NOTICES
Opinion and Order
[40 Pa.B. 2845]
[Saturday, May 29, 2010]Public Meeting held
May 6, 2010Commissioners Present: James H. Cawley, Chairperson; Tyrone J. Christy, Vice Chairperson; Wayne E. Gardner; Robert F. Powelson
AT&T Communications of Pennsylvania, Inc. v. Verizon North, Inc. and Verizon Pennsylvania, Inc.; C-20027195
Opinion and Order By the Commission:
Before the Commission for consideration is the Status Report and Motion to Extend the Stay (Motion to Extend Stay) of its Access Charge Investigation, which was jointly filed on August 12, 2009, by Verizon Pennsylvania, Inc. (Verizon PA) and Verizon North, Inc. (Verizon North) (collectively Verizon), in the above captioned proceeding.1 The Commission previously had stayed the Verizon Access Charge Investigation by Orders entered on January 8, 2007, and September 12, 2008. Each time the stay was granted for a twelve-month period awaiting the outcome of the Federal Communications Commission's (FCC) Unified Intercarrier Compensation Proceeding at CC Docket No. 01-92.2 Also, in each of those instances, the Parties were required to submit status reports, thirty days prior to the expiration of each of the stays, on the prior year's events that may have an impact on the Verizon Access Charge Investigation.
In addition to Verizon's Status Report and Motion to Extend Stay, we are also considering the Status Reports of the other Parties in this case. Those parties include Sprint Communications Company, L.P., Sprint Spectrum, L.P., Nextel Communication of the Mid-Atlantic, Inc. and NPCR, Inc. (collectively, Sprint) and AT&T Communications of Pennsylvania, Inc. (AT&T), all who filed their Status Reports on August 12, 2009. Also on August 12, 2009, Qwest Communications Company filed a letter in lieu of a Status Report.
On September 1, 2009, Verizon filed an Answer to Sprint's and AT&T's Status Reports, and AT&T and Sprint individually filed their Answers to Verizon's Motion to Extend. On September 2, 2009, a Joint Answer was filed by the Pennsylvania Telephone Association (PTA) and The United Telephone Company of Pennsylvania, d/b/a Embarq Pennsylvania (Embarq)3 (collectively PTA/Embarq) to Verizon's Motion to Extend.
History of the Proceeding The history of the proceeding is contained substantially on pages 2—9 of our January 8, 2007 Opinion and Order in this case at the above captioned docket. The following is gleaned from that history and also includes updates that have occurred since then.
In the Global Order4 entered September 30, 1999, the Commission directed all local incumbent exchange carriers operating in Pennsylvania to reduce their access charges. The Global Order further provided for a subsequent access charge proceeding to begin in January 2001 to determine additional access charge reductions and the possible elimination of the Carrier Charge pool. Subsequently, in January 2002, the Commission initiated a formal generic access charge investigation at Docket No. M-00021596 in order to accommodate the access charge investigation that was required by the Global Order.
On March 22, 2002, AT&T filed a Formal Complaint at Docket No. C-20027195 against Verizon North seeking to have Verizon North's access charges reduced to Verizon PA's levels pursuant to the requirements in the Bell Atlantic-GTE Merger Order at Docket No. A-310200 F0002, et al.5 AT&T's Formal Complaint was initially dismissed by then Chief Administrative Law Judge Robert Christianson, but was later reinstated by an Order entered December 24, 2002. The December 24, 2002 Order also bifurcated the access charge investigation so that all Verizon matters (i.e., those pertinent access charge matters pertaining to Verizon PA and Verizon North, including AT&T's Formal Complaint) as well as all matters relating to access charge parity between Verizon North, Inc. and Verizon Pennsylvania, Inc. resulting from the Merger Order at Docket No. A-310200F002, et al., would be litigated at Docket No. C-20027195; and the Rural ILEC Access Charge Investigation would continue to be litigated at Docket No. M-00021596.6
On December 30, 2002, Verizon PA and Verizon North filed a Joint Petition regarding further reductions to their access charges pursuant to the Merger Order, the Global Order and the generic access charge investigation at Docket No. M-00021596 (Verizon's Joint Petition for Access Charge Reductions). By Order entered May 5, 2003, at Docket No. M-00021596, et al., the Commission consolidated Verizon's Joint Petition for Access Charge Reductions with In re Joint Application of Bell Atlantic Corporation and GTE Corporation for Approval of Agreement and Plan of Merger at Docket Nos. A-310200F0002, A-311350F0002, and A-310222F0002, as well as with AT&T Communications of Pennsylvania, Inc. v. Verizon North, Inc. at C-20027195 regarding Verizon-North's access charges and assigned the matter to the Office of Administrative Law Judge for an evidentiary hearing and recommended decision within six months from the date of entry of that Order.
