ORDER NO. 97-127

ENTERED APR 09 1997

This is an electronic copy. Appendices may not be attached.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

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DISPOSITION: APPLICATION GRANTED

Note: By issuing this certificate, the Commission makes no endorsement or certification regarding the certificate holder’s rates or service.

The Application

On December 9, 1996, Digital Direct, Inc., (applicant) filed with the Commission an application for an amendment to its existing certification to provide telecommunications service in Oregon as a competitive provider. Applicant seeks authority to provide dedicated, non-circuit switched interexchange and intraexchange private line telecommunications service (i.e., dedicated transmission service) between and within areas coextensive with local exchanges of U S WEST Communications, Inc., (USWC), GTE Northwest Incorporated (GTE), and PTI Communications (PTI). The local exchanges of USWC encompassed by the application are listed in Appendix A to this order. The local exchange of GTE encompassed by the application is listed in Appendix B to this order. The local exchanges of PTI encompassed by the application are listed in Appendix C to this order.

Applicant will provide interexchange and intraexchange dedicated transmission services only. Applicant intends to provide dedicated, non-circuit switched, private line data, video, and voice communications services over fiber optic and coaxial cable networks. The services for which applicant requests authority are within the definition of dedicated transmission services set forth in Order No. 93-1850, docket UM 381.

Applicant will be a facilities based provider. Applicant does not intend to use or resell the facilities or services of local exchange companies except as necessary to gain access to interexchange carriers’ points of presence. Applicant may lease facilities from other competitive telecommunications providers.

In its application, applicant requested authority for USWC’s Albany exchange. However, applicant previously requested and received authority for the Albany exchange in Order No. 95-838. Therefore, no further consideration for the Albany exchange will be given in this order.

Applicant currently has authority to provide dedicated transmission services only for interexchange service in the Philomath exchange. See Order No. 95-440. Applicant currently has authority to provide dedicated transmission services for interexchange and intraexchange service between and within eight GTE exchanges and six USWC exchanges, all in the Portland area, and USWC’s Albany and Corvallis exchanges. See Order No. 95-838.

Procedural History

The Commission served notice of the current application on the Commission’s telecommunications mailing list on December 12, 1996. The Commission received a protest from USWC. Neither GTE nor PTI filed a protest; however, both were considered a party to this proceeding.

On February 11, 1997, an Administrative Law Judge (ALJ) with the Commission issued a ruling that adopted procedures for the processing of this docket. The ALJ also set forth a procedural schedule.

On March 6, 1997, the Commission Staff (Staff) distributed a proposed order for review by the parties. No party filed exceptions to the proposed order.

The Commission has reviewed the proposed order and the record in this matter. Based on a preponderance of the evidence, the Commission makes the following:

FINDINGS AND CONCLUSIONS

Applicable Law

Applications to provide telecommunications service and for classification as a competitive telecommunications services provider are filed pursuant to ORS 759.020. ORS 759.020 provides that:

(1) No person [or] corporation * * * shall provide intrastate telecommunications service on a for-hire basis without a certificate of authority issued by the commission under this section.

* * * * *

(5) The commission may classify a successful applicant for a certificate as a * * * competitive telecommunications services provider. If the commission finds that a successful applicant for a certificate has demonstrated that its customers or those proposed to become customers have reasonably available alternatives, the commission shall classify the applicant as a competitive telecommunications services provider[.] For purposes of this section, in determining whether there are reasonably available alternatives, the commission shall consider:

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

(b) The extent to which 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.

Applications to provide local exchange (intraexchange) telecommunications services are reviewed pursuant to ORS 759.050, the "competitive zone law." Under ORS 759.050(2)(a), the Commission may:

certify one or more persons, including another telecommunications utility, to provide local exchange telecommunications service within the local exchange telecom-munications service area of a certified telecommunications utility, if the commission determines that such authorization would be in the public interest. For the purpose of determining whether such authorization would be in the public interest, the commission shall consider:

(A) The effect on rates for local exchange telecommunications service customers both within and outside the competitive zone.

(B) The effect on competition in the local exchange telecommunications service area.

(C) The effect on access by customers to high quality innovative telecom-munications service in the local exchange telecommunications service area.

(D) Any other facts the commission considers relevant.

Under ORS 759.050(2)(b), the Commission shall:

[u]pon certification of a telecommunications provider under paragraph (a) of this subsection, establish a competitive zone defined by the services to be provided by the telecommunications provider and the geographic area to be served by the telecommunications provider.

