NOTICES
PENNSYLVANIA PUBLIC
UTILITY COMMISSION
Cancellation of Certificates of Public Convenience for Telecommunications Public Utilities; Reporting Zero Intrastate Operating Revenue
[49 Pa.B. 5084]
[Saturday, August 31, 2019]Public Meeting held
July 11, 2019Commissioners Present: Gladys Brown Dutrieuille, Chairperson; David W. Sweet, Vice Chairperson; Norman J. Kennard; Andrew G. Place; John F. Coleman, Jr.
Cancellation of Certificates of Public Convenience for Telecommunications Public Utilities; Reporting Zero Intrastate Operating Revenue; M-2019-3010251
Tentative Order By the Commission:
The Public Utility Code (Code) requires that by March 31 of each year, every public utility must file a report detailing its gross intrastate operating revenue for the preceding calendar year. 66 Pa.C.S. § 510(b). Gross intrastate operating revenue includes both retail and wholesale revenue derived from providing public utility service to the public for compensation in Pennsylvania. Under the assessment process and allocation formula established by the General Assembly, the public utility's annual revenue report is essential for the Commission to fund its operations and to properly allocate assessment costs among the regulated utility community. Id. Additionally, all public utilities, including telecommunications public utilities, are required to operate continuously and without unreasonable interruptions of service. 66 Pa.C.S. § 1501.
The Commission's Bureau of Administration has undertaken a review of its records to determine whether various utilities are complying with their operating and reporting requirements. According to that review, a significant number of telecommunications public utilities have reported zero gross intrastate operating revenue on the annual revenue reports required by Section 510(b) of the Code. Specifically, the telecommunications public utilities listed in Appendix A have filed the annual revenue report required by Section 510(b) but have reported zero gross intrastate operating revenue for the last three calendar years. Also, as shown on the annual revenue reports attached as Appendix B, each of these zero gross intrastate revenue reports was filed under oath by a representative of the public utility, under which each utility authorized the release of its state tax records to the Commission in accordance with Sections 505 and 506 of the Code so that Commission can verify the accuracy of the financial information supplied.
Each telecommunications public utility holding a Commission-issued certificate of public convenience (CPC) is assessed based on its gross intrastate operating revenues and is obligated to pay for the reasonable costs attributable to the regulation of all telecommunications public utilities. 66 Pa.C.S. § 510(f). Under the Section 510 assessment process, gross intrastate operating revenues is a key metric by which the Commission's costs of operations are allocated among public utilities holding a Commission-issued CPC. 66 Pa.C.S. § 510(b). By repeatedly reporting zero intrastate operating revenue, the telecommunications public utilities listed in Appendix A have failed to pay for the reasonable costs attributable to their regulation by the Commission and have failed to establish that they are operating continuously in Pennsylvania.
Section 1102 of the Code specifies that a CPC is required prior to beginning to ''offer, render, furnish or supply'' service ''within this Commonwealth.'' 66 Pa.C.S. § 1102(a)(1) (emphasis added). Moreover, to obtain a CPC as a public utility in Pennsylvania, an entity must offer its service to the public for compensation. 66 Pa.C.S. §§ 102(1)(i), (ii), (iv)—(vii). Thus, it follows that all certificated public utilities must have intrastate revenues, demonstrating intrastate service to the public for compensation in Pennsylvania, to qualify for public utility status in Pennsylvania.
Pursuant to Section 1103(a) of the Code, the Commission may grant a CPC to provide public utility status and service authority in Pennsylvania ''only if the commission shall find or determine that the granting of such certificate is necessary or proper for the service, accommodation, convenience, or safety of the public.'' 66 Pa.C.S. § 1103(a) (emphasis added). As such, if the Commission's records indicate that the entity holding a CPC has never or is no longer providing public utility service to the public for compensation in Pennsylvania, the CPC may be cancelled.
A public utility holding a CPC that has reported zero gross intrastate revenues for several years indicates that it is no longer providing jurisdictional public utility service in Pennsylvania for compensation. Therefore, a CPC for that entity is no longer necessary or proper for the service, accommodation, convenience, or safety of the public under Section 1103(a) of the Code.