On November 18, 2003, a Recommended Decision by Administrative Law Judge (ALJ) Cynthia Williams Fordham was issued wherein she recommended the adoption of a Joint Proposal by Verizon and the OCA for further reductions to access charges. Prior to the Commission's disposition on ALJ Fordham's Recommended Decision, Verizon PA, Verizon North, OCA and OSBA filed a Joint Petition for Resolution of Litigation which modified the Verizon/OCA Joint Proposal.7
By Opinion and Order entered July 28, 2004 (July 28, 2004 Order), the Commission, inter alia, reversed the ALJ's Recommended Decision and adopted the Joint Petition for Resolution of Litigation. The July 28, 2004 Order permitted Verizon to reduce and restructure its access charges by allowing Verizon to file a revenue neutral, rate rebalancing filing in which the net revenue reductions from access charge increases and decreases would be offset with revenue increases in monthly dial tone line rates for residential and business local exchange customers. In addition, the Commission remanded the case to the Office of Administrative Law Judge for the further development of a record, and issuance of a Recommended Decision on policy issues and other access charge concerns that were raised by the IXCs in their Exceptions, but which were not specifically resolved at that time. The issues on remand included, but were not limited to, the consideration of specific access charge reduction proposals, the removal of implicit subsidies from access charges and the reduction or elimination of the Carrier Charge.
ALJ Fordham's Recommended Decision on Remand was issued on December 7, 2005. By Order entered January 8, 2007, the Commission modified the ALJ's Recommended Decision on Remand and stayed the proceeding pending the outcome of the FCC's Unified Intercarrier Compensation proceeding, or for a period of twelve months from the date of entry of the Order, unless extended by Commission Order, whichever was earlier.
As noted, on August 12, 2009, Verizon filed its Status Report and Motion to Extend the Stay of its Access Charge Investigation in accordance with the January 8, 2007 Order, and Sprint and AT&T filed their Status Reports on August 12, 2009. These matters are now ripe for our consideration.
Discussion We note that any issue that we do not specifically address herein has been duly considered and will be denied without further discussion. It is well settled that we are not required to consider expressly or at length each contention or argument raised by the parties. Consolidated Rail Corporation v. Pa. PUC, 625 A.2d 741 (Pa. Cmwlth. 1993); also see, generally, University of Pennsylvania v. Pa. PUC, 485 A.2d 1217 (Pa. Cmwlth. 1984).
A. Status Reports and Verizon's Motion for Stay
In its Status Report and Motion to Stay, Verizon submits that the Commission should stay the Verizon Access Charge Investigation for at least another twelve months, or until September 12, 2010, while the Commission develops a record in the newly reopened Rural Access Charge Investigation at Docket No. I-00040105.8 In support of this position, Verizon opines that its access charge investigation and the Rural Access Charge Investigation are in a significantly different posture because: (1) Verizon's access rates have already been reduced and are low compared to other ILECs operating in Pennsylvania; and (2) a record has already been developed in the Verizon investigation and there is no other open litigation relating to Verizon's access charges. Verizon submits that if the Commission grants its request to further stay its investigation for at least another twelve months, it will allow the Rural Access Charge Investigation to progress and allow further monitoring of the FCC activity.9 If the FCC does not act in the interim, Verizon avers that the Commission will have made progress in the RLEC matter and may then be in a position to address the important and difficult issues of access pricing policy for all carriers fairly and comprehensively. VZ SR & Motion at 1—5, 8.
Verizon submits that the need to reduce its access charges is not as pressing as RLEC access charge reductions because, unlike Verizon's rates, which have undergone substantial examination and reduction over the years, including through this investigation, the RLEC rates have largely evaded substantive review. As such, Verizon is of the opinion that reducing the gap between the RLECs' access charges and Verizon's access charges should be the primary focus of the Commission. VZ SR & Motion at 6.
Verizon also contends that it is important to recognize that while the Commission has reduced Verizon's access rates, both through the Global Order and in this proceeding, and has generally stated its policy to move access rates closer to costs, the Commission has never confronted and decided many of the most fundamental questions of access pricing law and policy. While the Commission has been operating under a general premise that access rates should move downward toward cost, Verizon notes that the Commission has never specifically decided where or how the line should be drawn. Verizon also notes that the Commission recognized in its January 8, 2007 Order that if it were to restart this Verizon case and address the merits of the Exceptions to the Recommended Decision on Remand, it would be compelled to address the ultimate policy issues relating to the pricing of intrastate access, including ''whether access charges should be reduced 'to cost;' '' what is ''the cost of traffic sensitive rates;'' and whether to ''eliminate[ ] . . . the Carrier Charge.''10 VZ SR & Motion at 7 and 8. Verizon suggests that whatever the Commission ultimately determines with regard to these issues, the standards must apply consistently and evenhandedly to all carriers. In this regard, Verizon is of the opinion that it is better to wait until a full record in the RLEC case concerning these issues is completed. Id. at 8.
Verizon also notes that the Commission has not had the opportunity to consider the impact of Verizon's access rate reductions on CLECs in light of Act 183.11 As such, Verizon suggests that the Commission first address the inequity of allowing the RLECs to charge access rates much higher than Verizon and the majority of the CLECs before it considers further reducing Verizon's access rates and thereby lowering the bar for CLECs to comply with the statutory cap and exacerbating the gap between the rates of those carriers and the RLECs' rates. Finally, Verizon submits that extending the stay will delay the need to consider retail rate increases for Verizon's customers in light of the fact that 66 Pa.C.S. § 3017(a) requires that any reduction to Verizon's access rates must be revenue-neutral. VZ SR & Motion at 10.
