NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Order
[38 Pa.B. 2208]
[Saturday, May 10, 2008]Public Meeting held
April 9, 2008Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Tyrone J. Christy; Kim Pizzingrilli
Investigation Regarding Intrastate Access Charges and IntraLATA Toll Rates of Rural Carriers and The Pennsylvania Universal Service Fund; Docket No. I-00040105
2006 Annual Price Stability Index/Service Price Index Filing of Denver & Ephrata Telephone and Telegraph Company; Docket No. P-00981430F1000; R-00061377
2006 Annual Price Stability Index/Service Price Index Filing of Buffalo Valley Telephone Company; Docket No. P-00981428F1000; R-00061375
2006 Annual Price Stability Index/Service Price Index Filing of Conestoga Telephone & Telegraph Company; Docket No. P-00981429F1000; R-00061376
Order By the Commission:
Presently before this Commission for consideration is the Joint Motion of The Rural Telephone Company Coalition1 (RTCC), Office of Consumer Advocate (OCA), Office of Trial Staff (OTS), and The United Telephone Company of Pennsylvania d/b/a Embarq Pennsylvania (''Embarq PA'') (f/d/b/a Sprint), (collectively ''Joint Movants''). The Joint Motion concerns the RTCC/OCA/OTS/Embarq PA's request that the Commission grant a further stay of the above-captioned investigation at I-00040105. Several parties support the Joint Motion and other parties object to a further stay of the investigation.
For the reasons that follow, we shall reopen the investigation for the limited purpose of addressing the $18.00 cap on R-1 benchmark/caps and any equivalent B-1 benchmark/cap. We shall determine whether there is a need to increase the rate caps and/or funding for the Pennsylvania Universal Service Fund (''PaUSF'') in order to accommodate the revenue increases authorized for rural ILECs that are now resulting in increased local service rates beyond benchmark rate caps. If it is determined that the $18.00 cap should be increased, the investigation should also determine whether the size of the fund should be increased, decreased or remain the same. Further, we direct that the investigation examine whether a needs based test should be used to determine whether rural ILECs qualify for PaUSF funding.
Procedural History
Intrastate Access Charge Investigation Procedural History
Our Global Order2 of September 30, 1999 reduced access charges of all local incumbent exchange carriers operating in Pennsylvania. That order directed a PaUSF be established to enable the rural ILECs and Sprint/United3 to reduce access charges and intraLATA toll rates while at the same time ensuring that residential basic local service rates did not exceed the designated price cap of $16.00 per month. The Global Order also called for an investigation to be initiated in January 2001 to further refine a solution to the question of how the carrier charge (CC) pool could be reduced and to consider the appropriateness of a toll line charge to recover any resulting revenue reductions.
On July 15, 2003, at Docket Nos. M-00021596, P-00991648, P-00991649, M-00031694, M-00031694 C0001, and P-00930715, this Commission entered an order granting a Joint Procedural Stipulation filed on June 5, 2003, by the RTCC, Sprint/United, OTS, OCA, OSBA, AT&T Communications of Pennsylvania, Inc., Verizon and MCI WorldCom Network Services, Inc. The July 15, 2003 order further reduced intrastate access charges for the rural telephone companies operating within the Commonwealth and increased the cap on basic residential local service rates from $16.00 to $18.00 per month. The size of the PaUSF was not changed. No regulations were promulgated to alter the regulations4 governing the PaUSF or to terminate the fund. The PaUSF continues until a further rulemaking is completed.
On December 20, 2004, the Commission entered an order in the above-captioned case instituting an investigation into whether there should be further intrastate access charge reductions and intraLATA toll rate reductions in the service territories of rural incumbent local exchange carriers. This investigation was instituted as a result of the Commission's prior order of July 15, 2003, which discussed implementing continuing access charge reform in Pennsylvania. The July 15, 2003 order also provided that a rulemaking proceeding would be initiated no later than December 31, 2004, to address possible modifications to the PaUSF regulations and the simultaneous institution of a proceeding to address all resulting rate issues should disbursements from the PaUSF be reduced in the future.
The December 20, 2004 order directed the Office of Administrative Law Judge (OALJ) to conduct the appropriate proceedings including, but not limited to, a fully developed analysis and recommendation on the following questions:
a) Whether intrastate access charges and intraLATA toll rates should be further reduced or rate structures modified in the rural ILECs' territories.b) What rates are influenced by contributors to and/or disbursements from the PaUSF?c) Should disbursements from the PaUSF be reduced and/or eliminated as a matter of policy and/or law?d) Assuming the PaUSF expires on or about December 31, 2006, what action should the Commission take to advance the policies of this Commonwealth?e) If the PaUSF continues beyond December 31, 2006, should wireless carriers be included in the definition of contributors to the Fund? If included, how will the Commission know which wireless carriers to assess? Will the Commission need to require wireless carriers to register with the Commission? What would a wireless carrier's contribution be based upon? Do wireless companies split their revenue bases by intrastate, and if not, will this be a problem?f) What regulatory changes are necessary to 52 Pa. Code §§ 63.161--63.171 given the complex issues involved as well as recent legislative developments?Following the institution of this investigation, the Federal Communications Commission (FCC), on March 3, 2005, entered a further order addressing its intercarrier compensation proceeding at CC Docket No. 01-92 (FNPRM). The FCC is comprehensively examining the intercarrier compensation regime including interstate and intrastate access, reciprocal compensation and universal service. The FCC stated that one of the main reasons reform is needed is because the current intercarrier compensation system is based on jurisdictional and regulatory distinctions that are no longer linked to technological or economic differences. FNPRM at par. 15. The FCC also established goals for intercarrier compensation reform including the preservation of universal service and the promotion of economic efficiency (FNPRM at par. 33).
By order entered August 30, 2005, this Commission stayed the instant investigation for a period not to exceed 12 months unless extended by Commission order, or until the FCC issued its ruling in its Unified Intercarrier Compensation proceeding. We further ordered that upon the expiration of the 12-month stay of the investigation or the issuance of a FCC ruling in the Unified Intercarrier Compensation proceeding, whichever occurred earlier, the parties to the proceeding should submit status reports to the Commission pertaining to common or related matters in the instant investigation and the FCC's Unified Intercarrier Compensation proceeding and the need for any coordination of those matters or any new matters that may arise once the instant investigation is reinstituted. We also stated that we would entertain future requests for further stays of this investigation for good cause shown and for the purpose of coordinating this Commission's action with the FCC's ruling in its Unified Intercarrier Compensation proceeding. Our order stated that upon receipt of the status reports, Commission Staff should prepare a recommendation regarding the reinstitution of this investigation and taking of any other appropriate action.
In July, 2006, the so-called Missoula Plan5 was submitted to the FCC. Generally, the Missoula Plan seeks to unify intercarrier charges for all traffic over a 4-year time period, reduce intercarrier compensation rates, provide an ability to recover those reduced rates through explicit means, move rates for all traffic closer together, and establish uniform default interconnection rules. By notice issued July 25, 2006, the FCC requested parties submit comments on the Missoula Plan by September 25, 2006, and reply comments by November 9, 2006.
