ORDER NO. 98-190

ENTERED MAY 05 1998

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

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

AR 336

DISPOSITION: RULE AMENDED

This order modifies the administrative rules that determine who pays the cost of using the shared telecommunications service provider (STSP) facilities when an end user desires to obtain telecommunications services from a local exchange carrier (LEC) instead of the STSP. An STSP is a telecommunications provider that provides telecommunications services to end users using equipment and facilities located inside the boundaries of a campus or the walls of a building. The current rules were adopted to implement Oregon statutes enacted in 1987.

The issue over compensation for the use of inside wiring was brought to the Commission most recently in 1996 when GTE Northwest, Inc., (GTE) complained about the charges that Shared Communications Services, Inc. (SCS) was requiring for GTE to gain access to an SCS end user. GTE filed a petition for a declaratory ruling (DR 17) to address this issue on November 25, 1996. The Commission opened docket UM 839 on March 4, 1997, to consider those issues. After considerable discussion, the parties agreed that the matter should first be addressed in a rulemaking proceeding.

While investigating GTE's complaint, Staff determined that the Commission's rule governing the relationship between STSPs and the LECs is outdated. The current rule requires the STSP to provide, upon the end user’s request, alternative access to an LEC. The rule also provides that the STSP must provide to the LEC facilities and conduit space at reasonable terms, conditions, and prices. At the time the current rule was adopted, inside wiring was part of the regulated telecommunications service provided by the LEC. The Commission deregulated installation and maintenance of inside wiring in 1987. Order No. 87-778.

To bring the Commission's rule up to date, the Commission Staff recommended that the Commission amend OAR 860-032-0045. Staff's proposal, submitted on September 30, 1997, and modified on March 8, 1998, would:

Authorize the end user whose only access to local exchange service is an STSP to petition the Commission for an order requiring the STSP to make available to the petitioner alternative access facilities or conduit space at reasonable terms, conditions, and prices;

Specify that the petitioner is responsible for paying the STSP a reasonable fee for alternative access;

Allow another person to represent the petitioner in the proceeding;

Specify that the STSP shall establish at least one point of interconnection to provide alternative access as a result of the petition; and

Provide that the Commission will determine the appropriate points of interconnection as necessary in the course of considering a petition for alternative access.

At the September 30, 1997, public meeting, the Commission adopted Staff's recommendation to initiate this rulemaking proceeding. After notice with the Secretary of State, GTE, SCS, U S WEST Communications, Inc. (USWC), Oregon Telecommunications Association (OTA), and FirstLink Communications, Inc. (FirstLink) filed comments. On December 10, 1997, Administrative Law Judge Thomas G. Barkin held a hearing in this matter. After the hearing, participants filed additional opening, reply, and rebuttal comments.

BACKGROUND

The STSP provides telecommunications services to tenants of campuses or large buildings using customer premises equipment (CPE). The STSP may own the CPE, lease it from the building owner, or operate and maintain it under an agreement with the building or campus owner. STSP service includes connection to the public switched network.

The boundary point between the public switched network and the building or campus is called the point of interconnection or the point of demarcation. Points of interconnection are not always easy to locate. In some instances, particularly in older buildings, the ownership of the inside wiring is unclear. The cost to interconnect at a particular point can vary from building to building.

OPINION

This order addresses three issues:

Should the burden to petition the Commission be placed on the end user?

What are reasonable terms, conditions and prices?

What is the point of interconnection?

Should the burden to petition the Commission be placed on the end user?

Who should pay? The Commission adopts Staff's proposed rule that requires the end user to file a petition and pay a reasonable fee to the STSP for alternative access. It is the end user who is initiating the change in service by requesting alternative access to the LEC. We agree with Staff that the end user should be responsible for the payment. Furthermore, the STSP should receive the payment, since the STSP will be providing alternative access. USWC notes that some STSPs are charging telecommunica-tions providers rental fees for access to end users. We agree that this rule should apply to all charges by the STSP for access by the end user to an LEC.

