NOTICES

Pennsylvania Public Utility Commission v. Bell Atlantic-Pennsylvania, Inc. et al; R-00984335; R-00984335C0001; P-00981358

[28 Pa.B. 3180]

Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; David W. Rolka; Nora Mead Brownell; Aaron Wilson, Jr.

Public Meeting held
June 18, 1998

Opinion and Order

By the Commission:

Matter Before The Commission

   On April 6, 1998, Bell Atlantic-Pennsylvania, Inc. (Bell, BA-PA or Company) filed, at Docket No. R-00984335, revisions to its Local General Tariff--Telephone Pa. P.U.C. No. 1, for the purpose of introducing Business Individual Case Basis (ICB) tariff provisions, which would allow the Company to respond to competitive bids, to become effective June 5, 1998, and voluntarily postponed until June 21, 1998. Also on April 6, 1998, Bell Atlantic-Pennsylvania, Inc. filed, at Docket No. P-00981358, a Petition for expedited waiver of the 60-day notification period for Business Individual Case Basis tariff filing at Docket No. R-00984335.

   Answers in opposition to Bell's Petition were filed by AT&T Communications of Pa., Inc. (AT&T) and Teleport Communications Group, Inc. (TCG) on April 24, 1998, and by ATX Telecommunications Services, Ltd. (ATX) on April 27, 1998. An Answer and Formal Complaint was filed at Docket No. R-00981358C0001, by MCI Telecommunications Corporation and MCImetro Access Transmission Services, Inc. (collectively referred to as MCI) on April 27, 1998. On May 11, 1998, Bell filed a Reply to New Matter and Requests for Affirmative Relief By AT&T, TCG and ATX in Opposition to Petition For Expedited Waiver and Answer to MCI's Complaint.

Background

   On December 17, 1997, Bell filed a Petition at Docket No. P-00971307, for a determination of whether business telecommunication services should be deemed competitive services under Chapter 30 of the Public Utility Code, 66 Pa.C.S. § 3005(a). (See Petition of Bell Atlantic Pennsylvania, Inc. For A Determination Of Whether The Provision Of Business Telecommunications Services Is Competitive Under Chapter 30 Of The Public Utility Code, Docket No. P-00971307, filed December 17, 1997).

   At a Prehearing Conference held on February 5, 1998, ALJ Schnierle approved a 270-day schedule for that proceeding and the schedule was subsequently included in ALJ Schnierle's Second Prehearing Order of February 20, 1998.

   On February 12, 1998, Bell filed a Petition for Interlocutory Commission Review and Answer of a Material Question in which it requested that the Commission determine whether Chapter 30 and its express policy to promote and encourage competition, mandates a 180-day schedule for the approval of Bell's December 17, 1997 Petition.

   On March 30, 1998, the Commission entered an Opinion and Order at Docket No. P-00971307, concluding that case law clearly supports the conclusion that the 180-day language contained in § 3005(a) is directory only. The Commission specifically stated the following in Ordering Paragraph No. 1:

1.  That in response to Bell Atlantic-Pennsylvania, Inc.'s Petition for Interlocutory Commission Review and Answer of a Material Question, the Commission hereby concludes that the language contained in 66 Pa.C.S. § 3005(a) which states, ''[T]he commission shall enter an order approving or disapproving the petition within 180 days of the filing date'' is directory and not mandatory.

   As a result, the Commission directed that the proceeding should continue in accordance with the ALJ's 270-day schedule contained in his Second Prehearing Order.

   The March 30, 1998 Opinion and Order also acknowledged one of Bell's concerns pertaining to its inability to bid on requests for proposals (RFPs) which require submission of customized proposals. In response, the Commission stated the following in the March 30, 1998 Opinion and Order:

Finally, the main thrust of BA-PA's Petition is that a 180-day schedule is crucial to preventing substantial prejudice to its business customers, and the public generally because business customers are increasingly issuing requests for proposals which require submission of customized proposals. BA-PA claims that it is unable to provide such customized service offerings due to current tariff restrictions. However, this argument holds little weight since BA-PA's Special Services tariff at Pa. P.U.C. No. 304 does provide for flexible pricing and sanctions pricing on an individual case basis depending on the circumstances in each case. Nevertheless, in recognition of the potential for benefit to the Commonwealth, and the express acknowledgment of BA-PA's counsel that the issue of a Commonwealth-wide RFP might not occur before this proceeding is completed, the Commission stands ready to expeditiously respond to any request for appropriate waiver of BA-PA's tariff provisions or clarifications that would facilitate a fair bidding process.