In its Status Report, Sprint is of the opinion that the stay of Verizon's access charge investigation should be lifted. Sprint notes that there has been considerable activity in the FCC's Intercarrier Compensation proceeding at CC Docket 01-92, but avers that the FCC is no closer to achieving a unified intercarrier compensation regime that it was a year ago. Sprint notes that since the last time that the Commission ordered an extension of the stay of Verizon's access charge investigation, the FCC had issued a Further Notice of Proposed Rulemaking in the Intercarrier Compensation Docket (FNPR),12 accompanied by two alternative plans for a new intercarrier compensation regime.13 Sprint explains that although the two plans differ from each other, one important theme that runs throughout both plans requires each carrier's intrastate access rates to mirror its interstate switched access rates within two years of the effective date of an FCC final Order. Both plans also require that intrastate access rates be reduced by half (50%) of the difference between intrastate and interstate access rates within the first year, and the remainder of the difference in the second year. Additionally, Sprint adds that both plans rely heavily on the state Commissions to achieve a uniform and fair system of intercarrier compensation. Sprint points out that the plan in Appendix A specifically states that state commissions need not wait for the FCC to reform intercarrier compensations rules and that it is clear from the two plans that the FCC recognizes it will require cooperation from the state commissions to accomplish intercarrier reform. Sprint submits that there is no reason to anticipate that the FCC will issue any substantive decision in the Intercarrier compensation proceeding any time in the foreseeable future, and that the Commission should no longer stay the instant proceeding any longer. Sprint SR at 1—7.
Sprint notes that Verizon is one of many companies that filed comments in support of the draft plans in the FCC's FNPR at CC Docket No. 01-02. Sprint avers that Verizon did not contest interstate mirroring as an appropriate first step in the reform process and went much further in suggesting that all carriers should have their rates for exchanging all types of traffic capped at a level no higher than $0.0007 per minute of use. Sprint is of the opinion that in light of Verizon's support for access rate reductions, it seems logical to implement the rate reforms that were addressed in ALJ Fordham's Recommended Decision. Sprint SR at 4.
Sprint also notes that other state commissions are considering or have begun to again review access charge reform14 and that this Commission recently opened the Rural ILEC Access Charge Investigation. Sprint opines that by reopening the Verizon access charge investigation, the Commission will ensure that a final decision on the level of Verizon's intrastate access charges are timely reached and access reform will be addressed for all carriers in the state contemporaneously. Sprint SR at 5—7.
In its Status Report, AT&T also notes that the Commission recently lifted its stay of the Rural ILEC Access Charge Investigation, and asks that the Commission join the many other states by lifting the stay in the instant case for the same reasons the Commission expressed in lifting the Rural ILEC Access Charge Investigation stay. AT&T SR at 1 and 2.
AT&T expresses its frustration that this case was initiated over seven years ago and that, after initially ordering Verizon to reduce its access rates over five years ago, the Commission remanded the case to the ALJ, who subsequently recommended that Verizon's carrier charge be eliminated within six months to a year, and that the Verizon companies' access rates be reduced to their interstate levels within one to two years. Likewise, AT&T states that the Commission, on numerous occasions, has acknowledged the need for the elimination of subsidies from intrastate access charges—when the Rural ILEC Access Charge Investigation was reopened and when this instant case was remanded to the ALJ years ago—and that this still has not been accomplished. AT&T claims that the presence of implicit subsidies in access charges keeps prices too high for telecommunication services and hinders competition because prospective alternative service providers have to compete with heavily subsidized operations. AT&T SR at 2 and 3.
In light of the above, AT&T urges the Commission to resume the Verizon Access Charge Investigation as soon as practicable for the Commission and interested parties to do so. AT&T SR at 4.
In its letter, Qwest requests that it be placed on the record to show that it considers the issue of whether the stay of the Verizon Access Charge Investigation should continue or be ended is a policy decision that is best left to the Commission, based on its judgment and expertise. As such, Qwest submits that it neither supports or opposes continuation of the stay at this time.
In its Answer to the Status Reports of AT&T and Sprint, Verizon submits that the pressing issue currently before the Commission is not the relatively low access rates of Verizon, but the higher access rates of the RLECs. Verizon opines that the Commission must first close the gap between the rates of the RLECs' rates and Verizon before beginning its access rate investigation. Verizon suggests that the Commission should develop the RLEC record first, rather than taking any action in its case that might result in exacerbating the gap between the RLEC and Verizon rates or might result in premature legal or policy decisions that will later affect the RLEC case.
Verizon contends that its request to further stay its investigation is not necessarily inconsistent with the positions advanced by AT&T and Sprint. Verizon notes that AT&T, in its status report, requests that the Commission ''reduce Verizon's access rates reasonably soon after it reduces the RLECs' rates.''15 Since the Commission will not be in a position even to begin considering a reduction to the RLEC rates until after the RLECs' twelve-month litigation period elapses and exceptions and reply exceptions are filed, Verizon believes that its Motion is consistent with AT&T's requested timetable to stay the Verizon case and revisit its status in twelve months, when the RLEC case is likely to be closer to a potential resolution.
In response to Sprint's argument that this Commission has ''a unique opportunity to implement industry-wide access reform,''16 Verizon asserts that this Commission cannot consider these important policy issues on an ''industry-wide'' basis until it first develops a record in the RLEC case, so that it can address the important segment of the industry that is still charging access rates far out of proportion to what Verizon and other carriers charge for the same service.