On August 17, 2006, this Commission adopted a motion of Vice Chairman James H. Cawley convening a workshop and facilitated discussion of interested participants, to facilitate the development of comments to the FCC. The workshop was conducted and Commission comments were submitted to the FCC on October 25, 2006. The Missoula Plan and other intercarrier compensation reform proposals are currently pending before the FCC for consideration. This FCC proceeding continues to have significant potential to directly impact the issues in the instant proceeding.
On or about August 30, 2006, status reports were submitted to the Commission by the RTCC, OTS, OCA, Embarq6 , Verizon, Sprint/Nextel Corp.7 , the Wireless Carriers, and Qwest Communications. Additionally, the RTCC, OTS, OCA and Embarq filed a Joint Motion for further stay of investigation to which the other parties filed status reports in objection. That Joint Motion was granted by order dated November 15, 2006, which again stayed the investigation pending the outcome of the FCC's Unified Intercarrier Compensation proceeding at CC Docket No. 01-92, or until November 15, 2007, whichever was earlier. The order further directed that upon expiration of the 12-month stay, the parties should again submit status reports to the Commission pertaining to common or related matters in the investigation and the FCC's proceeding and the need for any coordination of those matters or any new matters that may arise once the Investigation is reinstituted. Ordering Paragraph No. 4. Status reports were due 30 days prior to the expiration of the 12-month stay or 30 days following the FCC decision, whichever occurred earlier.
The FCC has not made a decision to date regarding its intercarrier compensation proceeding. On October 16, 2007, the RTCC, OCA, OTS and Embarq filed a Joint Motion for further stay of our investigation. OSBA, Verizon Wireless, T-Mobile, Qwest, and AT&T filed Answers to the Motion. Said motion for a third stay is ripe for a decision.
D & E Companies8
PSI Filing Procedural HistoryOn April 28, 2006, the D & E Companies filed their 2006 Annual PSI/SPI Chapter 30 filings,9 which proposed revenue rate increases to non-basic local service rates and intrastate carrier access charges. The majority of the revenue increases were allocated to the non-competitive, switched access service rates. On June 23, 2006, the Commission entered orders giving the companies three options: 1) to ''bank'' collection of a revenue increase to a future period; 2) to allocate such increases to basic local exchange services rather than allocating the revenue increases to increase access charge rates; or 3) allocate the revenue increases to increase intrastate access charges subject to an access charge investigation. The D & E Companies elected the third option to raise intrastate access rates, subject to a final Commission determination regarding access charge reform in the pending instant investigation. On June 28, 2006, the D & E Companies filed their compliance tariffs, which became effective July 1, 2006.
On July 10, 2006, Denver & Ephrata Telephone & Telegraph Company filed a Petition for Reconsideration seeking reconsideration on certain issues determined by our Opinion and Order entered on June 23, 2006 at R-00061377 and P-00981430F1000. On July 21, 2006, the Petition for Reconsideration was granted pending further review and consideration of the merits.
Thereafter, as noted previously, on November 15, 2006, the Commission entered an order staying the instant generic access charge investigation for another year but directing the Office of Administrative Law Judge (OALJ) to hold expedited hearings for the limited purpose of reconsidering the June 23, 2006 orders regarding the D & E Companies' allocation of revenue increases to access charges. The Commission directed that the revenues collected from increases in access charges by the D & E Companies would be subject to refund, depending upon the outcome of the expedited hearings. November 15, 2006 order, Ordering Paragraph Nos. 6 and 10 at 18.
ALJ Susan Colwell's Recommended Decision issued February 22, 2007 recommended that no rescission or amendment of the June 23, 2006 Orders was warranted. However, on July 11, 2007, the Commission reversed the Recommended Decision, in part, holding that the D & E Companies' proposed increases in intrastate access charges were contrary to access charge reform and should, therefore, be rejected. As such, the Commission: 1) rescinded and amended its June 23, 2006 orders; 2) expressly rejected using PSI/SPI revenues for increases to access charges; and 3) directed the D & E Companies to file the appropriate tariffs to recover their allowable 2006 Annual PSI/SPI revenue in any manner consistent with their Chapter 30 Plans. Order entered July 11, 2007 at 38, Ordering Paragraph No. 4.
The D & E Companies subsequently filed a Petition for Reconsideration of our July 11, 2007 order. By order entered August 9, 2007, we granted reconsideration, pending review of and consideration on the merits, and on December 7, 2007, we entered an order addressing the D & E Companies' Petition for Reconsideration. In that order, we granted D & E a waiver to increase the current Residential one-party (R-1) benchmark/rate cap of $18.00 and any equivalent Business one-party (B-1) benchmark/rate cap beyond the current benchmark/rate caps, on the condition that the difference between the benchmark/caps and the new rates will be recovered from its local exchange customers and not from the PaUSF. We further clarified that we would permit D & E to recover the revenues previously assigned to access charges, as well as its 2007 banked revenues, through increases from its noncompetitive service rates. December 7, 2007 order at 42, Ordering Paragraph No. 5. Additionally, we referenced a new matter raised by the OSBA in its Answer and New Matter in this proceeding as to whether the maximum weighted average R-1 rate of $18.00, and limited increases to the weighted average business rates, should remain in effect in light of the terms and conditions contained in the Joint Access Proposal filed on December 16, 2002, at Docket No. M-00021596 by the RTCC, Sprint/United, the OCA, and OTS. In this regard, the OSBA stated:
14. The Joint Access Proposal indicated that the $18 cap on weighted average residential rates would remain in effect ''for a minimum three (3) year period January 1, 2004 through December 31, 2006.'' Joint Access Proposal. ''Elements of Proposal'' section, Paragraph 4.15. The Commission has taken no formal action to extend the cap on R-1 and business rates beyond December 31, 2006. Therefore, there is a question as to whether this, or any other, element of the Joint Access Proposal remains in effect.As such, we directed that we would address this matter, as well as whether the $18.00 benchmark/rate cap and its application to recover rate increases resulting from PSI/SPI filings under the new Chapter 30 rules should be modified, when we would consider the pending motions for further stay of our generic access charge investigation in our Order at Docket No. I-00040105. December 7, 2007 Order at 37.
We note that on December 17, 2007, the OCA filed a Petition for Reconsideration of our December 7, 2007 order requesting that we reconsider our granting the waiver that would permit D & E to increase its current R-1 benchmark/rate cap of $18.00 and any equivalent B-1 benchmark/rate cap beyond the current benchmark/rate caps, on the condition that the difference between the benchmark/caps and the new rates would be recovered from its local exchange customers and not from the PaUSF. On December 31, 2007, the Verizon Companies filed its answer. On January 10, 2008, the D & E Companies filed a Motion to Strike the Verizon Companies' Answer and on January 30, 2008, the Verizon Companies filed a Motion to Enforce Compliance with Refund Obligation and Payment of Interest. The OCA Petition for Reconsideration, the D & E Companies' Motion to Strike and the Verizon Companies' Motion to Enforce are all being addressed by a separate Order which we considered concurrently at the April 9, 2008, Public Meeting.
Background of the PAUSF from the Global Order
We established the PaUSF through our Global Order wherein we stated:
The USF is a means to reduce access and toll rates for the ultimate benefit of the end-user and to encourage greater toll competition, while enabling carriers to continue to preserve the affordability of local service rates. Although it is referred to as a fund, it is actually a pass-through mechanism to facilitate the transition from a monopoly environment to a competitive environment--an exchange of revenue between telephone companies which attempts to equalize the revenue deficits occasioned by mandated decreases in their toll and access charges.Global Order, page 142.
