ORDER NO. 97-257

ENTERED JUL 03 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

CP 317

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 April 29, 1997, United Telephone Company of the Northwest, d.b.a. Sprint, (applicant or United) filed with the Commission an application for certification to provide telecommunications service in Oregon. Applicant seeks to amend its current authority to allow it to provide intraLATA, intrastate, interexchange telecommunications (toll) services. United currently has authority as a telecommunications utility to provide local exchange service in thirty exchanges in Oregon. See Order No. 86-1197. The exchanges currently served by United are listed in Appendix A to this order.

Applicant seeks authority to provide intraLATA, intrastate, interexchange telecommunications service in all exchanges in which the applicant currently provides local exchange service. Applicant would become the Primary Toll Carrier (PTC) for those exchanges. A PTC is the default toll carrier for intraLATA telecommunications. GTE Northwest Incorporated (GTE) is the PTC in all GTE local exchanges. See Order No. 94-336. U S WEST Communications (USWC) is the PTC in all other exchanges in Oregon. By this order, applicant will be designated the PTC in all its local exchanges in Oregon, and USWC will lose its status as PTC, and the corresponding responsibilities, in those exchanges. This order does not apply to interLATA or to interstate telecommunications service.

Applicant will contract with other certified providers rather than directly provide operator services as part of its PTC operations. Applicant will make operator services available. A statement of compliance with Order No. 90-96 and ORS 759.690 was included in the application.

Applicant is affiliated with Sprint Communications Company, LP, (Sprint). Sprint has authority to provide interexchange telecommunications service in six exchanges in Oregon. See Order Nos. 87-049 and 87-1058. Sprint also has authority to provide local exchange service as an alternative exchange carrier (AEC) in many exchanges throughout Oregon, including all local exchanges of United. See Order Nos. 97-128 and 97-129.

The Commission served notice of the application on its telecommunications mailing list on April 30, 1997. The Commission did not receive any protests. USWC and AT&T Communications of the Pacific Northwest, Inc. (AT&T) filed petitions to intervene, which were granted. Since GTE is also a PTC in Oregon and will be affected by this order, GTE was also considered a party to this proceeding.

On May 28, 1997, an Administrative Law Judge (ALJ) with the Commission issued a ruling that adopted procedures for the processing of this docket. The ALJ set forth a procedural schedule.

On May 30, 1997, the Commission Staff (Staff) distributed a proposed order for review by the parties. USWC and AT&T Communications of the Pacific Northwest, Inc., (AT&T) filed exceptions to the proposed order. On June 23, 1997, Staff filed a reply to the exceptions filed by USWC and AT&T.

USWC Exceptions

In its exceptions, USWC requested two modifications to the proposed order, neither of which was opposed by Staff or United. First, USWC asked that condition 7, on page 5, be modified to clarify how USWC, GTE, and United will bill each other for terminating and transiting access services. Second, USWC requested that the ordering paragraph 3 be changed to make clear that USWC will not be the carrier of last resort for any exchange that it is not the PTC.

The Commission agrees with USWC’s exceptions and has made the requested modifications in this order.

AT&T Exceptions

AT&T states that the Commission must address four issues before granting United authority to be a PTC for its exchanges. AT&T’s first two exceptions relate to the toll and access tariffs (Advice Nos. 462 and 463) filed by United in conjunction with its PTC application. In those exceptions, AT&T contends that: (1) the toll rates in Advice No. 462 must meet appropriate imputation tests; and (2) United’s access rates in Advice No. 463 exceed costs. Staff is investigating those and other issues in its review of United’s tariff filings. However, while United has acknowledged that it cannot offer intraLATA toll service until those tariffs are approved, the exceptions raised by AT&T are beyond the scope of this certification proceeding. To partially address AT&T’s concerns, the Commission has modified condition 2, listed on page 5 of the proposed order to clarify the relationship between this proceeding and United’s corresponding tariffs.

Next, AT&T requests that the Commission should require, as a condition of approval of United’s PTC application, that United implement intraLATA dialing parity at the same time as it becomes a PTC. AT&T asserts that United will have a competitive advantage over other toll carriers if it becomes a PTC before it implements dialing parity.

However, as Staff notes, the issue is not whether some carrier will have a competitive advantage with being a PTC when dialing parity is implemented, but rather who that carrier will be. Upon approval of its application, United will replace USWC as the PTC in United’s exchanges. AT&T evidently presumes that USWC currently possesses those competitive advantages, but had not articulated why it prefers USWC to benefit from them rather than United. Furthermore, the Commission previously granted GTE authority as the PTC in its exchanges without requiring simultaneous implementation of dialing parity. United should be afforded the same treatment.

Finally, AT&T contends that the Commission must consider what appropriate conditions should be placed on United as a PTC. AT&T, however, apparently did not recognize that most of the conditions of the certificate listed in the proposed order were taken from Order No. 94-336, which granted GTE its PTC status.

The Commission has reviewed the proposed order, the exceptions, 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 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.

* * * * *

The commission may classify a successful applicant for a certificate as a telecommunications utility or 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:

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

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

Existing economic or regulatory barriers to entry.

Any other factors deemed relevant by the commission.