Since 1996 with the implementation of the Telecommunications Act of 1996 (TA-96), this Commission has facilitated the entry of competitive carriers in Pennsylvania. However, having facilitated their entry does not mean that we have relinquished our regulatory authority and oversight where it remains necessary. In the intervening years, we have acted to ensure that those CPCs we issued remain used in the provision of jurisdictional public utility services. For example, we previously determined that telecommunications public utilities in Pennsylvania must begin providing service to customers within one year of receiving certification from the Commission.1 This proceeding is a responsible continuation of our prior efforts to ensure the proper use of CPCs in Pennsylvania.
Under these circumstances, we tentatively conclude that the telecommunications public utilities listed in Appendix A that have reported zero gross intrastate operating revenues for three or more years are deemed to be no longer providing public utility service for compensation in Pennsylvania and, consequently, are no longer entitled to hold a Commission-issued CPC. As such, it is appropriate to initiate the process via a tentative order for cancelling the relevant telecommunications public utilities' CPCs as being in the public interest.
The Commission previously issued a proposed policy statement at Docket No. M-2018-3004578 intended to provide guidance on intrastate revenue reporting to those telecommunications public utilities in Pennsylvania who provide services over facilities that carry both interstate and intrastate traffic and who report zero intrastate revenues. As part of the policy statement, the Commission proposed to address the ten percent contamination rule established by the Federal Communications Commission (FCC). This rule is an administrative rule for certain jurisdictional cost and revenue separations and allocations2 that many of the zero reporters have referenced as their rationale and justification for reporting zero intrastate operating revenues to the Commission.3 In a nutshell, the rule specifies that if ten percent or more of the traffic on a mixed-use line is interstate, then all of the traffic for that line is considered interstate.
To the extent that any of the telecommunications public utilities listed in Appendix A are providing only interstate services under the ten percent contamination rule, we tentatively conclude that these carriers do not have a valid legal basis to retain their existing CPCs in Pennsylvania. Unless demonstrated otherwise, as providers of only interstate services, they fall under the exclusive jurisdiction of the FCC under Section 152(a) of the Communications Act, 47 U.S.C. § 152(a).
Interstate services also fall outside of the Commission's jurisdiction under Section 104 of the Code, 66 Pa.C.S. § 104, which precludes the Commission from regulating interstate services, absent congressional authorization to do so. Here, there is no such congressional authorization. Neither the Communications Act of 1934 (Act) nor TA-96 confers jurisdiction to the Commission to certificate carriers providing only interstate services. Rather, Section 152(a) of the Act expressly preserves the FCC's exclusive jurisdiction over interstate services. And, while TA-96 provides state utility commissions with parallel jurisdiction in certain areas, jurisdiction to certificate carriers providing only interstate services is not one of those areas.4 The Commission's certification powers are governed exclusively by the Code, and nothing under state or federal law specifically authorizes the Commission to issue a CPC to a telecommunications carrier that fails to prove, after notice and opportunity to be heard, that it does provide intrastate service.
Also, we tentatively conclude that failing to certificate a provider of only interstate services is not a competitive barrier to entry in violation of federal law. Under Section 253 of TA-96, ''[n]o State or local statute or regulation. . .may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.'' 47 U.S.C. § 253(a). We do not believe that failing to certificate a provider of only interstate services is a competitive barrier to entry. Such an outcome would not prohibit or have the effect of prohibiting providers from operating in Pennsylvania. Rather, these providers would be able to operate free from Commission oversight and regulation.
Moreover, Section 253(b) of TA-96 explicitly preserves state authority to impose competitively neutral requirements that are necessary, inter alia, to ''safeguard the rights of consumers'' and to ''protect the public safety and welfare.'' We note that the Commission in its order on market entry procedures implementing TA-96 specifically rejected the argument that Section 253(a) preempted our certification requirements. Rather, the Commission viewed the certification requirements, which would include the requirement that a CPC holder provide an intrastate service to the public for compensation in Pennsylvania, as necessary to safeguard consumers from potentially irresponsible carriers. We further note that our uniform methodology to develop the annual fiscal assessment process is essential to properly allocating assessment costs among the regulated utility community and to funding the Commission's operations and thus, is entirely consistent with the preservation of state authority to protect the public safety and welfare.