Under ORS 759.050(2)(c), the Commission may:

impose reasonable conditions upon the authority of [the applicant] to provide competitive zone service within the competitive zone * * * at the time of certification of a telecommunications provider, or thereafter.

Subsection (5)(a) of ORS 759.050 provides that:

unless the commission determines that it is not in the public interest at the time a competitive zone is created, upon designation of a competitive zone, price changes, service variations, and modifications of competitive zone services offered by a telecommunications utility in the zone shall not be subject to [the notice, hearing and tariff suspension procedures in] ORS 759.180 to ORS 759.190, and at the telecommunications utility’s discretion, such changes may be made effective upon filing with the commission.

OAR 860-032-0015(1) authorizes the Commission to suspend or cancel the certificate if the Commission finds that (a) the holder made misrepresentations when it filed the application, or (b) the applicant fails to comply with the terms and conditions of the certificate.

Designation as a Competitive Provider

Applicant has met the requirements for classification as a competitive telecommunications services provider. Applicant’s customers or those proposed to become customers have reasonably available alternatives. The incumbent telecommunications utilities, USWC, GTE, and PTI provide the same or similar local exchange telecommunications services in the service area requested by applicant. Other competitive providers, including AT&T, provide the same or similar interexchange services in the same service areas requested by the applicant. Subscribers to applicant’s services can buy comparable services at comparable rates from other vendors. Economic and regulatory barriers to entry are relatively low.

Conditions of the Certificate

As part of the application, the applicant agreed to, or acknowledged, several conditions listed in the application. Those conditions are adopted and are made conditions of this certificate of authority. In addition, applicant shall not take any action that impairs the ability of other certified telecommunications service providers to meet service standards specified by the Commission.

Public Interest

In docket UM 381, Order No. 93-1850, the Commission considered the public interest aspects of local exchange competition for dedicated transmission services similar to those described in the application before us now. In dockets CP 1, CP 14, and CP 15, Order No. 96-021, the Commission made several public interest findings regarding local exchange competition in general.

The Commission’s Findings of Fact and Opinion in docket UM 381, Order

No. 93-1850 at page 4 - 6, and the Commission’s Findings and Decisions in dockets CP 1, CP 14, and CP 14, Order No. 96-021 at pages 6-21, entered pursuant to ORS 759. 050(2)(a)(A) - (C), are adopted. The Commission takes official notice of the record in dockets UM 381, CP 1, CP 14, and CP 15. Based on a review of those findings, as well as information contained in the application, the Commission concludes that it is in the public interest to grant the application of Digital Direct, Inc., to provide local exchange telecommunications services as a competitive telecommunications provider in the exchanges listed in Appendices A, B, and C.

Competitive Zones

The exchanges listed in Appendices A, B, and C to this order are designated competitive zones pursuant to ORS 759.050(2)(b).

Pricing Flexibility

In Order No. 93-1850, docket UM 381, the Commission granted pricing flexibility for dedicated transmission services at the time the Commission granted the certificate of authority. Applicant also seeks authority to provide dedicated transmission services. Accordingly, USWC, GTE, and PTI are granted pricing flexibility in the exchanges listed in Appendices A, B, and C for dedicated transmission services.

ORDER

IT IS ORDERED that:

1. The application of Digital Direct, Inc., to provide the interexchange and intraexchange telecommunications services described in the application is granted with conditions described in this order.

2. Applicant is designated as a competitive telecommunications services provider.

3. Applicant may provide interexchange and intraexchange dedicated transmission services between and within the exchanges listed in Appendices A, B, and C.

4. The local exchanges of USWC listed in Appendix A, those of GTE listed in Appendix B, and those of PTI listed in Appendix C, are designated as competitive zones for dedicated transmission services.

5. USWC, GTE, and PTI shall receive pricing flexibility for dedicated transmission services for the exchanges listed in Appendices A, B, and C.

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 service of this order. The request must comply with the requirements in 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 party may appeal this order to a court pursuant to ORS 756.580.

APPENDIX A

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EXCHANGES OF U S WEST COMMUNICATIONS, INC.

ENCOMPASSED BY THE APPLICATION

Medford

Pendleton

Salem

APPENDIX A

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APPENDIX B

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EXCHANGES OF GTE NORTHWEST INCORPORATED

ENCOMPASSED BY THE APPLICATION

McMinnville

APPENDIX B

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APPENDIX C

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EXCHANGES OF PTI COMMUNICATIONS

ENCOMPASSED BY THE APPLICATION

Lebanon

Sweet Home

APPENDIX C

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