In light of the above, Verizon maintains its opinion that this Commission should at least endeavor to achieve a uniform benchmark intrastate access rate in Pennsylvania by reducing the RLEC rates closer to the rates that Verizon and the CLECs in its territory charge for the same intrastate access service and that it can only do that by allowing itself the time to develop the record in the RLEC case before it considers reopening the Verizon investigation. Accordingly, Verizon requests that the Commission stay its investigation during the twelve-month period while the RLEC case is being litigated.
B. Responses to Verizon's Motion to Extend Stay
AT&T objects to Verizon's Motion to Extend Stay, and avers that Verizon's arguments for delaying the investigation do not warrant a further stay for a third time. Instead, AT&T wants the Commission to take action to bring Verizon's intrastate access rates to parity with its interstate rates. AT&T notes that Verizon's intrastate access rates remain well above their interstate rate levels and also contain an unjustified Carrier Charge, making those rates discriminatory and harmful to Pennsylvania consumers. AT&T also argues that interexchange carriers (IXCs), like itself and others, cannot compete against e-mail, instant messaging, social networking web sites, VoIP providers and wireless carriers as long as IXCs incur access charges that other competitors are not required to pay. AT&T also is of the opinion that is not difficult to bring parity between Verizon's intrastate and interstate access rates because Act 183 assures that any access charge reductions will be revenue neutral. AT&T Answer at 1 and 2.
AT&T also notes that the Commission, in its Order reopening of the Rural ILEC Access Charge Investigation, has already decided that it will no longer wait for the FCC to address intrastate access reform and has acknowledged that FCC's Unified Intercarrier Compensation Proceeding will no longer be an excuse to delay access reform in Pennsylvania. As such, AT&T submits that, just as the Commission has decided to re-open the Rural ILEC Access Charge Investigation, the Commission should lift its stay in the instant case and move forward. AT&T Answer at 2—4.
In its Answer to Verizon's Motion to Extend Stay, Sprint argues that an extension of the Verizon Access Charge Investigation is neither warranted nor necessary. Sprint cites to the Commission's August 5, 2009 Order that reopened the Rural ILEC Access Charge Investigation and agrees with the Commission's assessment that it is unlikely that any reform initiative at the Federal level may take place any time soon. Sprint contends that the same problems that the Commission began to address in the Global Order continue to be pervasive today in Pennsylvania and that urgent action by the Commission is needed in order to effectuate access charge reform. Sprint opines that continuing the stay, as urged by Verizon, will simply further delaying those access charge reform goals expressed by the Commission in the Global Order. Sprint Answer at 1 and 2.
Sprint asserts that Verizon's intrastate switched access rates remain grossly over-inflated and that Verizon's use of percentages to characterize rate reductions as substantial is irrelevant and misleading when the starting point is many multiples above cost for monopoly-controlled bottleneck facilities. Sprint also claims that Verizon's Carrier Charges and intrastate switched access rates are unreasonable and outdated, and in need of reform. Sprint believes that any reform initiated at the Federal level may, in turn, require the Commission to order all carriers to mirror their interstate access charges. Sprint is of the opinion that reopening the Verizon access reform docket will place Pennsylvania in a position to effectuate industry-wide access reform and that the Commission should not forgo such an opportunity. Sprint Answer at 2 and 3.
Sprint submits that it has been an entire decade since the Commission began addressing access charges and today, many of the same problems exist. Sprint submits that the Commission has already developed a record including a Recommended Decision on Remand that can serve as the basis for a Commission Order to effectuate access charge reform, and that, if a further stay is granted, the Commission would increase the risk of that record becoming stale. Accordingly, Sprint, urges the Commission not to further delay the access charge reform goals that were addressed by the Commission in its Global Order. Sprint Answer at 3 and 4.
Embarq/PTA also oppose Verizon's requests for extending the stay and is of the opinion that Verizon failed to assert a legitimate basis for further delaying an examination of Verizon's access rates. Embarq and PTA assert that while Verizon claims that its access rates have already been substantially reduced and are comparatively low; so too have the RLECs rates been substantially reduced. Embarq and PTA explained that both Verizon and the RLECs undertook two rounds of access charge reductions, (Phase I and Phase II) first in the Global Order in 1999 and a second one in the proceeding that commenced in 2002. However, Embarq and PTA state that the second round of reform for Verizon was no more than compliance to the Commission's Merger Order of 1999 that required access charge parity of the former GTE North, Inc. access rates with those of the former Bell Atlantic Pennsylvania, Inc. rates. For this reason, Embarq/PTA contends that it would be more accurate to state that Verizon never implemented any Phase II access rate reform. Embarq/PTA Answer at 6—9.
Embarq/PTA also take issue with Verizon's claim that its switched access rate are quite low. Embarq/PTA aver that such claims should be rejected because they are meritless and purely self-serving to the issue of whether Verizon has demonstrated that a further stay is reasonable and in the public interest. In addition, Embarq/PTA avers that it is self serving for Verizon to advocate a State-wide standard for intrastate access rates when it opposes such a standard for local rates. Embarq/PTA contend that there is no statutory or regulatory requirement mandating that intrastate access rates be set at cost, at parity with interstate rates, or at parity with the access rates of Verizon, the largest ILEC in Pennsylvania. Embarq/PTA submit that a meaningful access reform proceeding should not involve a comparative relationship of Verizon's access rates to any other carrier's because Verizon's economies of scale and greater geographic density of population are not available to other carriers such as the RLECs. For these reasons, Embarq/PTA submit that Verizon's claim that its access rates are low and RLEC rates are extremely high is flawed, misleading and meaningless. Embarq/PTA Answer at 9—12.
