ORDER NO. 97-238

ENTERED JUN 25 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UT 132

DISPOSITION: ISSUES RECONSIDERED

On March 18 , 1997, we issued Order No. 97-107 adopting dialing parity policies for local exchange carriers. Applications for reconsideration have been filed by GTE Northwest, United Telephone Company of the Northwest, and U S WEST. AT&T, MCI, USWC, and the Commission’s Staff filed responses to the applications. We reconsider Order No. 97-107, and will discuss the issues addressed in the applications for reconsideration.

Issue 2(a)

In issue 2(a), we noted that some LECs are required to implement toll dialing parity by August 8, 1997, and other LECs have later deadlines for dialing parity implementation. We required LECs subject to the August 8 deadline to file dialing parity plans within 30 days of the effective date of Order No. 97-107, and the remaining LECs to file their plans at least six months prior to the effective date of their plans. Internal procedures we established to process the plans included notification of other telecommunications carriers, an opportunity for them to protest an implementation plan, and consideration of each plan at a public meeting.

USWC suggests that the internal procedures described above are unnecessary, adding only delays and expense to the process.

Elsewhere in its application for reconsideration, USWC notes that the marketplace could change drastically before it files its dialing parity implementation plan. USWC requests that the Commission modify its order to allow USWC to recommend different implementation procedures when it is ready to file its own dialing parity plan. USWC recommends Order No. 97-107 be modified to allow additional comments, and hearings if necessary, on its specific dialing parity tariff.

It is interesting that USWC finds the streamlined procedure established in Order No. 97-107 to be unnecessary, delay-causing, and expensive, and at the same time recommends a procedure that involves additional comments and possibly hearings. The Commission continues to be comfortable with the established review procedure that brings the implementation plans to it at a public meeting, and declines to change its treatment of Issue 2(a) in Order No. 97-107.

Issue 2(b)

Issue 2(b) asks the question: What types of information should be included in each plan beyond the minimum FCC requirements? In Order No. 97-107, we adopted several requirements beyond what the FCC requires, including a proposed conversion schedule by wire center.

USWC repeats the argument it made in its filed comments that the Commission should not adopt any requirements beyond the minimum FCC requirements. In addition, USWC states that it intends to implement dialing parity on a flash cut (statewide) basis, and contends that a conversion schedule by wire center is unnecessary.

We pointed out in Order No. 97-107 that, in order to give careful consideration to the proposed dialing parity plans, we need additional information beyond the minimum required by the FCC. If USWC plans to convert all its wire centers to 1+ intraLATA equal access at one time, it may simply say so in its tariff filing.

Issues 3(a) and (b)

One of the early issues addressed was the question of whether we should consider carrier of last resort responsibilities in this proceeding. After receiving comments from the parties, the Administrative Law Judge ruled that this dialing parity proceeding was not the appropriate case to address the important carrier of last resort issues. He pointed out that another proceeding specifically directed to those issues would be more likely to develop the kind of record needed to resolve those issues.

In Order No. 97-107, we adopted an equal access conversion process that requires LECs to send ballots to their customers to allow the customers to select their primary intraLATA toll carrier (PTC). We required that the ballots include the name of the customer’s current PTC.

USWC points out that the requirement to include the name of the customer’s current PTC requires it to be the carrier of last resort. USWC argues that because the intraLATA market is being opened to competition, USWC should be allowed to select those exchanges it wants to provide intraLATA toll service to, like its competitors. USWC would be free to abandon intraLATA toll service in exchanges it chooses not to serve.

The Commission affirms that this is not the appropriate forum to resolve the carrier of last resort issues. We will maintain the status quo until we are confident that any changes would still insure that all areas of the state will be provided intraLATA toll service. We decline to change the balloting process established in Order No. 97-107.

Issue 3(c)

We adopted policies to protect consumers and prohibit anti-competitive activities in Order No. 97-107. One of the requirements directs LECs to include in their dialing parity plans a summary of their business office practices relating to consumer protection and customer contacts that affect carrier selections. USWC objects to that requirement, saying that "[s]crupulous business office procedures and customer contact policies will be fully covered in the training of contact personnel. It should not be necessary, … to make these internal business documents part of U S WEST’s filed implementation plan." If USWC has scrupulous internal business procedures and customer contact policies, summarizing them and filing them with its implementation plan should not be onerous. We decline to change the policies established in Order No. 97-107 to protect consumers and prohibit anti-competitive activities.

