2). The majority reads the rural carriers' request to be an exclusive Section 251(f)(2) issue. If that is the case, the law clearly states that a state commission shall grant the relief if it is necessary to avoid a significant adverse harm on users, to avoid imposing a requirement that is unduly economically burdensome; or to avoid imposing a requirement that is technically infeasible AND is consistent with the public interest convenience and necessity. On this section, the federal courts have ruled that it is a burden to provide what Congress directed must be provided under Section 251(b) or (c) and that Congress specifically intended to exempt rural carriers from those obligations unless all three prerequisites were established. Iowa Utilities Board, 219 F.3d at 761. It is the full economic burden on the ILEC of meeting the request that must be assessed by the Commission. There is no evidence in today's majority decision that any economic burden, let alone the full economic burden, was considered at all. Compare Majority Decision at 7-11 with Iowa Utilities, 219 at 759-765 and Part E(2) in particular. The burden of proof is not placed on the rural carrier. Compare Majority Decision at 10 with Iowa Utilities, 219 F.3d at 762.

⁸ Iowa Utilities Board, 219 F.3d at 759, 761.

⁹ Compare Majority Decision at 7 with Iowa Utilities, 219 F.3d at 761.

¹⁰ See note 12 below.

¹¹ Compare Majority Decision at 7-11 with Iowa Utilities, 219 F.3d at 761 citing 142 Cong.Rec. S687-01 (Feb. 1, 1996) (statements by Sen. Hollings and Sen. Burns); 142 Cong.Rec. H1145-06 (Feb. 1, 1996) (Statement by Rep. Orton) and Conference Report, Telecommunications Act of 1996, Statement of Mr. Pressler from the Committee of Conference, p. 1.

¹² Compare Majority Decision at 7-12 and p. 12 in particular (''no evidence has been produced to establish a substantial adverse economic impart'') with Section 251(f)(2)(A)(i) (avoid a significant adverse economic impact) and Iowa Utilities Board, 219 F.3d at 760-762 (''It is the full economic burden on the ILEC of meeting the request that must be assessed by the state commission.'').

¹³ This concern is underscored by several facts. For example, during my tenure as a Commissioner, I am unaware of any specific site visit by any delegation of Commission staff to view, and experience, the problems and challenges facing rural Pennsylvania. Moreover, the Commission has not gone on record in one single proceeding at any time on rural concerns. This includes the FCC's Rural Task Force or any number of FCC rural proceedings--including federal support for rural health care services.

¹⁴ See Verizon Communications, Inc. v. Federal Communications Commission, 112 S.Ct. 1646 (2002); ''Federal Communications Commission Initiatives Review of Local Phone Network Unbundling Policies,'' Docket No. CC 01-339 (December 12, 200). The Comment and Reply Period closed July 17, 2002. The FCC has yet to issue a final order that, given the controversial nature of the matter, will probably engender further appeals. See, for example, Ex Parte letter filed with the FCC Nov. 19, by Qwest Communications International, Inc., SBC Communications, Inc., BellSouth Corp., and Verizon Communications, Inc.. The parties urged the FCC to reject requests by some state regulators and competitive local exchange carriers that states should be able to place a network element back on the unbundling list, even if the element is removed by the FCC, or that the FCC should delegate much of its responsibility over unbundling to the states. ''Bells Urge Limited State Role in UNE Decisions,'' TR Daily, November 17, 2002; Mississippi Public Service Commission, Letter to Chairman Michael Powell on Unbundled Network Elements, November 18, 2002, pp. 1-2 (UNE-P is a critical element in local competition and states are best positioned to determine what UNEs should be available); CLEC Letter to NARUC rebutting Verizon's claim that UNE-P was the functional equivalent of Total Service Resale (TSR) (November 18, 2002); ''States Unified Against FCC Eliminating UNE-P, Backing State Role Over UNE List,'' TR Daily, November 17, 2002.

¹⁵ See ''Federal Communications Commission Adopts Interim Measures to Maintain Universal Service Fund,'' Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, and 98-170.

¹⁶ See ''Federal Communications Commission Adopts Interim Measures to Maintain Universal Service Fund,'' Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, and 98-170.