The establishment of the PaUSF was carried out on a revenue-neutral basis and included the rebalancing of intrastate access charges, toll rates, and local rates by the rural local exchange carriers. The PaUSF was a modified version of a settlement plan submitted by the RTCC and Bell Atlantic-Pennsylvania, Inc. (Bell is now Verizon-PA).
The components of the PaUSF, from the standpoint of the RTCC members, are briefly summarized below:
1. All small incumbent local exchange carriers, which included all ILECs other than Bell and GTE North (GTE North is now Verizon-North), were directed to be recipients of the PaUSF. The PaUSF was established for the purpose of the rate rebalancing needs of the rural local exchange carriers including reductions in their intrastate access and toll rates. All Pennsylvania telecommunications service providers (excluding wireless carriers) were directed to contribute to the PaUSF based upon their intrastate end-user revenues.
2. The RTCC members were permitted to restructure, modify and reduce their access, toll and local rates, as follows:
a) Intrastate traffic sensitive switched access rates and structure (including local transport restructure) were converted to mirror interstate switched access rates and structure in effect on July 1, 1998.b) The Common Carrier Line Charge (''CCLC'') was restructured as a flat-rate Carrier Charge (''CC'') and reduced to an intrastate rate not exceeding $7.00 per line and allocated to intrastate toll providers based on their relative minutes of use.c) The RTCC members were given the opportunity to reduce their intrastate toll rates to an average rate not lower than $.09 per minute.d) The RTCC members with low local exchange rates were permitted to increase their residential one-party basic, local rates to an average monthly charge of at least $10.83, to the extent necessary to offset the reduced toll rates.e) Those RTCC members with an average monthly R-1 rate above $16.00 (inclusive of touch-tone) were directed to provide their customers with a Universal Service credit to effectively reduce the rate to $16.00 with the difference coming out of the PaUSF.See Global Order at pp. 151-152. Sprint/United (now known as Embarq PA) was not an original participant in the RTCC plan in the Global proceeding, but after pleading its inclusion in the PaUSF at the Global Order hearings, the Commission ordered that Sprint/United be included as a recipient carrier and in exchange for access charge reductions, it be allowed to draw $9,000,000 from the PaUSF annually.
We also stated in our Global Order:
[ W ]e shall initiate an investigation on or about January 2, 2001, to further refine a solution to the question of how the Carrier Charge (CC) pool can be reduced. At its conclusion, but no later than December 31, 2001, the pool will be reduced. In addition, we shall consider the appropriateness of a Toll Line Charge (TLC)[ or an intrastate Subscriber Line Charge ] to recover any resulting reductions.Global Order at 60.
The cap on average monthly R-1 rates is now $18.00 per our order of July 15, 2003. As discussed above, to date, only D & E Telephone Company has been granted a waiver that permits it to increase its rates over the current R-1 benchmark/rate cap of $18.00 and any equivalent B-1 benchmark/rate cap beyond $18.00 without first drawing from the PaUSF in order to satisfy revenue increases it is due from Chapter 30 PSI/SPI annual calculations. While we do not know the exact weighted averaged intrastate access charges the D & E Telephone Company is charging, we do know that D & E Telephone Company's residential rates in rate bands 4, 6 and 7 are the only currently active ones. We estimate the rates to be as follows: Rate Group 4 ($16.14), Rate Group 6 ($18.30) and Rate Group 7 ($19.38). We believe the D & E Telephone Company's other Rate Groups 1, 2, 3, and 5 have rates lower than $16.00.
Further Access Charge/Federal USF Reform History
In addition to the Commission's competitive undertakings on the intrastate side, the FCC instituted numerous proceedings aimed at further addressing an orderly transition from monopoly to a more competitive environment.
Pursuant to TA-96, the FCC undertook reform of both interstate access charges and Federal universal service support mechanisms. Beginning in 1997, the FCC adopted several measures to move interstate access charges for price cap carriers toward lower, cost-based levels by revising the recovery of loop and other non-traffic sensitive costs from per-minute charges to flat per line charges thereby aligning rates more closely with the way the costs are incurred.
For example, in order to phase out interstate carrier common line (''CCL'') charges, the per-minute charges assessed on interexchange (''IXC'') carriers through which ILECs recover their residual non-traffic sensitive interstate loop costs that are not recovered through their capped Federal subscriber line charges (''SLCs''), the FCC created the presubscribed interexchange carrier charge (''PICC''), a flat, per line monthly charge imposed on IXCs. The FCC also shifted the non-traffic sensitive costs of the line ports from per-minute local switching charges to the common line category and established a mechanism to phase out the per-minute transport interconnection charge (TIC). The FCC held that more rate structure modifications would be required to create a system that accurately reflects the true cost of service in all respects.
In its Interstate Access Support Order10 the FCC continued the process of access charge and universal service reform for price cap local exchange carriers. That order prescribed a more straightforward, and purportedly economically rational, common line rate structure by increasing the caps on the SLC, a flat monthly charge assessed directly on end-users to recover interstate loop costs, and phasing out the PICC, which the FCC viewed as economically inefficient due to the indirect flow of loop costs to end-users through IXCs. The FCC also revisited the controversial ''X-factor,'' in the Federal price cap mechanism changing its function from a productivity offset to a tool for reducing per-minute access charges to target levels proposed by parties participating before the Federal agency.
The FCC also established a new interstate access support mechanism, capped at $650 million annually, to replace what the FCC deemed implicit support included in the interstate access charges of price cap carriers, finding $650 million to be a reasonable amount that would provide sufficient, but not excessive, support. In this regard, the FCC observed that a range of funding levels might be deemed ''sufficient'' for purposes of TA-96, and that ''identifying an amount of implicit support in our interstate access charge system to make explicit is an imprecise exercise.''11
In recognition of the need for a more comprehensive review of the issues of access charge and universal service reform for the remaining 1,300 or so rural local exchange carriers serving less than 2% of the nation's access lines, the FCC placed such reforms for the non-price cap carriers on a separate track. As documented in a series of white papers prepared by the Rural Task Force, an ad hoc stakeholder group constituted by the FCC to study the differences between the provision of telecommunications services in rural and non-rural areas, rural carriers generally have higher operating and facilities costs due to lower subscriber population density, smaller exchanges and limited economies of scale.12 Significantly, rural carriers rely more heavily on revenues from access charges and universal service support in order to provide ubiquitous and affordable local service. On May 23, 2001, the FCC released its Fourteenth Report and Order and Twenty-Second Order on Reconsideration, and Further Notice of Proposed Rulemaking, Multi-Association Group (MAG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, CC Docket No. 00-256, Report and Order, 16 FCC RCD 11244 (released May 23, 2001) (''Rural Task Force Order'').
