NOTICES
PENNSYLVANIA PUBLIC
UTILITY COMMISSION
Cancellation of Certificates of Public Convenience for Telecommunications Public Utilities; Reporting Zero Intrastate Operating Revenue
[49 Pa.B. 5388]
[Saturday, September 14, 2019]Public Meeting held
July 11, 2019Commissioners Present: Gladys Brown Dutrieuille, Chairperson, statement follows, dissenting; David W. Sweet, Vice Chairperson; Norman J. Kennard; Andrew G. Place, statement follows, dissenting; 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 alloca-tions2 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 Three 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-2013-2402435 3116309 RCLEC, Inc. A-2014-2403433, A-2014-2403435 3116349 Constructure Technologies, LLC A-2014-2406886, A-2014-2406887 3116719 Charter Fiberlink Pennsylvania, LLC A-2014-2433541, A-2014-2433545, A-2014-2433546, A-2014-2433547 3118045 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
Statement of Chairperson Gladys Brown Dutrieuille This case involves the proposed revocation of the Certificate of Public Convenience (CPC) of some telecommunications public utilities who have allegedly failed to establish any public utility operations in Pennsylvania for the past three years. This is evidenced by the fact that they report no intrastate revenues under Section 510(b) of the Public Utility Code based, at least in part, on the 10% contamination rule. The federal 10% contamination rule treats intrastate revenues as interstate revenues when a customer states that more than 10% of those services are interstate. This rule arises under federal separations rules, a process that allocates network costs and revenue between interstate and intrastate jurisdictions. Revenues subject to this 10% contamination rule cannot be assessed for state universal service purposes.5
We have two classes of carriers under this rule.6 The first class contains carriers who are the subject of this action because they report zero intrastate revenues, particularly those that classify their revenues to be interstate under the 10% rule.7 The second class take thesame view of the 10% rule8 but pay assessments on intrastate revenues from other operations under Section 510(b).9
I disagree that the first class of carriers reporting zero intrastate revenues under the 10% contamination rule should be the subject of a Commission action. No carrier relying on the 10% contamination rule should lose their CPC.10
This approach to the 10% rule taken under Sections 1102 and 510(b) must be read in pari materia with the Telecommunications Act of 1996 (TA-96), particularly the Section 253 prohibition against erecting state barriers to entry into competitive markets. The Commission violates Section 253 by favoring telecommunications public utilities who report intrastate operating revenues, even if they also exclude revenues under the 10% contamination rule, compared to competitors who report no intrastate revenues under the same rule.
Section 1102 extends Commission authority to public utilities who provide service to the public for compensation. There is no language limiting jurisdiction only to ''intrastate'' public utilities with ''intrastate'' revenues. Any exclusive reliance on Section 104 for that proposition is misplaced because that provision must be read in para materia with Section 313(a), a provision recognizing concurrent power of the states to regulate interstate commerce. Concurrent power is the situation today in telecommunications given that federal law includes intrastate telecommunications and prohibits state barriers to competition.11
Section 510(b) contains no language authorizing the revocation of a CPC of an interstate public utility for reporting no intrastate revenues, particularly when that impedes their ability to compete or our ability to protect consumers. These are important considerations. A Pennsylvania CPC has, and continues to, facilitate the enforcement of federal law and the delivery of interstate services in Pennsylvania while promoting competition and protecting consumers.12 These provisions cannot sustain acts, policies or regulations that erect barriers to entry.
This action also violates our precedent. Our 1996 Order implementing the TA-96 issued CPCs to interstate and intrastate public utilities without this distinction and regardless of their revenues. We did so to avoid Section 253 preemption of our authority to issue CPCs. This approach makes it easier for competitive telecommunications public utilities to enter Pennsylvania markets to provide interstate and intrastate services as required by TA-96. The Commission cannot unilaterally create new subclasses of providers or start parsing revenues not announced in our 1996 Order, let alone revoke their CPC based on that unilateral action, without providing notice and an opportunity to be heard. To do that, the Commission must first amend that 1996 Order under the Section 703(g) process.