It is appropriate to initiate the process via a tentative order to cancel the CPCs of the telecommunications public utilities listed in Appendix A who have reported zero gross intrastate operating revenue for the last three calendar years. To the extent that a telecommunications public utility on the list challenges the cancellation of its CPC, the public utility must file comments within 20 days after publication of a Tentative Order in the Pennsylvania Bulletin. In accordance with due process, any such challenges may be referred to the Commission's Bureau of Investigation and Enforcement for investigation and for whatever further action may be warranted.
Alternatively, the telecommunications public utilities listed in Appendix A may file revised Section 510(b) revenue reports for calendar years 2016, 2017 and 2018, within 20 days after publication in the Pennsylvania Bulletin, to reflect their gross intrastate operating revenues derived from Pennsylvania operations. Carriers should include all supporting information (such as traffic studies, tax returns, jurisdictional allocation formulas and factors, books of account, reports, etc.) on which the carriers base their revenue determinations.
Absent the timely filing of comments challenging cancellation of a telecommunications public utility's CPC or the timely filing of revised Section 510(b) revenue reports, the Law Bureau shall prepare a Final Order for entry by the Secretary cancelling the relevant telecommunications public utility's CPC. However, the cancellation of any of these CPCs shall not affect whatever interstate operating authority, interconnection rights or other privileges or obligations these telecommunications public utilities may have under federal law, regulations, tariffs or orders; Therefore,
It Is Ordered That:
1. The telecommunications public utilities listed in Appendix A that have reported zero gross intrastate operating revenues for three or more years are tentatively deemed to be no longer providing public utility service for compensation in Pennsylvania and, consequently, are no longer entitled to hold a Commission-issued Certificate of Public Convenience. As such, it is appropriate to tentatively cancel the Certificates of Public Convenience of the relevant telecommunications public utilities as being in the public interest.
2. The Secretary serve a copy of the Tentative Order upon the Commission's Bureau of Investigation & Enforcement, the Bureau of Technical Utility Services, the Bureau of Administration, Department of Revenue—Bureau of Corporation Taxes, and all telecommunications public utilities listed in Appendix A. The Tentative Order shall be filed at each telecommunications public utility's application docket number.
3. The Law Bureau shall publish a copy of the Tentative Order in the Pennsylvania Bulletin.
4. The telecommunications public utilities listed in Appendix A, to the extent they challenge cancellation of their Certificates of Public Convenience, must file comments within 20 days after publication of this Tentative Order in the Pennsylvania Bulletin. Comments shall be sent to the Pennsylvania Public Utility Commission, Attn: Secretary Rosemary Chiavetta, Commonwealth Keystone Building, 400 North Street, 2nd Floor, Harrisburg, PA 17120. In accordance with due process, any such challenges may be referred to the Commission's Bureau of Investigation and Enforcement for investigation and for whatever further action may be warranted.
5. Alternatively, the telecommunications public utilities listed in Appendix A may file revised Section 510(b) revenue reports for calendar years 2016, 2017 and 2018, within 20 days after publication in the Pennsylvania Bulletin, to reflect gross intrastate operating revenues derived from Pennsylvania operations. The revised reports shall be sent to the Pennsylvania Public Utility Commission, Attn: Secretary Rosemary Chiavetta, Commonwealth Keystone Building, 400 North Street, 2nd Floor, Harrisburg, PA 17120.
6. Absent the timely filing of comments challenging cancellation of a telecommunications public utility's Certificates of Public Convenience or the timely filing of a revised Section 510(b) revenue report, the Law Bureau shall prepare a Final Order for entry by the Secretary cancelling the telecommunications public utility's Certificate of Public Convenience.
7. Upon entry of the Final Order described in Ordering Paragraph No. 6 above, the Certificate of Public Convenience of the relevant telecommunications public utility shall be cancelled, and the telecommunications public utility will be stricken from all active utility lists maintained by the Commission's Bureau of Technical Utility Services and the Fiscal & Assessments Section of the Bureau of Administration.
