ORDER NO. 99-493

ENTERED AUG 19 1999

This is an electronic copy and appendices and footnotes may not appear

UD 11

DISPOSITION: PETITION GRANTED

On June 8, 1999, U S WEST Communications, Inc., (USWC) filed a petition to price list two SMARTSET Feature Packages, which are packages of custom calling features for business customers. Only the packages themselves would be price listed, not the individual services in the packages. The individual services would remain in the regular tariff.

The two services proposed for price listing are:

SMARTSET Package

Call Waiting (includes Call Waiting ID)

Caller ID Name and Number

Call Forwarding Variable

SMARTSET PLUS Package

Call Waiting (includes Call Waiting ID)

Caller ID Name and Number

Call Forwarding Busy Line/Don’t Answer Expanded

Message Waiting Indication Audible

The rates and charges are in addition to all rates and charges for the associated underlying access line service. Both SMARTSET Packages are $11.95 per month.

Under ORS 759.030(6) and OAR 860-032-0035, the Commission may authorize a telecommunications utility to price list services if the services are not essential services, without any requirement that the services be subject to competition.

Commission Staff reviewed USWC's petition and presented its analysis at the Commission’s July 27, 1999, public meeting. Staff recommended that the Commission grant the petition and allow USWC to file a price list. Staff reasoned first that the services proposed for price listing are not essential because they contain features that can be purchased separately from tariffs.

Second, Staff queried whether the petition creates the potential for price discrimination. That is, Staff questioned whether these feature packages are identical to or so similar to other business feature packages that the company could use them as a basis for price discrimination. Staff found the answer to its question to be no. Further, Staff reasoned that even if USWC did attempt price discrimination, the Commission could order the services moved back to the regular tariff and fully regulated.

Staff noted that under ORS 759.030(7), the Commission could suspend the current filing and investigate further regardless of whether the proposed price list services are essential, if it has other public policy concerns. However, Staff raised no other policy issues.

Staff pointed out that USWC already has pricing flexibility in its Portland competitive zone for the packages included in this petition. Therefore, the petition effectively only adds to the areas where the company can change its rates for the packages in the petition without submitting to the Commission’s full regulatory process. Staff asserted that it sees no immediate risk of harm to the public interest in allowing this petition. However, Staff asked that the company be subject to a condition of service stating that the price for any package will not exceed the sum of the tariffed rates of the package’s individual service components.

According to Staff, USWC does not propose to change the rates or conditions of service under this petition. Therefore, the cost studies previously approved by the Commission, which show that the current rates cover the long run incremental costs of service, are still effective.

The Commission adopted the Staff report and granted USWC’s petition at its July 27 public meeting.

IT IS ORDERED that:

U S WEST Communications, Inc.’s petition to price list its SMARTSET packaged service is granted. USWC shall file a price list that is consistent with its petition.

The price of the package of services shall not exceed the sum of the tariffed rates of the individual service components of the package.

The decision to grant USWC's petition is made without prejudice to future decisions regarding:
a. Whether any particular services are essential or nonessential, or
b. Whether any particular service package should be price listed when some of the underlying services are tariffed.

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.