The Commission should not unilaterally issue this novel interpretation of Sections 1102 and 510(b) of the Public Utility Code and then selectively enforce it using a legal theory not reflected in a final Regulation. Agencies can announce rules by regulations or precedent but not in order to avoid a final regulation.13
Finally, some of the providers listed in Appendix A are Distributed Antenna System (DAS) operators. The Commission previously determined that DAS operators are not telecommunications public utilities under Pennsylvania law. That decision is under appeal in our Supreme court and is subject to a continuing Commonwealth Court stay. The Commission cannot conclude that these DAS providers are not jurisdictional public utilities and then, in the middle of an appeal on that very issue, proceed to revoke their CPCs for failure to report intrastate revenues as a regulated jurisdictional public utility. This violation of that stay is worsened when the subclass is limited to only those carriers who rely on the 10% contamination rule and report zero revenues while others, who are doing the same thing but pay assessments on intrastate revenues from other operations, do not.14
We must respect a stay issued in a jurisdictional case on appeal by not acting on related matters until the Supreme Court resolves the matter. A stay is a stay.15
For these reasons, I vote no.
GLADYS BROWN DUTRIEUILLE,
Chairperson
Statement of Commissioner Andrew G. Place Before us for disposition is the proposed initiation of a de-certification process for a number of competitive telecommunications carriers via a Tentative Order process. These competitive carriers have been previously certified by this Commission to operate within Pennsylvania and they have reported zero gross intrastate revenues to the Commission for a period of three years and, consequently, they have not been subject to the Commission's fiscal assessments under Section 510 of the Public Utility Code. A number of these carriers have been certified as competitive access providers (CAPs) consistent with our Implementation Orders that enforce relevant provisions of the federal Telecommunications Act of 1996 (TA-96),16 and some of them are distributed antenna system (DAS) providers. Some of these carriers have already responded to Staff data requests as to their respective reporting of zero intrastate revenues to the Commission and they have premised such reporting on the ten percent contamination rule of the Federal Communications Commission (FCC) that has been in effect in various forms since 1989.
The FCC's ten percent contamination rule can and does affect the jurisdictional classification of private line and special access circuits and services, and the corresponding classification of relevant capital investment, fixed costs, operational costs, and revenues. In short, if such circuits and services receive an interstate classification because of the types of traffic that they handle, then the telecommunications carrier in question will report zero intrastate revenues to this Commission for the purpose of fiscal assessments. The same carrier will report to the FCC the appropriate interstate revenues for a variety of federal purposes, including the computation of the FCC's regulatory fees.
The initiation of a decertification action against competitive carriers that affirmatively invoke or utilize the FCC's long-standing ten percent contamination rule and do not report intrastate operating revenues to this Commission is plainly wrong. This action does not afford appropriate due process to the affected carriers, it is unfairly discriminatory because it singles out only competitive carriers that invoke or use the FCC's ten percent contamination rule and violates federal law and regulations.
A. Lack of Due Process
This Commission—and many other state public utility or public service commissions—have lived under the FCC's ten percent contamination rule since it was first enacted in 1989 and subsequently modified to its current form.17 The invocation and utilization of the FCC's ten percent contamination rule by both competitive and incumbent telecommunications carriers for their private line and special access circuits, services, and revenues that are classified as interstate, has not triggered the attention of this Commission for many years. This agency has rationally accepted how this FCC rule operates and the end result of how relevant service revenues may be or are classified as interstate and not reported to this Commission for fiscal assessment purposes. If this agency had any material issues on how this rule applied for telecommunications carriers that operate under this Commission's jurisdiction, then this agency should have affirmatively sought to change this FCC rule. This, to the best of my knowledge and belief, has not happened.
Rather, the Commission prefers to initiate a decertification enforcement action against a number of competitive carriers, including those that affirmatively invoke or otherwise utilize this FCC rule and report zero gross intrastate revenues to this Commission.18 This does not provide appropriate due process to these competitive carriers because prior agency actions (e.g., Commission Staff discovery carried out in 2018), did not announce or declare a potential change in this agency's views regarding the applicability of the FCC's ten percent contamination rule to the individual competitive carriers that are the subject of this decertification enforcement action. Furthermore, the Commission did not provide comprehensive notice that it was potentially intending to change its long-standing views on the applicability of the FCC's contamination rule until November 8, 2018, and the appropriate notice publication in the Pennsylvania Bulletin did not take place until March 2, 2019.19 However, the present initiation of the decertification enforcement action retroactively extends for a past three-year period (2016-2018) for these competitive carriers and this greatly exacerbates the already existing due process problems. For example, the targeted competitive carriers may have to reconstruct and document records for specific private line and special access circuits or groups of circuits and consult with their end-user customers in order to ascertain whether the FCC's ten percent contamination rule was properly applied either by the carriers themselves or through their customers through corresponding certifications.