ORS 759.690 and OAR 860-032-0005 establish certain requirements providers of operator services must meet. Applicant will be responsible to ensure those requirements are met. Included are the following conditions:

The certificate holder involved in the provision of operator services shall:

1. Notify all callers at the beginning of the call of the telecommunications provider's name and allow a sufficient delay period to permit a caller to terminate the call or advise the operator to transfer the call to the customer's preferred carrier.

2. Disclose rate and service information to the caller when requested.

3. Not transfer a call to another operator service provider without the caller's notification and consent.

4. Not screen calls and prevent or "block" the completion of calls which would allow the caller to reach an operator service company different from the certificate holder. In addition, the certificate holder shall, through contract provisions with its reseller clients, prohibit the reseller from blocking a caller's access to his or her operator service company of choice.

5. When entering into operator service contracts or arrangements with clients who in turn resell or provide telephone service to the general public include in that contract provisions for public notification. A sticker or name plate identifying the name of the certificate holder shall be attached to, or in close proximity to, each telephone that has public access.

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 Telecommunications Utility

On March 28, 1997, applicant filed two separate tariffs with the Commission. Tariff Advice No. 462 contained terms, conditions and rates for interexchange Message Telecommunications Service; i.e., toll service. Tariff Advice No. 463 contained terms, conditions and rates for access service. By making those two tariff filings applicant acknowledged that it expected to be classified as a telecommunications utility. Those tariffs are being reviewed by Staff and will be considered separately by the Commission.

The Commission recognizes that several interexchange carriers have authority to provide interexchange telecommunications service in United’s local exchanges. However, as the PTC, the applicant will be the default carrier of intraLATA, intrastate, interexchange telecommunications service. In order for a customer to use another carrier for an intraLATA toll call, the customer will have to dial around the 1+ default to United. That is, the customer will need to dial 10xxx (Where xxx is the three digit carrier identification code (CIC) of the other carrier) or the other carrier’s special 1-800 number to select a carrier other than United. Therefore, the conditions faced by other carriers are not comparable to those under which applicant will be able to operate. Therefore, the Commission will not classify applicant as a competitive provider of interexchange services at this time, rather the Commission will classify applicant as a telecommunications utility.

Conditions of the Certificate

Applicant requested that it be a PTC for all local exchanges in which it currently provides local exchange service. As a PTC, United will be required to meet several conditions which do not apply to other competitive providers of interexchange telecommunications service. Therefore, the following are conditions of this certificate:

1. United, as a PTC, shall act as a toll carrier of last resort for all intraLATA, intrastate, interexchange telecommunications service from all of its local exchanges, except in those cases where the customer has selected another interexchange carrier.

2. United will design and develop nondiscriminatory intraLATA toll rates in compliance with PUC rules and orders, on a statewide average basis, unless otherwise required or authorized by the Commission. United will not begin operation as an intraLATA toll carrier (PTC) until United’s tariffs for intraLATA toll rates and revised access rates have been approved by the Commission.

3. United will design, develop and coordinate its intraLATA, intrastate, interexchange network taking into account reasonable interconnection arrangements with the other telecommunications carriers.

4. United will pay all access charges and subsidies imposed pursuant to PUC rules and orders.

5. United shall not discriminate in the provision of access to other certified interexchange carriers and its own PTC operations consistent with Commission rules and orders.

6. For purposes of imputing local transport, United shall use an imputed point of presence to be at the applicable originating tandem switch.

7. United, U S WEST Communications, and GTE Northwest will bill each other for terminating and transiting access services for calling between the companies using records of actual conversation minutes. United will also ensure that its terminating toll/access minutes can be reasonably identified by other Oregon local exchange carriers for access service billing.

8. United will ensure that billing records for non-sent-paid toll traffic that is to be billed to customers located outside United’s Oregon service territory are interchanged with the other local exchange carriers or their billing agents to ensure proper carrier identification and end user billing.

9. United will provide notice of its becoming a PTC and describing the approved toll rates to its customers by bill inserts, bill messages or separate mailings.

ORDER

IT IS ORDERED that:

1. The application of United Telephone Company of the Northwest, d.b.a. Sprint, to provide intraLATA, intrastate, interexchange telecommunications service in its local exchanges, listed in Appendix A, as described in the application, is granted with conditions described in this order.

2. Applicant shall be designated the Primary Toll Carrier in its local exchanges.

3. U S WEST Communications shall no longer be the Primary Toll Carrier, nor intraLATA toll carrier of last resort, in United’s local exchanges, listed in Appendix A.

4. Applicant, U S WEST Communications and GTE Northwest will bill each other for terminating and transiting access services according to the terms of this order.

5. United shall provide Message Telecommunications Service (toll service) and access services in compliance with terms, conditions and rates of tariffs approved by this Commission.

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 UNITED TELEPHONE OF THE NORTHWEST

ENCOMPASSED BY THE APPLICATION

Arlington

Bay City

Beaver

Butte Falls

Carlton

Cascade Locks

Cloverdale

Crater Lake

Diamond Lake

Fish Lake

Garibaldi

Grand Ronde

Grass Valley

Hood River

Lincoln City

Moro

Mosier

Odell

Pacific City

Parkdale

Prospect

Rockaway

Rufus

Shady Cove

Sheridan

The Dalles

Tillamook

Wasco

White City

Willamina