ORDER NO. 98-417

ENTERED OCT 09 1998

This is an electronic copy.

OF OREGON

CP 495

 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 July 6, 1998, CDS Networks, Inc. (applicant), filed with the Commission an application for certification to provide telecommunications service in Oregon as a competitive provider. Applicant seeks authority to provide interexchange service and local exchange telecommunications service in areas coextensive with local exchanges of U S WEST Communications, Inc. (USWC), GTE Northwest Incorporated (GTE), CenturyTel, and United Telephone Company of the Northwest, dba Sprint (United).

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

Applicant seeks authority to provide interexchange nonswitched, private line telecommunications service (dedicated transmission service) in all exchanges now served by USWC, GTE, CenturyTel, and United. Applicant also seeks authority to provide local exchange nonswitched, private line service (dedicated transmission service) in all exchanges now served by USWC, GTE, CenturyTel, and United. Applicant currently holds a certificate of authority to provide local exchange switched and interexchange switched telecommunications service in the same exchanges noted above. See Order No. 98-257, docket CP 441.

Applicant will operate as a reseller and as a facilities based provider of local exchange and long distance telecommunications service. Applicant may purchase services for resale from the incumbent local exchange carriers or from other certified competitive providers.

Applicant will not provide operator services, since operator services are not part of dedicated transmission service. A statement of compliance with ORS 759.690 and OAR 860-032-0005 (regarding operator services) was included in the application.

The Commission served notice of the application on the Commission’s telecommunications mailing list July 13, 1998. The Commission did not receive any protests. However, USWC, GTE, CenturyTel, and United will be considered parties to this proceeding.

On August 11, 1998, 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 September 1, 1998, the Commission Staff (Staff) distributed a proposed order for review by the parties. No exceptions to the proposed order were filed.

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:

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:

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.

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 service provider. Applicant’s customers or those proposed to become customers have reasonably available alternatives. The incumbent telecommunications utilities, USWC, GTE, CenturyTel, and United provide the same or similar local exchange services in the local service area requested by applicant. AT&T, MCI, Sprint, and USWC provide the same or similar interexchange services as 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 applications. Those conditions are adopted and made conditions of this certificate of authority. In addition:

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

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

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

4. Applicant shall comply with universal service requirements as determined 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 service similar to that 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 pages 4 - 6, and 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. 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 it is in the public interest to grant the application of CDS Networks, Inc., to provide local exchange telecommunications service as a competitive telecommunications provider in the exchanges listed in Appendices A, B, C, and D.

The exchanges listed in Appendices A, B, C, and D to this order are designated competitive zones for dedicated transmission service 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 service at the time the Commission granted the certificate of authority. Applicant seeks authority to provide dedicated transmission service. Accordingly, USWC, GTE, CenturyTel, and United are granted pricing flexibility in the exchanges listed in Appendices A, B, C, and D for dedicated transmission service.

  ORDER

IT IS ORDERED that:

1. The application of CDS Networks, Inc., to provide the intraexchange and the intrastate, interexchange nonswitched telecommunications service (dedicated transmission 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 intraexchange dedicated transmission service in the exchanges listed in Appendices A, B, C, and D and for interexchange dedicated transmission service in those same exchanges.

3. The local exchanges of USWC listed in Appendix A, those of GTE listed in Appendix B, those of CenturyTel listed in Appendix C, and those of United listed in Appendix D are designated as competitive zones for dedicated transmission service.

4. USWC, GTE, CenturyTel, and United shall receive pricing flexibility for local exchange dedicated transmission service, 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.

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

CP 495

EXCHANGES OF U S WEST COMMUNICATIONS, INC.

ENCOMPASSED BY THE APPLICATION

 Albany

Ashland

Astoria

Athena/Weston

Baker

Bend

Blue River

Burlington

Camp Sherman

Cannon Beach

Central Point

Corvallis

Cottage Grove

Culver

Dallas

Eugene/Springfield

Falls City

Florence

Gold Hill

Grants Pass

Harrisburg

Hermiston

Independence/Monmouth

Jacksonville

Jefferson

Junction City

Klamath Falls

Lake Oswego

Lapine

Leaburg

Lowell

Madras

Mapleton

Marcola

Medford

Milton-Freewater

Newport

North Plains

Oak Grove/Milwaukie

Oakland/Sutherlin

Oakridge

Oregon City

Pendleton

Phoenix/Talent

Portland

Prineville

Rainier

Redmond

Rogue River

Roseburg

St. Helens

Salem

Seaside

Siletz

Sisters

Stanfield

Sumpter

Toledo

Umatilla

Veneta

Walla Walla

Warrenton

Westport

Woodburn/Hubbard

APPENDIX B

CP 492

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 C

CP 495

EXCHANGES OF CENTURYTEL OF OREGON, INC.

ENCOMPASSED BY THE APPLICATION

 Aurora

Bly

Boardman

Bonanza

Brownsville

Burns

Camas Valley

Charbonneau

Chemult

Chiloquin

Creswell

Depoe Bay

Drain

Durkee

Echo

Fort Klamath

Fossil

Gilchrist

Gleneden Beach

Glide

Government Camp

Heppner

Huntington

Ione

Jewell

John Day

Knappa

Lakeview

Lebanon

Lexington

Long Creek

Malin

Maupin

Merrill

Mitchell

Monument

North Harney

North Powder

North Umpqua

Paisley

Paulina

Pilot Rock

Pine Grove

Rocky Point

Scappoose

Seneca

Shedd

Silver Lake

South Harney

Sprague River

Spray

Starkey

Sweet Home

Tygh Valley

Ukiah

Wamic

Yoncalla

APPENDIX D

CP 495

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