B. Discriminatory Treatment Between Competitive and Incumbent Carriers
The Commission's initiation of a decertification enforcement process against competitive telecommunications carriers that report zero intrastate revenues to this Commission is selective and discriminatory. Incumbent local exchange carriers (ILECs) also offer private line and special access services that are subject to the FCC's ten percent contamination rule and are classified as interstate. When that happens, the relevant ILEC interstate revenues are not reported to this Commission and are not subject to intrastate fiscal assessments.20 The theory that, the currently certified competitive carriers that are the target of the instant decertification enforcement action probably provide only interstate services and therefore do not need to be under this Commission's jurisdiction, ignores the fact that these carriers were certified so that they would have the ability to provide both intrastate and interstate services within the Commonwealth in accordance with the Commission's 1996 Implementation Orders. Furthermore, several of the targeted competitive carriers compete with ILECs in the provision of the same private line and special access services that are classified as interstate under the FCC's contamination rule. Thus, the instant Commission action constitutes a discriminatory approach among competitive and incumbent providers of the same services within Pennsylvania. This approach violates both the letter and the spirit of Section 253(a) of TA-96, that specifically bars any legal requirement that ''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) (emphasis added).
The FCC has stated the following in its own analysis of Section 253(a): ''As reflected in decisions such as the Commission's [FCC's] Texas PUC Order, a state or local legal requirement can function as an effective prohibition either because of the resulting 'financial burden' in an absolute sense, or, independently, because of a competitive disparity.''21 The FCC has further explained that ''Commission [FCC] precedent beginning with California Payphone itself makes clear that an insurmountable barrier is not required to find an effective prohibition under Section 253(a).''22 There is no doubt that the present initiation of a decertification enforcement proceeding against the targeted competitive carriers—while the interstate private line and special access services of ILECs affected by the FCC's contamination rule are not the subject of any Commission inquiry—will create a ''competitive disparity'' and, thus, an ''effective prohibition'' for competitive carriers to offer the same types of services within the Commonwealth.
Although there is a theory that certified telecommunications carriers that provide only interstate services within Pennsylvania do not need certification from this Commission, operational realities point to a totally different conclusion. This theory is totally inapplicable for the targeted telecommunications carriers that affirmatively invoke or otherwise utilize the FCC's contamination rule. Their respective private lines and special access circuits, in all likelihood, can and do handle both intrastate and interstate telecommunications traffic. However, the FCC's contamination rule operates in such a way (based on the proportions of intrastate and interstate traffic) to classify these private line and special access circuits as interstate for regulatory purposes.23 But, this is a far cry from a blanket assertion that because certain of the competitive carriers implicated in this proceeding report zero intrastate revenues to the Commission, that this automatically translates to an absolute ''zero'' of intrastate operations and services. For example, a Commission certified CAP that is also a DAS provider utilizing a special access fiber optic circuit to transport wireless traffic on behalf of wireless service providers may classify this circuit as interstate under the FCC's contamination rule. This does not mean that the same circuit does not simultaneously transport intrastate wireless calls including 911/E911 wireless emergency calls, and that this CAP somehow does not provide intrastate wholesale transport services.24 In other words, the jurisdictional classification and assignment of the circuit and its revenues does not necessarily follow its actual provision of intrastate services.
Commission certification of competitive telecommunications carriers as public utilities facilitates wholesale interconnection, access to poles and conduits, access to valuable numbering resources, etc. In other words, Commission certification works to reduce or even eliminate ''competitive disparities'' thus removing ''effective prohibitions'' and ''barriers to entry'' for telecommunications carriers that wish to enter, operate, provide services, and invest in the Pennsylvania marketplace. Furthermore, this also provides the Commission with the appropriate regulatory jurisdiction and oversight over telecommunications carrier networks and operations for the benefit of consumers. For example, the Commission not only can inquire but it can also affirmatively act, if a fiber optic private line with an interstate classification that is transporting intrastate 911/E911 emergency call traffic becomes inoperative, thus potentially degrading public safety.