Our decision is based on ORS 759.035(10), which requires the STSP to make alternative access available "on reasonable terms and conditions at reasonable prices." This statute protects the end user by assuring that the STSP provides alternative access to the end user, but it also insures that the STSP is compensated for providing access.

We do not agree with FirstLink and SCS who propose that the LEC pay the STSP for alternative access. These STSPs claim that the LECs, not the end users, are gaining access. Not only do we disagree with this view on legal grounds, but we also find that the proposal could burden the incumbent LEC (ILEC) with unreasonable costs. ILECs have limited ability to refuse to serve an end user. ORS 759.035 and 759.275. Furthermore, they must charge their end users tariffed rates that may not cover the cost of access to the inside wiring. This proposal could require the ILECs to pay for alternative access to an end user in instances where the service would never be economic. Ultimately, the cost of uneconomic service is recovered from other end users or the shareholders. The STSPs have not made a convincing argument why these groups should bear the responsibility of paying the STSP for the use of inside wiring.

The STSPs also assert that the LEC is better able to assess the reasonable-ness of the fee than the end user. In addition, they claim that the STSP and the LEC will have a business relationship for negotiating an appropriate payment. We find that end users should be responsible for assessing the value to them of alternative access. It is the end user who must choose whether alternative access is worth the price.

Further, SCS maintains that the Commission does not have authority to require either the end user or the building owner to pay for alternative access. It claims that the lack of a contractual relationship between the STSP and the end user precludes the Commission from requiring the end user to pay for access. In addition, it argues that the Commission does not have authority to require a building owner to compensate an STSP for an LEC's use of the STSP's facilities. Therefore, according to SCS, the Commission cannot compel an STSP to make its facilities available to an LEC under the assumption that the owner will reimburse the ILEC.

We conclude that SCS's analysis ignores the statutory scheme. Regardless of the particular arrangement between the STSP and the building owner, it is the STSP who is providing the telecommunications service. As a result, we have authority to enforce the STSP’s obligation to assure the end user’s access to an LEC. We acknowledge that the STSP may fulfill this obligation through an agreement with the building owner or in some other way. However, the STSP may not contract away the end user’s rights nor can it contract away its ultimate obligation to assure alternative access.

Can an LEC or another person petition on behalf of the end user? We do not adopt Staff's proposed rule that allows another person, such as the LEC, to represent the interests of the end user in a proceeding before the Commission to resolve disputes over the terms, conditions, and prices of alternative access. Oregon statutes and our rules limit the persons who may represent parties in contested cases to authorized representatives. LECs do not qualify for that status.

We agree with Staff that some end users may not have the expertise or resources to pursue a petition before the Commission. However, there are options for end users to obtain assistance in bringing a petition before us. As Staff notes, a negotiation process in which the LEC, the STSP, or the end user may participate will usually precede the petition. The LEC can assert the interests of the end user in those sessions. In addition, the Staff can provide advice and assistance to a party bringing a petition. Further, LECs can intervene in the proceeding. Finally, end users can hire their own counsel.

USWC, GTE, and OTA argue that the LEC should be able to petition the Commission. This option would provide the end users the expertise of parties familiar with Commission procedures. GTE claims this will minimize work for the end user. FirstLink opposes the notion that LECs be allowed to represent an end user's interests in accessing a competitor's infrastructure. FirstLink is concerned that such a provision would allow ILECs to gain improper competitive advantages. FirstLink suggests that ILECs may encourage end users to express dissatisfaction before the Commission about STSP services with which they are otherwise quite pleased.

In addition, FirstLink suggests that end users will have the ability to file a petition. FirstLink argues that the rule should be structured to encourage the tenant to pressure the building owners and managers to provide the service that the tenant wants. In FirstLink's view, sophisticated building owners and managers will respond appropriately. FirstLink offered no suggestions on how the rule might be drafted to accomplish that goal.