The Rural Task Force Order changed the manner in which rural interstate universal service support is currently calculated and applied. Among other things, the Rural Task Force Order endorsed use of a modified embedded cost mechanism for rural carriers, as opposed to a forward-looking cost mechanism required for price cap carriers, to determine rural carrier support, and included implementation of a rural growth factor (the sum of annual line growth and a general inflation factor) and a ''safety net'' additive and ''safety valve'' to provide support for new investment and growth above stated thresholds. While created as an interim plan, the FCC also made clear its intention to develop ''a long-term plan that better targets support to carriers serving high-cost areas, while at the same time recognizing the significant differences among rural carriers, and between rural and non-rural carriers.''13
The FCC also took major steps in beginning to reform interstate high-cost support, interstate access charges and universal service support systems for non-rural carriers through a series of reports and orders in the matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45 and the Interstate Access Support Order, and the interstate high-cost support for rural carriers through the Rural Task Force Order, the FCC began to address the matter of interstate access charge and universal service support reforms for the rural carriers. On November 8, 2001, the FCC issued its Second Report and Order at CC Docket Nos. 01-304, 00-256 (MAG Plan), 96-45 (USF), 98-77 (Access Charge Reform) and 98-166 (Authorized ROR), in what is referred to as the MAG Order. In the MAG Order, the FCC stated its intent to align the interstate access rate structure with a lower, more cost-based level, remove what the FCC deemed to be implicit support for universal service and replace it with explicit, portable and competitively neutral support. Specifically, the MAG Order lowered interstate access charges from approximately $0.046 per minute to possibly as low as $0.022 per minute, increased the interstate SLC over a period of time, and phased out the CCL by July 1, 2003, replacing it with a portable interstate common line support (''ICLS'') universal service mechanism. In addition, SLC caps were increased effective January 1, 2002, raising monthly per line SLC rates from a range of $3.50--$5.00 for residence and single line business to a range of $6.00--$6.50. These interstate changes have resulted in significant increases to most Pennsylvania consumers, which are in addition to the intrastate increases in local service rates under Pennsylvania's intrastate access charge reforms and the rate effects of Chapter 30.
More recently, in late Spring 2007, Congressional Representatives Rick Boucher and Lee Terry, members of the House Energy and Commerce Committee, which oversees telecommunications issues in the House, introduced a bill to reform the Federal Universal Service Fund (''USF''). Called the Universal Service Reform Act of 2007, the bill proposed to cap the growth of the Federal USF, in part, by limiting the number of eligible carriers and also by compensating them based upon their actual costs. The act also proposed to allow disbursements to be used for broadband deployment. This bill is pending.
This past summer, following a recommendation of the Federal-State Joint Board on Universal Service (''the Joint Board''), Senators Daniel Inouye, Chair of the U.S. Senate Committee on Commerce, and Ted Stevens began writing new legislation intending to address universal service reform. The Joint Board issued a statement on September 2, 2007, setting forth a set of guidelines for comprehensive reform of the Federal USF high cost fund. They recommended considering among other things state participation in determining support mechanisms.
Discussion
In the instant proceeding, the Joint Movants request that the Commission issue an order staying the above-captioned investigation for at least one year after the Commission enters an order acting on this Joint Motion, or until the FCC rules on its Unified Intercarrier Compensation proceeding at CC Docket No. 01-92, whichever is earlier. This would be the third such 12-month stay. The parties in opposition to the Joint Motion request the Commission resume a full investigation of all issues.
The Joint Movants claim that because the FCC's Unified Intercarrier Compensation proceeding at CC Docket No. 01-92 and pending Federal legislation may substantially alter the law governing intrastate universal service programs, these continuing Federal administrative and legislative activities present a ''moving target'' of uncertain result with respect to the parameters and outcomes of any further investigation undertaken in this docket at this time. Therefore, the Joint Movants believe there is no value in continuing an active investigation on the questions posed by the Commission in its December 16, 2004 Order initiating the investigation. The Commission's and interested parties' resources would be better spent elsewhere to address intrastate intercarrier compensation issues, according to the Joint Movants.
The Office of Small Business Advocate (OSBA) filed an answer and new matter agreeing with the Joint Movants that the Unified Intercarrier Compensation proceeding and pending Congressional legislation could significantly impact the issues raised in the instant proceeding. Thus, OSBA averred that the Joint Motion should be granted in its entirety and the caps on R-1 and corresponding business rates in the RTCC/Sprint/OCA/OTS/Embarq Joint Access Proposal filed on December 16, 2002 at Docket No. M-00021596 should remain in effect throughout the stay.
Omnipoint Communications Inc. d/b/a T-Mobile, Omnipoint Communications Enterprises LLC d/b/a T-Mobile and Voicestream Pittsburgh LP d/b/a T-Mobile (T-Mobile) filed as an intervenor supporting the Joint Motion with regard to the request for a further stay of the proceeding and reserving its rights on the substantive issues.
Cellco Partnership d/b/a Verizon Wireless (''Verizon Wireless'') concurs with T-Mobile's response to the Joint Motion. Verizon Wireless filed a separate statement on November 5, 2007, clarifying that it intervened for the limited purpose of asserting that pursuant to 66 Pa.C.S. § 102, the Commission lacked jurisdiction under the Public Utility Code to impose state universal service contribution obligations on commercial mobile service providers such as Verizon Wireless. Verizon Wireless takes no position on bifurcating the investigation for the purpose of allowing proceedings to continue with respect to rural incumbent telephone companies' intrastate access rates provided that any such proceeding not address whether wireless carriers should contribute to the Pennsylvania Universal Service Fund (''PaUSF'').
Verizon14 also responded to the Joint Motion opposing continuation of a full stay of the investigation. Instead, Verizon requested the Commission act to reduce the gap between the highest rural local exchange carrier's access rates and the rates Verizon and other carriers are permitted to charge for the same services. Verizon requests the Commission require the rural ILECs to make substantial progress towards reducing their access rates and to disclose their intrastate switched access rate elements and average rate per minute of use for the years 2006 and 2007. Verizon claims that it charges on average about $0.017 per minute for intrastate switched access service in Pennsylvania, a rate below the national average, while most of the rural ILECs' switched access rates average over $0.04 per minute, and some are as high as $0.07 or $0.10 per minute. While Verizon's carrier charge is $0.58 per line per month, most rural ILECs still maintain much higher access charges. Many range from $4 per month to $15 per month.
If the Commission decides to grant the stay, Verizon requests additional measures. First, Verizon requests we prohibit any rural ILEC from increasing its switched access rates during the stay period. Second, Verizon requests the Commission require the rural ILECs to comply with all orders arising out of the second stay of this investigation in 2006, including making Verizon and other carriers whole for the subsequently rejected attempts by certain of the moving parties to raise their access rates during the period of the stay. Third, Verizon requests that if the Commission stays the investigation, that we also direct that the PaUSF fund size will not be expanded for revenue increases consistent with Price Stability Index/Service Price Index (''PSI/SPI'') report filings by rural ILECs during the period of the stay. Further, Verizon wants maintenance of the status quo under the current PaUSF regulations.
We agree that there should be no increases in intrastate access charges during the stay period; however, the issue regarding increases to the PaUSF during the stay period due to rural ILECs' PSI/SPI filings requesting revenue increases will be referred to the Office of Administrative Law Judge (OALJ) for hearing and determination. Rural ILECs entitled to annual revenue increases may mainly choose to increase local residential rates up to the 18.00 cap on R-1 rates, to increase rates on non-competitive services, or to bank their revenue increases. The PaUSF was set initially at $34 million and Verizon generally contributes approximately half of the revenues of the fund each year.