¹⁷ For example, the FCC's 2001 decision adopting a five-year plan on access reform and universal service acknowledged use of a modified embedded cost mechanism for rural carriers and a forward-looking high-cost support mechanism for non-rural carriers. Federal-State Joint Board on Universal Service, Multi-Association Group (MAG) Plan for Regulation of Interstate Services of Non-Cap Incumbent Local Exchange Carriers and Interexchange Carriers, Order on Reconsideration (June 13, 2002), pp. 2-3 (June 2002 Reconsideration Order). The FCC's endorsement of the MAG Plan for rural carriers is, at best, a five-year transition plan that contemplates a Subscriber Line Charge (SLC) of $6.50 for residential users and $9.50 for others--and rates have been increased to reflect implementation of the RTF Order.

¹⁸ Second Reconsideration Order at 10, n. 59 citing RTF Order, 16 FCC Rccd at 11258, para. 28, emphasis added.

¹⁹ See Cable Modem Service NPRM. CS Docket 00-185 and CS Docket 02-52 (March 14, 2002). The FCC, after flatly declaring that cable modem is an ''interstate service'' and not a ''telecommunications service'' subject to common carrier regulation, opened a rulemaking to determine whether there were policies or legal reasons to treat cable modem service broadband differently from wireline broadband i.e., should cable be subject to unbundling or should cable companies have to permit ISPs other than their own to provide service to their customers? Moreover, the FCC has yet to act on AT&T's Petition to treat Voice-Over-The-Internet (VOIP) as exempt from access charges. Wireline Competition Petition. WC Docket No. 02-361 (November 18, 2002). Reply Comments are Due January 24, 2003.

²⁰ See, ''Comment Sought on Sprint Petition for Declaratory Ruling Regarding the Routing and Rating of Traffic by ILECs, DA 02-1740 (released July 18, 2002), AT&T Wireless Services, Inc. Reply Comments in Support of the Sprint Petition, pp. 15-16 (Wireless Petition Comment). ''It is critical to the development of CMRS competition that the Commission establish uniform policies on CMRS interconnection. This is particularly crucial in rural territories, where the frequency of disputes regarding the appropriate interpretation of the Act and the Commission's rules is increasing in volume and intensity. Wireless Petition Comment at 16.

²¹ See Telecommunications Act of 1996, Conference Report, Statement Accompanying S.652 (later the TA-96), p. 1; 66 Pa.C.S. § 3001(1).

²² See In the Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, Comments of the National Rural Telecomm Association and the Organization for the Promotion and Advancement of Small Telecommunications Companies, August 2001, p. 12 (NRTA-Opastco Comment). ''The present mix of access charges, end-user charges, and universal service has made it possible for small and rural ILECs to make the substantial investments necessary to serve the most sparsely populated areas and to promote high subscriber penetration.''

²³ NRTA-Opastco Comment, p. 13. In fact, most small and rural ILECs derive, in the aggregate, over 60 percent of their revenues from a combination of inter and intrastate toll access charges and universal service support mechanisms. Ibid. at 13.

²⁴ The majority's reliance on revenue derived from our state universal service fund is misleading and misplaced. That fund, originally supported by revenues from Verizon Pennsylvania's Price Change Opportunities, was originally focused on reducing the rural carriers' access charges to the predetermined amount set forth in our Global Order. That fund is set to expire well in advance of the FCC's five year transition plan. The absence of any federal or state support mechanism beyond the next few years will have adverse economic impacts on rural carriers' users. That impact will only be exacerbated by a rush to competition in rural areas where, if the experience with the non-rural carriers is instructive, the focus will be largely on multi-line/high-volume users.

²⁵ NRTA-Opastco Comment, p. 14.

²⁶ Petition of the Rural Carriers; Majority Decision at 4-5; NRTA-Opastco Comment, p. 14.

²⁷ See In the Matter of Rural Health Care Support Mechanism, WC Docket No. 02-60, Comment of Dr. Aaron Wilson, Jr., p. 1, n. 1.

[Pa.B. Doc. No. 03-196. Filed for public inspection January 31, 2003, 9:00 a.m.]

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