   As a result of the Commission's suggestion above, Bell is proposing, in the instant filing, revisions to its Local General Tariff--Telephone Pa. P.U.C. No. 1 in order to introduce Business Individual Case Basis (ICB) tariff provisions which would allow Bell to respond to requests from business customers or prospective business customers for competitive bids for regulated services, to become effective June 5, 1998, and voluntarily postponed until June 21, 1998. [The tariff, if granted, would facilitate Bell's ability to submit a competitive RFP to the Commonwealth of Pennsylvania in advance of a determination in the pending proceedings.]

   The accompanying Petition requests that the Commission waive the statutory 60-day notification period and permit the tariff to become effective immediately. Bell proposed that if the Commission grants the waiver, the Company will refile the tariff with an immediate effective date. Bell filed this Petition because of a desire to participate in a Commonwealth-wide RFP that might occur before the end of the 270-day schedule in the Business Services Reclassification filing at Docket No. P-00971307. In addition, Bell requests that the proposed tariff revisions remain in effect until the Commission renders a final decision in its Business Competitive Services Proceeding at Docket No. P-00971307.

The Tariff Filing

   The tariff revisions in the instant filing at Docket No. R-00984335 consists of a single page with the following language:

   33.  Individual Case Basis (ICB) Arrangements

   Arrangements will be developed on a case-by-case basis in response to a bona fide business customer or prospective business customer to develop a competitive bid for a service offered under this tariff and related tariffs. Rates quoted in response to such competitive requests may be different than those specified for such services in this tariff and related tariffs. ICB rates will be offered to the business customer in writing and on a nondiscriminatory basis based on the following conditions:

   a)  ICB arrangements shall be made available only to customers who generate or commit to generate $40,000 or greater in annual Bell Atlantic-Pennsylvania total billed revenues.

   b)  Rates charged under ICB arrangements shall exceed the imputation test approved by the Commission in its Final Order at Docket R-00953396C0001.

   c)  ICB arrangements shall be filed with the Commission under the Proprietary Seal to be effective on one day's notice.

   This tariff shall remain effective until the Pa. P.U.C. renders a final decision in Docket No. P-00971307, the Business Competitive Services Proceeding).

The Petition For Waiver of 66 Pa.C.S. § 1308(a)

   Bell's Petition at Docket No. P-00981358 requests a waiver of the 60-day notice requirement at 66 Pa.C.S. § 1308(a) for the tariff filing at Docket No. R-00984335 so that the proposed tariff revisions would be permitted to become effective on less than 60 days' notice.

   In support of its Petition, Bell argues that the proposed tariff would permit it to offer and enter into customized arrangements with business customers prior to the Commission's final decision in the Business Competitive Services Proceeding at Docket No. P-00971307. The final decision in the Business Competitive Services Proceeding is now anticipated on, or before, September 15, 1998, in light of the Commission's decision in its March 30, 1998 Opinion and Order at Docket No. P-00971307 that extended the review period from 180 days to 270 days in accordance with ALJ's Second Prehearing Order of February 20, 1998.

   In its Petition, Bell expressed its opinion that expeditious implementation of the tariff filing:

. . .(1)  will enable BA-PA to provide competitive prices to businesses--like the Commonwealth [of Pennsylvania] and Boeing--who are seeking competitive alternatives during the period [from now until September 15, 1998], (2) will spur competitors to make more competitive offerings (instead of relying on BA-PA's tariff ''umbrella''), and (3) will bring the full benefits of competition to Pennsylvania businesses without delay.

   Bell specifically stated its interest in responding to the Commonwealth of Pennsylvania's government RFP, which was expected to be rebid in June 1998,¹ and which could potentially be worth approximately $50 million per year. In addition, Bell referenced other business customers such as Penn State University and Boeing as companies that are increasingly requesting competitive proposals for which Bell is unable to provide customized contracts because of current tariff restrictions.

   In further support of its Petition and filing, Bell states that its proposed Business ICB tariff responds directly to the Commission's acknowledgment, in the March 30, 1998 Opinion and Order at Docket No. P-00971307, of the potential for benefit to the Commonwealth of Pennsylvania in permitting Bell to participate in a Commonwealth-wide RFP. Bell stated that the proposed Business ICB tariff responds directly to the Commission suggestion that it ''stands ready to expeditiously respond to any appropriate waiver of Bell's tariff provisions or clarification that would facilitate a fair bidding process.''