ROSEMARY CHIAVETTA,
Secretary
Appendix A
Carriers Reporting Zero Revenue for 3 or More Years
Utility Code Company Name Application Docket 310303 SNET America, Inc. A-310303 311022 TelMex USA, LLC A-311022 311028 Encompass Communications, LLC A-311028 311192 WDT World Discount Telecomm A-311192 311332 ABS-CBN Telecom N America, Inc. A-311332 311397 Blue Ridge Digital Phone Co. A-311397 311413 Windstream KDL, Inc. A-311413 311428 Norstar Telecommunications, LLC A-311428 3110327 Business Automation Technologies A-2008-2054592 3110580 ATC Outdoor DAS, LLC A-2008-2072972 3110581 One Source Networks CLEC, LLC A-2008-2073167 3110677 Dollar Phone Enterprise, Inc. A-2008-2080477 3111184 NexGen Networks Corp. A-2009-2112793 3113014 Mobilitie, LLC A-2010-2216831 3113844 Fairpoint Business Services, LLC A-2011-2259342 3113846 Voda Networks, Inc. A-2011-2259803 3114607 PEG Bandwidth PA, LLC A-2012-2301870 3115379 United Federal Data of PA, LLC A-2012-2340487 3115456 Certain Communications Corp. A-2013-2346419 3115703 365 Wireless, LLC A-2013-2403433,
A-2013-24024353116309 RCLEC, Inc. A-2014-2403433,
A-2014-24034353116349 Constructure Technologies, LLC A-2014-2406886,
A-2014-24068873116719 Charter Fiberlink Pennsylvania, LLC A-2014-2433541,
A-2014-2433545,
A-2014-2433546,
A-2014-24335473118045 American Cell, LLC A-2015-2502822 3118329 Cross River Fiber, LLC A-2015-2517360 3118661 Vesta Solutions, Inc. A-2016-2537383 3118721 Mobilitie Management, LLC A-2016-2569449 3118756 eNetworks, LLC A-2016-2543402 3119096 Tenny Journal Communications, Inc. A-2016-2562453 3119203 Synergem Technologies, Inc. A-2016-2567694
Appendix B Please refer to the address below to view the reports contained in Appendix B.
http://www.puc.state.pa.us/about_puc/consolidated_case_view.aspx?Docket=M-2019-3010251
[Pa.B. Doc. No. 19-1347. Filed for public inspection August 30, 2019, 9:00 a.m.] _______
1 Final Order Regarding the Commission's Plan to Implement a One-Year Timeframe for Inactive Telecommunication Carriers to Provide Service on an Annual Basis within the Commonwealth of Pennsylvania, Docket No. M-2011-2273119 (Order entered July 19, 2012).
2 The ten percent contamination allocates the costs associated with a jurisdictional-mixed or mixed-use line between the interstate and intrastate jurisdictions in order to calculate the assessment of various federal fees for the federal universal service fund, interstate telecommunications relay services, the administration of the North American Numbering Plan, and the shared costs of local number portability administration. Under the rule, the cost of a mixed-use line is directly assigned to the interstate jurisdiction only if the line carries interstate traffic in a proportion greater than ten percent. See In the Matter of MTS and WATS Mkt. Structure, Amendment of Part 36 of the Commission's Rules and Establishment of a Joint Bd., 4 FCC Rcd 5660, ¶¶ 2, 6-7 (1989); see also 47 CFR § 36.154(a)-(b).
3 The Commission's Fiscal Office, the Bureaus of Technical Utility Services, Investigation & Enforcement, and Audits, and the Law Bureau (Staff) identified some telecommunications carriers certificated as Competitive Access Providers in Pennsylvania who reported revenues inconsistently or repeatedly reported zero intrastate revenues. Accordingly, the Commission requested Staff to undertake an inquiry to examine the carriers' claims of zero intrastate revenues. As part of this inquiry, on September 7, 2018, Staff issued to all carriers who reported zero intrastate revenues a Secretarial Letter setting forth a comprehensive set of inquiries examining the basis for some carriers' claims of zero intrastate revenues.
4 Two examples of parallel jurisdiction under TA-96 include jurisdiction over interconnection agreements under Sections 251 and 252, 47 U.S.C. §§ 251 and 252, and jurisdiction over Eligible Telecommunications Carrier designations under Section 214, 47 U.S.C. § 214.
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