Embarq/PTA also disagree with Verizon's argument that a stay is warranted because ''a record in the Verizon investigation has already been developed.'' Contrary to Verizon's claim, Embarq/PTA maintain that ALJ Fordham's Recommended Decision on Remand, which was dated November 30, 2005, and the record developed in the Verizon Access Charge Investigation has already become stale and the idea of refreshing those records is largely meaningless. Embarq/PTA asserts that since the record in the Verizon investigation has been developed, Verizon has become much larger and more formidable entity to the RLECs in the telecommunications landscape. Embarq/PTA Answer at 13 and 14.
Embarq/PTA also believe that a stay in this proceeding is not warranted because it allows the Rural ILEC Access Charge Investigation to progress in order to procedurally bring it closer to Verizon's investigation while Verizon's investigation is placed on hold while the FCC's activity is monitored. Embarq/PTA argue that Verizon's reliance upon the FCC's activities is misplaced and that Verizon has failed to demonstrate why a further stay is warranted just for Verizon. Embarq/PTA maintain that the risk of moving forward with the proceeding at the state level before any FCC action impacts all ILECs and Verizon should not be accorded a more lenient regulatory treatment than all of the other ILECs in Pennsylvania. Embarq/PTA Answer at 14 and 15.
Embarq/PTA opines that in light of the Commission's August 5, 2009 Order, which lifted the stay on the RLEC investigation, there is no need to have both the Verizon and RLEC case on a consolidated procedural schedule; however, they contend that there is a need to ensure parity in regulatory treatment and it is not in the public interest to undertake an access investigation involving RLECs while staying the same investigation and review for Verizon, especially in light of the fact that Verizon serves 84% of the Pennsylvania telephone subscribers. Embarq/PTA Answer at 16 and 17.
In response to Verizon's proposal that the Commission address RLECs' and CLECs' access charges first before addressing Verizon's rates in conjunction with Verizon's claim that any decision to lower Verizon's access rates will ''in effect be a directive to lower the switched access rates of every CLEC that operates in Verizon's territory,'' Embarq/PTA argue that Verizon' s point is meaningless and fails to justify the preferential regulatory treatment sought by Verizon. Embarq/PTA submits that Act 183's requirement for pricing applies equally to all ILECs, not just the Verizon ILECs, and if the Commission reduces intrastate switched access rates for the RLECs in Pennsylvania, that decision will also impact access rates for those CLECs operating in the RLECs' service territories. Embarq/PTA Answer at 17.
Finally, with regard to Verizon's claim that a further stay will delay the need to consider retail rate increases for Verizon's customers, Embarq/PTA argue that this point is also meaningless in terms of allegedly justifying Verizon's desire for a carve-out regulatory treatment concerning its intrastate access charges. In this regard, Embarq/PTA note that the revenue-neutrality requirement of Section 3017(a) applies to all ILECs and not just Verizon and any access reduction that may result from the Commission's decision to lift the stay in the RLEC access investigation will impact rural Pennsylvania through possible retail rate increase as well, unless, of course, additional USF support is provided. Nevertheless, Embarq/PTA opine that Verizon's assertions are meaningless and disingenuous. Embarq/PTA Answer at 17 and 18.
In light of the above arguments, Embarq/PTA request that, for the same reasons set forth in the August 5, 2009 Order resuming the Rural ILEC Access Charge Investigation, the Commission should deny Verizon's request for a further stay and resume a generic investigation of Verizon's intrastate switched access charges. Embarq/PTA Answer at 17 and 18.
Embarq/PTA stated that Verizon's request that the Commission should first address the impact of rate changes on CLECs before addressing Verizon's access rates fails to justify the preferential regulatory treatment sought by Verizon. Finally, Embarq/PTA stated that Verizon's claim that a further stay will delay the need to consider retail rate increases is meaningless. Embarq/PTA add that the revenue neutrality requirement of Section 3017(a) applies to all ILECs, and not just for Verizon and that if the Commission changes pricing policies or reduces intrastate switched access rates, that decision will impact access rates of all CLECs and that Verizon has not provided any credible or reasonable justification as to why a stay should be granted. Embarq/PTA Answer at 16—18.
C. Disposition
Upon our review of the various Status Reports that were submitted to the Commission and Verizon's Motion to Extend Stay, and the Answers thereto, we shall deny Verizon's Motion to Extend Stay but we adopt an alternative time frame for the required adjudication of this matter.
As we noted in the August 5, 2009 Order that directed reopening of the Rural ILEC Access Charge Investigation at Docket No. I-00040105, et al., we have not seen any substantial resolution of intercarrier compensation issues by the FCC, and it is unclear whether the FCC will appropriately prioritize the area of intercarrier compensation and federal USF reform for ultimate resolution any time soon. We also noted that the pending proposals before the FCC to impose a $0.0007 rate for interstate and intrastate access charges alike nationwide do not warrant further stay of the investigation as FCC action does not appear to be imminent. We conclude that the same resolution applies in the instant proceeding as well. See August 5, 2009 Order at 18 and 19.