   Bell further notes that the Business ICB tariff will enable it to provide customized offerings to business customers in competitive bidding situations that exist after the 180 day statutory period for deciding the Petition, but prior to entry of a final ruling on the Petition and will ''facilitate a fair bidding process'' and ameliorate the prejudice to the Commonwealth and to its businesses created by the delay in ruling on Bell's Petition.

   Bell notes that it does not believe that Competitors will be disadvantaged by expedited approval of the Business ICB tariff because the proposed tariff contains safeguards and limitations that are substantially identical to other Bell and CLEC tariffs that are already in effect in Pennsylvania. Bell then goes on to note that TCG Pittsburgh's and NEXTLINK Communications tariffs presently contain tariffs that contain similar safeguards and limitations in that they both contain the $40,000 limitation and the requirement that the tariff be filed with the Commission under proprietary seal.² Bell also goes on to note that its proposed Business ICB tariffs are consistent with the ''most stringent'' ICB tariffs currently in effect and that MCImetro and AT&T currently have no limitation on dollar amount nor any requirement to file under proprietary seal.

   Bell concludes its Petition by requesting that the Commission expedite approval of its Business ICB filing and permit the tariffs to become effective upon one day's notice.

AT&T's Answer In Opposition to Bell's Petition

   On April 24, 1998, AT&T filed an Answer in opposition to Bell's Petition For Expedited Waiver of 60-Day Notification Period for its Business Individual Case Basis Tariff.

   AT&T argues that when the Commission rejected Bell's effort to impose an unreasonably abbreviated schedule for resolving its pending petition for competitive classification of all of its business services in the March 30, 1998 Opinion and Order at Docket No. P-00971307, the Commission, in effect, also rejected Bell's argument that its current tariffs prevented it from providing customized service offerings to business customers and that Bell's current tariffs already sanctioned pricing on an individual case basis depending on the circumstances in each case. AT&T then notes that as a result of Bell's claim for additional flexibility on a forthcoming RFP from the Commonwealth of Pennsylvania, the Commission indicated its willingness to respond to an appropriate waiver of Bell's tariff provisions that would facilitate a fair bidding process for that RFP.

   AT&T acknowledges the Commission's willingness to consider a waiver request from Bell on a case-by-case basis to allow Bell to respond to the Commonwealth's RFP. However, AT&T does not feel this petition and tariff revision is in keeping with that suggestion in that Bell has submitted an entirely new tariff that goes far beyond giving Bell the ability to respond to the Commonwealth's RFP. AT&T believes that Bell ignores the Commission's invitation to pursue an ''appropriate waiver'' on a discrete, case-by-case basis, but instead ''submitted an entirely new tariff that would give it the freedom to structure long-term customized offers to almost any business customer in any competitive bidding situation, with only one day's notice to the Commission of such filings and without adequate pricing safeguards.'' In AT&T's opinion, the proposed tariff ''would grant essentially the same inappropriate and overbroad regulatory freedom that Bell is seeking to obtain in the pending business services reclassification proceeding [at Docket No. P-00971307].''

   AT&T argues that Bell's petition and proposed tariff should be rejected based upon the evidence presented at the Commission's March 30 Technical Conference showing the poor state of competition in Pennsylvania's local exchange market and the lack of competitiveness of the overall business market in Pennsylvania.

   AT&T notes that it does not mean to suggest that ICB contracts have no legitimate place in competitive markets for competitive services. However, AT&T believes that such a competitive market does not yet exist in Pennsylvania. AT&T is of the opinion that this lack of viable widespread competition in Bell's local exchange services would disadvantage Bell's fledgling competitors by permitting Bell to freeze out new entrants with long term contracts set at anti-competitive terms and conditions. AT&T expresses its concern about long term contracts as stated below:

   In a non-competitive market, such as currently exists in the [sic] Pennsylvania for Bell's business local exchange services, Bell could lock up its customers in long-term contracts with no fear from competing offers by CLECs, and thereby preclude new entrants from providing such customers with alternative services for a considerable period of time. There is no way that CLECs will be able to capture the business of those customers, and therefore, the rivalry between service providers that the Commission and the General Assembly have long sought would be curtailed, if not completely forestalled.

   AT&T rejects Bell's argument that there are adequate safeguards contained in Bell's filings. AT&T believes that Bell's proposed imputation formula that was previously approved by the Commission in its Toll Customer Specific Pricing tariff at Docket No. R-00953396 is not only grossly inadequate as a safeguard, but has been explicitly rejected by the Commission in the Competitive Safeguards Investigation (Docket No. M-00940587) as inconsistent with the plain language of 66 Pa.C.S. § 3005(e)(2).