At some point, the system of the PaUSF whereby other operating companies in the Commonwealth support the incumbent rural ILECs during what is supposed to be a transitory time between local telephone monopolies into competitive markets must be reexamined. Until then, we will open the investigation for limited purposes, one of which is examining whether the $18.00 R-1 rate cap should be increased on monthly service rates and corresponding business rates and whether the PaUSF funding should increase to accommodate the Chapter 30 rural ILECs' annual revenue increases due to PSI/SPI filings.
AT&T Communications of Pennsylvania, LLC (''AT&T'') filed as Intervenor requesting the Commission resume this proceeding with the objective of removing implicit subsidies by reducing intrastate access rates to appropriate levels and rebalancing reduced ILEC revenues through increases to retail rates and a state universal service funding mechanism that would result in more economically rational prices for all rural incumbent local exchange carriers (''rural ILECs'') services.
AT&T argues that eight years ago the Global Order promised access rates would be reduced and implicit subsidies eliminated. AT&T claims that Commonwealth Telephone's intrastate access charges to AT&T are more than $0.07 per access minute, exceeding its $0.027 interstate charge and are more than four times higher than Verizon's corresponding intrastate charges. AT&T further claims that Embarq PA is maintaining intrastate access charges of nearly $0.05 per minute while its corresponding interstate charges are less than a penny. Likewise, AT&T claims Denver & Ephrata continue to have intrastate access charges approaching $0.06 per minute, but less than $0.025 interstate. AT&T claims North Pittsburgh's intrastate access charges are nearly $0.05 per minute, but interstate charges just slightly above $0.02. Finally, AT&T claims Conestoga's intrastate access charges are nearly $0.045 per minute but its interstate charges are only $0.027. AT&T claims these high intrastate access charges are keeping long distance prices higher than they should be for all Pennsylvanians.
AT&T avers that the Commission should resume the proceeding and remove implicit subsidies by reducing intrastate access charges to appropriate levels and rebalance revenues through increases to retail rates and the PaUSF. AT&T supports the Missoula Plan before the FCC, and AT&T does not address the problems that our State can potentially face if we further reduce access charges only to be financially penalized by the FCC's possible adoption of the Missoula Plan. We note that AT&T advocates increasing the size of the PaUSF as opposed to increasing rural ILECs' intrastate access charges. AT&T is a major contributor to the PaUSF.
We are mindful and appreciative of AT&T's claim that the rural ILECs' intrastate access charges do not mirror current interstate access charges. While we are not in favor of arbitrage brought about by non-mirroring of intrastate and interstate access charges, we note that a lot has changed on the Federal front regarding intercarrier compensation since our Global Order of September 30, 1999, as detailed in this order. In our judgment, another one-year stay of our investigation would be prudent since the FCC's ruling may be imminent and is likely to have a major impact on our own access charge investigation.
Qwest Communications Corporation (''Qwest''), and Sprint Communications Company, L.Pl, Sprint Spectrum, L.Pl, Nextel Communications of the Mid-Atlantic, Inc. and NPCR, Inc. Coalition, (collectively ''Sprint'') filed as Intervenors to the Joint Motion requesting the Commission resume the investigation because no Federal action directly impacting rural local exchange company intrastate access charges is imminent and further delay prevents the Commission from making progress on the important access charge and universal service issues we identified as the focus of this investigation in December, 2004.
Qwest requests the Commission deny OSBA's request for a determination on the proper level of the R-1 and business rates to the extent that such determination occurs without a formal adjudication where interested parties are provided with adequate notice and opportunity to be heard on the rate issue. In accordance with Commonwealth v. Thompson, 444 Pa. 312, 316, 281 A.2d 856, 858 (1971), we will refer the caps issue to the OALJ for a due process hearing for interested parties to determine whether the residential rate cap on R-1 and cap on business rates should be lifted.
Sprint urges this Commission to deny the Joint Motion on the grounds that intrastate access reform, particularly for the rural carriers, is urgently needed. Sprint claims it pays an average intrastate access rate in Pennsylvania that is much higher than the national average intrastate access rate and significantly higher than interstate access rates paid to Pennsylvania ILECs. Sprint claims the average per minute intrastate access rate paid to rural ILECs in Pennsylvania is the ninth highest in the nation. Sprint claims that the intrastate per minute expense paid by Sprint is on average $0.025 higher than the national average. Sprint's average intrastate access cost per minute paid to rural ILECs in Pennsylvania is $0.0617, while the interstate average cost per minute for these same rural ILECs is less than $0.0096. Sprint argues the costs should be the same. Further delay in the reduction of implicit subsidies in intrastate access rates is not warranted according to Sprint, and if the FCC acts while the investigation is ongoing, that action could be factored into the proceeding and any necessary adjustments addressed at that time. However, Sprint argues that it is unlikely the FCC will act before 2009. Further, Sprint argues that it is uncertain whether preemptive action by the FCC against the states would be upheld by the courts. Sprint admits the FCC's resolution of the proceeding will have an impact on Pennsylvania's local exchange carriers, but Sprint denies that any evidentiary record compiled by moving forward with the investigation would be moot or stale if the FCC acts. Finally, although Sprint admits there is legislative activity underway at the Federal level addressing universal service, Sprint argues that no time frame is set for deliberations and any definitive legislative action may not take place for several congressional sessions.
However, we are not persuaded by Sprint's argument to resume the access charge portion of the investigation at this time. The looming decision of the FCC regarding the Missoula Plan and of pending Federal legislation warrant a further one-year stay of the investigation. Sprint's assertions that it pays more in Pennsylvania for intrastate access charges are considered, but each company pays a different average access charge amount. Sprint did not offer any direct comparison between rural ILECs operating in our state with similar companies in other states.
At this time, the Commission believes that a just and reasonable rate standard as provided in 66 Pa.C.S. § 1301, should continue to apply to the analysis of the appropriate residential rate for basic local exchange service provided by the rural ILECs. In view of the Chapter 30 modified alternative regulation plans that contain reduced or eliminated inflation offset values in the price stability mechanisms for most of the rural ILECs, these companies are permitted to annually increase their respective residential rates. Therefore, the investigation should address the section 1301 requirement that rates be just and reasonable, that universal telecommunications service is available throughout the Commonwealth at affordable rates, and that the payment of reasonable charges for protected telecommunications services should be available on a nondiscriminatory basis in accordance with the Public Utility Code. 66 Pa.C.S. §§ 1301, 3011(2), 3011(3), 3015(g), and 3019(h).