We note that most of the Parties involved in the Rural ILEC Access Charge Investigation at Docket No. I-00040105 are also involved in the Verizon Access Charge Investigation. We further note that the Parties in the Rural ILEC Access Charge Investigation are in the midst of preparing briefs in that case in order for ALJ Kandace Melillo to meet the August 5, 2010 deadline for the issuance of a Recommended Decision. As such, in order to avoid a potential heavy burden on the Parties, as well as to ease the case load of the Office of the Administrative Law Judge, we shall delay the conduct of evidentiary hearings for this case until after the issuance of a Recommended Decision by the presiding ALJ Melillo in the Rural ILEC Access Charge Investigation at Docket No. I-00040105.
As noted in Footnote No. 9, if we granted Verizon's request for an additional twelve-month stay, it would extend the stay that expired on September 12, 2009, until September 12, 2010. By our action in this disposition, we will adopt an alternative time frame for the adjudication of this matter which directs that hearings in the instant proceeding shall not begin until a Recommended Decision in the Rural ILEC Access Charge Investigation at Docket No. I-0004010 has been issued, which is currently expected to be on August 5, 2010.
Although we considered Verizon's request to extend the stay for the entire additional twelve months as a course of action, we reject that request in order to resolve the outstanding issues with regard to access charges and the way they hampered competition in the telecommunications market that persisted at the time of the Global Order, supplemented by the need for a resolution of access charge issues concurrently with the other ILECs rather than on a piecemeal basis. As Sprint has reminded us, an entire decade has passed since the Commission began reforming access charges in the Global Order and many of the same areas of concern may still persist. This Commission cannot forgo such an opportunity to effectuate industry-wide access reform any longer. By reopening Verizon's access charge investigation we will be in a position to ensure consistency in addressing the outstanding access rate issues. These issues include addressing the access pricing policy based on the mandates of Chapter 30 and § 3017(a) of the Public Utility Code.
Accordingly, we shall direct the Office of Administrative Law Judge to resume evidentiary hearings for this case immediately after a Recommended Decision is issued in the Rural ILEC Access Charge Investigation at Docket No. I-00040105. Consistent with our action in our August 5, 2009 Order in the Rural ILEC Access Charge Investigation, in the event that the FCC makes a final determination in its Unified Intercarrier Compensation Proceeding, or any other proceeding that may have an effect on intrastate switched access charges, during the re-opened investigation, the impact of said determination shall be addressed by all parties as part of the proceeding.
It is also important to note that there remain certain issues that have never been decided upon from the Remand proceeding that took place before ALJ Cynthia Williams Fordham. ALJ Fordham's recommendation, in summarized format, was provided in our January 8, 2007 Opinion and Order in this case when we initially stayed the instant proceeding. That summary is reproduced below for the purpose of demonstrating those issues that remained unresolved just prior to the stay of this investigation:
1. That the Commission should move forward with additional access charge reform for Verizon and deny the requests of those Parties' who argued to stay the instant investigation until after the FCC makes a ruling in the ICR proceeding. (R.D.-R at 58-60);
2. That, with regard to Verizon's Phase I Compliance filing: (a) Verizon has demonstrated that it complied with the Phase I Order and should not be required to true-up on an annual basis using the most recent available data on access volumes and end user line volumes as requested by AT&T. (R.D.-R at 60); and (b) Verizon should be required to use historical access minute volumes, rather than forecasted access minutes, in rebalancing local and access rates because a forecast of such minutes would not insure that the revenue would be closer to the estimated recovery amount. (R.D.-R at 60-61);
3. That the Commission: (a) should not endorse the ICF plan or adopt portions of this plan in resolving this case because the states should continue to have a role in regulating intrastate access charges. (R.D.-R at 61-62); and (b) should not adopt the NASUCA plan because it does not address the IXC's requests, does not allow for neutral rate rebalancing as required by Chapter 30, and would not assist the Commission in deciding the next steps for access reform in Pennsylvania. (R.D.-R at 62);
4. That, within six months to a year after the Commission's Order in this matter is entered, Verizon's Carrier Charge of $0.58 per minute should be eliminated and the cost associated with the local loop, which is currently being recovered by the Carrier Charge, should be paid by the local end user customers (equivalent to a maximum of $0.95 per line per month) rather than by the IXCs. (R.D.-R at 63-64);
5. That the Commission should deny the IXCs' request to price access charges by using the total element long run incremental costing (TELRIC) methodology because the IXCs failed to prove that TELRIC costs represent Verizon's actual expected cost of providing service. (R.D.-R at 65);
6. That the Commission should require Verizon to reduce the remaining intrastate traffic sensitive access charges to interstate levels within one to two years after the final Order in this matter is entered. (R.D.-R at 65 - 66);
7. That the Commission should reject the IXC's proposal that Verizon's remaining access charges be reduced to cost. (R.D.-R at 66);
8. That the Commission should deny requests by AT&T, MCI, the OCA and the OSBA that recovery of access charge reductions through local line increases include non-contractual lines and competitive lines. (R.D.-R at 66-67);
9. That this proceeding be marked closed after the Carrier Charge and the reduction of intrastate rates to interstate rates is completed. If additional access reform would still be required, a separate proceeding should be commenced at that time. (R.D.-R at 66).
