ORDER NO. 98-255

ENTERED JUL 01 1998

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

CP 413

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 January 6, 1998, U S WEST Communications, Inc. (USWC or applicant), filed with the Commission an application for certification to provide telecommunications service in Oregon as a competitive provider. Applicant seeks authority as a competitive provider of switched and private line intraexchange (local) telecommunications service in areas coextensive with local exchanges of GTE Northwest Incorporated (GTE) and United Telephone Company of the Northwest, dba Sprint/United (United). Applicant also requests authority to provide, as a competitive provider, interexchange intraLATA toll service and interexchange private line service (i.e., non-switched or dedicated transmission service) in the same areas.

The local exchanges of GTE encompassed by the application are listed in Appendix A to this order. The local exchanges of United encompassed by the application are listed in Appendix B to this order.

Applicant is a telecommunications utility. Pursuant to ORS 759.025, applicant currently has authority as a telecommunications utility to provide switched and private line local exchange service in 64 exchanges. Applicant also has authority as a utility to provide switched and private line interexchange, intraLATA telecommunications service statewide. See Order No. 86-1237, docket UM 70. In GTE and United exchanges, applicant will operate as a reseller and as a facilities based provider of telecommunications services. Applicant may purchase services for resale from the incumbent local exchange carriers or from other certified competitive providers.

Applicant, USWC, is currently the largest telecommunications utility operating in Oregon. Further, applicant is currently the Primary Toll Carrier (PTC) in its own exchanges, and throughout the state except for the local exchanges of GTE and United. A PTC is the default toll carrier for intraLATA telecommunications. The Commission approved GTE as the PTC in all GTE exchanges. See Order No. 94-336. United is the PTC in all United exchanges. See Order No. 97-257.

Applicant will provide operator services. Applicant currently has authority to provide operator services, as granted in Order No. 86-1237, docket UM 70. A statement of compliance with ORS 759.690 and OAR 860-032-0005 (regarding operator services) was included in the current application.

The Commission served notice of the application on the Commission’s telecommunications mailing list January 12, 1998. The Commission did not receive any protests. However, GTE and United will be considered parties to this proceeding.

On February 18, 1998, an Administrative Law Judge (ALJ) with the Commission issued rulings that adopted procedures for the processing of this docket. On March 13, 1998, and again on April 10, 1998, the ALJ extended the date on which Commission Staff (Staff) would distribute a proposed order for review by the parties. Staff distributed the proposed order on May 11, 1998. USWC filed an exception to the proposed order on May 26, 1998. On June 5, 1998, staff replied to USWC’s exception.

USWC’s sole exception to the proposed order related to interexchange private line authority. Staff’s proposed order granted authority for intraexchange (local) service and for interexchange, intraLATA switched (toll) telecommunications service. It did not, however, grant interexchange authority for non-switched, private line (dedicated transmission) service. In its exception, USWC stated that its application requested such authority and requests that the order be modified accordingly.

A review of the application reveals an ambiguity regarding a request for interexchange private line service. Staff originally interpreted the application to not request such authority. On further review, Staff agrees that the application could be read to request private line authority and filed a revised proposed order.

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 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 service 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 telecommunications 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 telecommunications 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:

upon 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.

ORS 759.690 and OAR 860-032-0005 establish certain requirements providers of operator services must meet. 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 call aggregators include in each 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 Competitive Provider

Applicant has met the requirements for classification as a competitive telecommunications services provider for the exchanges listed in Appendices A and B. Applicant’s customers or those proposed to become customers have reasonably available alternatives. The incumbent telecommunications utilities, GTE and United, provide the same or similar local exchange and intraLATA toll services in the local service area requested by 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.

Applicant is classified as a competitive telecommunications services provider for the services it offers pursuant to this order. The Commission recognizes that applicant also operates as telecommunications utility in certain exchanges in this state. With respect to services applicant offers as a competitive provider pursuant to this order, applicant is not required to file rate schedules under ORS 759.175 or charge the rates that applicant files with the Commission as a telecommunications utility.

Conditions of the Certificate

The Commission first applied the competitive zone law, ORS 759.050, in dockets CP 1, CP 14, and CP 15. After full evidentiary hearings and consideration of the public interest criteria set forth in ORS 759.050(2)(a), the Commission designated three competitive providers of switched local exchange services as alternate exchange carriers (AECs) in the Portland metropolitan area. See Order No. 96-021. The Commission subsequently applied those findings and conclusions to dockets CP 132, CP 139, and CP 149, and certified two AECs to provide switched local exchange services in areas located throughout the state.