   In rejecting the petition, AT&T does not oppose Bell's effort to bid on the Commonwealth RFP. AT&T believes that Bell already possesses sufficient regulatory flexibility to compete effectively for that business. However, if that is not the case, Bell should seek a waiver from the specific tariff requirements to allow it to bid on the RFP. AT&T believes that since Bell has refused this more limited course of action, Bell's intent is not to just obtain the ability to bid on the RFP, but to prevent the development of a truly competitive local exchange market in Pennsylvania.

   AT&T also has reservations that the proposed tariff will benefit customers. AT&T notes that while individual customers that Bell favors with an ICB offering may experience some immediate benefit from that contract, the adverse impact of Bell's proposal on competition in general will be to the ultimate detriment of customers and competitors, and thus to the Commonwealth's economy.

TCG's Answer In Opposition to Bell's Petition

   On April 24, 1998, TCG filed its Answer in opposition to Bell's Petition For Expedited Waiver of 60-Day Notification Period for its Business Individual Case Basis Tariff. In its Answer, TCG believes that the Commission should deny the Petition because Bell's request is premature and Bell has failed to provide any justification for circumvention of the ongoing Chapter 30 review process.

   TCG believes Bell's instant filing is an overly broad request for relief that would circumvent the Chapter 30 unbundling and imputation requirements and that the Commission should recognize Bell's blatant attempt to circumvent the ongoing Chapter 30 review process and existing tariff processes.

   TCG also states that Bell has provided no evidence, anecdote or example supporting that it has been unable to respond to the Commonwealth of Pennsylvania's RFP. TCG believes that the March 30 Commission Order states that Bell has sufficient tariff flexibility to respond to the RFP because Bell made no effort to dispute the Commission's clear finding in the March 30, 1998 Opinion and Order that Bell has sufficient tariff flexibility to participate in bidding situations.

   TCG then states that Bell relies on its Chapter 30 mantra that there must be regulatory parity and refers to Bell's claim in the instant filing that the proposed tariff contains ''safeguards and limitations that are substantially identical to other Bell and CLEC tariffs that are already in effect in Pennsylvania. TCG is of the opinion, however, that in order to substantiate that regulatory parity between these carriers is justified, Bell must first be required to show that there is operational parity among it and the CLECs.

   TCG avers that Bell is not able to demonstrate that operational parity exists. Furthermore, TCG notes that unlike Bell, TCG has no ''monopoly'' customers with the attendant possibility for cross-subsidy, does not own bottleneck facilities and is subject to competition with at least one facilities-based competitor at every single one of its customer's sites. TCG stresses that these competitive disparities are not addressed by Bell's self-proclaimed ''most stringent'' proposed ICB tariff, which would be limited to $40,000 in billings and require filing of contracts under proprietary seal.

   TCG believes that Bell's petition is not a request that is intended to facilitate a fair bidding process, but is a blanket waiver in advance of a decision on its Chapter 30 petition.

   TCG states that Bell has requested immediate approval of ICB arrangements for all of its business customers and that this in effect, seeks Chapter 30 relief even prior to the date that its pending Petition at Docket No. P-00971307 would have been adjudicated under the 180-day period. TCG is of the opinion that Bell's instant Petition ignores the Commission's clear indication that it would consider any appropriate Bell waiver request only with respect to Bell's effort to compete in the Commonwealth-wide RFP, to facilitate a fair bidding process. TCG believes that even if Bell's Petition is limited to this issue, it has failed to provide any support for the grant of its request.

   TCG argues that Bell has not cited any instances in which delay of the Chapter 30 decision would impede it from responding to a request for competitive bids and fails to identify what uncertainty exists now and how its request is consistent with the scheduling of the anticipated RFP.

   TCG asserts that responses are not due the day the RFP is issued and that Bell's Chapter 30 decision at P-00971307 could be issued well before any response to the Commonwealth of Pennsylvania RFP is required. In this context, TCG believes that granting Bell's Petition would be premature and tantamount to a free ride which would afford it the benefits of offering ''competitive services'' with no actual findings or corresponding obligations.