As noted, the January 8, 2007 Order stayed the investigation pending the outcome of the FCC's Intercarrier Compensation case at CC Docket No. 01-92 or for a period of twelve months from the date of entry of this Opinion and Order, unless extended by Commission Order, whichever was earlier. Although the twelve-month stay expired on September 12, 2009, the proceeding remains stayed until we make a determination based on the instant Status Reports and Verizon's Motion to Extend.
We note that the stay has rendered some of ALJ Fordham's recommendations moot, while others have since been resolved in subsequent proceedings. Nevertheless, it is apparent that the record in this investigation needs to be updated. As such, in addition to our specific directives, infra, we will direct the ALJ and the Parties to consider those issues that still need to be resolved in the reopened investigation and whether any parts of the developed record in the investigation can be used or whether they need to be refreshed.
With regard to our specific directives for matters to be addressed in this investigation, we shall afford the participating parties due process opportunities to supplement the evidentiary record including any issues that were not adjudicated at the time of the Remand before the ALJ. In addition to the supplemental issues that will be raised by the parties, the participating parties shall address and provide record evidence on the legal, ratemaking and regulatory accounting linkages between (a) any FCC ruling that may have an impact on intrastate switched access charges; (b) the intrastate access charge reform for ILECs in view of the new Chapter 30 law and its relevant provision at 66 Pa.C.S. §§ 3015(g), pertaining to ''Rate change limitations,'' and 3017, pertaining to ''Access charges;'' and (c) the potential effects on rates for Verizon's basic local exchange services. In addition, should the resulting rate changes from this investigation occur within the context of the Verizon Companies' subsequent Price Change Opportunity fling, the ALJ shall address the potential implications of the resulting rate changes in the calculations associated with the relevant PCO filing and why those resulting rate changes would be considered lawful, just and reasonable pursuant to the Chapter 30 law.
Finally, it is worth mentioning that our primary reason for staying the instant investigation was to await an FCC ruling in its Unified Intercarrier Compensation Proceeding. While there has been some activity in that proceeding that has been addressed by Parties in their status reports, there has been a major, notable development, which occurred after the due date for the submission of the last round of status reports, that may have a profound effect on intrastate switched access charges. That development is the issuance of the FCC's National Broadband Plan (NBP), which was released on March 16, 2010.
The NBP, formally entitled ''Connecting America: The National Broadband Plan,'' was prepared by the FCC in order to fulfill a mandate by the United States Congress to develop a ''national broadband plan'' to ensure that every American has ''access to broadband capability.'' The NBP addresses, inter alia, the transition from a circuit-switched network to a platform over which multiple internet protocol-based services converge.17 NBP at 59. The NBP also includes recommendations on universal service and intercarrier compensation that will affect the path of the transition. Id. The Executive Summary of the NBP, on page XIII, addresses a recommendation to ''[r]eform intercarrier compensation, which provides implicit subsidies to telephone companies by eliminating per-minute charges over the next 10 years and enabling adequate cost recovery through the CAF'' (Connect America Fund).18 In light of this recent development, if the FCC makes any pertinent rulings directly related to the NBP during the course of this access charge investigation, we shall direct the ALJ to consider and address how those rulings may have an impact on the outcome of this investigation.
Conclusion
In light of the above, and consistent with our reasoning and actions in the Rural Access Charge Investigation at Docket No. I-00040105, et al., we shall deny Verizon's Motion to Extend Stay but allow for a reduced stay until August 5, 2010, or until a Recommended Decision is issued in the Rural ILEC Access Charge Investigation consistent with our disposition above; Therefore,
It is Ordered That:
1. The Motion to Extend the Stay filed by Verizon Pennsylvania, Inc. and Verizon North, Inc. is hereby denied.
2. The stay of the access charge investigation at Docket No. C-2007195 for Verizon North, Inc. and Verizon Pennsylvania, Inc. is hereby lifted.
3. This investigation at Docket No. C-20027195 is hereby assigned to the Office of Administrative Law Judge for the development of the appropriate evidentiary record and the issuance of a Recommended Decision.
4. Hearings shall not be held until after the issuance of a Recommended Decision by the Presiding Administrative Law in the Rural ILEC Access Charge Investigation at Docket No. I-00040105.
5. The participating parties shall be afforded due process opportunities to supplement the evidentiary record including any issues that were not adjudicated at the time of the Remand before Administrative Law Judge Cynthia Williams Fordham at this docket.
6. In addition to any supplemental issues raised per Ordering Paragraph No. 5, above, the participating parties shall address and provide record evidence on the legal, ratemaking and regulatory accounting linkages between: a) any Federal Communications Commission's ruling in its Unified Intercarrier Compensation proceeding; b) the intrastate access charge reform for ILECs in view of the new Chapter 30 law and its relevant provisions at 66 Pa.C.S. §§ 3015 and 3017; and c) the potential effects on rates for Verizon's basic local exchange services.
7. 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 and any other Federal Communications Commission proceeding or activity that may directly impact intrastate switched access charges.
8. A copy of this order be served on all telecommunications carriers operating in Pennsylvania, the Office of Consumer Advocate, and the Office of Small Business Advocate and the Office of Trial Staff.