The Commission takes official notice of the record in dockets CP 1, CP 14, and CP 15. In Order No. 96-021, the Commission established conditions applicable to AEC certificates. Since applicant, U S WEST Communications, Inc., proposes to offer local exchange services, it seeks certification as an AEC. Pursuant to ORS 759.050(2)(c) and Order No. 96-021, applicant as an AEC shall comply with the following conditions:

1. Applicant shall terminate all intrastate traffic originating on the networks of other telecommunications service providers that have been issued a certificate of authority by the Commission.

2. Whenever applicant terminates intrastate long distance traffic directly or indirectly from interexchange carriers or from its own toll network to its end user customers, applicant shall contribute to the Oregon Customer Access Fund (OCAF), or its equivalent, in accordance with provisions of the Oregon Customer Access Plan (OCAP) or any successor plan approved by the Commission. Applicant shall contribute using rates approved by the Commission on intrastate terminating carrier common line access minutes, or on any other basis determined by the Commission. Applicant may not participate in (i.e., receive money from) pooling arrangements established under the OCAP or any successor plan unless authorized by the Commission.

3. Applicant shall comply with the Oregon Exchange Carrier Association’s (OECA) informational and operational needs as specified by the OCAP or any successor plan approved by the Commission.

4. Applicant shall offer E-911 service. Applicant has primary responsibility to work with the E-911 agencies to make certain that all users of their services have access to the emergency system. Applicant will deliver or arrange to have delivered to the correct 911 Controlling Office its customers’ voice and dialable Automatic Number Identification (ANI) telephone numbers so the lead 911 telecommunications services provider can deliver the 911 call to the correct Public Safety Answering Point (PSAP). Applicant agrees to work with each 911 district and lead 911 telecommunications services provider to develop database comparison procedures to match applicant’s customer addresses to the 911 district’s Master Street Address Guide in order to obtain the correct Emergency Service Number (ESN) for each address. Applicant agrees to provide the lead 911 telecommunications services provider with daily updates of new customers, moves, and changes with the corresponding correct ESN for each.

5. Applicant shall not take any action that impairs the ability of other certified telecommunications service providers to meet service standards specified by the Commission.

6. At the request of the Commission, applicant shall conduct and submit to the Commission traffic studies regarding traffic exchanged with telecommunications services providers and other entities designated by the Commission.

7. For purposes of distinguishing between local and toll calling, applicant shall adhere to local exchange boundaries and Extended Area Service (EAS) routes established by the Commission. Applicant shall not establish an EAS route from a given local exchange beyond the EAS area for that exchange.

8. When applicant is assigned one or more NXX codes, applicant shall limit each of its NXX codes to a single local exchange and shall establish a toll rate center in each exchange that is proximate to the toll rate center established by the telecommunications utility serving the exchange.

9. Applicant shall comply with universal service requirements as determined by the Commission.

10. Unless otherwise provided pursuant to an interconnection agreement adopted by the Commission pursuant to Section 252 of the Telecommunications Act of 1996, applicant shall enter into interconnection agreements with telecommunications utilities for exchange of local and EAS traffic, ancillary services (i.e., directory listings, directory assistance, 911 arrangements, mutual repair referral) and other interconnection matters in accordance with requirements the Commission established in Order No. 96-021 as otherwise modified by the Commission.

11. If applicant provides services to a subscriber who, in turn, resells the services, including operator services, then applicant and the subscriber must comply with ORS. 759.690 and OAR 860-032-0005.

Since applicant, USWC, is a telecommunications utility, but will operate as a competitive provider in the exchanges listed in Appendices A and B, applicant will be required to comply with the following conditions:

12. Applicant shall keep separate accounts for its regulated utility services and its competitive provider services. Applicant shall comply with OAR 860-027-0052, regarding allocation of costs and revenues. Further, applicant shall file with the Commission an updated cost allocation manual, as required by OAR 860-027-0052(9).

13. Applicant shall have authority to provide intraLATA toll services as a competitive provider in areas coextensive with the exchanges listed in Appendices A and B. However, applicant shall not act as a Primary Toll Carrier (PTC) for GTE’s and United’s local exchange customers.