Also, we direct that the reopening of the investigation encompasses the issue of whether the PaUSF can be used for the provision of revenue support to the rural ILECs of their Chapter 30 annual revenue increases resulting in piercing the residential R-1 rate cap which currently stands at $18.00 per month. In doing so, the contemplated investigation will also examine whether a ''needs based'' test (and applicable criteria) should be used for determining which rural ILECs should qualify for Pa. USF support funding. This ''needs based'' test will take into account the support that the Federal USF affords the Pennsylvania rural ILECs. The ''needs based'' test will also be conducted in a forward looking manner and will examine circumstances that exist as of the time a company requests to recover basic service costs above the rate cap from the PaUSF. In prior Commission Orders that addressed the need to reopen the investigation at Docket No. I-00040105, various linkages have been identified in the regulated intrastate and interstate operations of the rural ILECs that affect the potential outcome of these issues:
However, the intrastate access charge reform for the rural ILECs is not independent from the potential outcomes of the FCC's Unified Intercarrier Compensation proceeding. A number of the rural ILECs operating in Pennsylvania are ''average schedule companies,'' i.e., their operational revenues, expenses, and assets are not subject to jurisdictional intrastate/interstate allocations. Thus, the overall annual revenue level of these ILECs depends on the receipt of Federal Universal Service Fund (USF) support distributions. Similarly, these ILECs are also recipients of support contributions from the Pennsylvania USF (Pa. USF). Furthermore, certain outcomes of the FCC's Unified Intercarrier Compensation proceeding can directly affect the intrastate carrier access charges of the rural ILECs.Investigation Regarding Intrastate Access Charges and IntraLATA Toll Rates of Rural Carriers, and the Pennsylvania Universal Service Fund, Docket No. I-00040105, Order entered August 30, 2005, at 16 (footnotes omitted).
In view of the preceding discussion, we believe that the reopened investigation should encompass the following additional issues and inquiry areas:
1. Whether the Commission has the authority under Chapter 30 and other relevant provisions of the Public Utility to perform a just and reasonable rate analysis of the rural ILECs' residential rates for basic local exchange services when such rates exceed the appropriate residential rate benchmark.
2. The reopened investigation should address the appropriate benchmark for the rural ILEC residential rate for basic local exchange service taking into account the statutory requirements for maintaining and enhancing universal telecommunications services at affordable rates. Participating parties should be availed of the opportunity to submit appropriate studies and testimony, including economic cost studies, that can provide the necessary information for the establishment of the appropriate residential benchmark rate for maintaining and enhancing universal telephone service goals in Pennsylvania.
3. Whether Pa. USF funding support should be received by rural ILECs that incrementally pierce the appropriate residential rate benchmark because of the regular annual Chapter 30 revenue increases, and whether the Commission's PaUSF regulations at 52 Pa. Code § 63.161 et seq. should be accordingly revised. The relevant inquiry should include the role of non-expired ''banked revenues'' that rural ILECs may have accumulated through the operation of their respective Chapter 30 modified alternative regulation plans and corresponding price stability mechanisms.
4. The reopened investigation should address whether the potential availability of PaUSF support distributions to those rural ILECs that pierce the appropriate residential benchmark rate because of their respective annual Chapter 30 annual revenue increases has any anti-competitive or other adverse effects, especially with respect to the currently established PaUSF support contribution mechanism and its participating telecommuni- cations utility carriers.
5. The ''needs based'' test should address the following interlinked areas that involve the operations of the rural ILECs:
a. The Chapter 30 annual rural ILEC price stability mechanism revenue increases;
b. The annual Federal USF support that the Pennsylvania rural ILECs receive;
c. The fact that most of the Pennsylvania rural ILECs are ''average schedule'' telephone utility companies that do not jurisdictionalize a number of revenue, expense, and asset parameters for their regulated operations;
d. Whether there is any relevance that rural ILEC assets and facilities may be used both for the provision of regulated intrastate telecommunications services, but also for the provision of non-jurisdictional services that potentially include unregulated services;
e. Whether the overall financial health of the rural ILECs that continue to get both PaUSF and Federal USF support should play a role for continuing to receive PaUSF support distributions;
f. Whether the PaUSF level of support distributions to the recipient rural ILECs should be adjusted in relation to the revenue increases in local exchange rates that have been or are implemented through their respective Chapter 30 modified alternative regulation plans and price stability mechanisms.
The rest of the investigation, however, will again be stayed for 12 months from the date of entry of this order or upon completion of the FCC's Unified Intercarrier Compensation proceeding, whichever occurs first. The Office of Administrative Law Judge will be given twelve months from the date of entry of this order within which time to complete this reopened investigation and issue a Recommended Decision.
Although the Joint Motion does not expressly state that the Joint Movants advocate a continuation of the current PaUSF under the existing regulations codified at 52 Pa. Code §§ 63.161--63.171, it can be inferred that it is the position of the Joint Movants that the status quo be maintained until there is a resolution after an investigation and until a future rulemaking determines otherwise. We are of the opinion that maintaining the status quo will also ensure that the current levels of intrastate access charges will not be increased during the stay. It has been, and continues to be the intention of this Commission, since the Global Order of 1999, to gradually lower intrastate access charges so as to allow for greater competition in the intrastate and interexchange toll markets. At the same time we are assuring that local service rates do not become unreasonably high in those incumbent service territories, and that there are always reasonably affordable phone carriers operating in all areas of this State.
We acknowledge that the Missoula Plan as well as other proposals before the FCC in the Unified Intercarrier Compensation proceeding could have a significant impact on rural access reform as many of these proposals advocate interstate and intrastate access charge reform as well as Federal and state universal service funds. Most of the proposals suggest that rural carriers should continue to receive funding of their networks to foster universal service and in many cases create supplemental rural universal service funding or access charge replacement funding to compensate rural carriers for additional required access reform. In addition, the Missoula Plan contains provisions that, if adopted, may affect our jurisdiction over setting intrastate access charges.
We submitted comments to the FCC requesting the Amended Missoula Plan be rejected because the Federal Benchmark Mechanism (FBM) unfairly proposed to compensate states for rates that exceed a $20--$25 range for early adopter support.15 The FBM may not support lower benchmarks like Pennsylvania's $18.00 capped benchmark of residential monthly rates. The FBM also proposes to pay to lower high intrastate access rates. If we further reduce access rates now, we may jeopardize our state's ability to obtain Federal funding for this change.
Currently, our PaUSF reimburses rural ILECs for revenues lost due to reductions in intrastate access charges and intraLATA toll rates on a revenue-neutral basis. The PaUSF collects approximately $34 million annually from the certificated telecommunications carriers operating in Pennsylvania on a pro rata share based upon their net end user retail revenues. The proposed FBM would limit state USF compensation to only $10 million, with no provision to provide any additional Federal support to individual state USFs beyond the aggregate $10 million amount. With this proposal before the FCC, it is in this Commonwealth's best interest that we delay further reductions in access charges in order to avoid being penalized by a potential Federal policy that could preempt us from regulating intrastate access charges and/or penalizes us financially for taking a proactive stance towards reducing access charges independently with a State-operated universal service fund.16
The Missoula Plan also advocates that the FCC should exercise its authority to preempt state regulation of intrastate access and local interconnection and establish alternative cost recovery mechanisms within the intrastate jurisdiction. If adopted, it is unclear what this would cost Pennsylvania carriers and their ratepayers. If a Federal USF were to replace individual state USFs in access charge reform, it is possible that Pennsylvania would continue to be a substantial net-contributor to the Federal Fund regarding access charge reform because we have already undertaken reform within our State, and our intrastate access charges are lower than some other states. Thus, other states would have a greater need to draw from a Federal USF or restructuring mechanism to support their respective revenue-neutral intrastate access charge reductions.