The Commission cannot predict with any certainty the future course of jurisdictional classifications of private line and special access circuits and services that are offered by both competitive and incumbent carriers and are affected by the FCC's contamination rule. Such services and associated revenues may be currently classified as interstate, but such classification may change in the future depending on the nature of traffic that these network facilities handle. That makes the initiation of the decertification enforcement action against the targeted competitive carriers that affirmatively invoke or otherwise utilize the FCC's contamination rule a very expensive but unnecessary exercise that in itself will amount to an ''effective prohibition'' for competitive carriers to offer intrastate and interstate services within Pennsylvania in contravention of Section 253(a) and the Commission's own 1996 Implementation Orders. For example, a targeted competitive carrier that may be decertified under the progression of the instant proceeding may be able to apply again for certification in the future accruing needless legal and regulatory expenses in the process. In short, the instant decertification enforcement proceeding will deter the market entry of competitive telecommunications carriers in Pennsylvania with inimical effects for competition in the provision of services and for capital investment in network facilities including those that will be used for the provision of various broadband access services.
I cannot fail to observe that the initiation of this decertification enforcement action alters the Commission's 1996 Implementation Orders. This alteration is being effectuated without appropriate and more universal notice and request for comment from interested parties, contrary to Section 703(g) of the Public Utility Code. 66 Pa.C.S. § 703(g).
Finally, I see no reason why at this time and with an appeal still pending before the Pennsylvania Supreme Court regarding the CAP status of DAS providers, why such competitive telecommunications carriers should be targeted in the present decertification enforcement proceeding. Because of this pending appeal, the potential decertification of DAS providers with CAP certifications from this Commission is and should be at a standstill.25
For these reasons, I will be respectfully dissenting from the disposition of this matter.
ANDREW G. PLACE,
Commissioner
[Pa.B. Doc. No. 19-1404. Filed for public inspection September 13, 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.
5 Texas Office of Public Utility Counsel, Pennsylvania Public Utility Commission et al. v. FCC, 183 F.3d 393 (5th Cir. 1999)(TOPOC).
6 These two classes are different from carriers with a CPC that have not complied with their filing obligations. The failure to submit an Annual Report for three years subjects a utility to potential revocation of a CPC, particularly given that the Commission will reach out to them prior to proposing to revoke their CPC. Moreover, none of the carriers are DAS providers in the current appeal. See Cancellation of Certificates of Public Convenience for Telecommunication Public Utilities; Failure to Operate or File Annual Revenue Report, M-2019-3011090. Policy Statement Compare Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services, Docket No. M-2018-3004578 (Comments of Verizon Communications, Inc. and BCAP) with Appendix A.
7 The record does not detail whether every member in the first class relied on the 10% contamination rule to report no revenues. There is no demonstration that they agree with the legal view claimed by some in the second class that the TOPOC decision precludes any assessment on interstate revenues. Compare Policy Statement Compare Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services, Docket No. M-2018-3004578 (Comments of Verizon Communications, Inc. and BCAP) with Appendix A.
8 The record in the Policy Statement proceeding shows that a majority believe that the Commission cannot assess interstate revenues under this rule. The action taken here contains no explanation why the commenters in the Policy Statement taking that view and excluding the same revenues are excluded from this proceeding. Moreover, the Policy Statement or regulation is not final and the action is limited to only competitors. Compare Policy Statement Compare Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services. Docket No. M-2018-3004578, particularly the Comments of Verizon Communications, Inc., with Appendix A.
9 Compare Policy Statement Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services. Docket No. M2018-3004578, Comments of Verizon Communications. Inc., and the Broadband Coalition of Pennsylvania (BCAP) with Appendix A.
10 Compare Policy Statement Compare Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services. Docket No. M-2018-3004578 (Comments of Verizon Communications, Inc. and BCAP) with Appendix A.
11 AT&T Corporation v. Iowa Utilities Board. 525 U.S. 368, 371-313 (1999).
12 Ill. Pub. Telcoms. Ass'n v. FCC, 410 U.S. App. D.C. 69, 752 F.3d 1918 (2014), cert denied 135 S. Ct. 1583 (2015). See e.g., AT&T Corporation v. Core Communications, Inc. and the Pennsylvania Public Utility Commission, Docket Nos. 14-1499 & 14-1664 (November 25, 2015) (Commission enforcement of federal intercarrier compensation rule upheld); Palmerton Telephone Company v. Pa. PUC, Docket C-20092093336 (March 16, 2010) (CPC provider of interstate services required to compensate an intrastate carrier); RTCC v. Pa. PUC. 941 A.2d 751 (Pa. Cmwlth 2005) (Commission promotion of competition under state and federal law upheld); Palmerton Telephone Company v. Global NAPS South. Inc., Docket No. C-2009-2093336 (March 16, 2010), Letter of Palmerton Telephone (December 23, 2010) (Commission enforcement apprised of interstate carrier with CPC refusal to comply with the Commission's March 2010 Order).