   TCG asserts that granting Bell's Petition would circumvent the Chapter 30 process and undermine the spirit and purpose of Chapter 30. TCG believes that Bell's request that its tariff remain in effect until the Commission renders a final decision in Docket No. P-00971307, is absurd considering that even without a waiver, these terms could be in effect for three and one-half months, only to have the Chapter 30 petition rejected or dismissed. TCG refers to the recent ALJ Recommended Decision at Docket No. P-00971293 in which a similar Chapter 30 Petition requesting that intraLATA toll services be deemed competitive should be dismissed without prejudice. TCG notes that such a result could seriously inconvenience consumers who may enter into ICB arrangements with Bell over that time and then find that the terms are subject to dispute once the parties have the proper opportunity to review and challenge them. TCG then refers to the instance at Docket No. M-00940587 when existing Centrex Extend Customers were forced into higher rates because it was determined that Bell failed to meet the imputation test after these rates were put into effect. As such, TCG concludes that the Commission deny the Petition for expedited approval of its Business ICB tariff and dismiss the Petition as premature.

ATX's Answer In Opposition to Bell's Petition

   On April 27, 1998, ATX filed its Answer in Opposition to Bell's Petition. ATX, by reference, incorporates the Answers filed by TCG and AT&T.

   In addition, ATX is of the opinion that Bell is blatantly attempting to preclude the ALJ's Recommended Decision and the administrative process from making an adjudication in Bell's pending case at Docket No. P-00971307.

   ATX also believes that it is more appropriate for Bell to make individual requests for waivers as necessary instead of requesting a blanket approval.

   ATX also states that approval of Bell's instant tariff would permit Bell to enter into ICB arrangements with consumers on one day's notice. This could seriously inconvenience those consumers if the Chapter 30 Petition at Docket No. P-00971307 is rejected or dismissed. ATX also believes consumers could be harmed if the rates would be set at a predatory price levels and then need to be changed.

   ATX is also of the opinion that approval of this tariff would cause harm to CLECs because Bell could set predatory price levels and lock customers into long term contracts.

   ATX concludes by requesting that the Commission deny the Petition For Expedited Waiver in its entirety.

MCI's Answer and Formal Complaint

Answer:

   On April 27, 1998, MCI submitted an Answer and Complaint against Bell's proposed tariff filing and Petition. In its Answer, MCI notes that Bell will benefit by the extended 270 day schedule to hear evidence and rule on Bell's request to declare 84 of its business services competitive. MCI denies Bell's allegation that there are telecommunications contracts worth $50 million that Bell cannot reasonably bid upon. Although MCI does not have sufficient information to determine the veracity of Bell's statement, MCI notes that Bell has not provided any information or documentation on the alleged RFP except for unsupported assertions.

   MCI also denies that Bell does not have sufficient flexibility under its existing tariffs to customize a competitive proposal. MCI argues that Bell has a customer specific pricing tariff as well as a Special Services tariff which appear to provide Bell with sufficient flexibility to compete fully in the market. MCI goes on to references a complaint against MCI by Bell at Docket Nos. C-00967717 and R-00973866C001 in which Bell claims that MCI's Individual Case Basis tariff is substantially similar to Bell's customer specific pricing tariff. MCI states that Bell is now claiming that the tariffs are different and that Bell is disadvantaged. MCI is of the opinion that the difference between what Bell's existing tariff provisions allow Bell to do and what the proposed tariff would allow must be demonstrated before the new tariff is approved.

   MCI further claims that Bell is the incumbent provider of services and has extensive market power at this point. MCI argues that virtually every call made in Bell's territory uses Bell's facilities for origination, termination or both and that the access charges collected by Bell for these calls limit the ability of competitors to reduce rates. MCI is concerned because it believes that only Bell has a ubiquitous network which can immediately be used to respond to RFPs by large business customers while all other competitors are likely to have to use Bell's network for all or part of any proposal offered. As such, MCI argues that Bell's competitors cannot offer prices below what Bell can offer.

   MCI claims that the Commission, in its March 30, 1998 Opinion and Order, stated that it was ready to respond to an appropriate waiver request that would facilitate a fair bidding process. MCI interprets that the Commission was open to a waiver request for an individual competitive bidding process and individual contract. MCI argues that the Commission did not intend for Bell to file a tariff that would grant a continuous and ongoing waiver of the regulations. This tariff would allow Bell to receive the benefits of competition without having to return to the Commission for authority, and before there is a fully competitive local business market. MCI disagrees with Bell that the Commonwealth and its businesses will be prejudiced if there is a delay in ruling on the Petition to permit Bell's tariff to become effective on less than 60 days' notice. Furthermore, MCI maintains that the Bell petition is simply an ''end run'' around Bell's original Petition at Docket No. P-00971307 which requests to reclassify its business services as competitive. MCI avers that Bell is trying to accomplish with this tariff filing what they want in their Petition to reclassify their business services as competitive. MCI is strongly opposed to giving Bell this flexibility without a full hearing. MCI also alleges that Bell's argument for granting it the opportunity to act as though it already met the criteria for competitive designation of its business services could only make sense if it is very likely that Bell will meet its burden of proof in the business services deregulation petition at P-00971307. MCI is of the opinion that the evidence presented thus far demonstrates that the opposite is the case.