9. A copy of this order be delivered for publication in the Pennsylvania Bulletin.
ROSEMARY CHIAVETTA,
Secretary
[Pa.B. Doc. No. 10-1019. Filed for public inspection May 28, 2010, 9:00 a.m.] _______
1 Verizon indicates that its Motion to Extend Stay is being filed on behalf of Verizon Pennsylvania, Inc., Verizon North, Inc. and MCImetro Access Transmission Services, LLC, d/b/a Verizon Access Transmission Services (MCImetro). However, as noted by AT&T Communications of Pennsylvania, Inc. (AT&T) in Footnote No. 1 to its Answer to Verizon's Motion to Extend Stay, the instant access charge investigation involves the review of intrastate access rates of the two Verizon incumbent carriers (Verizon PA and Verizon North). MCImetro, as a certified competitive local exchange carrier (CLEC) in Pennsylvania merged with Verizon in 2005, and has become part of Verizon by Order entered on January 11, 2006, at Docket No. A-310580F0009, et al. MCImetro is not an incumbent carrier whose rates are being investigated at this docket. As such, we are considering the Motion to Extend Stay as being filed by the two Verizon incumbents alone.
2 See In the Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92, FCC 05-33, Further Notice of Proposed Rulemaking (released March 3, 2005) (Unified Intercarrier Compensation Proceeding), wherein the FCC is comprehensively considering, inter alia, establishing a unified intercarrier compensation rate in lieu of interstate and intrastate access charges and local reciprocal compensation rates.
3 It is noted that Embarq is now known as The United Telephone Company of Pennsylvania, LLC, d/b/a CenturyLink as a result of its recent merger approval in Pennsylvania earlier this year. See Joint Application of The United Telephone Company of Pennsylvania, LLC, d/b/a Embarq Pennsylvania and Embarq Communications, Inc. For approval of the Indirect Transfer of Control To CenturyTel, Inc., Docket No. A-2008-2076038, (Opinion and Order entered March 10, 2010).
4 Re Nextlink Pennsylvania, Inc., Docket No. P-00991648; P-00991649, 93 Pa PUC 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. Commonwealth 2000), which was vacated in part MCI WorldCom, Inc. v. Pa. PUC, 577 Pa. 294, 844 A.2d 1239 (2004).
5 See Joint Application of Bell Atlantic Corporation and GTE Corporation for Approval of Agreement and Plan of Merger, Docket No. A-310200F0002, et al., (Opinion and Order entered November 4, 1999) (Merger Order).
6 By Order entered July 15, 2003, at Docket No. M-00021596, the Commission granted a Joint Procedural Stipulation filed by the Rural Telephone Company Coalition, The United Telephone Company of Pennsylvania, the Office of Trial Staff, OCA and OSBA with regard to the pertinent unresolved issues in that proceeding. Subsequently, by Order entered on December 20, 2004, at Docket No. I-00040105, the Commission instituted a further investigation for consideration of whether there should be additional intrastate access charge reductions and intraLATA toll rate reductions in the service territories of rural ILECs and all rate issues and rate changes that should or would result in the event that disbursements from the PaUSF are reduced. That Rural ILEC Access Charge Investigation was stayed various times; but after several years of inaction by the FCC in its Unified Intercarrier Compensation proceeding, the Commission reopened the Rural ILEC Access Charge Investigation in August 2009. See Order entered on August 5, 2009, at Docket No. I-00040105, et al. (August 5, 2009 Order). Initial evidentiary hearings have concluded in that proceeding and a Recommended Decision is expected in this matter by August 5, 2010.
7 The OSBA was not a party to the Joint Proposal of Verizon and the OCA in ALJ Fordham's Recommended Decision but was added as a joint petitioner in the Joint Petition for Resolution.
8 See August 5, 2009 Order at Docket No. I-00040105.
9 The expiration of the last stay occurred on September 12, 2009, pursuant to Ordering Paragraph No. 2 of the September 12, 2008 Order at Docket No. C-20027195, which stayed the investigation ''pending the outcome of the FCC's Intercarrier Compensation case at CC Docket No. 01-92 or for a period of twelve (12) months from the date of entry of this Opinion and Order, whichever is earlier, unless extended by Commission Order.'' If granted, the end of the stay requested by Verizon would be September 12, 2010, which would be thirty-eight days after the August 5, 2010 deadline for a Recommended Decision in the Rural ILEC Access Charge Investigation.
10 See January 8, 2007 Order at 4, 7.
11 Act 183 requires that no CLEC ''may charge access rates higher than those charged by the [ILEC] in the same service territory, unless such carrier can demonstrate that the higher access rates are cost justified.'' 66 Pa.C.S. § 3017(c).
12 See In the Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-02, Further Notice of Proposed Rulemaking (FNPR), 46 Comm. Reg. 431 (rel November 5, 2009).
13 The alternative plans were contained in the form of proposed orders. See FNPR at Appendices A and C.
14 Sprint SR at 6.
15 AT&T SR at 2.
16 Sprint SR at 4.
17 These IP-based services include voice, data and video.
18 The CAF will be created to support the provision of affordable broadband and voice with at least 4Mbps actual download speeds. It will shift up to $15.5 billion from the existing federal Universal Service Fund program to support broadband over the next ten years.
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.