13 National Labor Relations Board v. Wyman-Gordon Co., 394 U.S. 759 (1969).
14 Compare Policy Statement Compare Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services. Docket No. M-2018-3004578 (Comments of Verizon Communications, Inc. and BCAP) with Appendix A.
15 Sunoco Pipeline L.P. v. Pennsylvania State Senator Andrew E. Dinniman and Public Utility Commission. No. 1169 C.D. 2018 (Pa. Cmwlth Ct. 2019).
16 In re: Implementation of the Telecommunications Act of 1996, Docket No. M-00960799, Order entered June 3, 1996, 1996 WL 482990; Order on Reconsideration entered September 9, 1996, 26 Pa.B. 4588 (1996), 1996 WL 482990 (collectively Implementation Orders); Proposed Modifications to the Application Form for Approval of Authority to Offer, Render, Furnish, or Supply Telecommunications Services to the Public in the Commonwealth of Pennsylvania, Docket No. M-00960799, Final Order entered May 22, 2014.
17 47 CFR § 36.154(a). See also MTS and WATS Market Structure, Amendment of Part 36 of the Communications Rules and Establishment of a Joint Board, CC Docket Nos. 78-72 and 80-286, Decision and Order, 4 FCC Red 5660, 5660-61,¶¶ 1, 2 (1989); and In re Federal-State Joint Board on Universal Service et al., CC Docket No. 96-45 et al., (FCC, Acting Chief, Wireline Competition Bureau, Rel. March 30, 2017), Order, 32 FCC Red 2140, slip op. DA 17-309, 2017 FCC LEXIS 954 (FCC WCB Audit Order), application for review pending.
18 See, e.g., ATC Outdoor DAS, LLC, verified response to Staff Data Request, March 27, 2018; PEG Bandwidth PA LLC, verified response to Staff Data Request, Docket No. M-2018-3004503, September 27, 2018.
19 Policy Statement Regarding the Reporting of Intrastate Operating Revenues for Section 510 Assessment Purposes by Jurisdictional Telecommunications Carriers Offering Special Access and Other Similar Jurisdictionally-Mixed Telecommunications Services, Docket No. M-2018-3004578, Order entered November 8, 2018, 49 Pa.B. 929 (March 2, 2019).
20 Docket No. M-2018-3004578, Comments of the Verizon Companies, April 16, 2019, at 9.
21 In re Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, et al., WT Docket No. 17-79, WC Docket No. 17-84, (FCC Rel. Sept. 27, 2018), Declaratory Ruling and Third Report and Order, slip op. FCC 18-133, ¶ 39 at 19 (FCC Declaratory Ruling) (emphasis added), citing in part In re The Public Utility Commission of Texas, et al., (FCC Rel. Oct. 1, 1997), 13 FCC Rcd 3460, 3466, 3498-500, ¶¶ 13, 78—81.
22 FCC Declaratory Ruling, ¶ 41 at 21 (emphasis added), citing in part In re California Payphone Assoc., (FCC Rel. July 17, 1997), 12 FCC Rcd 14191, 14205, 14206, ¶¶ 28, 31.
23 The same happens for private line and special access circuits of ILECs that come under the same FCC rule.
24 This Commission has ruled that DAS providers with CAP certifications are not public utilities. This ruling is under appeal before the Pennsylvania Supreme Court. Review of Issues Relating to Commission Certification of Distributed Antennae System Providers in Pennsylvania, Docket No. M-2016-2517831, Orders entered March 17 and May 4, 2017, reversed Crown Castle NG East LLC, et al. v. Pa. Public Utility Commission, 188 A.3d 617 (Pa. Cmwlth. 2018), allocatur granted appeal pending.
25 Sunoco Pipeline L.P. v. Pa. State Senator Andrew E. Dinniman & Public Util. Commission, Pa. Cmwlth. Memorandum Opinion, No. 1169 C.D. 2018, May 20, 2019, slip op. at 7 (''A stay is a stay'').
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