   MCI also denies Bell's allegation that competitors will not be disadvantaged by expedited approval of the Business ICB tariff. MCI notes that there is no comparison between Bell's market position and the market position of any other provider in the local market. MCI states that competitors must rely on Bell's ubiquitous network for origination and termination of every telephone call and that other providers are locked into paying high access charges and high unbundled network element (UNE) rates to provide service to customers. As such, MCI avers that the Bell is clearly market dominant and the playing field is far from level. MCI also argues that imputation tests do little to address the issue when access rates far exceed costs and the imputation test is averaged over a broad range of services as proposed by Bell.

Formal Complaint:

   In its Formal Complaint, MCI alleges that Bell's proposed tariff is unjust and violates Section 1301 et seq. and Section 3005 of the Public Utility Code. It gives Bell the ability to provide all of its services, including local services, on an individual case basis, creating the opportunity to engage in price squeezes, predatory pricing and other anti-competitive practices.

   MCI claims that by approving the proposed tariff, the proceeding at Docket No. P-00971307 will become moot. When the proposed tariff is in place, Bell can offer prices that no competitor can match, and enter into long term contracts that locks up the market for the largest business customers.

   MCI takes the position that the proposed tariff is unlawful because it allows a level of deregulation which the General Assembly did not envision before the market was fully competitive. MCI states that the General Assembly clearly defined those requirements and criteria which must be made before an incumbent local exchange carrier could be granted competitive designation of a service. MCI is of the opinion that Bell still has not demonstrated that it has met any of those criteria in the proceeding at Docket No. P-00971307 and that by granting the present Petition and allowing the tariff to become effective on an expedited basis, or at all, would not be in compliance with the requirements of Section 3005 of the Public Utility Code.

   MCI points out that Bell argued in Docket No. P-00971293 that CLECs must meet the requirements of Chapter 30 before the Commission can give them the flexibility that competitive designation would give to Bell. However, MCI states that the flexibility that Bell claimed was unlawful for the CLECs to receive, is the same type of relief from regulation that Bell is now trying to get. MCI claims that Bell has consistently argued before the Commission that CLECs must have tariffs with the exact same language as Bell's. For Bell to request waivers from that language now is inconsistent with their past policy.

   MCI avers that granting Bell's Petition and granting a waiver of the regulations will provide Bell with the ability to eliminate competition in the nascent local exchange and that Bell has already demonstrated its willingness to provide certain services below cost, such that others cannot compete. MCI notes that other competitors cannot compete with Bell's present tariffs which provide free toll calling on weekends because of the substantial access charges or UNE charges that competitors must pay to Bell and that there is no reason to believe that imputation would eliminate such practice for business services. MCI is of the opinion that if the proposed tariff is approved, Bell would be able to make such offers without review by the Commission.

   In conclusion, MCI requests that Bell not be granted additional flexibility when it has not determined that it is necessary. MCI does not believe that Bell's tariff will spur competitors to make more competitive offerings. Therefore, MCI requests that Bell's Petition for expedited waiver be denied and require a full 60 day notice for all ICB tariffs and a suspension of the tariff pending a full hearing.

Bell's Reply to New Matter and Requests for Affirmative Relief By AT&T, TCG and ATX in Opposition to Petition For Expedited Waiver and Answer to MCI's Complaint.

   In its opening statement, Bell remarks that eight years ago AT&T argued the following in its Reply Comments in the proceeding at CC Docket No. 90-32 (In Re: Competition in the Interstate Marketplace), filed September 18, 1990:

What is really at stake in this proceeding . . . is the opportunity for all [business] consumers to receive the lower prices, better service, and wider choice that competition promises . . . Precisely as [we] anticipated, however, [our] competitors have sought to obscure this fact, in favor of self-serving and mistaken arguments that the public interest is somehow advanced by regulatory practices that would continue to insulate them from full competition. These arguments should be rejected, and firmly, as they repeatedly have been in the past.