Public Interest

The Commission’s Findings and Decisions in dockets CP 1, CP 14, and CP 15, Order No. 96-021 at pages 6 - 21, entered pursuant to ORS 759.050(2)(a)(A) - (C), are adopted. 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 USWC, to provide local exchange telecommunications services as a competitive telecommunications provider in the exchanges listed in Appendices A and B.

Competitive Zones

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

Pricing Flexibility

The Commission’s Findings and Decisions in dockets CP 1, CP 14, and CP 15, Order No. 96-021 at pages 82 and 83, entered pursuant to ORS 759.050(5)(a) - (d), are adopted. Accordingly, GTE will gain pricing flexibility in an exchange listed in Appendix A when:

1. Applicant, or an authorized AEC, has received a certificate of authority to provide local exchange service.

2. GTE files a tariff which satisfies the Commission’s requirements regarding the provision of interim number portability, as set forth in Order No. 96-021, and the Commission approves the tariff. GTE has satisfied this requirement. See Order No. 96-278.

3. Staff notifies the Commission that a mutual exchange of traffic exists between GTE and an authorized AEC, including but not limited to, applicant. If Staff previously provided the required notice regarding an exchange, no additional notice is required for that exchange.

(a) As used in paragraph 3 above, "mutual exchange of traffic" means a mutual exchange of traffic between GTE and the AEC within each exchange on an exchange-by-exchange basis. For example, if there is a mutual exchange of traffic in the Silverton exchange, GTE would get pricing flexibility in the Silverton exchange only.

(b) As used in paragraph 3 above, for an AEC who is a reseller (i.e., an AEC does not use its own lines or switches to provide the particular service at issue), a "mutual exchange of traffic" exists when the AEC orders and receives one service, at a wholesale rate, from the LEC for resale pursuant to a certificate granted under ORS 759.050.

Similarly, United will gain pricing flexibility in an exchange listed in Appendix B when:

1. Applicant, or an authorized AEC, has received a certificate of authority to provide local exchange service.

2. United files a tariff which satisfies the Commission’s requirements regarding the provision of interim number portability, as set forth in Order No. 96-021, and the Commission approves the tariff.

3. Staff notifies the Commission that a mutual exchange of traffic exists between United and an authorized AEC, including but not limited to, applicant. If Staff previously provided the required notice regarding an exchange, no additional notice is required for that exchange. The definitions in paragraphs 3(a) and 3(b) above, also apply here.

ORDER

IT IS ORDERED that:

1. The application of U S WEST Communications, Inc., to provide the local exchange and interexchange, intraLATA telecommunications service described in the application is in the public interest and is granted with conditions described in this order.

2. Applicant is designated as a competitive telecommunications provider for local exchange switched and non-switched (dedicated transmission) service, and for interexchange, intraLATA switched (toll) and non-switched (dedicated transmission) service in the exchanges listed in Appendices A and B.

3. The local exchanges of GTE listed in Appendix A and those of United listed in Appendix B are designated as competitive zones.

4. GTE and United shall receive pricing flexibility for local exchange service on an exchange-by-exchange basis as set forth in this order.

5. Pursuant to ORS 759.050(2)(c), applicant shall comply with Commission imposed universal service requirements as a condition of authority to provide local exchange service as a competitive provider.

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 pursuant to ORS 756.580.

APPENDIX A

CP 413

EXCHANGES OF GTE NORTHWEST INCORPORATED

ENCOMPASSED BY THE APPLICATION

Amity

Aumsville/Turner

Bandon

Beaverton

Brookings

Clatskanie

Coos Bay/North Bend

Coquille

Cove

Dayton

Detroit

Elgin

Enterprise

Forest Grove

Gold Beach

Grand Island

Gresham

Hillsboro

Hoodland

Imbler

Joseph

La Grande

Lakeside

Langlois

Lostine

McMinnville

Mill City

Murphy/Provolt

Myrtle Point

Newberg

Port Orford

Powers

Reedsport

Sandy

Scholls

Sherwood

Silverton

Stafford

Sunnyside

Tigard

Union

Vernonia

Wallowa

Yamhill

APPENDIX B

CP 413

EXCHANGES OF UNITED TELEPHONE COMPANY 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