We do not adopt the USWC, GTE, and OTA proposal. As we stated previously, the statute is framed to protect the end user’s rights, not to further the interests of one telecommunications provider over another.

What are reasonable terms, conditions and prices?

Staff’s proposed rule does not specify what the terms, conditions, and prices for alternative access should be. Staff believes this decision must be made on a case-by-case basis. Staff, SCS, and FirstLink assert there is too much variety in the facts of each case for a single methodology to be useful. FirstLink notes that the Washington Utility and Transportation Commission does not regulate access rates unless it finds that end users are unable to have access to other LECs. We agree with Staff and the STSPs.

We understand the views of OTA and GTE that Commission policies on the terms, conditions, and prices would avoid protracted disputes on what is reasonable. Without such guidance, GTE is concerned that every request for alternative access will require a petition. However, the record in this proceeding is inadequate for us to consider setting policies on adequacy of terms, conditions, and prices.

We disagree with SCS’s assertion that the Commission lacks authority to set the rates for the use of STSP facilities. The admonition in ORS 759.035(10) that "the shared telecommunications service provider may be required to make alternative facilities or conduit space available on reasonable terms and conditions at reasonable prices" evidences a role for the Commission in disputes over alternative access.

We do, however, agree with the STSPs that the Commission cannot require an STSP to allow an end user to use the STSP’s facilities without just compensation. The nub, as all parties recognize, is to determine what compensation is just. We adopt Staff’s advice to address that issue on a case-by-case basis. In those proceedings, we will determine "reasonable terms and conditions at reasonable prices," as commanded by ORS 759.035(10).

What is the point of interconnection?

Staff proposes that the Commission decide the location of the points of interconnection when investigating end user petitions. We agree with Staff that decisions over the location of the points of interconnection can be complex and that we will have to establish the points when we set terms, conditions and prices. As a result, we will resolve disputes over points of interconnection on a case-by-case basis.

In this proceeding, we do not have a sufficient record to address USWC’s and FirstLink’s request that we provide guidance on the location of the points of interconnection. USWC asserts that uniformity on the principles of interconnection points will help maintain the integrity of the network, when parties are called upon to negotiate points of interconnection. FirstLink asks the Commission to set technical standards for a provider-neutral, consistently positioned point of interconnection. FirstLink asks the Commission to describe several methods of placing interconnection points including carrier-negotiated points of interconnection. However, neither party made detailed proposals. Nor does the record contain discussion of the advantages and disadvantages of particular guidelines. There is no basis for us to reach a reasoned decision on this issue.

FirstLink notes that it is difficult to locate the point of interconnection in some buildings. It asserts that in some older buildings, the ILECs may claim ownership of facilities inside the building. FirstLink also claims that the point of interconnection in these buildings is not always clearly marked. In those instances, FirstLink asks the Commission to require the ILEC claiming ownership to show proof of ownership and to bear the burden of creating the point of interconnection. FirstLink also asks the Commission to set out both a method for resolving ownership issues quickly and cost-effectively, and a method by which ownership issues for new wiring installations in multi-unit buildings may be established. FirstLink offers no suggestions on how that might be done. We conclude that issue is beyond the scope of the docket. This proceeding is limited to rules implementing ORS 759.035(10). In addition, even if we wished to address the matter, the record is not adequate to provide the guidance. Finally, it is unclear how much of a problem FirstLink is actually experiencing.

Finally, SCS claims that our jurisdiction over certain types of wiring on the customer side of the point of interconnection is limited. SCS asserts that unprotected premises wiring that runs from the point of interconnection to nodes inside a multi-unit development is not inside wiring. It argues that inside wiring is limited to the protected premises wiring that runs from the nodes to the individual units. The basis for SCS’s contention is that the FCC regulations distinguish between unprotected and protected premises wiring and the language of the regulation addressing unprotected wiring does not contain "deregulation language." See 47 C.F.R. § 68.213 and § 68. 215.