   Bell then goes on to state that AT&T is now ironically attempting to insulate itself from full competition by opposing Bell's request to offer individual contract prices to large and medium size Pennsylvania businesses, even though every other competitor in Pennsylvania, including AT&T, has tariffs providing precisely the same pricing freedom which Bell seeks.

   Bell argues that AT&T and its allies, MCI, TCG and ATX (referred to collectively as the ''Opponents'') are now asking the Commission to deny similar pricing freedom for Bell by making the same ''self serving and mistaken arguments'' that AT&T previously denounced.

   Bell is of the opinion that its competitors are using factual distortions that characterize their opposition by adopting a strategy of using every pleading filed in every proceeding before the Commission to prelitigate both the merits of Bell's competitive service filings and Bell's anticipated application for authority to provide interLATA services pursuant to Section 271 of the Telecommunications Act.

   Bell requests that the Commission consider only the issue at hand and take into consideration that the public interest favors more, not less, competition. As such Bell requests that its ICB tariff be granted.

   In its Reply to New Matter and to Request for Affirmative Relief, Bell notes that none of the Opponents challenges the legality of Bell's Business ICB tariff under the relevant provisions of the Public Utility Code. Bell believes this is because each of them already have similar tariffs in effect.

   In response to the Opponents assertion that Bell does not need flexibility of ICB pricing, Bell states that the allegations that: (1) it already has the flexibility to provide comprehensive custom-priced telecommunications packages to business customers, and (2) Bell does not face significant competition in the market for business local exchange services, are both untrue. Bell notes that if it already has the ability to offer customized individual contracts for business telecommunications service in response to customer requests, it is difficult to imagine why the Opponents would be so vehement in their opposition. Bell states that contrary to the allegation by the Opponents, its Toll Customer Specific Pricing (CSP) tariff and its Special Services Tariff No. 304 do not give Bell the flexibility to price business local exchange services on a competitive basis since Bell's competitors are selling combined packages of local exchange services, intraLATA toll services, interLATA toll services and wireless services at customized rates in exchange for customers' term commitments. Bell clarifies that its Special Services Tariff 304 only permits them to raise or lower tariffed rates for special services for all customers within Commission-approved rate bands and only allows for individual case based pricing under certain circumstances for specific items (that is, Intellimux and Digital Data services). In addition, the Toll CSP tariff allows Bell to offer individual discounts on only intraLATA toll service to larger customers.

   Bell then refers to recent letters by business customers (Central Columbia School District in Bloomsburg, PA; Marriot International, Inc.; and Air Products) it had received in support of ICB pricing. Bell believes that these letters not only confirm Bell's inability to respond to competitive offers but they also confirm the motivation of AT&T, MCI, TCG and ATX in opposing Bell's tariff.

   In response to the Opponents argument that Bell's business market is not sufficiently competitive to warrant approval of Bell's ICB tariff filing, Bell states that it served the parties in the proceeding at Docket No. P-00971307 with copious evidence of competition for business telecommunications service and the competitive nature of the market for that service. This included the following:

   *  The volumes of traffic exchanged between Bell and the CLECs continue to grow at a rapid rate from 50 million minutes of use in January 1997 to 400 million minutes of use in March 1998.

   *  Almost 50,000 trunks interconnect BA-Pa's and CLEC networks representing an available CLEC capacity of approximately 500,000 telephone lines.

   *  During the last 12 months, the average quarterly growth rate in Bell's provision of resold access lines and unbundled loops is 633%, 216%, respectively.

   *  76% of business customers in Bell's service territory are located in wire centers where at least one facilities-based competitor is present.

   *  94% of Bell's business access lines are in wire centers where at least one competitor is present through collocation, facilities deployment, purchase of unbundled loops, or resale of local exchange services.

   Bell then goes on to address the Opponents allegation that the proposed tariff is not consistent with Chapter 30. Bell notes that each of the Opponents have a similar ICB tariff in effect. Bell states that pursuant to Section 1308 of the Public Utility Code, Bell is entitled to propose whatever tariff revisions it deems necessary or proper, subject to Commission approval. The only requirement is that the rates be just and reasonable and as such Chapter 30's competitive service provision simply does not apply.