The Missoula Plan further proposes an ''Early Adopter Fund'' of $200 million to support states like Pennsylvania that have already reduced intrastate access charges to closer mirror interstate access charges. However, since our PaUSF's inception in April, 2000, our 35 rural ILECs alone have received over $200 million from the PaUSF in the aggregate. Therefore, Pennsylvania would possibly not be able to fully recover its PaUSF support outlays under the ''Early Adopter Fund'' as proposed. The Missoula Plan also brings into question whether this Commission should act quickly to order further intrastate access charge reductions, which possibly then would hurt our chances in the future of receiving Federal subsidy monies for these reductions. Given all of these potential changes at the Federal level that can affect universal service, we agree that the Joint Motion should be granted in part.
Under the Missoula Plan, the Low-Rate Adjustment (LRA) in the FBM will cap the interstate residential subscriber line charge (SLC) for carriers with rates less than $20.00 to $2.00. This means that a carrier in a state with rates less than $20 will have to increase its lower rates by no more than $2.00. If it does, it obtains support from the Restructuring Mechanism. The LRA cap rewards carriers and state commissions that did not aggressively pursue rate rebalancing or access reform before the Missoula Plan. Under the Amended Missoula Plan, those commissions and carriers now must increase their largely unreformed local rate by no more than $2.00 before they benefit from the Restructure Mechanism. We are concerned about this and since we have permitted Denver & Ephrata Telephone and Telegraph Company to increase its R-1 monthly rates beyond the $18.00 PaUSF cap, and other ILECs may want the same relief in future PSI/SPI filings.
It is important to note that the inflation offset factors for most of the rural telephone companies have been reduced to zero and this has resulted in more annual revenue increase opportunities for rural ILECs than were ever previously allowed in the past. In this regard, the limited investigation we institute by this Order should specifically address whether the $18.00 cap should be modified in light of the greater increases now allowed by the new Chapter 30. If it is determined that the $18.00 cap should be increased, the investigation should also determine whether the size of the fund should be increased, decreased or remain the same. In addition, the investigation shall address whether or not a ''needs based'' test (and applicable criteria) for rural ILEC support funding from the PaUSF in conjunction with the Federal USF support payments that the rural ILECs receive should be established in order to determine which rural ILECs qualify for PaUSF funding.
We are further persuaded to stay the rest of the investigation because there is pending Federal legislation designed to change existing Federal USF funding and potentially related issues. Under these circumstances, further stay of the procedural schedule at Docket No. I-00040105 remains both judicious and warranted until changes arising from the Federal legislative landscape have settled and are known.
Accordingly, for these above-stated reasons, the Joint Motion will be granted with the exception that the issue of whether to increase PaUSF funding and whether to raise the $18.00 cap on R-1 residential monthly service rates and corresponding business rate caps/benchmarks shall be referred to the OALJ for a due process hearing and Recommended Decision.
Since there has been no resolution to access charge reform, the status quo stays in place, and the PaUSF shall continue under the existing regulations codified at 52 Pa. Code §§ 63.161--63.171 until such time as new regulations are promulgated eliminating or modifying the Fund; Therefore,
It Is Ordered:
1. That the Joint Motion of the Rural Telephone Company Coalition, Office of Consumer Advocate, Office of Trial Staff, and the United Telephone Company of Pennsylvania d/b/a Embarq Pennsylvania is granted in part and denied in part as follows:
(a) that this investigation is reopened for the express and limited purposes of addressing whether the cap of $18.00 on residential monthly service rates and any corresponding cap on business monthly service rates should be raised, whether funding for the Pennsylvania Universal Service Fund should be increased, and whether or not a ''needs based'' test (and applicable criteria) for rural ILEC support funding from the PaUSF in conjunction with the Federal USF support payments that the rural ILECs receive should be established in order to determine which rural ILECs qualify for PaUSF funding as described in the body of this order;
(b) that the remainder of the investigation shall be further stayed pending the outcome of the FCC's Unified Intercarrier Compensation proceeding at CC Docket No. 01-92 or for one year from the date of entry of this Order, whichever is earlier; and
(c) that this matter be referred to the Office of Administrative Law Judge (OALJ) for hearing and recommended decision within twelve (12) months of the date of entry of this Order.
2. That in order to assist the Commission in resolving these key issues in Ordering Paragraph No. 1, the investigation should also encompass the following additional issues.
(a) Whether the Commission has the authority under Chapter 30 and other relevant provisions of the Public Utility to perform a just and reasonable rate analysis of the rural ILECs' residential rates for basic local exchange services when such rates exceed the appropriate residential rate benchmark.
(b) The reopened investigation should address the appropriate benchmark for the rural ILEC residential rate for basic local exchange service taking into account the statutory requirements for maintaining and enhancing universal telecommunications services at affordable rates. Participating parties should be availed of the opportunity to submit appropriate studies and testimony, including economic cost studies that can provide the necessary information for the establishment of the appropriate residential benchmark rate for maintaining and enhancing universal telephone service goals in Pennsylvania.
(c) Whether PaUSF funding support should be received by rural ILECs that incrementally pierces the appropriate residential rate cap because of the regular annual Chapter 30 revenue increases, and whether the Commission's PaUSF regulations at 52 Pa. Code § 63.161 et seq. should be accordingly revised. The relevant inquiry should include the role of non-expired ''banked revenues'' that rural ILECs may have accumulated through the operation of their respective Chapter 30 modified alternative regulation plans and corresponding price stability mechanisms.
(d) The reopened investigation should address whether the potential availability of PaUSF support distributions to those rural ILECs that pierce the appropriate residential rate cap because of their respective annual Chapter 30 annual revenue increases has any anti-competitive or other adverse effects, especially with respect to the currently established PaUSF support contribution mechanism and its participating telecommunications utility carriers.
(e) The ''needs based'' test should address the following interlinked areas that involve the operations of the rural ILECs:
(i) The Chapter 30 annual rural ILEC price stability mechanism revenue increases;
(ii) The annual Federal USF support that the Pennsylvania rural ILECs receive;
(iii) The fact that most of the Pennsylvania rural ILECs are ''average schedule'' telephone utility companies that do not jurisdictionalize a number of revenue, expense, and asset parameters for their regulated operations;
(iv) Whether there is any relevance that rural ILEC assets and facilities may be used both for the provision of regulated intrastate telecommunications services, but also for the provision of non-jurisdictional services that potentially include unregulated services;
(v) Whether the overall financial health of the rural ILECs that continue to get both PaUSF and Federal USF support should play a role for continuing to receive PaUSF support distributions;
(vi) Whether the PaUSF level of support distributions to the recipient rural ILECs should be adjusted in relation to the revenue increases in local exchange rates that have been or are implemented through their respective Chapter 30 modified alternative regulation plans and price stability mechanisms.
3. That upon the resumption of the full investigation, the participating parties shall be afforded due process opportunities to supplement the evidentiary record.
4. That upon resumption of the full investigation, the participating parties shall address and provide record evidence on the legal, ratemaking and regulatory accounting linkages between: a) the Federal Communications Commission's ruling in its Unified Intercarrier Compensation proceeding; b) the intrastate access charge reform for rural ILECs in view of the new Chapter 30 law and its relevant provisions at 66 Pa.C.S. §§ 3015 and 3017; c) the Pennsylvania Universal Service Fund; and d) the potential effects on rates for the basic local exchange services of the rural ILECs.