Issue 4(a)

In Order No. 97-107, we required LECs that are not required to have their dialing parity plans implemented by August 8, 1997, to file their dialing parity plans at least six months prior to the scheduled effective date of their plans. USWC requests that the Commission allow these LECs to delay filing their rates and cost workpapers until 30 days prior to the scheduled implementation date. USWC states that it could provide more accurate information if those documents are filed closer to the actual implementation date.

AT&T, MCI, and Staff oppose the request. They argue that 30 days is an insufficient time period to adequately investigate and resolve any disputes that might arise from the workpapers.

The Commission is persuaded that the benefits to be gained by having the longer period of time to review the workpapers outweighs the gains that might accrue from having the workpapers prepared later in the process. Workpapers sometimes raise significant issues that need to be resolved prior to making final decisions in proceedings involving parties with differing points of view. USWC's request to delay the filing of workpapers until 30 days prior to the scheduled date of implementation is denied.

Issue 4(b)

Issue 4(b) asks the question: If customers are offered free presubscription, what time frame is appropriate? We answered that question in Order No. 97-107 by allowing a four-month period for customers to change presubscribed carriers without incurring non-recurring charges. No limitation was placed on the number of times a customer could select a presubscribed carrier during the four-month period. GTE finds an inconsistency between that decision and our decision in Issue 4(c) in which we decided that existing customers who do not select a presubscribed carrier will continue to be served by the carrier serving them at the time they are offered a choice of carriers. In explaining our decision, we said that we assume "that customers who fail to make an intraLATA selection after being given two opportunities are satisfied with their current PTC." GTE finds an inconsistency between the "two opportunities" quoted in the previous sentence and the decision announced in Issue 4(b) to allow a four-month period during which customers may select carriers without incurring non-recurring charges. GTE apparently thinks we are allowing an unlimited number of carrier changes in one paragraph and limiting the number to two in another paragraph.

The "two opportunities" refers to two opportunities to select a carrier in connection with a simultaneous interLATA and intraLATA conversion, not two changes after an initial carrier selection is made. The process of allowing customers to select a presubscribed carrier envisions a second ballot being sent to those who do not make a selection after receiving the first ballot. Customers therefore have two opportunities to make a selection before they are assigned to the carrier already serving them. There is no inconsistency between the two opportunities to select a carrier and the number of times a carrier selection may be changed during the grace period.

GTE also contends that it currently is unable to track this type of carrier selection activity without incurring costly modifications to its system. It suggests limiting customers to one free presubscribed carrier change during the four-month grace period. MCI and AT&T point out that GTE does not specify what its system limitations are or how expensive the modifications would be, so the suggested limitation should be denied. MCI and AT&T contend that allowing customers more than one PIC change in the initial presubscription period will encourage dissatisfied customers to shop around, thereby enhancing competition.

Staff is not opposed to limiting the number of presubscription changes to an initial selection and one change without charge, and points out that the proposed limitation may reduce the potential for "gaming" by customers who switch carriers multiple times because of incentives offered by interexchange carriers. Also, Staff is not opposed to allowing greater flexibility in the length of the grace period.

USWC supports GTE's position except that USWC recommends allowing LECs to select either a 90-day or a 120-day grace period for customers to select a presubscribed carrier and make one change without charge. USWC states that a 90-day grace period is easier to track administratively.

GTE does not explain how its system can track a process of allowing one carrier selection change without charge while being unable to track more changes within the four-month grace period. However, allowing customers to make one carrier change after selecting an initial presubscribed carrier is a reasonable request. The Commission doubts that it would be much of a problem, but there would be the potential for customers to abuse the process by making a large number of carrier changes. Therefore, LECs may impose a change charge on customers who make a change after the customer makes an initial presubscribed carrier selection and one additional carrier selection during the grace period.

The Commission is not persuaded that it should change the minimum grace period established in Order No. 97-107. However, LECs should be allowed greater flexibility to adopt a longer grace period or allow more PIC changes without incurring charges. Therefore, LECs may adopt the decisions announced above, or they may file implementation plans that allow a greater number of presubscribed carrier selections without imposing a change charge or a grace period that lasts longer than four months.