   Bell then explains why it believes that the proposed tariff is not the equivalent of competitive classification. Bell argues that ''competitive classification permits the LEC to offer a competitive service however, wherever, and to whomever it likes, subject to Chapter 30's competitive safeguards provisions.'' Bell clarifies that in contrast, its proposed tariff requires (1) a bona fide request for a competitive bid; (2) a written offer; (3) a $40,000 annual revenue commitment; and (4) filing of ICB contracts with the Commission. Bell further points out that the Commission rejected an identical argument when it approved Bell's Toll CSP tariff and determined that tariffs that provide customers opportunities for lower prices and innovative service offerings in response to competitive pressures ''promote the primary policy goals of competition envisioned by Chapter 30.''

   Bell goes on to note that each of the Opponents has a virtually identical tariff in effect despite the fact that none has ever filed alternative regulation plans. Bell then remarks that ''[i]f BA-PA's tariff is barred by Chapter 30, theirs [i.e. the Opponents' ICB tariffs] are as well.''

   Bell then addresses the proposed imputation method in the instant ICB filing. Bell argues that the proposed tariff's imputation requirement is identical to the standard adopted by the Commission for tariffed toll customer-specific pricing arrangements. Bell denies the allegations by AT&T and ATX that the proposed tariff's imputation requirement has been rejected for all purposes by the Commission as inconsistent with Chapter 30. In support of its denial, Bell states that the proposed imputation standard is identical to the standard approved by the Commission for customer-specific pricing contracts offered under the Toll CSP tariff. Bell notes that that tariff--like the tariff at issue in the instant filing--was subject to 66 Pa.C.S. § 1308, and not the competitive services provisions of Chapter 30, 66 Pa.C.S. § 3005. Thus, Bell avers, the Commission was free to adopt the economically correct imputation standard, pursuant to which the incumbent imputes the rates for the inputs competitors must purchase from the incumbent in order to provide competing service. Bell then states that AT&T's argument that Chapter 30 barred use of this standard and required imposition of Section 3005(e)(2)'s ''pay for what you use'' standard was raised, litigated, and rejected in that case.

   Bell also believes that AT&T's contention that the imputation standard approved in the Toll CSP case was rejected in the Commission's Competitive Safeguards Investigation is grossly misleading. Bell argues that the Commission declined even to consider the same standard in its Competitive Safeguard investigation because it felt that it was barred from doing so by the language of 66 Pa.C.S. § 3005(e)(2). Bell is of the opinion that this is not the case here just as it was not the case when the identical test for use in pricing Bell's Toll CSP contracts. Bell is of the notion that Section 3005(e)(2) applies to services classified as ''competitive'' and thus free from the tariffing requirements of the Public Utility Code. In contrast, Bell believes that the Public Utility Code's traditional tariffing requirement, not Chapter 30, govern consideration of Bell's proposed ICB tariff.

   Bell further provides argument to AT&T's, MCI's and ATX's allegations that the ICB contracts will permit Bell to ''lock up'' customers and thus ''freeze out'' ''fledgling'' new entrants. Bell notes that AT&T's used this same argument in the proceeding at Docket No. P-00971293 in which Bell petitioned the Commission for a determination of whether intraLATA toll service is competitive under Chapter 30. Bell agrees with ALJ Schnierle in his Recommended Decision when he states that ''[t]he fact that a competitor's costs might increase in a competitive market does not, in our view, rise to the level of an anti-competitive advantage that must be rejected by the Commission.''

   Bell believes that AT&T's allegation that the proposed ICB tariff will allow Bell to favor one segment of customers over another without justification, and even refuse to offer the same terms to similarly-situated customers, is meritless because the existence of competitive alternatives has long been an acceptable basis for distinguishing among customers. Furthermore, Bell notes that the proposed tariff expressly provides that ICB arrangements will be offered on a nondiscriminatory basis. As a result, Bell cannot refuse to offer the same terms to similarly-situated customers.

   Bell stresses that its proposed ICB tariff will benefit all business customers and the Commonwealth's economy in contrast with AT&T's and ATX's allegations that Bell's proposal will adversely impact competition and have a detrimental effect on customers and competitors as well as the Commonwealth's economy. In closing, Bell requests that the claims of AT&T and the other Opponents be rejected.

   Bell then proceeds to answer MCI's Formal Complaint. Bell references its foregoing replies in its denial of each of MCI's averments and respectfully requests that the Commission grant Bell's Petition for Expedited Waiver of 60-Day Notification Period for its Business ICB tariff; reject AT&T's and ATX's request for the affirmative relief of dismissal of Bell's proposed tariff; and permit Bell's tariff to go into effect immediately.

[Continued on next Web Page]

---

No part of the information on this site may be reproduced for profit or sold for profit.

This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.

---