5. That the Commission Staff from the Office of Special Assistants and the Law Bureau is hereby directed to continue monitoring the Federal Communications Commission's Unified Intercarrier Compensation proceeding.
6. That the Commission shall entertain future requests for further stays of this investigation for good cause shown and for the purpose of coordinating this Commission's actions with the Federal Communications Commission's ruling in its Unified Intercarrier Compensation proceeding.
7. That upon the expiration of the 12-month stay of the access charge portion of the instant investigation or the issuance of a Federal Communications Commission ruling in the Unified Intercarrier Compensation proceeding, whichever occurs earlier, the parties to this proceeding shall submit status reports to the Commission pertaining to common or related matters in the instant investigation and the Federal Communications Commission's Unified Intercarrier Compensation proceeding and the need for any coordination of those matters or any new matters that may arise once the instant investigation is reinstituted. Status reports are due 30 days prior to the expiration of the 12-month stay or 30 days after the FCC decision is made regarding the Unified Intercarrier Compensation proceeding, whichever occurs earlier.
8. That upon receipt of the status reports directed in Ordering Paragraph No. 6, above, the Office of Special Assistants and Law Bureau shall prepare a Staff recommendation for the Commission's timely consideration at a Public Meeting on reinstituting this investigation and taking any other appropriate action.
9. That the Pennsylvania Universal Service Fund shall continue under the existing regulations codified at 52 Pa. Code §§ 63.161--63.171 until such time as new regulations are promulgated eliminating or modifying the Fund.
10. That absent extraordinary circumstances, intrastate access charges of the rural incumbent local exchange carriers including Embarq shall not increase during the period of this stay.
11. That the current average benchmark caps on R-1 and corresponding business rate caps shall remain in effect pending the outcome of the ALJ hearing and final Commission determination.
12. That pending the outcome of the ALJ hearing and final Commission determination, the rural recipient carriers of the PaUSF shall not increase their revenues from the PaUSF during the stay for purposes of revenue increases associated with annual PSI/SPI report filings. Instead, the rural ILECs are permitted to bank their revenue increases, or increase local rates up to and including the $18 cap for R-1 services and the current related cap on business services.
13. That a copy of this order be delivered to all telecommunications carriers operating in Pennsylvania and to Solix, Inc., the current Administrator of the Pennsylvania Universal Service Fund.
14. That a copy of this order be delivered for publication to the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 08-907. Filed for public inspection May 9, 2008, 9:00 a.m.] _______
1 The RTCC consists of the following rural incumbent local exchange carriers: Windstream Pennsylvania, Inc. f/k/a ALLTEL Pennsylvania, Inc., Armstrong Telephone Company--PA, Armstrong Telephone Company-North, Bentleyville Telephone Company, Buffalo Valley Telephone Company, Citizens Telephone Company of Kecksburg, Frontier Communications Commonwealth Telephone Company, Conestoga Telephone and Telegraph Company, Denver and Ephrata Telephone and Telegraph Company d/b/a D & E Telephone Company, Deposit Telephone Company, Frontier Communications of Breezewood, Frontier Communications of Canton, Frontier Communications of Lakewood, Frontier Communications of Oswayo River, Frontier Communications of Pennsylvania, The Hancock Telephone Company, Hickory Telephone Company, Ironton Telephone Company, Mahanoy & Mahantango Telephone Company, The North-Eastern Pennsylvania Telephone Company, North Penn Telephone Company, North Pittsburgh Telephone Company, Palmerton Telephone Company, Pennsylvania Telephone Company, Pymatuning Independent Telephone Company, South Canaan Telephone Company, Sugar Valley Telephone Company, Venus Telephone Corporation, Lackawaxen Telecommunications Services, Laurel Highland Telephone Company and Yukon-Waltz Telephone Company.
2 Re Nextlink Pennsylvania, Inc., Docket No. P-00991648; P-00991649, 93 PaPUC 172 (September 30, 1999) (Global Order); 196 P.U.R. 4th 172, aff'd sub nom. Bell Atlantic-Pennsylvania, Inc. v. Pennsylvania Public Utility Commission, 763 A.2d 440 (Pa. Cmwlth. 2000), alloc. granted, 844 A.2d 1239 (Pa. 2004).
3 Sprint/United later divested its landline operations. United Telephone Company of Pennsylvania is the local phone company doing business as Embarq Pennsylvania.
4 The regulations governing the PaUSF are found at 52 Pa. Code §§ 63.161--63.171. There is no sunset provision in the regulations; however, in December, 2004, the Commission was contemplating whether it should begin the legal process of rulemaking to terminate the fund on December 31, 2006.
5 The Missoula Plan was filed on July 24, 2006 by the National Association of Regulatory Utility Commissioners (NARUC) in recognition of one meeting site where the proposal was considered. It was not endorsed by NARUC, but the filing is one in a series of intercarrier compensation proposals in the FCC's CC Docket No. CC 01-92.
6 The RTCC, OTS, OCA and Embarq filed a joint status report.
7 Sprint Nextel Corp. filed on behalf of Sprint Communications Company L.P., its interexchange and competitive local exchange carrier entity, and its wireless entities operating in the Commonwealth: Sprint Spectrum, L.P. d/b/a Sprint PCS and Nextel Communications, Inc., and NPCR, Inc. d/b/a Nextel Partners.
8 The D & E Companies include: Buffalo Valley Telephone Company, Conestoga Telephone & Telegraph Company and Denver & Ephrata Telephone & Telegraph Company.
9 See Act 183 of 2004, P. L. 1398 (66 Pa.C.S. §§ 3011--3019), which repealed the prior Chapter 30 law.
10 Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Transport Rate Structure and Pricing, End User Common Line Charges, CC Docket Nos. 96-262, 94-1, 91-213, 95-72, First Report and Order, 12 FCC Rcd 15982, May 31, 2000, (Access Charge Reform Order) at 15998 Par. 35.
11 Interstate Access Support Order at 13046 par. 201.
12 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 9164-65 (1977) (Universal Service First Report and Order) at 8917 par. 253 (subsequent history omitted); Rural Task Force Order.
13 Id. at 11249 par. 8.
14 Verizon filed on behalf of the Verizon ILECs, Verizon Pennsylvania Inc. and Verizon North Inc. as well as Verizon's CLEC, MCImetro Access Transmission Services, LLC d/b/a Verizon Access Transmission Services, (collectively referred to as ''Verizon''). As already discussed, Verizon Wireless filed separately in response to the Joint Motion.
15 In January 2007, the Missoula Plan proponents generated an analysis detailing the putative benefits of the Missoula Plan. That initial analysis has since become the Amended Missoula Plan. The proponents filed an ex parte letter with the FCC on January 30, 2007 which this Commission has urged the FCC to reject. See Comment of the Pennsylvania Public Utility Commission in the Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, DA 07-738.
16 Our PaUSF is a ''closed'' system. Certificated carriers offering service in Pennsylvania help support the intrastate access charge reform by contributing to the PaUSF. Intrastate revenues are re-distributed within the state. The PaUSF supports rural ILECs by providing local service subsidies to help keep local rates affordable as those companies rebalance their rates from a monopoly rate structure to a competitive rate structure resulting in decreases to access charges and offsetting increases to local service rates.
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