We disagree. As GTE notes, both types of wiring are referred to as premises wiring. We have examined the FCC’s most recent order addressing inside wiring and can find no suggestion that the FCC intended to preempt state regulation. FCC Order 97-209. The FCC stated that the record in the docket "reveals no specific local policies (on points of interconnection) that must be preempted." Supra, ¶35-36. Furthermore, the FCC endorsed its conclusion that the point of interconnection should be the same for simple and complex wiring. Finally, our order deregulating installation and maintenance of inside wiring makes no distinction, for regulatory purposes, between simple and complex wiring. Order No. 87-778 at 2-3. See also Order No. 96-028 (UC 122).

Proposals to Broaden the Docket

FirstLink asks that the rule be expanded to address issues related to ILEC ownership of inside wiring. FirstLink would require ILECs that own inside wiring to file tariffs allowing alternative access by other LECs and STSPs. We conclude that the issue FirstLink raises is outside the scope of this proceeding. The notice that established this docket was limited to issues related to alternative access by end users of STSPs. We have limited our focus to issues relating to the interpretation of ORS 759.030(10). Concerns about STSP access to LEC facilities must be addressed in another proceeding.

USWC asks that the rule be broadened to apply to housing developments where a developer or other provider has offered telecommunications services to all residents of multi-unit dwellings, including housing developments. USWC claims that the STSP may not always be the responsible decision maker. It also asserts that its current tariffs reflect this position.

We decline to expand the scope of this docket. The rule that we adopt here should be limited to the scope of ORS 759.035(10). That statute addresses the right to alternative access for end users of STSPs. USWC asks us to extend the rule into an area where our jurisdiction may be limited. Furthermore, USWC is incorrect in asserting that its tariffs give it authority to require a building owner to offer alternative access. The USWC tariffs are predicated on the need to obtain the cooperation of the building owners. See P.U.C. Oregon No. 25 2.2.8.C. Cable, Wire and Service Termination Policy.

ORDER

IT IS ORDERED that the rule attached as Appendix A is adopted. The rule will be effective upon filing with the Secretary of State.

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

APPENDIX A

860-032-0045

Petitions for Alternative Access by Customers of Shared Telecommunications Service Providers

(1) Any person who uses shared services or any affected public utility whose only access to local exchange telecommunications service is a shared telecommunications service provider may petition the Commission for an order requiring a the shared telecommunications service provider to make available to the petitioner alternative facilities or conduit space at reasonable terms, conditions, and prices for the purpose of establishing alternative access to local exchange telecommunications service.

(2) The petition shall include:

(a) The name and address of the petitioner;

(b) The name and address of the shared services shared telecommunications service provider;

(c) The type of services required by the petitioner.; and

(d) The petitioner’s statement indicating a willingness to pay a reasonable fee to the shared telecommunications service provider for alternative access.

(3)(a) If, after notice and investigation, the Commission finds a shared service provider has not provided reasonably priced and reasonably available alternative access to local exchange services, the Commission may require the shared service provider to make conduit space and inside cabling available to the local exchange public utility on reasonable terms and conditions at reasonable rates;

(b) The shared provider shall provide the local exchange public utility access and cabling on an unbundled and nondiscriminatory basis. Inside cabling means the cabling necessary for the public utility to serve the customer on the shared service provider's side of the point of demarcation. The utility and the shared provider shall agree on one point of demarcation.

(3) The shared telecommunications service provider shall establish one or more points of interconnection to provide alternative access as a result of a petition under this rule. A point of interconnection is a location where facilities of the shared telecommunications service provider may be connected to the facilities of a telecommunications utility or competitive telecommunications provider. The Commission will determine appropriate points of interconnection as necessary in the course of considering a petition for alternative access.

Stat. Auth.: ORS Ch. 183, 756 & 759

Stat. Implemented: ORS 759.030

Hist.: PUC 27-1985 (Temp), f. & ef. 12-19-85 (Order No. 85-1203); PUC 16-1986, f. & ef. 11-17-86 (Order No. 86-1159)