Issue 4(c)

In Order No. 97-107, we decided that existing customers who fail to make a PTC selection after receiving two ballots will continue to be served by the PTC they were using at the time of equal access conversion. USWC states that with intraLATA presubscription, the intraLATA market is fully competitive, and USWC should be allowed to select those exchanges it chooses to serve. It therefore asks that existing customers who fail to make a PTC selection not remain USWC toll customers if USWC chooses to exit their long distance market.

USWC's argument is a continuation of its contention that it should be allowed to abandon toll service as it chooses, rather than being the carrier of last resort. As we have stated elsewhere in this order, we decline to use this proceeding to relieve USWC of its carrier of last resort responsibilities. USWC's request to revise our decision in Issue 4(c) is denied.

Issue 5(a)

In Order No. 97-107, in addressing the types of conversion costs that are appropriate for recovery, we referred to FCC Rule 51.215, which allows recovery for the incremental costs necessary for the implementation of dialing parity. We listed certain expenses that would be included, but did not specifically list the expenses associated with free PTC changes. USWC seeks clarification that recoverable conversion costs include those expenses.

LECs should be allowed to recover their incremental costs incurred in implementing dialing parity. Those costs include PTC changes when those changes are offered free of charge for dialing parity implementation. The Commission clarifies that PTC change charges may be included in recoverable conversion costs.

Issue 5(b)

In Order No. 97-107, we established principles for determining how conversion costs would be recovered and over what period of time. We decided that conversion costs should be recovered from intraLATA originating minutes of use over a four-year period of time. USWC contends, as it did in the comments it filed in this proceeding, that conversion costs should be recovered from both originating and terminating minutes of use, and that intraLATA and interLATA minutes of use should incur a charge. USWC also requests a three-year recovery period.

USWC's arguments do not persuade us to change the decisions we reached on Issue 5(b) in Order No. 97-107. This proceeding addresses dialing parity as it relates to the origination of intraLATA toll calls. It does not address how interLATA calls are to be directed, nor does it direct how intraLATA or interLATA toll calls are to be terminated. Its focus is on the origination of intraLATA toll calls, and assessing conversion costs on intraLATA originating minutes of use is appropriate. We also are not persuaded that the four-year time period for recovery of conversion costs should be changed.

Issue 6

Issue 6 asks the question: Should new customers be treated different from existing customers at the time of equal access conversion? In Order No. 97-107, we selected a 60-day grace period for new customers to select a primary carrier. During that grace period, customers who fail to make a primary carrier selection would have their intraLATA calls carried by their default carrier. At the end of the grace period, those customers would have to make a primary carrier selection or use carrier access codes to make intraLATA toll calls.

Several parties ask the Commission to reconsider Issue 6. GTE and United state that their networks currently have design limitations that prevent them from tracking new customer-specific activity. They also are concerned that even with notification, some customers will be confused and blame their default carrier for problems encountered during that grace period. In addition, they point out that the current interLATA practice requires new customers to dial carrier access codes until they make a primary carrier selection. The parties requesting reconsideration suggest that new customers failing to select a primary carrier be required to dial a carrier access code to make an intraLATA toll call. Staff also suggests that new customers who select a primary carrier be allowed an initial selection and one additional selection without charge during the same grace period allowed to existing customers.

The Commission does not want to make the transition to dialing parity any more cumbersome or costly than necessary. The benefit of a grace period during which new customers may consider selecting a primary carrier would be outweighed by additional costs if the LECs must incur substantial additional expenses to provide that grace period. In addition, less confusion is likely to occur if the same primary carrier selection procedures apply to interLATA and intraLATA calls. The Commission reconsiders the grace period decision in Issue 6 in Order No. 97-107 and decides that new non-selecting customers must dial a carrier access code to route their intraLATA toll or intrastate toll calls until they make a selection of a primary carrier. They may make an initial primary carrier selection and one change of primary carrier without charge (or a greater number of carrier selection changes if the implementation plan permits a greater number pursuant to the flexibility granted in our discussion of Issue 4(b)) during the same grace period adopted for existing customers.

ORDER

IT IS ORDERED that Order No. 97-107 is reconsidered and the decisions announced in that order are affirmed and amended as stated above.

Made, entered, and effective ____________________________.

A party may appeal this order to a court pursuant to ORS 756.580.