ORDER NO. 96-257

ENTERED OCT 04 1996

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UX 17

DISPOSITION: GRANTED WITH CONDITIONS

On May 8, 1996, GTE Northwest Incorporated (GTE or Company) filed Advice No. 570 requesting deregulation of its voice messaging services (VMS) and related trade names, "GTE Voice Messaging" and "GTE Personal Secretary," pursuant to ORS 759.030 and OAR 860-032-0025. On July 1, 1996, GTE requested and received a 90 day extension in the review process.

At its public meeting on September 24, 1996, the Commission adopted Staff’s recommendation to deregulate the Company’s VMS and related trade names.

Based on the Advice No. 570 and the Commission’s records, the Commission makes the following:

FINDINGS OF FACT

GTE provides telephone service in Northwestern Oregon, including portions of the Portland metropolitan area, Northeastern Oregon and along the southern coast of Oregon.

GTE has enacted operating and accounting procedures to record unregulated sales, capital costs and expenses separately from the regulated operations.

The confidential pricing information developed in Docket UM 351 indicates that GTE plans to price its VMS above its long run incremental cost. This ensures that, at least initially, the incumbent is not employing predatory pricing practices.

There are many alternative providers of comparably priced VMS in the Company’s Oregon territory. Answering machines are relatively inexpensive and are available throughout the marketplace. Other competition identified by GTE includes pager, cellular phone, and secretarial service providers. Additionally, there are several regional voice mail/answering service providers operating in GTE’s Oregon territory including: Accuracy Plus, Advanced Answering and Communications, Answer America, Business Connections, Calls Unlimited Inc., Echo Communications, HQ Business Centers, U S West Messaging Service, and Voice-Tel Northwest. A sampling of the supplier prices for these services indicate that GTE’s prices to businesses are competitive; however, GTE currently provides lower prices to residential customers.

Staff has not identified any regulatory barriers to entry into the VMS market. The only economic barrier identified is the initial startup cost of the business, including the cost of the Voice Server. Central office features, such as Call Forwarding and GTE SMDI, are available from GTE at tariffed rates. The unregulated VMS operation must pay tariff rates for any services purchased from GTE’s regulated operations.

GTE has agreed to adhere to Customer Proprietary Network Information (CPNI) restrictions specified in the Telecommunications Act of 1996.

OPINION

Applicable Law

ORS 759.030 requires the Commission to exempt a telecommunications service from regulation if price and service competition exist. Prior to making these findings, the Commission shall consider:

a) The extent to which services are available from alternative providers in the relevant market.

 

b) The extent to which the services of alternative providers are functionally equivalent or substitutable at comparable rates, terms, and conditions.

 

c) Existing economic or regulatory barriers to entry.

 

d) Any other factors deemed relevant by the Commission.

 

OAR 860-032-0025 requires the Commission to determine that the proposed rate for the service is, at a minimum, equal to its full long range incremental cost, prior to exempting a service from regulation. Furthermore, the Commission shall consider the following:

a) The extent to which the services are available from alternative providers in the relevant market;

 

b) The extent to which the services of alternative providers are functionally equivalent or substitutable at comparable rates, terms, and conditions;

 

c) Existing economic or regulatory barriers to entry;

 

d) Any other factors deemed relevant by the Commission.

 

OAR 860-027-0052 governs the allocation of costs between regulated and nonregulated utility operations. The following requirements are applicable to GTE’s VMS deregulation request:

a) Transfers of assets from a nonregulated account to a regulated account shall be recorded in regulated accounts at the lower of net book value or fair market value;

 

b) Transfers of assets from a regulated account to a nonregulated account shall be recorded in regulated accounts at the tariff or price list rate or at the higher of net book value or fair market value;

 

c) When services or supplies are sold by a regulated activity to a nonregulated activity, the sales shall be recorded in the regulated revenue accounts at the tariffed or price listed rates;

 

d) When services or supplies are sold to a regulated activity by a nonregulated activity, sales shall be recorded in the regulated accounts at the nonregulated activity’s cost or the market rate, whichever is lower;

 

e) When a telecommunications public utility provides both regulated and nonregulated intrastate service, the utility shall maintain a current intrastate cost allocation manual on file with the Commission.

 

Order No. 94-1556 deregulated United Telephone Company of the Northwest’s VMS, subject to four conditions. GTE has agreed to comply with these same conditions with modifications to satisfy the CPNI requirements specified in the Telecommunications Act of 1996. The four conditions require GTE to:

1) Charge the unregulated VMS the existing tariff rates for billing and collection services. This condition is consistent with the Commission’s cost allocation rule.

 

2) Permit anyone to purchase, at a reasonable price, any customer lists the Company obtains through its LEC position which are used for VMS marketing purposes.

 

3) Establish a fair market value for the transfer of any CPNI from its regulated operations to its unregulated VMS business. This requirement is consistent with the Commission’s cost allocation requirements. The Telecommunications Act of 1996 prohibits the use of CPNI for marketing purposes except in aggregate form or at the request of the customer.

 

4) Record all VMS purchases by the regulated operations in the regulated operations’ accounting books, at the lower of cost or market. This requirement is consistent with the Commission’s cost allocation rule.

 

CONCLUSIONS

Advice No. 570 meets the requirements of ORS 759.030 and OARs 860-032-0025 and 860-027-0052.

 

This request should be granted, subject to conditions.

ORDER

IT IS ORDERED THAT:

GTE Northwest Incorporated’s request to deregulate its Voice Message Services (VMS) and related trade names "GTE Voice Messaging" and "GTE Personal Secretary," is granted, subject to the following conditions:

a. GTE will charge its existing price-listed billing and collection rates to its unregulated VMS operation for billing and collection services rendered.

 

b. Any customer list, obtained by reason of GTE’s LEC position and used for VMS marketing purposes, shall be made available to anyone at a reasonable price.

 

c. GTE’s regulated operations shall charge its unregulated operations the fair market price for its Customer Proprietary Network Information (CPNI). GTE may not use CPNI for purposes other than the provision of communications service unless otherwise instructed by the customer.

 

d. All VMS purchases by GTE’s regulated operations shall be recorded in the accounting books at the lower of cost or market price.

 

e. GTE shall comply with OAR 860-027-0052(9) regarding its intrastate cost allocation manual within 90 days.

 

 

Made, entered, and effective .

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of this order. The request must comply with the requirements of OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070(2)(a). A party may appeal this order to a court pursuant to ORS 756.580.